July 2007
Vidya Viswanathan
New Delhi
MURALI Srinivas is an entrepreneur who has recently incorporated Tripod
Housing, a company that will build houses for lower income groups (LIG)
and the economically weak sections (EWS). Tripod will initially construct
400 sq ft apartments adjacent to industrial areas in Hyderabad and Dehradun.
Srinivas is raising Rs 4 crore through equity for the project, and is investing Rs
25 lakh. Srinivas claims that he can give a 50 per cent return on the invested
amount in two years.
The housing projects will factor in economic and social concerns. 
Each welldesigned
unit will cost Rs 4 lakh. The whole project will be environmentfriendly.
Srinivas, who started his career as an LIC officer, has earlier promoted two
more businesses. He started Bibo water, a drinking water company based in
Hyderabad which has experience in selling water sachets to rural areas. He was
the chief operating officer (COO) of Healing Fields Foundation, an organisation
set up to make health care affordable to the poor. He then invested in Mimo
Finance, a Dehradun-based microfinance company that started operations in
November 2006.
Civil Society caught up with Srinivas to find out how he plans to build houses for people with less money. Excerpts:
How did you move from microfinance to housing?
I looked at where the money was going. About 80 per cent of microfinance does
not go to livelihood generation. Most of it goes into housing or health.
Where have you acquired land?
That is the foremost and largest problem. A land bank is not available. For our initial
projects we have identified industrial areas close to Dehradun and
Hyderabad. Selaqui is an industrial area located 20 kms from Dehradun. It has
pharmaceutical giants like Biological E, Glaxo and many other small companies.
Our business model is an urban one. We are not targeting villagers because apartments
are not the model for them. They live in great surroundings and land is
available there. They need home improvement.
We are targeting factory workers and some informal workers like roadside
food vendors and vegetable vendors. Our model will be in an 80:20 ratio for formal
and informal workers. We have spoken to NHB and leading home finance
LIC Housing, and they are keen to lend.
How will you fund this? How much land do you need?
We will fund our project through equity and debt. We have to raise enough money to purchase land. We need two acres to build 300 units. We have located land close to a 7,500 acre industrial estate in Hyderabad. Andhra Pradesh Industrial Infrastructure Corporation (APIIC) developed the estate. They have 2,000 acres for common use. APIIC gives land to industry at Rs 32 lakh an acre. I have also asked them for land at Rs 15 lakh an acre in return for equity. I think it is their responsibility to build housing. As many as 10 workers live in one 200 sq ft room in several areas. The situation is the same in Delhi’s Munirka and Lado Sarai areas. Even though the industrialareas are far, they have no option.
How will you fund the informal sector?
We have discussed some methods with National Housing Board and other funding agencies. One is, we get them to save the difference between the EMI (equated monthly instalments) and the rental that they pay. We will then allocate them a unit. If they can save the same exact amount on the exact date for a year, we will allot it to them. We have spoken to people, who will pay somehow. We are figuring out models. We will combine health and life insurance and see that the person picking up a house is covered, that it is not a risk for us. After we construct, there will be more housing developments in the area in the years to come. After buying the house for Rs 4 lakh it can be sold for Rs 6 lakh. But we don’t want the person who bought the house to lose it.
How much money do you need to raise and where is the company now?
We need only Rs 4 crore of equity. Manab and I have invested some money and we have already spoken to high net worth individuals, private equity and venture capitalists. We are in the process of preparing a detailed project report (DPR) that will be done by this month. We will do the bhoomi puja by September. Our money is required for acquiring land and for approvals. Then we get project finance from the banks. We need the DPRs for the banks.
What happens if you don’t get land from APIIC?
We have already identified land near the industrial area. But it costs Rs 50 lakh per acre, which is why we are waiting.
Is it viable at Rs 50 lakh an acre?
At that price it will cost Rs 1,000 per sq ft. If we get land at Rs 15 lakh per acre from the government it will come down to Rs 900. Cost of construction is Rs 650 per sq ft. But every little bit counts. The attraction of the land from the government, apart from price, is that the entitlements will be clean.
Will you manage the township? Will it have common areas?
We will manage the township for five years. Otherwise there will be factions based on community, language or caste. We will have common areas but if we construct 300 units in two acres these may not be in open spaces. We might put common spaces in the basement or on top of a building. We may put in prayer places and a dispensary depending on what the community wants. We will identify the needs of the people in the programme which is part of the DPR.
Do you have a design?
We have the design. We have an MoU with Monitor, the consulting group started by Michael Porter, for design and technical assistance. Monitor has World Bank assistance to help low-cost housing companies. They have six or seven other pilot projects.
Will your project have a green cover? Will it be environment-friendly?
We will do whatever we can afford at Rs 100 per sq ft. The project will have solar power for one fan and a tube light. Drinking water and sewage will be treated. Re-cycled water will be used for flushing. We will separate solid waste. We are also looking at biogas. If people want a playground that doesn’t have grass but trees around, we will make it. We have ambitions of building a small community hall for music and for a library. Other than the architects, a team from France is keen to help us. The team consists of an Indian architect who is a friend, a sociologist, landscape planner, urban planner and so on.
How will you prevent this from becoming a speculative project?
We cannot control what people do after they buy.
Will you be doing the construction work?
We are not going to build ourselves. We will outsource it to a contractor. Our onsite engineer will check quality. A programme manager will carry out a survey on customers, talk to business houses and after the project starts, he will be in charge of monitoring. The third role is that of a finance guy and an administrative person. These four people will belong to the JVs. In Delhi, Tripod Housing will just have a finance guy, a programme manager and me, a team that will remain the same even after 10 years. In a place like Delhi you have to pay a decent salary. I would rather have less and pay more. My father was a civil engineer and he built the Salem and Vizag steel plants as a consultant. He knows the process. Today, large banks are interested in microfinance.
Do you see the same happening in low-cost housing?
Certainly. According to Kumari Selja, the Union Minister for Housing, total housing shortage in the country is 24.71 million units as of 2007. Of this, 17.9 million units will be needed in the EWS category and 6.29 million in the LIG categories. In the middle income group (MIG) category, the shortage will be just 0.45 million units. The housing boards etc., can build only four million.
What is your target for the next 10 years?
In five years we will do 3,600 units. In 15 years we would have built a million. In the first five years, we have to build a relationship with banks, housing finance companies and NHB. Any project takes two and a half years to complete, and we have to build our brand after that.
Want to give feedback on this article |
Disclaimer
The views expressed here are strictly personal and civilsocietyonline.com does not necessarily subscribe to them. We shall endeavour to upload/publish as many of the comments that are submitted as possible within a reasonable span of time, but we do not guarantee that all comments that are submitted will be uploaded/published. Messages that harass, abuse or threaten other members; have obscene, unlawful, defamatory, libellous, hateful, or otherwise objectionable content; or have spam, commercial or advertising content or links are liable to be removed by the editors. We also reserve the right to edit the comments that do get published. Please do not post any private information unless you want it to be available publicly.
Your Feedback on this story...
_________________________________________________________________________________________________________