Karnataka's aerospace policy awaits Cabinet nod

The Karnataka government has finalised its much-awaited aerospace policy and the cabinet clearance is awaited. Through this policy the state government is looking at attracting $10 billion (Rs 55,000 crore) investment in the next 10 years and make Bangalore a major aerospace hub in South Asia.

“The policy draft was circulated to the stakeholders earlier this year and we have now fine tuned it. It is currently before the state cabinet for final approval,” M Maheshwar Rao, commissioner, department of commerce and industries said.

The new policy will be in place for a period of 10 years starting 2012. During the first phase of (2012-17), the state government is looking at attracting $4 billion investment into the sector. During the second phase (2017-22), it plans to attract another $6 billion worth of investment in the aerospace sector, the policy draft said. It also envisages creation of jobs for about 100,000 persons during this period.

The policy is likely to be announced in January 2013, a few days ahead of the forth coming Aero India 2013, the premier defence aviation industry exhibition in Bangalore.

The policy is aimed at increasing the contribution of Aerospace sector towards enhancing the share of industry in the State’s GDP from 28 per cent to 30 per cent in the first phase and to 32 per cent in the second phase.

Other main objectives of the policy are to make Karnataka a preferred global destination for manufacturing of aircraft, aircraft systems and sub-systems, assemblies and components. It is aimed at making Bangalore a magnet for global Tier-I suppliers and promote the state as one of the leading MRO hubs in Asia. Strengthening of R&D infrastructure for achieving innovative and cutting edge technologies.

Karnataka is already home to India’s aerospace industry. As early as 1940, India’s premier aerospace establishment, Hindustan Aeronautics Limited (HAL) started its activities in Bangalore. Other public sector undertakings like Bharat Electronics Limited, NAL, DRDO, ADA, ADE, ISRO among others are present in the city.

“Karnataka intends to take advantage of the promising scenario and strive to project the state as the aerospace hub for Asia in the next five years and as one of the top global aerospace and MRO destinations by 2022,” the draft Aerospace Policy document said.

The policy has been formulated through extensive consultation process with industry associations, trade bodies, related government departments, organizations and other stakeholders. The Aerospace Core Group committee constituted by the government of Karnataka also discussed the policy framework. The Confederation of Indian Industry (CII) and PwC offered suggestions.

Aerospace infrastructure shall include both new establishment, modernization of existing facilities, maintenance, repair and overhaul (MRO), testing facilities, laboratories, storage hubs and silos, warehouses, common technical and service centers, aerospace SEZs among others.

As part of its efforts to promote aerospace industry in the state, the Karnataka government has already earmarked 1,000 acres for Bangalore Aerospace SEZ and Park near the Bangalore international airport at Devanahalli. Already, land has been allotted to 27 companies including HAL, BEML, and Dynamatic Technologies among others.

Aerospace majors such as Boeing, Airbus, Bombardier and Embraer have evinced interest to take up space for setting up their India facilities in Bangalore. The park has potential to emerge as an aerospace industry cluster with an ecosystem to generate direct jobs to 242,000 people and house domestic and overseas firms in an integrated space with required infrastructure facilities.

Karnataka also proposes to establish a new Aerospace University in the state in association with a suitable knowledge partner. It is also proposed to have a flying training school to be located within the campus. The university and the flying school will be set up as a joint venture between the state and interested investors. It is also proposed to infuse capital into innovative ventures by creating an Aerospace Venture Capital Fund with a corpus of Rs 200 crore with participation of government (to the extent of Rs 50 crore), financial institutions and other investors.

It’s curtains for Pallavi theatre

Multiplex effect

Another Bangalore landmark is set to vanish. The 36-year-old Pallavi theatre, located across the street from the Kanteerava Indoor Stadium, will be brought down soon.

Since 1976, the theatre has long regaled Telugu moviegoers and will have its last screening on December 26. The building will make way for a 10-storey superspeciality hospital.

Hari Kumar, a staff member at the theatre, cited financial problems and a change in the taste of cinema audience as the reason for the closure. “The cinema-viewing culture in urban areas has undergone a drastic change. People are overawed by luxury theatres housed in shopping malls, which offer more than just movies. It has become difficult to fill all the 1,211 seats in our theatre. While we get viewers in the first week of any release, the number dwindles in the following weeks. Because of this, the management has decided to close down the theatre,” he said.

Reinvention

With the rise of multiplexes, standalone theatre owners have had to reinvent themselves or face extinction. Although several iconic theatres - Lido, Rex, Majestic and Kalpana, to name a few - still remain, by and large many of the old theatres have faded into history. 

Many standalone theatres have transformed into multiplexes to keep pace with the competition. Other theatres like Santosh, Nartaki and Sapna on KG Road whose land lease expires in 2013 are set to become multiplexes. 

“This has been the phenomenon in the last decade. The new concept of shopping and entertainment under one roof and the weekend culture has taken us by storm. Even people from Ramanagar and other semi-urban areas spend time at shopping malls and watch movies. We have to see this in the larger context of the development model and the ethos that it evokes in our society,” says B Suresh, director of Kannada films.

“One of the best things that the multiplex has done to films is that it has killed the hero and has given space for experimentation.”

K V Chandrashekar, owner of Veeresh Cinemas, said multiplexes have democratised film exhibition in the City. 

“Earlier theatres were concentrated in the Majestic area. They were only a few which we used to call suburban theatres, but now there are some 198 screens in the City, with films now being screened in Vijaynagar, Jayanagar, Bana*shankari, Jalahalli, Marathalli, Koramangala – areas which never had theatres earlier. Standalone cinemas that stood regally in the central business district are facing a shortage of audiences as cinephiles now have access to a screen closer home,” he said.

Subsidised tickets

Many cinegoers, however, complain about the high ticket prices at multiplexes and feel that such theatres will never be accessible to low-income groups. The average ticket price at a standalone cinema house is Rs 50, while it is at least Rs 150 at a multiplex. One way to redress these odds is to look at Tamil Nadu as an example, explained B Suresh.

At subsidised rates

“The Tamil Nadu government has decreed that 25 per cent of the seats at these multiplexes must be available at subsidised rates. Everyone would go to multiplexes if the same rule is followed in Karnataka,” Suresh said.

Recently, the Karnataka Film Chamber of Commerce tried to control the ticket fares at multiplexes, stating that it should be no more than Rs 20. Resistance from the multiplex lobby, however, resulted in a stay order on the proposal from the Competition Commission of India.

Bangalore ranked third in job generation in 2012

The year 2012 saw a 21 per cent decline in job generation in various sectors across India.

Bangalore ranked third among major cities as over 75,000 jobs were generated between January 1 and December 15, 2012, according to an analysis carried out by Associated Chambers of Commerce and Industry of India (Assocham).

The National Capital Region (NCR) topped the country as over 1.1 lakh jobs were generated during the period followed by Mumbai with over 77,000 jobs. Chennai secured the fourth place by generating over 44,000 jobs.

The least number of jobs were generated in Kolkata (over 25,000) among the top five metros, said D.S. Rawat, secretary-general, Assocham.

Over 5.3 lakh jobs were generated during the period across India. The first half of the year saw over 2.8 lakh jobs generated, said a survey, ‘Job trends across India in 2012’.

Assocham sourced its inputs primarily from data tracked on a daily basis for vacancies posted by about 4,000 companies in job portals such as timesjobs.com, naukari.com, monster.com and shine.com and job-related advertisements published in national and regional newspapers for 56 cities and 32 sectors. Information technology (IT) sector topped the list by generating over 2.1 lakh jobs in the country. Academics and education ranked second with over 34,500 jobs followed by insurance (over 27,100), banking (24,500), automobile (22,890), financial services (22,500), manufacturing (20,400), engineering (18,650), hospitality (16,100) and IT hardware (15,600 jobs).

Academics and education sectors registered a 16 per cent growth in job generation in the first six months of 2012.

The aviation sector registered a job generation growth of over 78 per cent in the second half of the year (till December 15) followed by sports (41 per cent) and retail (6 per cent).

In Delhi, the telecom sector generated maximum employment opportunities with over 53,000 jobs followed by IT (over 11,000 jobs), hospitality, manufacturing, architecture, infrastructure, textile, banking, real estate and gems and jewellery.

