NEWSMAKER: Pradeep Jain

Surprise number

Pradeep Jain

Pradeep Jain, chairman, Parsvnath Developers, caught everyone by surprise earlier this week when he announced his intentions of foraying into mobile telephony.

He said he had already applied to the Department of Telecom for licences in 22 circles, making it the first instance of a realty developer diversifying into telecom.

The timing of the announcement also turned out to be crucial. Two days after Jain went public, the Telecom Regulatory Authority of India came up with recommendations for a new licensing framework that could make it easier for newer players to get spectrum and launch services.

Jain says he is entering telecom because a huge opportunity continues to exist in the sector. "Despite increasing number of subscribers, the penetration of mobile telephony in India is still low as compared to developed countries. As and when number portability is introduced, it would offer immense business opportunity to new entrants," he said.

Despite Jain sniffing out a big opportunity in telecom, industry experts are baffled by his foray into this sector. They are questioning his knowledge of this highly technical and competitive sector. In Jain's defence, he is tying up with a "world renowned mobile operator".

A special purpose vehicle will be set up for this business whose promoters include Jain, local investors and the "mobile operator". Beyond this, Jain is tight-lipped about the venture. He declined to share investment figures or any other details.

Jain's entry into the big league is a typical rags-to-riches story. At the age of 22, shortly after completing his graduation in commerce from Delhi University in 1986, Jain became a property broker.

Starting off with a 45-square feet office in Connaught Place (now known as Rajiv Chowk), Parsvnath has grown to become the eighth largest realty company by market-capitalisation at Rs 5,411 crore.

Though Jain now has 40,000 square feet of office space between two buildings on Barakhamba Road, he has retained his start-up office for sentimental reasons.

For eight years, before he became a property developer, Jain was a broker and used to buy land for some of the biggest realty firms in existence today. This is where Jain's expertise lies and which he has cleverly leveraged to keep his input costs for hitting the sky.

This expertise is invaluable today. Every developer has been complaining of reducing margins-land prices continue to head north, contracting fee has become more expensive, manpower costs are going up and other raw materials like steel and cement have also become costly.

But since land remains the most important and expensive commodity for a developer, Jain feels he has scored over others on this front. Also, he never buys land from the secondary market, but acquires directly from farmers.

Growing from a one-man show, Parsvnath today employs 925 professionals. The company's Rs 1,090 crore public issue, which came out late last year, was oversubscribed 68 times.

Parsvnath has a pan-India presence across 48 cities and 17 states with projects spanning across key verticals of the real estate industry-residential, office space, malls and special economic zones.

Parsvnath has 159.84 million sq ft of developable area including five SEZs with developable potential of 27.96 million sq ft. While the company has already commenced work on 74 million sq ft, it is confident of starting work on the rest this financial year.