AFFORDABLE HOUSING WILL DRIVE GROWTH : KOCHOUSEPH CHITTILAPPILLY

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Kochouseph Chittilappilly, who helms reputed real estate brand Veegaland Homes, is bullish about the Indian housing market. The bottom of the demand pyramid would be key to the growth of the housing sector in the country, he tells C. Gouridasan Nair, Consultant Editor, CP.

C.Gouridasan Nair: How is the construction industry faring, post-Covid? How do you see the construction industry across India coming out of the pandemic? Are we here with positives? Or are we saddled with more challenges than positives?

Kochouseph Chittilappilly: We all have been through a lot of difficulties during the pandem- ic. Sales were down and construction was not possible during certain times because of the lockdowns. But slowly, things have improved. Now, we have come back and, I would say, the situation is better as compared to the pre- Covid period.

CGN: Yes, you are right. If you look at the construction scene across India, as you said rightly, the industry has really bounced back. How could we do this? Is it on account of pent-up demand, demand that was there and which could not be met during the pandemic or immediately after that?

Mr. Chittilappilly: I believe, whatever sudden setback we may have, India has an intrinsic power. We have a large population with a large number of educated and employed people, earning well. They need facilities, more and more facilities. So, there was pent-up demand for the last three years. Once the Covid-19 pandemic subsided, the market just reacted. And I believe, not only in our case, but all the construction companies have made a come back, almost back to normal.

CGN: During the pandemic, we saw a large number of labourers returning to their homes, in in North and North-East India, and it was such a heart-breaking scene. You are much more than a builder. How did you see that?

Mr. Chittilappilly: During the pandemic, except for the serious lockdown days, we were trying our level best to continue the construction work. We had commitments and so we had to fulfil those commitments.

Also, we tried our level best to retain our workers, especially the migrant labourers, giving them all the facilities and keeping them comfortable. As far as we were concerned, construction work went on even during the height of Covid.

CGN: Was this true of others as well? Were many of them were doing this? I don’t think so…

Mr. Chittillappilly: See, that depends of a lot of other parameters. They must have the attitude, and must be ready to spend a little more for their workers’ needs. But we took it as a challenge. We decided, okay, we will help them. And, finally, that gave us a positive result.

CGN: But even as the industry was trying to come back, it was hit by a sudden spurt in material costs… Cement prices have shot up, steel is costing more and, I think, for every material that is used by the construction industry, the price has gone up. How are you meeting that challenge?

Mr. Chittilappilly: Yeah, that is definitely a sad situation. It has forced us to increase our pric- es as there was no other way, because for all the basic materials, including plastic and other items, the cost has gone up. So, yes, we revised our prices and people were ready to accept it.

CGN: What is the percentage of price hike that you talk about?

Mr. Chittilappilly: Not very high. I believe it was in the range of 15 to 20 per cent.

CGN: What were the kind of ongoing price pre-Covid like, say, for a middle level apart- ment or villa?

Mr. Chittillappilly: We have always focused on the medium scale buyer. So, our apartments are generally, say, 1,200-1,500 to around 2,000 to 2,000 square feet area. That means they are all employed people, not very rich, so they have their limitations. We try to arrange bank loans for them and also guide them on how to get a bank loan, etc. And, that way, more people have come to us over time.

The construction quality is also very import- ant. Because we know that when we produce a product, like whether it is V-Guard stabiliser or something else, it has to have topmost quality. Because compared to any product like that, the apartment or the villa is their lifetime achievement their ambition, their dream coming true. We are fulfilling those aspirations.

Quality, therefore, is very, very important and even though we give one year guarantee or an- other few years’ support guarantee, I believe the building has to stand years and years and decades and decades. So, right from the very beginning of the design, and through the construction phase, we give a lot of importance to the quality aspects.

CGN: So, this is essentially about hand-hold- ing with your clients, right? Rather than a buyer- seller that business where something sold and forgotten?

Mr. Chittilappilly: Yeah, definitely! when compared to many giants in the industry, we entered the real estate market very recently. That means just eight years ago. And, we have lost two years in between because of Covid-19. That was a setback.

What I have noticed through these years is that there is great demand for a quality, responsible, builder. I would underline the term responsible builder because nowadays, people are not satisfied with any structure given to them. They are not only looking at the guarantees offered, but at other aspects, including the safety norms, quality norms and adherence to the laws.

There, I think, we have been able build up a good reputation. We have built up goodwill and we are very about retaining that goodwill founded on quality. So, as a responsible builder, we have enough customers. Of course, our prices are slightly higher than that of many others, but still people are ready to buy our homes.