Assocham analysis shows that job market has slightly recovered in the last six months as employment generation growth declined by about 15 per cent between July and December 15 while the decline was by over 25 per cent during the first six months of the year.

Wipro plans to build its biggest campus near Bangalore

At a time when shaky global economic cues have pushed most companies to postpone real estate investments, India's third-largest software exporter Wipro BSE -1.65 % is finalizing plans to build its largest campus that can house at least 30,000 employees in Bangalore.

The new campus, whose first phase is expected to have a built up space of 2.5 million square feet, will come up on a 50-acre plot that is 4 km away from its existing 1.9 million sq ft campus in Sarjapur, on the outskirts of Bangalore.

This will be in addition to Wipro's existing campuses across the country and is not aimed at consolidating operations. Currently, the software major's headcount stands at about 138,000 employees. "We are currently in the process of finalising the master plan for the new campus," said Hariprasad Hegde, vice-president and global head of operations at Wipro. He did not provide details on the developer of the project or how much it would cost.

The Sarjapur facility -the largest for the company so far - accommodates nearly 31,000 employees.

The proposal to develop an additional campus was pending for sometime due to issues with land approvals. However, these have now been sorted out and the company has received the go-ahead for the project. Wipro is currently working with architects on the master plan.

Software biggies have been investing in new development centers to cater to future growth even though the current industry situation is not encouraging. In October, India's largest software exporter Tata Consultancy Services BSE  -1.25 %  also announced plans to build a 1.5 million sq ft facility in Indore.

For Wipro, which added 13,000 employees last fiscal, the hiring pace has slowed down this year as the employee churn has stabilized. In November, software body Nasscom said the industry's growth target for the year to March 2013 would be at the lower end of the 11-14% range it forecast earlier.

Last year, the sector grew a little over 16% to touch $70 billion (about Rs 3.85 lakh crore) in exports. Faced with tough macro-economic situations in the US and Europe, large corporations there have been delaying technology spending.

Revenue from the US and Europe together make up over 80% of the revenue for Indian IT services companies. On Tuesday, shares of Wipro closed at Rs 388.10 on the Bombay Stock Exchange, down 1.6% from Monday's close.

Govt may unveil aerospace policy soon after winter session

An aerospace policy aimed at attracting global investments and making Bangalore a major aerospace hub in South Asia may be unveiled by the government immediately after the assembly winter session at Belgaum.

An aerospace policy aimed at attracting global investments and making Bangalore a major aerospace hub in South Asia may be unveiled by the government immediately after the assembly winter session at Belgaum.

"We have an aerospace policy, which may be announced immediately after the Belgaum winter session. We are scheduling it. It is ready," Principal Secretary (Industry) M N Vidyashankar told reporters here.

He said government had taken inputs from all stakeholders in the aerospace sector before framing it and claimed Karnataka was the first state to announce such a policy.

Vidyashankar said Karnataka would become the largest knowledge hub in the world. "It may not happen in two or five or ten years, but it will happen," he said.

He also said no other city can beat Bangalore as a 'knowledge city' as it boasts of 396 Research & Development laboratories. Cities like National Capital Region and Pune boast of only 107 and 103 laboratories respectively, he said.

"Twenty years down the line, the world will depend on India and Karnataka for high-end manpower," Vidyashankar said.

On the progress on Aerospace Park near Bangalore International Airport, he said three units are almost ready and one of them would launch production on January 25 2013.

"About seven to eight companies have already started construction," he added.

Karnataka expects close to about six to seven billion dollars with every major aviation player under one roof at the aerospace park.

Vidyashankar said government plans to have the ground breaking ceremony of infrastructure developer Sun Forest City's project in March 2013.

"We are meeting them almost every week. They should be in a position to give us project details by December end," he said.

Sun Forest City have identified land and landowners have willingly agreed to surrender the land, he said, adding the land would be acquired in phases."

City homes, country roads

Bangalore has been battered by negative publicity in recent days. Yet, there appears to be no serious threat to the growth of the housing sector here. According to consulting firm Prop Equity, compared to the drop in sales in the National Capital Region and Mumbai Metropolitan Region, there has been very little ups and downs in the prices in Bangalore. This may be the reason for quite a few new launches during the just concluded festival season. Even new developers are starting their ventures in Bangalore.

If we take a ride around the Outer Ring Road we can see the real estate growth in the BBMP and nearby areas. There is hardly any space left without construction, either finished or semi-finished. Almost all ‘outskirts’ too are filled with new projects. Some prominent areas beaming with construction activities can be grouped into the following ‘extensions’:

North: New airport road, Yelahanka, Devanahalli and Doddaballapur Road

South: Hosur Road, Bannerghatta Road, HRBR and Anekal road

East: Banaswadi, K.R. Puram, Marathalli, Whitefield and Brookfield

West: Tumkur Road, Jalahalli, Hesarghatta Road and Nelamangala.

Kengeri and Bidadi on the south-west on Mysore Road can also be included in this cluster.

But what is of immediate concern is the condition of the roads leading to the new projects in the developing areas.

Most of the new projects quote ‘attractive’ prices as compared to the city areas and road or no road, the investor is lured to ‘book’ a flat or buy a plot before prices hit the ceiling. The promise of a ‘posh’ or ‘decent’ locale remains a promise even after the apartments are complete and the process of handing over the flat to the owner is done with.

One has to ponder over the need for at least a semi-developed road, lest you find your vehicle stuck in the mud, which problem remains for many months and even a couple of years till the owners or resident organisations shell out money to upgrade the approach road. The developers are also finding the going tough to dispose of the left out and surrendered apartments.

They try to attract investors by offering freebies like modular kitchen, modern furniture, festival discounts etc. Some of them get a VIP for inauguration of the flat as a route to improving the roads.

Property market and infrastructure

The critical role of roads and other infrastructure needs to be well understood by all stakeholders in the property market.

Even traders shun areas where the roads are in a bad condition. Lack of good roads and parking place can force even the leading brand outlets to move out /relocate.

The increasing number of malls too is a challenge to even well-established shopping centres as they have better ambience apart from other facilities under one roof. Prices of property will also be adversely affected when roads and other infrastructure are not well developed.

A recent report about posh shopping areas like M.G. Road / Brigade Road and Commercial Street losing their sheen needs to be taken as a prelude to worse days to come.

Some possible plans for the city’s roads and infrastructure

Ward-wise road development plans be put in place.

Sanction for new projects should essentially include plans for road development.

In addition to arterial roads, access roads to new projects should also find a place in the city’s annual plans.

Rubberised/concrete roads which may have longer life to be preferred to usual asphalt roads.

Maintenance of roads be entrusted to specialised agencies.

Loopholes in awarding work contracts be plugged and stringent standards prescribed despite opposition.

Other infrastructure like water supply and drainage to go hand in hand with property development instead of waiting for Cauvery water for years together.

Property prices and demand for houses cannot be viewed in isolation. It will be in tandem with the various infrastructure needed for better living and enhanced quality of life.

If this is not achieved, the demand graph will not hold on for long.

Bangalore emerging as a major city of ‘organic brands’

BioFach India, an offshoot of World Organic Trade Fair BioFach in Nurnberg, plans to hold its organic fair in Bangalore from November 29 to December 1.

The fourth edition of BioFach India 2012 by Nuremberg Messe is supported by the Karnataka Department of Agriculture and the International Competence Centre for Organic Agriculture (ICCOA).

“The fair is to facilitate organic production, manufacturing, trade and it is the single platform where various stake-holders in the organic value chain congregate to network,” said International Competence Centre for Organic Agriculture (ICCOA) Executive Director Manoj Kumar Menon.

Talking about trends in the organic food consumption in Bangalore, Menon said, “The city has emerged as a prominent organic brands city in the country.”

“Compared with other cities which have only a few of them, Bangalore has brands in black pepper, ginger, turmeric and coffee etc. The city has also attracted major crops to do good volumes on a daily basis,” he added.

Menon expressed confidence that the BioFach India would further boost the organic farming as well as organic trade in Karnataka. At the last year’s fair organic cotton and jaggery had fetched some business.

