R Vasudevan was barely 34 when he learnt his first business lesson: courtesy pays.
“I was sitting in a builder’s office to finalize a deal for bulk purchase of flats for my employer when the builder insulted a customer and threatened to return his cheque just because the customer asked for a tentative date of completion for the project,” he says.
Now 54, Vasudevan says for the two decades he has been in business, courtesy to clients has helped him build a real-estate business worth Rs3,000 crore.
In a market riddled with cost overruns and delays, Vascon Engineers Pvt. Ltd, the company founded by Vasudevan, built its first IT park in Pune picking up on a project that incorporated a hefty penalty clause for delays.
The 60,000sq. ft office for MphasiS, which operates at Kalyani Nagar, was up and running in 95 days. That compares with an industry benchmark of 200 days. Vasudevan and his team earned their first bonus on it.
Since then, Vascon has built more than 11 millionsq. ft. of premium residential, commercial and specialized IT zones in Pune, its home city. Brands such as Adlabs, Shopper’s Stop, McDonalds and Hyatt have all moved into properties designed and built by Vascon. The firm has made customized buildings for pharma and other industries and has clients ranging from Hindustan Unilever Ltd to Dr Reddy’s Labs.
A first-generation entrepreneur from a middle-class family, Vasudevan says his growing up years in a largely Jain-community-dominated locality of Mumbai was what made him set out on his own. “I was one of two from the huge group of friends in the colony who went to college. The rest joined family businesses,” he recalls.
Vasudevan’s initial years were spent doing contract construction for a series of pharma companies, after his first contract for setting up a greenfield site for Cipla on the outskirts of Mumbai.
Vasudevan, who cobbled together Rs1 lakh from friends to get his business going, says, business was tough in the early years, but his persistence saw him through.
In the first few years in Pune, he concentrated on residential properties, but, he says, he foresaw the potential for an information-technology hub and related businesses and was first off the mark to build customized properties for IT companies. And at a time when builders were still selling their properties in advance to fund their construction, he sold only a portion of his property and used that fund to construct. “By the time the construction progressed, prices went up and my realization from selling at each phase was higher than the initial price,” he says.
The growth has not gone unnoticed with HDFC recently picking up 10% stake for Rs138 crore and foreign funds such as Credit Suisse and NV Realty investing Rs325 crore in various projects.
Vasudevan’s obsessive attention to detail may have caused him some setbacks, but ultimately it’s always paid off, he claims.
Half way through constructing a massive 2,50,000sq. ft. mall and commercial property in the middle of the city’s business district, he realized the concept was outdated in global markets and got the entire plan reworked. “I realized that we had started constructing the mall like an arcade where anybody could set up shop, but around the world, malls were inviting synergistic brands into their properties. Also, malls globally lease space to brands and sell part of the property as commercial space, which is exactly what I did. The project was delayed as a result, but the trouble paid off when, in November last year, the Nucleus Mall bagged the award in the Innovative Design and Development of a New Project category at the International Design and Development Awards at Arizona, winning against entries from Japan, Singapore, Australia and the US,” he says.
The attention to detail also goes into his residential projects, which are snapped up in the market before the ground-breaking ceremony is done.
“We appreciate the reliability factor in dealing with Vascon since the company always delivers what it promises,” says Varsha Gawandi, a landscape architect who lives in one of Vascon’s residential projects in Pune.
While his work will seem enviable to his colleagues in the business, industry watchers such as Raju Mahtani, managing director, NAI Property Terminus, a company which deals exclusively with the property requirements of corporates, beg to differ. He feels Vascon hasn’t grown at the pace it could have.
“Vascon was in industrial contracting for over two decades and could have easily leveraged this expertise to grow much more, but he has chosen to work with just the few companies in pharma that he is familiar with. With global majors such as General Motors and Volkswagen setting up new plants in Pune, he could have got huge growth potential if he had grown his contracting business instead of getting into IT and residential,” says Mahtani.
With projects worth Rs2,000 crore under operation now and an additional Rs600 crore-plus worth of construction going on the floor in a few months, Vascon is on the look-out for associates who will part-finance the projects. An option would be to dilute stake in Vascon Engineers, the holding company.
With action in Pune plateauing, Vasudevan is foraying into cities such as Coimbatore, Belgaum and Chennai in South India and second-rung cities such as Nashik, where he will construct with local partners who own the land. Going multi-locational and working in different segments such as residential and contract construction has helped him in the past. In the late 1990s, when the real-estate market, especially the residential sector, crashed, Vasudevan’s company, too, took a beating.
“I could barely pay the staff salaries, but what bailed me out was the fact that I was doing contract work for other companies in other cities. Those were dark days, but they taught me to diversify and de-risk business.”