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KEF Holdings invests $300m in India

KEF Holdings, a UAE-based diversified conglomerate, will invest US$300 million (Dh1.1 billion) in setting up three prefabrication factories in India that will help accelerate the pace of growth of India’s real estate and construction sectors, currently undergoing tremendous transformation.

The company’s first such project, KEF Infra One Industrial Park, one of the world’s largest, integrated offsite manufacturing facilities, is expected to generate revenues of US$1 billion (Dh3.67 billion) by 2020, from US$150 million generated in 2017 – its first full year of operation following the official inauguration in 2016.

This will make KEF Infra one of the fastest-growing technology and engineering companies in the world, and reflects the growth potential for the industry in India, as it witnesses rapid urbanisation.

The offsite manufacturing technology specialist has an order booking worth US$207 million (Dh 760.3 million) for FY 2017-18.

The game-changing company is the brainchild of UAE-based Indian entrepreneur, Faizal E. Kottikollon, and is an anagram of his initials. In 2013, Kottikollon invested US$100 million to establish KEF Infra One to transform the construction industry. Its growing success is the catalyst behind the company’s new expansion plan which will see an investment outlay of US$300 million in building three new large format factories.

“We are currently looking at setting up at least three such factories in Uttar Pradesh, Maharashtra and Hyderabad,” Faizal E. Kottikollon, Chairman of KEF Holdings, told a media gathering at the KEF Infra One office in Krishnagiri, Tamil Nadu, India.

“We are at an exciting crossroads today, as we see a global wave of technology-led innovation that is changing the way we do business. Our operations underpin this ambition, to disrupt sectors through world-class technology that can deliver value more than ever before.

“In a short span of three years, KEF Infra has demonstrated our ability to bring world-class proficiency in design, engineering, manufacturing, assembly, and project management-all under roof, thereby, transforming the traditional construction industry by significantly reducing costs and increasing efficiencies.

“KEF Infra is entering a critical phase where we have created an interest amongst Indian developers, planners, architects and government policy-makers to avail our new technology to build projects faster and with less cost that are also more environment-friendly.

“The new technology-enabled model has the capacity to deliver large number of projects within a short span of time and provides the ideal solution for a country like India where the government plans to develop mass housing for the low and mid-income groups across the country as part of its ‘Housing for All’ scheme.

The factory, which literally ‘manufactures’ buildings from the concept and design stage to completion and handover, is set to revolutionise India’s construction industry – traditionally a labour-intensive and time-consuming sector that generates a large quantity of waste – by reducing cost by 40- 50 percent, build-time by 50 per cent and construction waste from 12 percent to 2 percent.

KEF Infra uses offsite manufacturing technology on a  Building Information Model (BIM) platform that designs the entire building, feeds the information on materials – both quality and quantity – and then de-constructs the building part by part and sends the information to various production units for processing and ‘producing’ or ‘manufacturing’ the building components – the floor slabs, wall panels, door panels, window panels - and stores them in the right order for installation and re-assembling onsite.

In this process, the building is manufactured from basement, ground floor upwards in an assembly line format at the factory. The parts are then transported onsite where it is then assembled using cranes and machineries with minimal human intervention. The entire process is automated in a factory, in a controlled environment thus delivering high quality results.

“We have signed with LuLu Group to develop India’s first prefabricated shopping mall in Lucknow. The 2 million square feet project will be delivered in a record 21 months compared to the conventional delivery time of five to six years,” Kottikollon said.

KEF Infra has witnessed robust growth in its order book, since the launch of the 42-acre KEF Infra One Industrial Park.

In 2017, KEF Infra delivered the 400,000 square feet MEITRA Hospital (500 beds in two phases; 209 completed) in Kerala, within a record time of 18 months, and manufactured 175 public canteens and 20 kitchens as part of the Indira Canteens Project initiated by Karnataka state government. In addition, the firm handed over the Embassy 7B project, a 1.7 million square feet commercial building for the Embassy Group, which was completed in 13.5 months in Bengaluru, and the Infosys Building Phase 2 in Bengaluru which is a 500,000 square feet building completed in 15 months.