He explained that the previous edition of international organic trade fair held in Bangalore had seen a total business transaction of Rs 17.5 crore. The major chunk of this had gone to Karnataka as the home state had accounted for a business of Rs 11 crore.

Karnataka Principal Secretary Agriculture Department Bharatlal Meena said 141 exhibitors including 16 international players had so far confirmed their participation in the event.

Similarly, various States including Kerala, Maharashtra, Andhra Pradesh, Tamil Nadu, Himachal Pradesh, Sikkim and Mizoram were participating in the event being held at the Bangalore Palace Grounds.

Meena said country accounted for 10.9 lakh hectares of crops under certified organic cultivation including 51,500 hectares in Karnataka. In 2011, the exports of organic crops had earned revenue of Rs 600 crore for the country while the domestic sales had fetched Rs 300 crore, he noted.

In a bid to encourage organic agriculture in the state, the Agriculture Department had taken up a plan to promote organic farming in about 100 acres of land in each taluk.

Rapid Expansion for Office Space in Bangalore

A report by Jones Lang LaSalle has found that the office space market in Bangalore has expanded 50% since 2008, reflecting the city’s rise onto the international stage.

Once dubbed a ‘Pensioner’s Paradise’ and India’s ‘Garden City’, Bangalore has overturned its reputation in recent years to become the subcontinent’s very own ‘Silicon City’.

With a large and growing population of young enquiring minds, an innovative history and rising rents per square foot, now Bangalore’s office market too appears to be catching up with international demand.

(Find out more about Bangalore’s rapid ascension.)

In just four years, square footage has expanded 50% and is expected to continue at this pace until 2016 when there could be as much as 100 million square feet of office space on the market.

“The demand-supply gap is the lowest in Bangalore, compared to all other metros in the country, which will not only ensure sustained growth but also an increase in rentals over the next few years,” says Regional Executive MD at Cushman & Wakefield, Sanjay Dutt.

“The availability of high quality, office spaces at sub-dollar rental levels and access to skilled workforce continues to drive Bangalore’s growth,” adds Jones Lang LaSalle’s Bangalore MD, Karun Varma.

“The creation of new office space in the past three years has been rapid and at this rate, the city is expected to touch the 100 mn square feet landmark in record time.”

Singapore, Bangalore among top 20 startup ecosystems

Singapore and Bangalore are ranked the world's 17th and 19th most influential startup ecosystem, respectively, signifying a global startup revolution.

These findings were published Tuesday in Startup Ecosystem Report 2012, released by Startup Genome and Telefónica Digital. Based on data from more than 50,000 startups around the world, the study concluded Silicon Valley, Tel Aviv and Los Angeles were the top 3 startup hubs.

"Overall, the Startup Ecosystem Index paints a glowingly positive picture of the state of entrepreneurship aorund the world. While Silicon Valley is far and away the strongest ecosystem, just 5 or 10 years ago, most of the other ecosystems on the list either barely existed or didn't exist at all," it said.


Startup Ecosystem Index

Two Asian cities among top 20 :The report noted Singapore, ranked 17th, has the potential to become the central startup ecosystem of Asia, bringing together the markets of China, India, Indonesia, and Malaysia. The city-state's "unique geographical position at the heart of Asia provides a fertile environment for entrepreneurs to start, grow and scale their businesses not only in Asia, but globally", it added.

Singapore performed well, ranked 8th, in both the funding and talent indexes. The funding index measures how active and how comprehensive the risk capital is in a startup ecosystem, while the talent index measures how talented the founders are in the startup ecosystem.

India's Bangalore also made the top 20 list ranked at 19. The report noted India could well be "one of the toughest countries in the world" for a startup to flourish as it is ranked 140th in the world in nominal GDP per capita despite being one of the fastest growing economies. However, India's large market "provides a foundation for a prospering startup scene", it noted.

Although it ranked 18th in the talent index, the report stated India's rich talent base meant well-educated and highly skilled India Web entrepreneurs had the ability to transform both the country's economy and society. "Bangalore needs to take certain steps to enable entrepreneurs to build global startups and attract talent and capital from abroad," the report said.

The Singapore government has been making concerted efforts to encourage a startup environment, setting aside funds to support such activities and providing access to these via its various agencies including the Economic Development Board and International Enterprise Singapore. 

India's startup ecosystem also is developing, with several local major companies including Infosus, Wadhawan Group, and Wipro, starting up incubators and venture capital funds. In addition, there are initiatives such as the National Entrepreneurship Network (NEN) which links up mentors and students or other members, and IIM Ahmedabad's Centre for Innovation Incubation and Entrepreneurship (CIIE) which seeks to foster innovation through incubation, investment and training.

A O Smith to expand Bangalore unit

US-based water heater manufacturer A O Smith is getting into its second phase of expansion in India by increasing its production capacity of its Bangalore facility. The company will invest over Rs 100 crore in 2013 to triple the production capacity.

Having entered the Indian market in 2008, A O Smith had set up its production unit in 2010. The 76,000 sq ft facility produces four lakh units of residential water heaters per year. It had invested $10 million on the facility in 2010.

“In the second phase, 1.5 lakh sq ft space will be added to the existing facility for an investment of $20 million. With this, the capacity of the unit will expand to 12 lakh units per year by June. The facility will manufacture 15 and 25 litre horizontal water heaters, 35 to 100 litre heat pump water heaters and natural gas products,” said Tamal Chaudhuri, managing director, A O Smith India Water Heating.

The company has been producing 36 SKUs of its residential water heaters till now. With the capacity expansion, all the 62 SKUs will be domestically manufactured. However, A O Smith will continue to import the commercial water heaters from its production units in the US, Europe and China.

The company had clocked $20 million sales from its Indian operations last year. This year it expects to grow by 40 per cent. The company also expects to break even this year.

“In the Rs 800 crore electric water heater market in India, A O Smith has 14 per cent share. In two years we want to garner 18 per cent market share,” he said.

The organised segment, which accounts for 72 per cent of the total water heater market in India, is dominated by Racold in value terms and Bajaj in volume terms. Last year the water heater market grew by 10 per cent, but the growth has slowed down to 7 to 8 per cent this year with less number of residential projects coming up during the year.

Luxury villa projects get funds

Bangalore: Luxury villa projects are attracting investments from private-equity (PE) funds and non-banking financial institutions (NBFCs) as real estate firms slowly step out of their comfort zone of building fast-selling residential apartments.

While investments in the residential space continue to remain a sweet spot for funds and NBFCs alike, the investors are also exploring the emerging option of funding particularly large villa projects.

In a new transaction, Reliance Capital Ltd funded Rs.60 crore in an ongoing villa project of Skylark Mansions Pvt. Ltd in Bangalore suburb Whitefield.

Azure Capital Advisors Pvt. Ltd along with a co-investor recently invested in a 20-acre land that will have 200 villas in Sarjapur Road, Bangalore, being developed by Azven Realty Pvt. Ltd. Villa development became a thing of the past after the 2008-09 slowdown and most developers resorted to smaller residential projects with preferably mid-priced apartments.

This year, however, has seen a slew of villa launches in southern Indian cities such as Bangalore and Chennai, indicating a comeback of sorts for this real estate product.

Rajeev Bairathi, director, DTZ International Property Advisors, said villa projects are typically self-funded by real estate companies. “But if developers are looking to expand the land parcel and acquire additional land to the project, then they would need capital.”

The villa projects coming up now begin at the price of a high-end apartment, Rs.80 lakh to Rs.1 crore, and can go upward of Rs.10 crore. Bangalore’s Skylark Mansions is developing 114 villas priced at Rs.2-5 crore each.

“We raised the money for project construction. We have four ongoing projects, of which two are villas, though apartments are fast-moving products compared to villas,” said chief executive P.S. Suresh.

Shailesh Ghorpade, managing director and chief executive, Azure Capital, said their project is priced at around Rs.1-1.75 crore a villa and is targeted at actual users in a captive market that has many large campuses of information technology companies nearby. In another recent transaction, ASK Property Investment Advisors invested about Rs.100 crore to help Shriram Properties Ltd buy land.

