Visakhapatnam - Market Research

Visakhapatnam:When one of the top 20 pharma giants in the world, Eisai Pharmaceuticals of Japan, inaugurated its global research and development and production facility in Visakhapatnam last month, it was not just another feather in the cap of the city that is being dubbed as the ‘city of destiny’. Rather, it was a harbinger of how significant the city has become in recent times and how fast it is developing into a major centre on the eastern coast.

The Telangana issue, which has forced planners to look beyond Hyderabad, has given a fresh impetus to the city. Known till recently for the Eastern Naval Command and the steel plant, Vizag is fast transforming into an IT hub, a pharma junction and a real estate goldmine. Lying on the Chennai-Kolkata coastal corridor, the city is home to the biggest special development zone, called the Petroleum, Chemical and Petrochemical Investment Region (PCPIR), where an investment of $80 billion is expected.

The Vizag Urban Development Authority (VUDA), touching four districts, is the third biggest in the country after Bangalore and Mumbai. At least 25 IT companies are coming up here — three are already operational, four will be operational in a month and others by the end of 2010.

Like Hyderabad, IT is proving to be the catalyst for accelerated development here, forcing the authorities to lay four-lane roads and revamp public transport and civic infrastructure. Recently, a new fleet of metro buses was introduced and townships are being planned to meet the growing demand.

“There is an investment of Rs 700 to 800 crore in the IT sector here. We are looking at 20,000-30,000 jobs by the end of 2010,” said Naresh Kumar, head of Symbiosis Technologies which started in November.

Blessed with a natural harbour, the coastline is jotted with small hills that earlier prevented its growth, but private and public entrepreneurship has meant that the city is now growing on these hills. The country’s most picturesque IT parks have come up on Hill no 2 and 3 near Rushikonda and Madhurwada and another one is coming up at Ghambhiram.

“Considering that a majority of the people working in Hyderabad, Chennai and Bangalore in the IT industry are from coastal Andhra, most of them may return to Vizag as the industry develops here. Companies which have data storages in Hyderabad or Bangalore are looking at a second place to store backups and Vizag is proving to be an ideal location. A couple of years ago, finding even 10,000 sq feet of ready office space was difficult. Today, there are people with one lakh sq feet space ready to be occupied,” added Kumar.

The city has also become a pharma zone with more than 20 major pharma companies coming up here. The Jawaharlal Nehru Pharma City, developed by Ramky Group in collaboration with AP Industrial Infrastructure Corporation (APIIC), has 17 pharmaceutical companies. The adjacent Pharma SEZ has two global giants — Eisai Pharma of Japan and Pharmagel of Germany.

“The infrastructure and the facilities provided here are attracting investment. Good investment environment, large talent pool and easy access to global destinations due to the presence of ports are of great advantage. After Japan, the US and UK, this is our new research and development centre. We plan to manufacture 2 billion tablets and 30 tonnes of formulations per annum,” said Eisai Knowledge Centre head Sanjit Singh Lamba.

Executive Director of AP Industrial Infrastructure Corporation (APIIC) Ishwar Rao said that besides the existing 17 companies in the pharma SEZ, another 30 companies will come up within a year. “A multi-product SEZ of 6,000 acres is coming up besides the Brandix Apparel SEZ. All this has injected life into Vizag. The Gangavaram and Vizag port and excellent connectivity to Kakinada port, 180 km away, have made it the gateway,” added Rao.

“The city is looking at slingshot development in the next five years. The three growth engines are infrastructure, IT & ITES and travel and tourism. The existing 20 lakh population is expected to reach 50 lakh in the next five years, so Rs 1,500 crore is being invested under the JNNURM to upgrade the civic infrastructure,” said vice-chairman of VUDA V N Vishnu.

Spread over 603 sq km near Vizag, the PCPIR will see several mega integrated petrochemical complexes and refineries coming up like never before in a single corridor that extends across the coast from Vizag to Kakinada. The HPCL is the nodal organisation which will anchor the development of infrastructure, in association with APIIC.

“Unlike other cities, Vizag’s real estate prices have remained stable and there is only a marginal drop in rates. That is because 70 per cent of the population is employed with PSUs like steel plant, shipyard, naval dock yard, HPCL, and have a permanent income. The demand for real estate has been steady and not subject to recession. The city is developing so fast that residential layouts some 30 to 40 km from the city centre are being lapped up immediately,” said N V Satya, president of Apartment Builders Association.

RealEstate - UNION Budget 2010-11

Union Budget 2010-11 has both positive and negative aspects for the real estate developers as well as the buyers. There is a revision in personal income tax slabs, which will strengthen the purchasing power of the buyers affecting the demand of the residential sector. The common man will also be benefited by the continued subsidy of one per cent for affordable housing loans, which will help this sector to grow. A one-time interim relief would be provided to the housing and real estate sector by allowing pending projects to be completed within a period of five years instead of four years for claiming a deduction on their profits.

On the other hand, a two per cent increase in excise duty of cement and steel might not prove profitable for the real estate developers as the cost of construction would be expensive which will ultimately result in the increased cost of the project and hence the buyers will be affected. Also, it would have been a great support to the real estate sector if Section 80I (B) would have been renewed to thrive the demand of affordable housing.

Union Budget 2010-11 is supportive for the tax payers as the extension of limit will help in reducing burden on individual tax payers. The budget tabled will induce renewed sense of optimism over the country's growth.