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ORBIT IN THE NEWS

17 February 2011

“We had to constantly fight peoples distrust of builders"

Pujit Aggarwal in conversation with Pooja Kothari and Sunaina Sehgal - India Inc., Febrary 2011. Photograph by Mexy Xavier

As a 16-year-old, Pujit Aggarwal was literally “lured” into real estate. His father and uncle were working on their maiden venture as property developers. On his uncle’s suggestion, post his classes at Sydneham College, Aggarwal decided to try his hand at selling the block of offices his family was developing in Navi Mumbai. His sales pitch worked, earning Aggarwal a neat 1.5 per cent of the deal value in commission. “I had tasted blood,” recalls Aggarwal, who earned a princely sum of Rs 1 lakh in the process. There was no turning back from there. There was something addictive about the business, and Aggarwal knew he wanted to be a part of that.

Cut to today, Aggarwal, along with his father, Ravi Kiran Aggarwal, runs Orbit Corporation, a Rs 450-crore real estate developer in Mumbai.

Though people outside the financial capital might have a hard time recalling what Orbit is, residents of the city might recall its reputation as a redeveloper of dilapidated buildings—not to mention, the company that most recently hit the headlines for win- ning the bid to redevelop Kilachand House—once home to the Maharaja of Patiala and one of the last palaces in the city. 

Given its success in recent years—Orbit has grown nearly 40 per cent in the past three years—it is difficult to believe that the Aggarwals are relatively new to the sector.

Hailing from Haryana, the family had moved to Mumbai in 1973 and founded Orbit Steels to manufacture steel plates. As typical of a family-owned business, they pursued other rev- enue opportunities, such as export of fabric, arts and crafts, and later, frozen foods under the Tasty Bites brand.

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Given its success in recent years—Orbit has grown nearly 40 per cent in the past three years—it is difficult to believe that the Aggarwals are relatively new to the sector.

Hailing from Haryana, the family had moved to Mumbai in 1973 and founded Orbit Steels to manufacture steel plates. As typical of a family-owned business, they pursued other rev- enue opportunities, such as export of fabric, arts and crafts, and later, frozen foods under the Tasty Bites brand.

 

In the early eighties, the senior Aggarwal introduced the Indian consumer to the concept of ready-to-eat meals and packaged frozen vegetables. “The experiment bombed in the market,” says his 38-year-old son. “We were much ahead of our times for the Indian market. We survived by exporting the products and by selling them to institutions like the canteens of the armed forces.” Luckily, the business scraped through and was later sold to Hindustan Unilever in 1995.

During its moments of struggle with various businesses, the family ventured into real estate through co-investments. It didn’t take them long to realise the potential of the industry. So, it gave up other pursuits and dived into real estate full time.

The initial years weren’t easy. The Aggarwals didn’t have the deep pockets to bite into Mumbai’s expensive real estate deals. However, the senior Aggarwal noticed that old, dilapidated buildings standing in posh South Mumbai localities were going at not only cheaper rates but were also more easily available.

“The landlords of such properties barely got any rental income because of rent control laws. The returns were even negative in some cases. So, getting them to sell to us wasn’t that difficult,” explains his son.

Having created a niche in redeveloping old properties into swanky, luxurious residences and offices, the Aggarwals formalised their efforts into a corporate entity called Orbit Corporation in 1999. “It was an uphill task. We had to constantly fight people’s distrust of builders and convince them that we weren’t out to usurp their properties,” recalls the younger Aggarwal. Over the years, Orbit has single-mindedly focussed on localities within South Mumbai, even raising money on the stock markets to fund its operations. 

Along the way, it’s been helped by the management team’s unrelenting focus on delivering value to its customers, and some wise decisions. In 2008-09, as the economy cratered and sales froze for almost six months, Orbit decided to convert its commercial premium complexes into residential flats. “We were nimble-footed and responded in time to the weakening demand for commercial real estate,” says Aggarwal.

Similarly, five years ago, when competitors were constructing luxury apartments in Lower Parel, Orbit decided to make one-room studio apartments, which later sold like “hot cakes”.

In its 20 years of experience across Mumbai’s landscape, Orbit has also set high standards for itself. Aggarwal likes to point out that each Orbit building comes with a 20-year warranty against leakage. “We use stainless steel reinforcement bars for construction, so that repairs need to be done much later than is usual for buildings,” explains Aggarwal.

It has taken him time to get here—and to develop this eye for detail and best practices. But the time has been worth it. Today, as father and son comfortably occupy their swank office in upscale Mumbai, Orbit’s looking to raise Rs 1,000 crore in the near future.

It’s working on projects of various sizes. Besides the Khilachand house, which is their most ambitious to date, there’s a cluster development in Malabar Hill and a 200-acre project in posh Alibagh.

It won’t be long before their “teamwork” leads to the realisation of the son’s dream of “ringing the bell at the New York Stock Exchange”. 

 

COMPANY DASHBOARD

 Orbit Corporation

Sector Construction
Year of Incorporation 2000
Net Sales 2009 (January to December) Rs 447 crore
Three-year sales CAGR 40%
Average Profit Margin (last 3 years) 27%
Market Cap (as on December 31, 2009) Rs 190 crore
 
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