The Bangalore project coming up on around 16 acres of land in Sarjapur Road has a large villa component along with apartments. Sunil Rohokale, group chief executive, ASK Group, said villa projects offer a great opportunity to PE funds because the cash flow generation is very strong in these. “We would be happy to look at more such villa projects,” said Rohokale.

Chennai-based realty firm Casa Grande Pvt. Ltd has shifted focus to developing villas in the past two years and has a pipeline of 2,000-3,000 villas.

On Tuesday, the company launched an 18-acre project, Casa Grande Pavillion, with 350 villas in three formats: independent luxury villas at around Rs.1 crore, twin villas at Rs.80 lakh and row houses at Rs.55 lakh.

“We are looking to raise PE money for new land acquisitions, which will have villas and apartments,” said Arun Kumar, founder and managing director, Casa Grande. PE funds have invested around $262.25 million (around Rs.1,439 crore today) in residential projects so far this year, compared to $247.24 million in all of 2011, according to VCCEdge, a research platform.

Spain is eyeing a slot in IT City’s aerospace park

The European nation is keen on a presence in Bangalore as it views the city as a research and development hub in aerospace technology in India

One of the biggies in the aerospace industry, Spain, is looking at setting up a base in the IT city. It is eyeing the upcoming aerospace park next to Bengaluru International Airport (BIA) at Devanahalli.

The state-of-the-art 985-acre facility is being developed by the state industries and commerce department. It also has a 252-acre Special Economic Zone in its premises. 

The aerospace park has already got investors and project proposals from HAL, Jupiter Aviation, Dynamic Technologies, Centum Electronics, AMADA, BEML, Wipro, Tyco and Aero Electronics Private Limited.

With Bangalore being a hub for research and development in aerospace technology in India, Spain is keen on a presence and had initiated talks when its ambassador visited the city recently. 

Surbhi Sharma, honorary consul of Spain, told Bangalore Mirror, “With Bangalore being the centre of R&D in aerospace, Spanish companies’ priority would be to set up a base here. Spain is in the forefront in aerospace industry and its first choice of investment in aerospace sector would be Bangalore.’’

Like India, even Spain is an important part of European Aeronautic Defence and Space Company(EADS), a global pan-European aerospace and defence corporation and a leading global defence and military contractor. The EADS stable includes the Airbus commercial aircraft, Airbus military covering tanker, transport and mission aircraft. EADS is a major supplier to the Indian commercial aviation sector. More than 180 Airbus aircraft were delivered by 2010-end.

The Karnataka government has signed an MoU with Sunforest City, one of the world’s biggest promoters of aerospace parks, to set up one in Bangalore. Sunforest City is negotiating with several international aircraft manufacturing giants like Boeing, chopper firms in Russia and logistic partners to invest in Bangalore.

Bangalore Aerospace Park is targeting investments up to $5 billion dollars spread over the next nine years. The Karnataka government is banking big-time on this mega-project as the aerospace industry is the highest employment multiplier.

“Spain is an important part of Airbus manufacturing process and also a strong EADS player. The Spanish consul in Bangalore is already in talks with Sunforest City. They may look at manufacturing aviation components or outsourcing components and assembling them here,” M N Vidyashankar, principal secretary, industries and commerce department, told Bangalore Mirror.

The government has asked Sunforest City to submit a detailed project report and implementation plan for aerospace park.” The state provides land and it is up to the park promoter to get investment and in turn pave the way for job creation. On an average, manufacturing/assembling one civilian aircraft generates 2,500 jobs,” Vidyashankar added.

How FAR would the state govt go to grant Infosys its wish

The IT giant which has acquired 300 acres of land for expansion in Sarjapura has made an application to the govt to hike the Floor Area Ratio for the campus. The existing FAR in that particular region %is 0.5, but Infy wants it raised to 2.

The state government is in a fix. It has to deal with a high-profile 'request', complying with which could involve bending the zonal regulations for a singular case.

Infosys Technologies which has acquired around 300 acres of land for its IT expansion in Sarjapur has made an application to the government to increase the Floor Area Ratio (FAR) for the campus. The existing FAR in that particular region is 0.5, but Infy wants a 2 FAR.

Having passed through Industries and Commerce Department and Urban Development Department, the proposal has now reached the Bangalore Metropolitan Region Development Authority (BMRDA) for its review.

The babus are a divided lot over the issue. One section sees no harm in giving in to Infy's request as there “can always be a via-media to relax any rule legally.” But qualified town planners are dead against making an exception for one company.

With other areas of Bangalore saturated with development, and with empty spaces constantly shrinking, the Anekal-Chandapura region is touted as the destination next for software companies, realty projects and commercial development. As many as 70 infotech companies are located within a radius of about 16 km from Chandapura circle.

Just 12 km from the circle, on the Sarjapura-Attibele Road, Infosys has acquired a 300-acre land for its next expansion. The area comes under the jurisdiction of Anekal Local Planning Area, which has 170 villages under 

its purview.

Infosys is waiting for a positive response from the government. Bangalore Mirror mailed its queries to Infosys on Thursday, and in the response received on Friday, Ramadas Kamath U, senior vice-president, head of Infrastructure, commercial, facilities, administration and security, and V Balakrishnan, member of the Board stated: “Yes, we have made an application to the state government to relax the FAR norms for Sarjapur as the land is costlier and availability is very limited. So far we have not heard anything from the government. Hope they will consider the request.”

PE offers 560 cr for part of UB City

Blackstone Deal May Be Part Of Plan To Recapitalize KFA 

Private equity giant Blackstone has made a Rs 560-crore offer to acquire the rent yielding real estate assets of Vijay Mallyas investment company UB Holdings,the promoter of the grounded Kingfisher Airlines,said sources directly aware of the matter.The deal may be part of the companys plans to recapitalize the airline in which it holds a little more than 24% stake.

The joint offer from Blackstone and technology park developer Embassy Group both have an equal joint venture to acquire office buildings falls slightly short of the asking price and is pending final negotiations.The deal could see Mallya offloading 3.60 lakh sq ft of tenanted office space and 60,000 sq ft of luxury retail thats part of UB City,a 1.6 million mixed use project still under development in the heart of Bangalore.The transaction will not include UB corporate offices and the branded ultra-high end Kingfisher residences.

TOI  first reported in May this year that PE biggies,including Blackstone,were evaluating a deal involving real estate business of UB Holdings.

A top UB executive confirmed Blackstone formal bid but added the company has received more than one offer.Sources said another suitor in the fray was southern developer RMZ Corp,backed by baring Private Equity Partners India.

Blackstone may be the front runner even though UB top brass held meetings with RMZ last week.A Blackstone spokesperson declined to comment on speculation. Mallya told TOI he was not aware of any such offers since nothing has come up for his consideration.

Sources said Blackstone offer may be a structured transaction,with the PE financing the deal through a special purpose vehicle of the Embassy Group.This would help Blackstone circumvent FDI restrictions,which are likely to crop up.

UB City is a joint venture between Mallyas UB Holdings and Prestige Developers,in which he has 55% share of the developed space.Some of the big corporate names occupying office spaces in UB City include 3M,Apple,Citibank,Ernst & Young,Toyota,Kawasaki and Yahoo.

At present UB City commands office rental rates of Rs 120 to Rs 130 per sq ft and retail rental rates of about Rs 250 to Rs 300 per sq ft,giving annualized return on rental incomes of about 11-13 %.Last month,Blackstone sunk Rs 1,015 crore for a significant minority stake in Pune Dynasty Projects,a special purpose vehicle (SPV) in which Embassy holds three of its FDI-compliant commercial business parks,in Bangalore.

At the announcement of the deal,Jitendra Virwani,CMD,Embassy Group,had said that the newly formed SPV would be charting out an aggressive road-map to increase its rent-yielding office space portfolio.

REALTY TO RESCUE 

UBHL raised around Rs 100-125 crore from HDFC by way of a rental monetization package comprising its office and retail spaces at UB City UBHLs audited fi nancial report for March 31,2012,states that it has borrowed Rs 525 crore against Kingfisher Towers-Residences at UB City

Shell to hire 600 more R&D staff in Bangalore

Shell will hire an additional 600 researchers and engineers in its Bangalore technology centre and move to a new 40-acre campus in Devanahalli on the outskirts of the city by 2015.

