Pallabika Ganguly (ML): How many township projects are you developing or planning to develop?

Manish Kalani (MK): Currently, we are developing 11 township projects in Tier II cities. The first four townships that we launched are in Indore, Raipur and Udaipur. The total built-up area of all our township projects is about 50 million sq ft. We are working with two concept projects, Treasure Town and Treasure Vihar. Treasure Town is a project with a fully-equipped club house, spa, schools, and shopping centres while Treasure Vihar is a project of affordable houses.

ML: How many Treasure Towns and Treasure Vihars are you developing?

MK: We are coming up with two Treasure Towns in Indore, two in Udaipur and one in Raipur. Each Treasure Town has an approximate built-up area of 4.5 million sq ft. It comprises two and three bedroom, hall and kitchen (BHK) apartments, starting from 1,500 sq ft to 2,000 sq ft. The apartments are priced between Rs50 lakh to Rs60 lakh.

In our Treasure Vihar project, we have a built-up area of 4.5 million sq ft. We are coming up with three such projects in Indore, one in Udaipur and one in Raipur. We are looking at creating some of the greenest townships in terms of open space.

ML: Don’t you feel that the prices you quoted for these projects are high for a Tier II city?

MK: We have recently launched Treasure Town in Indore and have already received booking for 300 apartments, priced from Rs25 lakh to Rs50 lakh. In Udaipur, we received about 150 bookings. For our Treasure Vihar projects, we received bookings for 300 apartments in Indore and 100 bookings in Udaipur. So I don’t think the prices are high when you look at the services and facilities that we are offering.

We are launching the fourth township, the second Treasure Vihar in Indore, in January 2010. It comprises one BHK (500 sq ft), two BHK (700 sq ft) and three BHK (1,200 sq ft) and the price range would be between Rs7 lakh to Rs20 lakh.

ML: What is the time frame for development of these township projects?

MK: We plan to hand over our four Indore and Udaipur-based townships from December 2010 till 2015.

ML: Who are the stakeholders in your township projects?

MK: We have K2C, an AIM-listed company which has invested $10 million in the Indore township project, Landmark Group has invested $5 million in the Udaipur township and the rest is owned by EWDPL.

ML: The industry is sceptical about Tier II cities. Why are you launching townships and shopping centres in these cities?

MK: Our unique selling proposition has always been carrying out developments in emerging,
fast-growing cities. Before entering a city, we measure it on different parameters—the city must have potential and we must be the first mover to exploit the potential. In most of the locations, we developed the first shopping centres.

ML: How many shopping centres have you planned in 2010?

MK: All together, we are developing 13 shopping centres, out of which two are operational in Indore and the third will open at Nanded in Maharashtra in January 2010. Moving forward, we will be launching our next shopping centre at Ujjain between March and April. Then there is one shopping centre coming up at Raipur in September, one at Bhilai in October, and another at Jabalpur in December followed by a third shopping mall at Indore in December. The remaining four shopping centres at Mohali, Udaipur, Vadodara, Thiruvananthapuram and Amravati will be operational between 2010-2011. All our projects are in advanced stages of construction. The total construction of these shopping centres is close to 10 million sq ft. Out of 10 million sq ft, 6 million sq ft is already being constructed. Most of the malls are at the fit-out stage. From December 2010, nine malls will be operational and the rest will be operational by 2011.

ML: You are coming up with an initial public offering (IPO) next year. Can you elaborate on your plans for the same?

MK: We are planning to raise about Rs500 crore–Rs600 crore through an IPO for future expansion and a small portion will be utilised for the repayment of debt.

ML: How do you see the retail segment growing in the next two years?

MK: We were the first one to propagate the revenue-share model in India even before retailers started talking about it. We are at the tip of the iceberg. The organised consumption in India is still around 5%-7% while in other countries like China it is 25% plus, in the US it is 85% and in Europe it is 65%. So we are at the bottom and we have a long way to go. There are not enough retailers in India.

Out of 200-odd operational shopping centres, 80% of malls are filled with the same 400 brands. There is no new experience.

ML: How do you think more number of players can come into the retail segment?

MK: We have more than 5,000 successful brands in the country which individually do an annual turnover of more than Rs5 crore, which some of the organised retail players do not even earn. Many of them are manufacturers, while some are exporters.  

These are brands that do not have expertise to come to the mall. First, they claim that they are manufacturers and they do not understand the business of retail. Second, they do not understand the concept of rent and revenue-sharing. Third, those who do have an appetite to take risk do not approach any mall because they are afraid that mall operators will deny entry to them. They are happy running a successful business. We need to assist these brands with our expertise so that they can easily step into retail. That is what we do by offering our expertise; I offer a revenue-share model to the retailers.