"IT parks cost almost a third of the cost of those developed outside India"

L&T dominates this specialised business "� at last count it had built 21 IT parks in the country "� and faces almost no competition from others.

Though it is the market leader, it still does not expect this specialty segment to contribute much to its topline in the years ahead. It accounts for only about two per cent (about Rs 90 crores) of the L&T ECC division's turnover of Rs 4,338 crores.

In an interview, A Ramakrishna, deputy managing director, L & T, who heads the company's ECC division, tells S Kalyana Ramanathan that it costs only a third of the cost of building IT parks overseas to build IT parks in India. Excerpts:

How many IT parks has L&T ECC built in India so far?
We started with pioneering work in the Bangalore IT Park and then followed it up with HITEC City in Hyderabad.

The IT Park in Bangalore is spread over 55 acres and cost Rs.1,500 crore. ECC was involved in the construction of phase 1 and package 1 of the project which had a value of Rs 300 crore.

HITEC City was promoted by L&T Infocity Ltd, a joint venture between Larsen & Toubro (89 per cent) and APIIC (11 per cent) and was developed at a cost of Rs1,500 crore.

The second phase, spread over three hectares, has also been very successful. It has been completely sold out.

The next big project L&T took up was the Tidel Park (20 hectares) at Chennai and Bhavani Technopark (180 acres) at Thiruvananthapuram.

What has been L&T ECC's experience been in building knowledge centres for leading IT companies in India?
The ECC division has built IT infrastructure and knowledge centres for some of the leading lights in the Indian IT sector. We have worked with Wipro, Infosys, GE, Oracle and Cognizant.

Our expertise in this segment today is clearly benchmarked against the best in the world. We have, in fact, earned even a bonus for completing projects before the scheduled time.

IT companies in particular are very keen on completing projects on time, if not ahead of the deadline, as project delays can be very damaging.

What projects do you have in the pipeline?
We are now working on the third phase of HITEC City in Hyderabad. This will be spread over 160 acres and will be completed in the next four to five years.

Cyber Park in Bangalore, which will have over 45,500 sq mt of air conditioned space, will be ready by March or April next year.

How competitive in terms of costs is L&T's work on IT parks?
We are obviously competitive. Otherwise people wouldn't be buying our properties. In terms of prices outside the country, our cost is as little as a third of what it is outside the country.

However, you cannot compare IT parks with other commercial buildings in the country. Typically, the rental value of the IT parks we construct is Rs 20 to Rs 30 per sq foot and around Rs 1,600 per sq ft for outright sale.

What is crucial here is the need to develop an IT park at the shortest possible time. Apart from that, high speed connectivity and good fire fighting systems must be in place.

Has L&T undertaken IT park projects outside India?
We have undertaken one project, Ebene-Cyber Towers, in Mauritius spread over five lakh sq ft. There are some proposals from Sri Lanka too.

However it must reembered that IT parks have a special reason to be in India. As mentioned, the cost of IT parks in India is almost a third of the cost of those developed outside the country "� this is one of the reasons our IT park developments have been more or less restricted to India.

What has been the IT park construction projects' contribution to L&T ECC's total revenue? What are the growth prospects in this segment?
The ECC division's turnover at Rs.4,338 crore last year contributed close to 40 to 45 per cent of L&T's total turnover of over Rs.10,000 crore.

The building and factories division of ECC, which has created large commercial infrastructure like the ICICI office and the National Stock Exchange building, contributes close to 20 per cent of ECC's revenue.

IT parks as such contribute less than two per cent of the ECC's topline. It is difficult to comment on a super-speciality section under the building and factories division and try to project the growth rate for that segment alone.