The $470-billion oil and gas company established the tech centre in 2006 and it currently has 900 R&D staff split across two leased facilities.The centre is one of only three such in the world.The others are in Amsterdam in Netherlands and Houston in the US,each with about 1,200 researchers.Given the Bangalore growth plans,the centre here could become Shells biggest in three years.

Matthias Bichsel,director of projects and technology in Royal Dutch Shell,who was in Bangalore for the laying of the foundation stone of the new campus,said the Bangalore centre was Shells lead centre for bitumen research,creating different kinds of asphalt applications for roads.It is a major centre of computational science,which involves gathering massive amounts of data generated to construct mathematical and software models to analyse and solve problems.The centre is modeling,for instance,the surface of our giant oil field in Majnoon in Iraq.It will tell us where to drill the wells,where to locate what, Bichsel said.

The Bangalore centre leads Shells water technology group,which develops solutions to reduce water in the energy discovery and development process.A lot of water currently is used to crack open rocks,to cool refineries and to maintain pressure in reservoirs.

In India,Shell is involved in multiple businesses.It manufactures branded lubricants,has two bitumen plants,is the major investor in the Hazira LNG re-gasification terminal,and operates 60 gas stations.Yasmine Ghandhi Hilton,who took over from Vikram Mehta as Shell India chairman in October,said the company had the license to operate 2,000 gas stations,but the absence of alevel playing field vis--vis the public sector oil companies was holding back expansion.It (the diesel subsidy) is politically challenging for the government,but it will happen over time, she said,and indicated that it may happen once Aadhar makes subsidy-targeting possible.

Bhartiya group announces $2-billion township in Bangalore

 

Bhartiya group has launched $2-billion Bhartiya City, a 125-acre integrated township in Bangalore. The city has IT SEZ component as well.

The group has partnered with Leela Group to operate a 300-room hotel, which is planned as part of the project.

Announcing Bhartiya City, Snehdeep Aggarwal, chairman, Bhartiya group, said, “The project will be developed in phases. In the first phase, we are taking up development of residential, IT office space, retail and hotel.”

“In the first couple of years, we plan to take up 3.2 million square feet of residential, 0.6 million IT office space, 0.7 million retail and 0.5 million hotel,” he added.

The project is located within the BBMP limits. The township is master planned by Perkins Eastman from New York and architects include Broadway Malyan from the UK/Singapore, RSP-Bangalore and Edifice-Mumbai.

“For executing the project, we are leveraging our two decades of expertise in global fashion industry to use design as the differentiator,” said Aggarwal.

As per the master plan, the township comprises of eight districts – residential (Nikoo Homes), mixed use retail, residential and entertainment districts, certified IT-SEZ with an option of ready-to-use office spaces and also an international school, community space and a hospital.

According to Sasi Madathil, CEO, Bhartiya group, the project is a design-driven innovation applied to real estate project. The whole project is likely to be completed in 8 to 10 years.

The group has partnered Leela Group to operate a 300-room hotel. “The group will spend Rs 250 crore for hotel construction and the Leela group will manage the hotel titled Leela Bengaluru,” said Arjun Aggarwal, CEO, Bhartiya City Developers.

“The group has partnered with a few Italian kitchen and furniture makers to provide customised homes at very reasonable prices,” said Swaroop Anish, COO, Bhartiya City Developers.

Spate of property launches in Blore

This Kind Of Trend In Realty Sector Seen Prior To 2008 Downturn 

Its the start of the festive season and property developers are keeping the spirits high with a host of new product launches.Much like what is being seen in the automotive space.

In under 30 days,the city has seen some five new residential launches by A-grade developers,a trend last seen prior to the 2008 downturn.

The new launches range from 2-BHK apartments to 4,000-sqft villas,with prices starting at Rs 37 lakh.

In the first quarter of this financial year,Bangalore was the single largest market in terms of volume.The real estate market in the city has been robust despite the subdued marco-economic sentiments, said Pirojsha Godrej,MD of Godrej Properties.The Mumbai-based developer launched two residential projects in the city in under two-weeks.

On Thursday,Godrej launched a 1-million sqft project,called Godrej E-City,in Electronics City Phase-1,which offers 2,2.5 and 3-BHK apartments,with floor spaces ranging from 964 sqft to 1,625 sqft,at prices starting from Rs 37 lakh.

Prior to this,the company launched a niche villa project,Godrej Gold County,on Tumkur Road,which comprises of 87 units priced above Rs 2 crore.

Mayank Ruia,head-residential of The Phoenix Mills,said,In under a month we have sold close to 350 units of the 400 units on offer in the first phase of our project. The Mumbai-based developer has launched an ultra-high end residential project,One Bangalore West,in Rajajinagar,which has apartments ranging in size from 2,400 sqft to 4,000 sqft at a price of Rs 8,400 per sqft.

In a similar price bracket is Embassy Groups luxury residential project Embassy Lake Terraces at Hebbal.This new project has apartment sizes ranging between 3,500 sqft and 9,900 sqft.Prices start from Rs 3 crore.

Puravankara Projects launched an ultra premium property,Purva Whitehall,on Sarjapur Main Road,which offers buyers only 3 and 4-BHK apartments.

Jackbastian Nazareth,CEO,Puravankara Projects,said The number of enquiries for luxury projects (priced above Rs 2 crore) has increased by close to 30% in the last six months. Nazareth added,The demand for luxury projects is being fuelled by first generation entrepreneurs,senior management from the IT/ITeS sector,and the larger HNI and NRI base in the city. 

In order to showcase to buyers the breadth of offerings now available,Times Property is launching the 8th edition of its property expo,Home Affairs.The expo will be held on October 20 and 21 at The Lalit Ashok.

COMING BACK TO LIFE 

Projects nearing completion in South East and North Bangalore witnessed an increase in capital values of 10-15 % during the first half of 2012 During the January to June period capital values of mid-segment residential units in South East,East and Off-Central locations increased by around 4-8 %,while those in the Central,North and South Bangalore were higher by 1-4 % as compared to the same period a year ago

Bangalore IT.biz 2012 kicks off. Yawn

India's premier IT event was launched today. Did you hear of it? If not, you are in good company. 

The three-day Bangalore IT.biz 2012 - inaugurated with the theme 'Future of ICT: India's big shift to innovation' - began with a function at 10am, 35 minutes late. The small hall, with a capacity of accommodating a few hundred people, was not brimming with people either.

If the few hundred people and stalls put up by various companies are anything to go by, it seems the Bangalore IT.biz, the state government-sponsored event, has been losing its sheen gradually year by year. 

Thousands of people used to vie among themselves to get entry into Palace Grounds, where Bangalore IT.com used to be held. After a few years, the event was shifted to Hotel Ashok. There was no problem for people to visit the event by paying entry fee since the venue was within the city. Though the ongoing event is meant for business-to-business visitors, there were not many people at the event and most of the stalls wore a deserted look.

Chief minister R Jagadish Shettar lackluster speech only added to the gloom. Shettar's speech was full of announcements that were made at events held during his tenure or DV Sadananda Gowda's tenure. During his speech, the chief minister mentioned Karnataka's contribution to IT exports and the job opportunities for engineers in Bangalore. 

As if it is not enough, the chief minister allocated most of his time repeating the number of memorandum of understandings (MoUs) signed during the Global Investor Meet 2010 and 2012. He had also repeated state government's policies for promoting semiconductor and electronic hardware manufacturing. 

He has also mentioned the state government's policy on animation and gaming and how animation and gaming sectors will further strengthen the IT prowess of the state. 

On the much-publicised and hyped Information Technology Investment Region (ITIR) to be established between Devanahalli and Chikkaballapur, the chief minister did not make any announcement on its progress, except indicating that the Union government had given 'in principle' clearance to the project. However, he told media on the sidelines that work on the ITIR will commence before the assembly elections.

