What progress and transformation do you see in the industry as a whole, given that it's been a roller-coaster ride with a wave of reforms over the last few years alongside Covid related disruptions in the last 2 years?
There’s definitely been a shift. The share of sales from organized developers increased to 40% in FY21 from 17% in FY17. Reforms like RERA and GST has helped in according industry status to otherwise fragmented and unorganised real estate sector. The implementation has led to rapid organization and consolidation of the sector. Well managed developers who are the organized players have become stronger and stand to gain a greater market share especially since Covid has accelerated the consolidation process. The industry dynamics stand to benefit organized large players and the government’s focus on infrastructure coupled with favourable policies are signs of progress. Huge FDI inflow and lower home loan rates coupled with lower regulatory charges in form of stamp duty have certainly been a stimulus.
Advertisement
We’re seeing attractive opportunities in the education, healthcare, e-commerce and logistics sector. Even in terms of technology, developers are now focusing on optimization at both sales and development levels so that affordability can remain intact. The spur in real estate demand during Covid has brought back the focus on timely delivery.
What are your core strengths and key competencies?
Ans. We’ve developed our service portfolio by capturing the complexities. We began in 2012 by constructing gated communities, and today we build high-rise and super-high-rise buildings, gated communities, commercial and retail spaces, healthcare and factory facilities, parking lots, and data centres. Tata Trust-Cancer Hospital, Lodha-The Park, T-Series Corporate Office, and others are just a few of the high-profile projects we've completed. We have marquee public sector clients like CIDCO and PWD, as well as prominent private sector clients like Raymond, Oberoi Realty, Phoenix Market City, and others, who account for 75% of our total order book. Global players have invested in our clients, increasing the visibility of our projects. By de-risking the business model, hedging in an unpredictable sector, safeguarding revenues, and so on, our hybrid service portfolio with a 62:38 ratio of the public and private sector in the total orderbook captures the best of both worlds with government, quasi-government, and branded real-estate developers.
Advertisement
A crucial strength for us is ownership of the modern system framework and other core assets for designing and building. We believe that implementing a variety of technology options available to us in the construction of buildings allows us to shorten construction timeframes and focus primarily on major cities, delivering end-to-end construction services for housing, commercial hospitals, hotels, and industrial projects. This broadens our service offering, expands our market share, and gives us more control over projects.
What is the business model of Capacite Infraprojects, and what opportunities can it have in the future?
Our bid pipeline remains strong, and we are in the advanced stages of negotiations on orders in excess of Rs. 2,000 crores. We are expecting the current year to close with fresh order inflows of Rs.2400 crores or thereabouts. Scale benefits and cost optimization remain one of our fundamental competencies; we've taken a number of steps to boost our bottom line, and we have strict cost control procedures in place. By strategically prioritising and deploying resources, we hope to reduce the idling and underutilization of resources. Our continued focus on client service and cash flow management has clearly benefited the business model and will always be a priority even in the future.
We follow a sustainable model with timely order book execution, technological focus, continuous adaptability and flexibility by leveraging our eco-system to navigate large opportunities for sustained profitability. You will be seeing a dip in capital expenditure on the back of our increasing revenues. Thus, Capacite is well-positioned to gain traction driven by its impressive execution track record with stable margins, healthy order book and return ratios, lean balance sheet, asset-light business model and a strong management pedigree.
Capacite is a relatively young company and yet the pace at which you have scaled has been surprising. How has this been possible?
The Company's sharp focus on the single segment of buildings, combined with a strong asset base and the promoters' extensive experience in the EPC area, has allowed us to quickly scale up in the building market and establish ourselves as a respected player. We recognised early on that each type of building necessitates a high degree of skill, scale, and speed to accomplish, hence we use different types of system frameworks to fulfil the varying construction requirements of diverse types of buildings. Temperature-controlled concrete, self-compacting free flow concrete and special concrete for vertical pumping are just a few examples of modern technologies that you require. We've also emphasised the need for having a skilled workforce. Our rising execution capabilities and growth potential reflect our wise investment in these core assets.
