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.