Then the chief minister gave out figures. He narrated how the state government had constituted Karnataka ICT Group under the leadership of Mohandas Pai during the Global Investors Meet 2012 to increase the ICT export revenues to Rs 4 lakh crores by 2020 and 20 lakh jobs in ICT segment and help to incubate 1,000 entrepreneur-driven companies by 2020. Chief secretary S V Ranganath was conspicuous with his absence, while Aravind Limbavali, minister for health, was seen leaving the dais much before the chief minister has delivered his speech. That summed up the importance the event had for the Shettar government.

From Worli to Whitefield for real estate

Mumbai-based television professional Jayesh Muzumdar came visiting Bangalore to meet relatives a year ago, and ended up spontaneously buying a 2BHK apartment on the airport road. Today, the apartment in a Purvankara project has appreciated by over 30 per cent – from Rs15 lakh to Rs20 lakh. “That kind of amount would not even make up the down payment component for an apartment in Mumbai. The rates in Bangalore are relatively so low that I did not even have to take a loan,” says Muzumdar.

Another Mumbaikar, Rajesh Rao, purchased a 1000-square-foot apartment in Whitefield for Rs45 lakh earlier this year, and is now earning a monthly rent of Rs15,000 on it. “Compared to Mumbai, Bangalore has much higher demand for rental apartments,” says Rao, adding that for the same rent in Mumbai, he would have had to invest at least twice the amount for an apartment in Mumbai’s suburbs.

For Mumbaikars, who face a starting rate of Rs10,000 per square foot even in the far-flung suburbs of their metropolis, Bangalore’s realty rates offer an easier entry point. Even prominent upcoming areas like Hosur Road, Whitefield, Tumkur Road, Kanakapura Road and Mysore Road have projects priced between Rs2500 and Rs4500 per square foot. “A good percentage of buyers in my Bangalore projects are investors from Mumbai, and even Pune,” says Sunil Mantri, Chairman, Mantri Housing, whose nine projects are in different stages of execution in Bangalore.

“Bangalore's weather and is also a pull factor for individual investors from Mumbai, who are keeping the option open of eventually settling down here,” says Mantri. While Mumbai’s residential realty market has been stagnating for the past one year, Bangalore has witnessed good activity — and upward movement of prices — thanks partly to investors from outside the city.

“While the short-term economic inhibitors currently at play across the country have definitely had their effect on buyers’ sentiments, Bangalore’s residential market is still one of the most resilient from a long haul perspective,” says Karun Varma, managing director for Bangalore & Kochi, Jones Lang LaSalle India, adding that most of the transactions are in the price band of Rs3000 to Rs7500 per square foot.

‘Bangalore has a lot of job opportunities’

Expatriates love Bangalore for its cosmopolitan lifestyle, salubrious environment, food and people. Christopher Willcocks, an expat from the UK, shares his experiences here.

Christopher Willcocks from the UK came to Bangalore for a three-week holiday — but now, he calls this place a home away from home. The City mesmerised him so much that he decided to stay back. “The first flight that I took in my life out of Europe was to India. My friend invited me here to see what a great country it is. I realise now how true he is. I’ve made such good friends here — I’ve never met people like that back home in London,” he says.

He adds that Bangalore has a lot of career options that suit expatriates. “I work here as a cross-cultural communication trainer for the BPO sector. I train people to think from the UK perspective; I cannot imagine doing this job anywhere else. Bangalore has a lot of job opportunities,” he states.

Going down memory lane, Christopher mentions that he misses the charm that the City had a few years ago. “I came to Bangalore seven years ago. Back then, Bangalore had a good nightlife. It was not this crowded. It was calm and serene. In fact, it reminded me of a small city in England. But now, Bangalore is growing rapidly. It looks like a metropolis,” he says.

Most expatriates do face their own share of problems when they come to the City. For Christopher, it was the language issue.

“Since I have stayed in Bangalore for over seven years, many people criticise me for not learning Kannada. I consciously make an effort to speak in the regional language. But the problem is that in Bangalore, very few people speak in Kannada. I try to talk to an autorickshaw driver, and he wants to practice his English on me. He says, ‘My children go to an English-medium school, I want to learn English to speak with them’. Everyone converses with me in English. In such a situation, learning a language becomes difficult,” he says.

Indian cuisine is not just popular in India but across the world. Christopher points out, “I used to love Indian food, even when I was in England. The UK has the largest number of chains of Indian cuisine in the West. Indian food is very popular there. I love the simplicity that is present in Indian dishes, especially those from South India. My favourites are rice, rasam and dal.”

Adding to that, he says, “My partner is from the North-East. She enjoys different Assamese delicacies. The variety of food found in India is unbelievable!”

Ask him if he dislikes anything about Bangalore, and he says, “Garbage is a big problem here. The City is great and the people are friendly — so, if the garbage is managed properly, it will have everything in place to match international standards.” Christopher’s passion has always been music and in Bangalore, he has got a chance to pursue it.

“In 2006, I got together with a bunch of guys and formed a band called ‘Usual Suspects’. We were one of the first Bangalore bands to play punk rock. Currently, I am working on a project called ‘Crash TV’,” says Christopher.

Indian movies have always got worldwide attention. Christopher says, “Though I do not understand the language, I watched ‘Rock On!’ and enjoyed it. Another movie I love is Taare Zameen Par — I cried watching that film. Indian movies portray emotions elegantly.”

To sum up, Christopher says, “I love this City and its people. They have welcomed me here!”

Sun-Apollo to invest up to $50 mn in Sobha Developers

Private equity firm Sun-Apollo will invest up to $50 million in projects developed by Bangalore based real estate company Sobha Developers sources with direct knowledge of the matter told Reuters. 

The investment will be on a project basis, and Sun-Apollo will invest 20-25 percent of its commitment in the first project, one of the sources said. Executives at Sobha and Sun-Apollo could not immediately be reached for comment. 

Sobha, based in the southern Indian city of Bangalore, has built more than 51 million square feet of homes and offices since its inception in 1995. 

Sun-Apollo, a joint venture between India's Sun Group, controlled by the Khemka family, and U.S.-based AREA Property Partners, formerly called Apollo Real Estate Advisors, raised more than $600 million in 2006 to invest in real estate projects in India. 

In December 2011, it invested about 450 million rupees ($8.5 million) in a subsidiary of Mumbai-based Godrej PropertiesBSE 2.36 % . 

Private equity investments in real estate fell 44 percent in the September quarter to $394 million from $726 million a year earlier, according to Venture Intelligence, an industry data tracker.

PE firm Blackstone inks India’s biggest commercial real estate acquisition deal

US private equity firm Blackstone has inked India's biggest commercial real estate acquisition deal, which will give it 50% stake in a Bangalore builder-owned portfolio of three business parks for $200 million (over Rs 1,000 crore).

The deal beats Citigroup's acquisition of a Mumbai office building earlier this year for Rs 985 crore, which was bigger than Maple Tree's Rs 800-crore buyout of 2 million sq ft from Assetz Global Technology Park and Baring PE Partners' Rs 500-crore investment in RMZ Corp for 6 million sq ft space.

A person familiar with the matter told ET that Blackstone, which invests in realty firms, has bought stake in an SPV comprising three commercial properties totalling over 10 million sq ft — Embassy Golf link and Manyata Embassy Business Park in Bangalore and Embassy Tech Zone in Pune.

"Blackstone and Embassy Property Developments signed the transaction earlier this month. The deal was followed by the October 4 order of the Competition Commission of India, which gave clearance for the transaction," said the person, who did not wish to be named. "It is an equity-level investment, where a holding company was floated with three commercial assets under it. However, the deal finally cascaded down to the SPV level."

A detailed email sent to Embassy did not elicit a response while Blackstone in an email reply said, "We would not like to comment on this story. Our communication protocol does not allow us to speak on market speculation."

Experts said the deal is in line with this year's trend. "Given the uncertainties in political and economic environment, investors are risk-averse and are investing in pre-leased commercial assets. Around 70% of the transaction closed this year are in pre-leased assets," says Rajeev Bairathi, director-investment advisory at DTZ India.

As per the transaction, Blackstone will get compulsorily convertible debentures of Pune Dynasty Projects (PDP), which is currently into the development of the non-SEZ part of Embassy TechZone in Pune.

