Monday, March 18, 2013

Big Challenge is Positive Cash Flow

Ram Yadav, Head – Finance and Strategy, Orbit Corporation, In an Exclusive Interview with B&E’s Mona Mehta

Orbit Corporation has been one of India’s biggest redevelopment real estate players and has been much far ahead of any possible competition in Mumbai. Ram Yadav, Head - Finance & Strategy, Orbit Corporation, shares the current scenario for Orbit and its future plans and strategies:

B&E: How has this year been for Orbit Corporation in terms of financial performance (on basis of sales growth) and what are your future targets?
Ram Yadav (RY): The sales growth has been phenomenal for us in recent times. We clocked fresh sales of Rs.7.894 billion in FY10 as compared to a meagre Rs.851 million in FY09 due to the slowdown. In the current financial year, we have already registered sales of Rs.3.44 billion. We are targeting a 30% growth in revenues in FY11. To achieve the same, we are ramping up our human capital, execution capabilities and building efficiencies in the overall processes.

B&E: What’s your take on the real estate sector’s major challenges and what’s your suggestion to investors interested in realty stocks?
RY: Lack of transparency and industry level benchmarking in the real estate sector has created an environment of mistrust for the entire developer community. The challenge is to move towards greater transparency and better corporate governance for the sector. My suggestion to investors is that their time horizon of investment should be medium to long term as quarter on quarter results of a realty company is not a correct parameter of true value.

B&E: Amidst a tight liquidity scenario, what are the major challenges for Orbit and how will you tackle them?
RY: The major challenges are to maintain positive operational cash flow and quicker maturity of projects under acquisition. To handle them, we are focussing on reducing inventory gestation and faster execution to shorten our cash conversion cycle and also on aggressive acquisition of projects under pipeline.

B&E: Is Orbit planning to enter into JVs for its upcoming real estate projects or looking at offering real estate services to other infrastructure/real estate companies?
RY: We believe that the real estate business is local in nature and the best way to expand geographically is through JVs with local developers. Our company keeps on evaluating such proposals for JVs on a continuous basis. As and when we see an attractive opportunity, we may go ahead with JVs.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

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