To garner higher returns and diversify their business, the Sonipat SMEs, Panipat and Karnal have started shifting focus from their core business to real estate business. Around 25 SMEs have taken this route and are striking deals.
"In last one and half years, around 10-12 SMEs in Karnal have entered the real estate market and some of them are about to finish their projects," said Anil Sehgal, general secretary of Karnal HSIIDC Association.
MONEY MATTERS
Elaborating the reasons behind this trend Sehgal said, "It takes around five to six years for most units in Karnal to reach the break-even point, while in real estate, one can make profits by the end of their first project which takes just two to three years."
Talking about the investment Sehgal said, "It depends upon the capacity of the entrepreneur, but in Karnal there are two ways through which small enterprises are entering the realty market. First they have collaboration with realty developers by providing plots and allowing the developer to develop a house or otherproperty. In this type of collaboration, small enterprises just provide the plot and rest of the developmental work is taken care of by the developer. They do it on a revenue sharing basis where the plot-owner governs around 30-40 percent while the developer holds 60-70 percent share, depending on the size of the project."
Premsagar Vij, president of the Panipat Exporters Association said, "Such revenue sharing is possible when the plot size is big, (8 to 10 acres). However, there are some small enterprises in Panipat, who have entered into realty business with an investment of Rs 1.5 to Rs 2 crore and they a govern profit of around 30-50 percent in the period of around three years."
Asked about the number of units shifting to realty business in Panipat, Vij said, "In last three years, around five big textile players of Panipat have entered the realty market which includes, Paliwals and me."
LESS HASSLE
"Profitability is definitely a major reason but poor infrastructure in these areas is also a reason for such move," said Madan Lal Gandhi, president of Rai Industrial Area, Sonipat.
He said that most of the units in Sonipat are lying idle because they are unable to continue under the 'Tuglaqi' industrial system in the region. Around ten units have forayed into real estate business to continue in the market. He said that there are so many hassles in the region created by government departments such as pollution control, power shortage, labour, HSIIDC, municipal etc. where you need to take regular clearances till you are running your unit while in real estate, and you need to take construction approvals once for once. So, running an industry in the region is difficult and less profitable than running a real estate firm.
Gandhi said that majority of the units shifting towards realty are from rice packaging industry, textile and carton making industry. These units are severely hit by power shortage and pollution control department. In absence of adequate power supply, these units have no option but to use diesel generators which emit carbon, setting the local pollution control department on its toes.
No comments:
Post a Comment