Once converted, Blackstone will hold 50% stake in the SPV. Additionally, Embassy, which owns 51% stake in PDP, will acquire 49% from Alta Vista, a Mauritius-based financial institution, making it a subsidiary of Embassy Property Developments (EPD).

"Post this acquisition, EPD will transfer its shareholding of 35.77%, 51.01% and 48.75% in the three SPVs in Pune and Bangalore that are developing business parks along with some other assets in the form of advance paid for the purchase of land and for acquiring joint development rights to PDP.

Herein after, all the three SPVs will become the investee company," said a CCI order. Embassy Golf link is a 5-million-sqft, or 65-acre, business park while Manyata Embassy Business Park is a 100-acre integrated mixed-use development business park, which has a developable area of 18.29 million sq ft.

Embassy TechZone in Pune is spread over 70 acre with 52 acre designated for a special economic zone. Some of Embassy's big tenants at its commercial properties in Bangalore and Pune include IBM, Capgemini, Mercedes Benz, Atos Origin and Accenture. "Blackstone and Embassy will jointly control and manage the entity in which the fund has invested. The deal has very complicated structure with multiple cross-holdings. Embassy will be responsible for completion of the project," the person said.

Bangalore property market surpasses Mumbai, Delhi and Chennai with 140 per cent growth

Bangalore has outpaced bigger property markets such as Mumbai, Delhi and Chennai with 140% growth in the quarter to June over the year-ago period, even as sales in most other cities stagnated or even plummeted.

In the first quarter of the current fiscal, 15.58 million sq ft of residential space was sold in the city, giving it a total market share of 13.9%, property research firm PropEquity said. In comparison, property sales in Mumbai Metropolitan Region and National Capital region fell by 60% and 57%, at 15.98 mn sq ft and 28.86 mn sq ft, respectively. The trend continued into the second quarter.

"Bangalore is witnessing higher offtake compared to other bigger realty markets in the country despite challenging times," said Pirojsha Godrej, managing director and chief executive officer of Godrej PropertiesBSE 0.74 %, which is in the process of launching projects totalling 4 million sq ft over the next few months.

Experts say Bangalore's real estate market is growing due to a combination of factors such as a higher percentage of end users among buyers than in the other cities and a relatively moderate price escalation.

In 2011-12, the southern cities, including Bangalore, contributed nearly 40% to the country's home loan disbursals of Rs 1.95 lakh crore. Since April, LIC Housing FinanceBSE 0.02 % garnered around 14.5% of the total home loan business from the Bangalore region, compared with 12% in the corresponding period last year.

"Bangalore property market is leading both in terms of loan disbursement and sanction," said VK Sharma, CEO of LIC Housing Finance.

Delhi-NCR and Mumbai witnessed a sharp drop of over 40% in property sales in 2012 compared with the previous year, mainly due to multiple increases in home loan rates and inflated property prices. The southern cities, including Bangalore, did not see such a sharp downturn partly due to the turnaround in the IT sector. 

Sentiment was bearish due to worries about macroeconomic growth trickling down to job security and increments. But policy level changes will result in improvement in sentiments and the pent-up demand is likely to be converted hereon," said Niranjan Hiranandani, managing director of Hiranandani Group.

According to the Confederation of Real Estate Association of India (CREDAI), new launches in the bigger markets of Mumbai and Delhi have fallen by 50% and 57%, respectively. "Lack of project approvals has restricted new property supply. Additionally, contribution requirement from home loan seekers has gone up to 40-45% as loans are now being disbursed excluding stamp duty, registration and other taxes , thus impacting sales," said Lalit Kumar Jain, president, CREDAI.

"NCR has seen a drop in home sales because work in Noida extension was stalled for many months. The Noida region was also impacted because of elections in Uttar Pradesh," said Sameer Jasuja, chief executive officer at PropEquity.

Britannia closes in on deal to sell its Bangalore head office land

Britannia Industries, the publicly-held biscuits and dairy major, may be closing in on a deal to sell its six-acre prime real estate land in Bangalore for about Rs 550 crore by the year-end. The land, which houses Britannia’s corporate head-office and residential quarters, has been on the block since December 2011, after Britannia confirmed that it is exploring options to monetise this asset.

Sources say that the asking price of this property has appreciated by a over 20 per cent to Rs 550 crore during the past year, which is why the deal could not be closed before.

According to sources, many property developers and few other corporate houses have looked at how this prime land can be leveraged.

“Piramal Group, Bharti-Walmart are among the few prominent players who have explored this land parcel,” two real estate consultants in the know told Business Standard. While Britannia maintained that they stand by their earlier statement about considering options to leverage this land asset, the company has denied any negotiations with Bharti-Walmart.

Many developers are eyeing the land, which is on the Old Airport Road connecting the central business district to the technology hub of Whitefield, for commercial and retail development. There are not many integrated retail plays in that part of the town.

Bombay Realty, the realty arm of the Wadia Group, which owns Britannia Industries, is also understood to be exploring ways on how they can work on this parcel. This is the second time that Britannia is trying to unlock this land after its attempt in 2008 fell through.

Real estate consultants indicate that about 1 million sq. ft can be developed on this property where the rental ranges between Rs 60 and 80 per sq. ft.

Over the past two years, Britannia has been battling inflation in its key ingredients and has been effectively creaming away costs. The company’s consolidated debt stands at a little over Rs 600 crore. For the first quarter of FY13, Britannia posted an 18.4 per cent increase in net profit to Rs 46.5 crore on a revenue of Rs 1,348 crore, which grew by 12 per cent.

Britannia Industries’ stock gained 1 per cent to close at Rs 477.70 per share on the National Stock Exchange on Thursday.

TE Connectivity to employ 3,000 in B’lore

Connectivity solutions provider TE Connectivity on Thursday said it will provide direct and indirect employment to 2,000-3,000 people in their upcoming manufacturing facility in Bangalore.

The company will invest close to Rs 250 crore to build a 2,80,000 sq ft manufacturing facility at the Aerospace Park, Yelahanka and would be operational by 2014. The facility would create jobs in the areas of assembly, packaging, molding, stapling, tooling machine components, copper wire, optical fibre and cable processes.

“The new facility in Bangalore will become the design, manufacturing centre for TE in India, serving global and Indian customers,” TE Connectivity India President V Raja said. At present, the company has more than 4,500 employees in its eight facilities in India, five in Bangalore, two in Pune and one in Kochi.

It clocked Rs 1,400 crore sales last fiscal ended September 2011 and, Raja said that the company targets $1 billion in sales in the next five years. TE’s manufacturing plants in Shirwal and Wagholi in Pune will be expanded over the next three years with the key focus of expanding India operations by increased local product development.

Technicolor And Rockstar Games Establish Dedicated Games Unit

Technicolor has established a new high-end game art and animation team dedicated to working with Rockstar Games.

The Rockstar Games dedicated unit leverages a segment of Technicolor’s highly experienced team of game artists, animators and state-of-the-art technology infrastructure at its Bangalore, India-based digital production studio. Technicolor India has already worked on several major Rockstar titles including Red Dead Redemption, L.A. Noire and Max Payne 3.

"This partnership reinforces Technicolor’s strong commitment and strategy to growing its art and animation business for the video game industry and we are proud to work with cutting edge industry leaders like Rockstar Games," said Tim Sarnoff, President of Technicolor Digital Productions.

"Technicolor were a fantastic resource for us during the development of Max Payne 3," said Jeronimo Barrera, VP of Development at Rockstar Games. "We’re looking forward to building the partnership on future projects."

Technicolor Digital Productions produces high-quality CG animation for television, direct-to-video, commercials, video games and location-based entertainment through its industry leading production facility in Bangalore, India. Major clients include DreamWorks Animation, Electronic Arts, Mattel, Nickelodeon, Rockstar Games, Sony Computer Entertainment America, and Square Enix.

Top-notch talent pool lures IT, BPO firms to Karnataka

The trend points to manpower availability for skills that are more than plain vanilla outsourcing work that companies indulged in earlier.

Despite a slowdown, Karnataka continues to draw IT and BPO companies due to the large talent pool and specialised skill sets.

In the last two months, four IT and BPO companies have opened development centres in Karnataka.

