VGN’s diversification strategy

D. Pratish Managing Director, VGN

At crucial junctures, VGN Developers (VGN) has found a way to expand its offering and keep pace with changing trends – from manufacturing bricks when it was first established in 1942 to in the 1980s when it established itself as a land developer and sold plots. In 2008, the company added another dimension. Under the guidance of D. Pratish, managing director and fourth-generation entrepreneur, VGN entered the real estate development business and has constructed 3,500 apartments since then. There are over 8,500 apartments that are in the pipeline. Currently, a recognised brand name in Chennai, the company is expanding into Hyderabad, New Delhi and few other tier-2 cities.

VGN is targeting revenues of Rs. 4,500 crore by 2015. “If the need arises, we would also like to go public, which is why we are strengthening our systems and processes,” says Pratish

But, all this and more is just part of Pratish’s dreams turning to reality. Armed with a masters in business administration and a passion for engineering, he has already crossed yet another milestone in 2010 by entering the infrastructure development business. “We want to build our core competencies to become a developer in the true sense,” he explains. Typically, there are many developers who take up contracts and then subcontract them. However, for VGN, the goal was clear – to have its own team of engineers and foremen who will execute the projects on hand. With this in mind, the team is constantly growing from 10 in 2008 to a targeted 650 by 2012. The company has orders to the tune of Rs. 700 crore and will execute EPC (engineering, procurement and construction) projects in Chennai, Gujarat, Karnataka, Orissa – where work has already started – and Madhya Pradesh and Goa, where the work is yet to start. The projects include building roads, bridges, canals and the infrastructure for a power plant.

The system advantage

Pratish believes that the country needs infrastructure developers in thousands, but there are only a handful that have the capability to meet the requirements. While this is one of the reasons why a new entrant like VGN may have bagged projects, the company has focused on being nimble. The company has implemented SAP for smoother operations and has constantly worked on enhancing its level of expertise.

Pratish also believes in decentralising management and ownership; the chief-executive officers of the two wings of business and the department heads take care of day-to-day operations. He is also focused on quality and the company is in the process of implementing ISO and OHSA (Occupational Health and Safety Act Occupational Health and Safety Act) standards.

Growing steadily

One of the advantages VGN had when it started building apartments was its reputation in the plot development business. “All our papers were clear and we had a database of 15,000 to 20,000 loyal customers who have been with us, some for over two generations,” he says. With aggressive advertising and celebrity endorsements, the company has managed to further improve its visibility.

The branding exercise did not prove to be a waste of resources as the company grew more than 300 percent in the real estate business, from Rs. 70 crore in 2009-10 to Rs. 300 crore in 2010-11. It also registered revenues of Rs. 150 crore in the infrastructure development vertical in the last fiscal. It is targeting Rs. 4,500 crore by 2015 from both these verticals. “If the need arises, we would also like to go public, which is why we are strengthening our systems and processes,” explains Pratish.

Pratish likes to unwind in the evenings by watching Hollywood flicks, or spending time with his family and friends. He believes this unwinding helps him come up with fresh ideas and that, along with his passion for engineering, has been responsible for the tremendous activity seen within the company since 2008, when he took over after a three-year training stint across several departments. With a firm head on his shoulders, Pratish is ensuring that his family-run enterprise of six decades lives up to its expectations and has a robust growth story going forward.

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