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KHCL - The Business
Mode of Operation
KHCL develops and sells properties on an outright basis, except in the case of old
buildings taken up for conversion. The latter are very few in number . The following
course of action is taken for properties developed and sold on an outright basis.
With the experience gained over the years, the promoters of KHCL identify properties
for development after careful thought and consideration. Some of the aspects dwelt
upon are:
Location of the property
Connectivity by road and train
Proximity to various essential amenities
Cost of the property as compared to the prevailing prices in that area
Demand for residences of offices in that particular area
Growth potential of that area
Clear title vetted by a solicitor or advocate.
Once a property has been identified, the company negotiates with the seller. All
legal aspects are looked into in detail. On completion of all requisite formalities
satisfactorily, land acquisition is completed. KHCL undertakes projects either on
its own, in partnership with the seller of the land, or as a joint venture with
another construction company.
Growth drivers
Increasing Level of urbanization
Above-average economic growth in India. A burgeoning population,
a pool of highly skilled workers, integration with the world economy, and increasing
domestic and foreign investment are all expected to propel real GDP by at least
6% in the next decade.
Outsourcing continues to spirit up the businesses of IT companies,
BPOs and call centres. The supply of high-quality space from developers has been
insufficient to meet the demand thus generated. This will continue to exert upward
pressure on values for such properties. At least 55 mm sq.mt. of premium office
space needs to be created over the next five years. According to Crisinfac, an investment
of Rs.1.50 billion is likely in this sector.
Increased industrial growth. With the country making rapid strides
on the economic front, investments in industries like steel, oil and gas, aluminum,
textiles, sugar, cement, automobiles and the like have received a boost. This expansion
will give rise to increased construction activity.
Thrust on infrastructure. Having identified infrastructure as
a critical area, the Government has drawn up ambitious programmes for development
and modernization of roads, railways, airports, sea ports, the power sector and
the irrigation sector. These programmes will throw up opportunities for developers.
Not only that, this development will lead to growth in uncharted areas as a spin-off.
Rapid expansion in the retail sector. The growing middle class
will cause nominal retail sales to grow at east 10% p.a. through 2010. This growth
will be fed by a proliferation of malls and shopping arcades: industry experts expect
at least 400 malls to be built over the next 5 years at a total outlay greater than
Rs.100 billion.
The impetus given to special Economic Zones (SEZs) by the Government
has seen 172 SEZs already sanctioned, and about 300 awaiting approval. The total
investment for their construction is likely to cross Rs.1 trillion over the next
five years.
Ever-widening demand for residential properties due to rapid
growth in population, rising incomes, decreasing household sizes and higher aspirations.
In 2005, the retail segment showed a capital appreciation of 25-30%. During 2006
also, the trend continuous. The current demand-supply gap of 20 mn units requires
extensive residential construction.
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