Nasdaq-listed Pegasystems opened a new development centre totalling 55,000 square feet in workspace. The Bangalore centre will support its global operations and will deliver R&D, engineering services, industry solutions framework and customer support to its global Fortune 500 clients, similar to other software majors.

In July, Xchanging, a London Stock Exchange (LSE)-listed IT and BPO company opened a new centre in Shimoga Special Economic Zone and aims to hire 3,000 people by 2013.

Similarly, Serco, a BPO company this week opened a new facility at Shimoga and plans to have a total headcount of 450 people by November. The facility will offer BPO services to a leading privately held telecom company.

‘ATTRACTIVE PROPOSITION’

According to analysts, despite higher costs due to inflation, availability of talent still makes it an attractive proposition.

“We did not open operations only due to cost but to help us drive the next wave of growth based on our value proposition,” said Alan Trefler, founder and CEO, Pegasystems.

“No other location in the world offers the large pool of quality talent found in cities such as Bangalore. They offer a bundle of distinct and mutually reinforcing benefits which companies can leverage for competitive advantage,” said Peter Schumacher, CEO, Value Leadership Group.

A further proof of this can be seen from the fact that this month, Ellucian, a company that provides technology for higher education opened a new development centre in the heart of Bangalore.

All this points to manpower availability for skills that are more than plain vanilla outsourcing work that companies indulged in earlier.

“Companies are focussing on areas such as predictive analytics for the US financial sector, regulatory compliance related work etc. as compared to call centre kind of jobs,” said Sanjoy Sen, senior director, Deloitte.

PREMIUM ON TALENT

Sidhant Rastogi, director, Zinnov, said: “In most cases, companies setting up their centres were unable to find the right talent in the right number in their native geography, or could not source talent locally in the near future.”

A recent study by Zinnov found that India will produce 250,000 engineers from only tier 1 engineering colleges over the next five years.

The new-age gold rush

Despite a global economic slowdown and increase in employee related costs, India continues to draw IT and BPO companies due to a large pool of available talent pool armed with specialised skill sets. In the last four months, more than half a dozen IT, BPO and start-up companies have opened development centres in Karnataka.

Chinese telecom equipment maker Huawei plans to open a product development centre in Bangalore built over 1 million square feet that can seat 4,000 people. eBay has opened a global development centre in Bangalore and plans to hire 1,000 people by 2015. The company plans to recruit senior technologists with product development experience to create new technologies for its ecommerce business. Competitor Walmart also opened a centre to undertake Walmart’s e-commerce work in India. Others like HP have opened a 2,00,000 square feet development and support centre in Bangalore.

Similarly, Nasdaq-listed Pegasystems has opened a new development centre totalling 55,000 square feet in workspace. The Bangalore centre will support its global operations and will deliver R&D, engineering services, industry solutions framework and customer support to its global Fortune 500 clients, similar to other software majors.

In July, Xchanging, a London Stock Exchange (LSE) listed IT and BPO company opened a new centre in Shimoga Special Economic Zone and aims to hire 3,000 people by 2013

So, at a time when the Indian IT majors are facing an uncertain global economic climate and increasing anti-outsourcing sentiment, why are companies opening up development centres in India? According to companies and analysts India despite its higher costs, availability of talent makes it an attractive proposition.

Alan Trefler, Founder and CEO, Pegasystems is of the opinion that talent available for data analysis or database concepts in addition to taken for granted skill sets like Java or SQL programming is higher in India.

“No other location in the world offers the large pool of quality talent that can be found in cities like Bangalore that offer a bundle of distinct and mutually reinforcing benefits which companies can leverage for competitive advantage,” said Peter Schumacher, CEO, Value Leadership Group.

A further proof of this can be seen from the fact that in August, Ellucian, a company that provides technology for higher education opened a new development centre in the heart of Bangalore. All this points to manpower availability for skills those are more than plain vanilla outsourcing work that companies indulged in earlier. “Companies are focusing on areas like predictive analytics for the US financial sector, regulatory compliance related work etc. as compared to call centre kind of jobs,” said Sanjoy Sen, Senior Director, Deloitte.

A lot also has to do with the specific talent that is needed in a particular geography. Companies in the developed markets (including Japan) have been struggling with this. Sidhant Rastogi, Director, Zinnov said, “In most cases companies setting up their centres were unable to find the right talent in the right number in their native geography, or could not source talent locally in the near future.” Whether it’s in areas like SAP consulting, networking or cyber security, India has options with 5.5 lakh engineering students graduating every year.

Startup story

Technology product startups based in the Silicon Valley and other places are following bigger companies to Bangalore. Snap MyLife Inc. headquartered in Princeton, New Jersey that provides cloud-based applications, opened its India development centre in February.

Companies from other countries are similarly setting up development centres in Bangalore. New Zealand-based Pingar, with offices in Hong Kong, India, the United Kingdom and the US entered India in February in partnership with CMC to develop and implement software products in India and abroad.

Bangalore is attractive for these companies due to the wide choice of talent pool available across different areas for technology companies. A couple of years back, top IT companies like Infosys and others started to move into Tier 2 cities like Trivandrum, but for product start-ups, Bangalore is a big draw.

“Despite high commercial real estate, we see the good quality of technical engineers for developing products like ours in Bangalore,” said Jiren Parikh, President and CEO of Snap MyLife. According to analysts and industry watchers, what has changed now is the increased maturity and the perception of building products that create higher value. Others share a similar point of view. “People migrate to different companies since they don’t get to build products and Bangalore has a wide talent pool to choose from. Also, opportunities in areas like cloud and mobility is making employees consider product companies,” said Vinodh Kumar, Global Director of Engineering, and Head of BloomReach India. The company is three years old and was started by ex-Google employees.

Snap MyLife currently employs 35 product engineers and according to company executives and will triple its employees in the next few months.

Pingar India is planning to increase its current staff in Bangalore of 13 to 35 over the next few months. “These positions will be focused largely on new business development and technical engineering support,” said Peter Wren-Hilton, CEO, Pingar. BloomReach did not give out its India hiring plans but said that has about 80 employees in the US and the company plans to hire aggressively in India. Karnataka has around 200 engineering colleges, according to state data.

Tier II play

To cut costs and contain attrition, MNC are increasingly moving into Tier 2 cities, says a recent Zinnov study. It went on to add that while 96 per cent of MNC R&D companies are located in cities like Bangalore, increasingly they are moving to Tier 2 cities like Ahmedabad, Jaipur, Chandigarh, Coimbatore, Vadodara, Nagpur, Pune and Trivandrum. Further, the study highlighted that there are around 2 lakh employees who work in R&D centres for multi-national companies.

This R&D talent pool is growing at the rate of 9 per cent every year and is expected to reach 250,000 by 2015. Chandramouli C S, Senior Director-Globalization Advisory, Zinnov, said, “MNCs started expanding to Tier-2 cities due to advantages like higher catchment area, lower attrition, cost arbitrage, etc.” Typically, Tier 2 cities were a preferred destination for IT and BPO companies who were grappling with commercial real estate and attrition costs. This trend is being seen now with multinationals like Dell, Nokia, Amazon and others who are looking at tier 2 cities that would be in addition to their existing centres in major cities.

Cost of living in Tier 2 cities in India is 10-25 per cent lower compared to Tier-1 cities and provide cost advantage of 15-40 per cent in commercial real estate costs. “Salary costs and other expenses go up in a tier 1 city over a period of time,” said Manohar Joshi, Director –Systems, IonIdea Inc. IonIdea set up a development centre in Hubli a few years ago.

Also, fresh talent pool in Tier 2 cities is estimated to form 35 per cent of the Indian R&D workforce going ahead. A majority of the work being undertaken involves testing, customer support and bug fixing. These typically tend to be lower level work in terms of profile but which is critical to a company’s operations, analysts say.

While India continues to be a draw, competition from countries like China in terms of engineering skills is catching up. Add to that, 25 per cent of graduates are unemployable and as a result organisations spend about a billion dollars every year in training them. The sooner Indian educational institutions address these issues, the better it would be for the sector. Else, Indian companies will be forced to look to their neighbour across the wall for software talent too.