 "Ashish Puravankara")
Bengaluru-based Puravankara Projects is restructuring after almost 40 years in the realty business, to bring more efficiency. Ashish Puravankara, the company's new managing director and chief executive officer, tells Mansi Taneja about his strategy for the next five years. Edited excerpts:
What is the strategy behind the restructuring?
The exercise has been going on since December. The company has reached a certain scale over 40 years. We have to identify things we need to change. We are realigning processes for the next phase of growth.
We have merged several back-end functions such as CRM, technical functions, sales and marketing in our two firms, Puravankara Projects and Provident Housing.
We will outsource construction to reduce delays in delivery and bring in more efficiency. We want to focus on land acquisition, sanctions, design and sales while construction will be managed by others.
What prompted you to link employee compensation with performance?
We have realigned the compensation of 48 senior managers, including managing director, joint managing director and chief executive. It will be based on their performance. They have been given yearly targets, regionwise, in terms of launch, sales and execution. We have also rewritten their decision-making powers.
What is your sales target for the next five years?
We sold about 2.9 million sq ft of residential space in 2014-15 with a value of Rs 1,472 crore and are expecting to sell 4 million sq ft in the current financial year. By 2020, we plan to sell 13.2 million sq ft annually.
The company has 24 million sq ft area under development, another 13.3 million sq ft will be launched this financial year. In the next five years, we will have about 42 million sq ft under development across five focus cities Bengaluru, Chennai, Hyderabad, Pune and Mumbai.
How much delay have you faced in your projects?
There have been delays of six-seven months in our projects, which we aim to bring down to four months immediately. Ultimately, the aim is to have zero delay. Because of delays, our cost goes up and the brand is impacted. We are assessing how quickly we can launch a project starting from acquisition. So, even if construction is delayed, we will create a buffer for timely deliveries.
What are your plans for launching residential projects in Mumbai and Pune. Are you looking at entering the Delhi-NCR market?
We will launch our project in Bhandup, Mumbai, in nine months. It will be our re-entry into this market; we did some projects in 1983-85. We are in the process of designing the concept. In Pune, the launch will happen within three months. We are not looking to enter Delhi-NCR now. There are more opportunities in our five focus cities. The north is heavily investor-driven.
When do you expect a revival in the industry?
There is a general slowdown in the market but end-user demand is strong. Sales can become slow for two reasons: sentiment and affordability. There is traction for the right product at the right price.
