JOIN USA corporate office today is not what it used to be a decade ago or for that matter a couple of years ago. Workplaces are changing with employees demanding healthier, technologically-advanced, and flexible spaces. Congested offices littered with files are passé. Collaborative, open, green, innovative, well-lit office floors are in.
The development offers an opportunity for the corporate interiors management sector, which is expected to grow by 15 per cent in 2015 with revenues of around Rs 3,700 crore.
Cherry Hill Interiors, which operates in the sector, is relishing the opportunity to furnish more efficient ‘green offices’. Rajiv Mohan, the company’s Managing Director, tells Deccan Herald’s Umesh M Avvannavar and Hrithik Kiran Bagade about the company’s journey so far.
Can you tell us about Cherry Hill?
Cherry Hill’s journey began in early 1987. With a CARE rating of ‘A’ in long-term and ‘A1’ in short-term, we operate in the space of corporate interiors, fitting offices for many multinational companies (MNCs) present in India, viz. Google, Yahoo!, Dell, Microsoft, HSBC, BT, Morgan Stanley, Cargil, Adobe, Aon Hewitt and Bank of America, among others.
We are a specialist in this space, since we have the capacity to deliver the largest places in a single location for a single client on a general contracting (GC) basis. Now, we are in the process of aligning the organisation as the biggest and best player for big jobs and large areas on GC basis. Currently, we are operating from Delhi NCR, Bangalore, Hyderabad, Chennai, Kolkata, Mumbai, and Pune.
Can you explain what is general contracting (GC)?
GC stands for general contracting or general goods contracting. The trend used to be that if there is a site, the client would use the services of multiple service providers for different jobs. But under GC, we provide 360 degree services on a turnkey basis to the client. That way, the client needs to interact with one company only, which makes its job also easier. And from our perspective, it is better revenue booking on each side. This model is popular in western countries, but is not present in our country for some reason. Now this model can be replicated here also successfully.
The GC model positions us as integrators of fit-outs with essential services. It also reduces client co-ordination time (between different service providers) significantly. A downside is that there are not many corporate interiors companies which are equipped to take up big jobs on a GC basis because of lack of expertise, initiative, financial strength, resources, and opportunities. But we have established a lead in this business over the years.
Where are the emerging areas for corporate interiors in India?
We are concentrating in Bengaluru, besides surrounding emerging hubs such as Mysuru and Hubbali, apart from Belagavi, one of the fastest growing towns. Then a lot of activity is also seen in areas around Delhi NCR, followed by Chennai, Mumbai, and Hyderabad. Bengaluru and Hyderabad are more for IT/ITeS organisations, whereas Mumbai and Delhi NCR have a mix of IT and finance, banking, and investment sector.
Apart from them, Coimbatore is also coming up. Kolkata has picked up from only the last couple of years. It is estimated that the cumulative demand for space would become almost 130 million sq ft in three years.
How different is the Bengaluru market from the other markets?
Indian cities are expected to be the top performing in terms of office space demand in Asia-Pacific. Bangalore is the leading real estate market in the country due to the expansion of IT, ITeS and multinational companies. After Bangalore, NCR it is the biggest place offering big volume of office places to so many clients.
What are the challenges you face?
I would say that corporate interiors is not an organised sector. The spaces which constitute over 35 million square feet of consumption per year are in the so-called organised sector, made up of ‘A’ grade clients. What is happening is that since the sector is not well-organised, growth takes longer than required. In the organised sector, we would have achieved much faster growth than what we have achieved now. Due to this being an unorganised sector, there are many gaps in terms of achieving numbers, which we could have done so much easily as an organised sector.
In general, the organised sector is increasing every year which will have a positive impact on our topline on a y-o-y basis.
Also, state-level VAT and its inconsistencies pose a challenge. We strongly welcome the Government’s GST initiative which is expected to streamline the taxes.
Which are the other key players in the corporate interiors space?
We are a pan-India organisation. We usually compete with a few players but these players are mostly regional in nature. In every region, we have a separate set of regional competitors. We don’t have one single company to compete with us in all regions. In other words, we are the only multi-location player in the corporate interiors space.
Can you tell us something about Cherry Hill’s turnover?
Our turnover for the previous year was to the tune of Rs 175 crore. South India contributed 33 per cent of our turnover. This year, we are sure of achieving around 30 per cent growth.
What are your company’s future plans?
Our future plans are very precise and we have seen that there is scope for expansion in some of the existing cities where we are operating, like Bengaluru. As we speak, we are in negotiations for another million sq ft of space in Bengaluru. Other than that, we have also picked up Kolkata and Coimbatore in terms of further development. We are developing various systems and processes, including use of cutting-edge IT to improve the project delivery time. We are developing a smartphone app for providing our clients real-time data with various value-added features.
Are you going to enter into tie-ups for global ventures?
We are already representing big MNCs, whose products we sell. We have exclusive licences for representing them or selling their products pan-India. We have a trading position with them right now, which reduces time and cost factors. We are also looking for a strong financial partner to grow our business in the long-run.
What new trends have you found in terms of office design?
You see, earlier offices were designed to a budget. The latest trend is that clients are telling designers to make up the office space to be functional and flexible, so that the same office can be used for business in different environments, which are created in different areas of the same space. What is required is for people to have their own space, which can give them their own time, doubling up as their private space too. This is a very good combination because it reduces work pressure and load on an employee, making work more fun.
What future do you see for green buildings in India?
The green building movement in India has gained tremendous impetus over the years. More than 75 per cent of buildings that would exist in 2030 are yet to be built. There is huge potential in design and construction of green buildings. India is also starting to ride this wave, and clearly can be a large market.