CGN: When you talk about quality, you know, there is this process of due diligence, which is often lost sight of. When somebody wants to buy a house, they reach out to you. Come to one of your front offices and ask you for the price. You make an offer, etc. Sometimes they bite, sometimes they don’t. But, in between, there is often very little process of due diligences happening. My question is how do you help the buyers to buy the best?

Mr. Chittilappilly: Oh yes, that is definitely an important point. Most of the buyers have little technical knowledge. They do not know any- thing about the intricacies of construction. So, we try our level best to educate them why we are slightly costly, what are the materials we use and how we go about implementing our projects.We share a lot of information with the potential buyers. Whether they would ultimately buy our homes or not is immaterial. We give them a lot of inputs. That will help them even when they go elsewhere and make a purchase.

That is our attitude. We try to educate them to the maximum because, as far as civil con- struction is concerned, an ordinary person would not be in a position to identify whether a product is of good quality or inferior quality. So, that way, we give them a lot of inputs.

CGN: That would mean quality is, obviously, the responsibility of the builder and not the buyer…

Mr. Chittilappilly: Definitely! It is the responsibility of the builder because the buyers are quite ignorant about the technical details. As I said earlier, many them are not technical people. They do not know the details or the speci fications. In that context, I appreciate the RERA rules and regulations. The rules and guidelines are actually are a great help for both the indus- try and the home buyers. Many people used to curse it as an additional burden on us. Al- ready we have many layers of decision making and control to live with. So that reaction was natural.

However, I strongly believe that it is a necessity. Because incidents have happened and many of burnt their fingers. People who invest their hard-earned money have a right to quality products and they cannot be left in the lurch half-way through a project. So, that way, I appreciate the new rules of RERA.

CGN: When we talk about quality and cost being higher, what is it doing to your bot- tom line? You’re all about your profit mar– gin, does it remain the same? Or are you suffering a little erosion in your profit?

Mr. Chittilappilly: No, it’s not like that. Actually, we when we calculate the MRP, we find a portion of our own percentage and we keep it, no doubt about that. See, we also need to give a proper after sales service. Even after completion of the project and hand over to the residents’ association, we do a lot of hand holding. We support them technically. They can ask any number of questions and we will give them any guidance they need. Whenever they need a service, we will direct them to contractors or agencies they require, on anything that is connected to our product.

CGN: May be, this is where property technology platforms come in… They do part of the due diligence and also some part of the negotiation for the buyer. How do you see the new technologies playing a role in the construction sector?

Mr. Chittilappilly: Of course, they have a big role to play. For your information, when compared to many other giants in the industry, ours is a small activity. We never do too many constructions at a time. We do a maximum of three or four projects at a time. Some would be in the beginning stage and some in the finishing stage and some others would be half way through. So the need for big technological tools is minimal for us.

However, we do use many technical tools. We also give a lot of personal attention to en- sure quality compliance. Our engineers and managers have been trained to give a lot of personal attention to quality. When compared to many other activities like, for example, manufacturing of V-Guard products, which is a processing industry, automation is possible. Here, some automation may be possible, but you will still need a lot of manual labour.

So, yes, it is a 50-50 issue in the sense that technology is good. At the same time, sincerity of your managers and engineers is equally important.

CGN: Technology adoption is at a very slow pace across the world, not just in India. From what I understand, even in the U.S., tech adoption is very low and I believe only 20% to 30% of the construction industry really use all these technologies. But things are changing. Do you see that happening in India? Of course, you are not a big builder, as you always say, but regardless of whether you are a big builder, you will have to bring in efficiencies…

Mr. Chittilappilly: Of course, we will have to go for new technologies when we scale up our operations. Even otherwise, quality can receive a big boost with the use of new technologies. We will, I am sure, need different technology platforms to cross-check and even to control human errors. That is very important.

CGN: Coming to materials, the quality and performance of materials have undergone major changes in recent times. How is all that helping you in reducing the project gestation period, the time required to start a project, end it, and deliver. Are the new materials helping you that way?

Mr. Chittilappilly: To a certain extent, it does. But, by and large, we have to observe certain mandatory time-frames for curing and all that. New materials do help us save some time, but it is more about advance planning and all that.

CGN: You mean efficient project management…

Mr. Chittilappilly: Yeah, project management is very important these days. We have a set of efficient engineers and managers and we de- pend on outside consultants too. They train our people. But I strongly believe that, ultimately, it is our responsibility. We cannot simply depend on others and give the responsibility to some other agency and just expect quality there. We have to let our own managers and engineers to get accustomed to new technologies and new methodologies. That is very important. That way, I am happy that by this time our engineers are well equipped to take up any challenge.

