Following the footsteps of realty players life DLF and Parsvnath Developers, consumer electronics giant Videocon Group has also decided to put its special economic zones (SEZs) on the backburner. Its realty unit Videocon Realty and Infrastructure Ltd (VRIL) will now focus on medium-sized business hotels, said a director of the group.

“We are developing medium-sized business hotels across the country. The first hotel will be in Kolkata, which is already in the construction phase. We are no more looking at SEZ projects as of today,” said SM Hegde, director, Videocon Group.

VRIL’s first project is coming up at Kolkata where it plans to develop hotel, retail and information technology space. Last year, it had bought around 30 lakh sq ft of land from Philips India at Rs9 crore. The company has initiated the first phase of construction in about 8 lakh sq ft of land. The construction area is divided into 1.5 lakh sq ft for hotel & retail space and 6.5 lakh sq ft for information technology space.

The Philips factory is still operational in the same land and occupies 30% of the total space. The first phase is supposed to be completed in the next 12 months to 18 months. Ahluwalia Contracts (India) Ltd is constructing the property for VRIL in Kolkata.

The group is planning to construct 200 rooms with a daily rental between Rs2,000-Rs5,000 per room, depending upon the location. VRIL is in talks with a few established players in the hospitality segment like Hilton Worldwide for design, planning and operation. 

“We are coming up with hotels in other places like Aurangabad, Ahmedabad, Nashik, Bengaluru and Hyderabad,” said Mr Hegde.

The company has got land parcels available in ten locations across the country and has a land bank of more than 2,000 acres. In a few cities, projects are in the design and planning stage and the company aims to come up with two to three such properties in the next two years.

After Kolkata, the next projects will be initiated in Ahmedabad and Aurangabad. The company believes that now is the best time to enter the real-estate market when property rates are depressed. VRIL expects the overall environment in real-estate to improve by the time these projects are up and running.

“According to various reports, India’s GDP will grow at 8%; if this happens, it will open more job opportunities in the country. With the boom in the job market, the information technology sector will also start hiring. At present, commercial real-estate prices are reasonable and attractive,” said Mr Hegde.

According to various media reports, Videocon had two SEZ projects in Maharashtra and four in West Bengal, which it had planned to implement by special purpose vehicles (SPVs). The company had planned to tie up with separate players for SEZ projects. It had earlier planned to list its real-estate arm by 2010. However, considering the state of the real-estate industry, Videocon has held back this plan.

Last year, realty major DLF got four SEZs de-notified by the commerce ministry, citing lack of demand for commercial space, and Parsvnath had put 12 projects on hold.

In 2006, when the SEZ rules were notified, there had been a mad rush for setting up such enclaves. These special enclaves have been hit by land-acquisition problems, resistance from farmers and new regulations. Big projects like the Navi Mumbai SEZ, Reliance’s Haryana SEZ and Posco’s SEZ could not take off as land-acquisition problems remained unresolved.
— Pallabika Ganguly