CGN: In essence, you are saying that quality is all about an internal culture…

Mr. Chittilappilly: Definitely! We now know there is a limit to how much we can depend on outside agencies. But, of course, when we think about a structural engineer or an architect, definitely, we have to select the best, people who can give you the best inputs based on their expertise and long experience.

CGN: Do you see any change in client de- mands as compared to the pre-Covid period? People are now talking about the need for more space because they spend more time at home. Is there a change in demand, change in perceptions?

Mr. Chittilappilly: Yes, there is that demand, by and large. In the sense, for example, those who were planning to buy a two-bedroom apartment are now talking about having a separate office room so that they can work from home. That means a third bedroom. See, we are concentrated in Kerala, and I would say that in Kerala, the demand pattern has not changed that much.

CGN: You didn’t start out as a builder. You started out making pro ducts, which can be used by homes. You didn’t make homes. And all know we you are a self-made man. How was it to start out with nothing?

Mr. Chittilappilly: We are here talking about the earlier period. Okay, that was in 1977. At that time, I Was a bachelor, aged 27. I was forced to resign from a small company where I worked because that company was not grow- ing well. I was searching for another better job. For your information, my ambition was to be- come a scientist. I was a post-graduate in Physics. If I had got a job in ISRO or somewhere, there would not have been a V-Gurad or anything that I set up later. Well then, there was some sort of a pressure building up within. So, I was forced to start on my own. That was the beginning of V-Guard in 1977, 45 years back.

KOCHOUSEPH CHITTILAPPILLY

CGN: If we look around in Kerala, what we see are big houses, most of them shut down with nobody to live there. There are so many houses like that here. But, at the same time, we also see a construction boom which results in people coming to live together in apartments. How do you look at this? Do you see a new kind of community life emerging in Kerala?

Mr. Chittilappilly: No. Earlier, as you know, a lot many people from Kerala had gone out to the Gulf and made money and their first ambition was to build a big house in a separate plot. After a few years, they found that it was very difficult to maintain single houses in single plots. Now, the trend has changed. Even if they have a lot of money, they would like to buy an apartment. The reason is that things like general maintenance would be taken care of by a residents’ association.

Also, for the NRIs especially, a sense of security is very important. Sometimes only family members will be here. There would also be situations where only elderly people will be at home. Their personal security is an issue. So, slowly I think the culture of multi-story buildings and community living started. Actually, it started very late in Kochi and Kerala, in general, as compared to Mumbai and all. But now that trend is very, very popular.

I used to give a lot of advice to our apartment owners’ association. We have to live in this particular space. We have to let others also to live in peace there. Initially, there were a lot of frictions, but now people are accustomed to all that.

CGN: Sometimes the restrictions are a little too harsh. Like about keeping a dog. You can’t leave it because you love it so much, like your own child…

Mr. Chittilappilly: There must be some discipline, you know because there are others living next door with a different set of tastes, likes and dislikes. Then only will things work smoothly.

CGN: Looking at the way the governments at the Centre and in the States are support- ing the construction sector, are you happy with the way they do it? Do you think more can be done? What more do you want the governments to do for the construction sec- tor, at the State and at the national level?

Mr. Chittilappilly: It is foolish if any entrepreneur expects anything from the government. Don’t expect any leniency from the government because they have so many other issues to worry about, so many other problems to solve. Especially a democratic government must look after people’s basic needs. We can demand whatever we want, but we should not expect the government to do too much for us.

CGN: Some like the Maharashtra government had reduced the stamp duty during the Covid period, suffering some erosion in their revenues. That helped the industry sus- tain. Do you think more such measures are needed like, say, making bank loans easily available to the buyers…

Mr. Chittilappilly: Nowadays, getting a bank loan is very easy as compared to earlier times. For the buyer, that is very important If the buyers get loans without any hassle, it would also help the builders.

CGN: Where do you see this industry going from here? Are we going likely to go in for more luxurious and more spacious apartments and big built-up spaces? Or are we going more in the direction of affordable housing?

KOC: I strongly believe that the bottom of the pyramid is very important. It is very large, which means the ordinary people would be the key driver growth here. Of course, there may be demand for luxury apartments, but they would be few in numbers, when you look overall, whereas the basic need of the people for shelter is quite large.

India is progressing well as compared to many other countries. That would prove to be an advantage i for the construction companies too because younger people are getting educated and employed, whether outside or inside India. So, definitely the requirement for the average middle income apartments would certainly grow.

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