Currently, the firm is executing a one million square feet college hospital for Kovai Medical Center and Hospital (KMCH) in Coimbatore, Tamil Nadu, Phase 2 of the Indira Canteens and kitchen project, which includes an additional 262 facilities across Karnataka, besides the LuLu Mall in Lucknow. The firm has also signed on the G Kuppuswamy Naidu Memorial Hospital (GKNM) in Coimbatore as a client.

In India, real estate is the second largest employer after agriculture and is slated to grow at 30 percent over the next decade, according to a report by India Brand Equity Forum (IBEF). “The Indian real estate market is expected to touch US$ 180 billion by 2020. The housing sector alone contributes 5-6 percent to the country's Gross Domestic Product (GDP),” it says.

In the period FY2008-2020, the market size of this sector is expected to increase at a Compound Annual Growth Rate (CAGR) of 11.2 per cent. Retail, hospitality and commercial real estate are also growing significantly, providing the much-needed infrastructure for India's growing needs.

“A total of 217,900 new houses in six Indian states were sanctioned by the Ministry of Housing and Urban Affairs, Government of India under the Pradhan Mantri Awas Yojana (PMAY) to push affordable housing in the urban areas of the country,” the IBEF report says.

“The private equity investments in real estate increased 26 percent to a nine-year high of nearly Rs 40,000 crore (US$6.01 billion) in 2016.”

The real estate sector in India is estimated to have attracted investments worth US$7 billion in 2017, which will rise further to US$10 billion by 2020. According to data released by Department of Industrial Policy and Promotion (DIPP), the construction development sector in India has received Foreign Direct Investment (FDI) equity inflows to the tune of US$24.54 billion in the period April 2000-June 2017.

KEF Infra is also delivering several specialised projects through each of its independent verticals such as Precast, Prefabricated Bathroom Pods, Modular MEP, Joinery, Aluminium and Glazing for clients like Sands Infra, Malabar Gold, Brigade, Mahindra, Bhartiya City, Leela and At One amongst others. KEF Infra is expanding its offering to hotels, retail stores and other commercial units.

Faizal added, “The year 2017 was monumental for us at KEF Infra, during which we have gained the trust of numerous top companies. This has helped us to cement our position as industry leaders in the off-site construction space and fuel our drive to create sustainable and inclusive development.”

KEF Infra One employs 2,000 professionals including 650 engineers.

In an exclusive interview with Gulf Property, Faizal E. Kottikollon, Chairman of KEF Holdings, elaborated his thoughts. Excerpts:

Gulf Property: You have invested a large pool of capital and resources in this industry. How big is the market for offsite construction technology?

Faizal Kottikollon: Very big. In fact, we have barely touched 1 per cent of its potential and there is a lot of need for basic infrastructure and an big opportunity to deliver it faster and better using technology.

If you look at the construction and building sectors in India, these are still very traditional in nature. A normal residential project takes two to three years to build, whereas we could deliver the same in half the time, at nearly 60 per cent of the cost and the least amount of waste.

Looking at the overall Indian market, we see a huge demand for our business. The Indian government is planning to provide homes for all by 2022, when the country turns 75. Under the Pradhan Mantri Awas Yojana (PMAY), the government plans to deliver 20 million homes in 305 cities and towns across the length and breadth of the country.

This alone will drive the demand for mass affordable housing. The question is – do we have enough resources to carry out this huge task? How many workers will be required, how much time will be required to do this?

You simply cannot do this enormous job with the traditional method. The construction industry needs technological intervention or disruption if you like.

So, offsite precast technology is the right solution for the construction industry in India, going forward. With the kind of technology that we have put in at the KEF Infra One factory in Krishnagiri, we see a huge opportunity to change the building industry in India.

Are you talking to the government for the mass housing projects under the PMAY scheme that could perhaps lower the construction cost that could be offered to the people at a subsidised rate?

Yes, we are talking to the government as our technology could fast-track these homes at a much cheaper cost than what the market offers.

However, developing millions of homes would require a large pool of resources and we need to build more offsite manufacturing facilities in India to meet the objectives. One factory in Krishnagiri will not be enough. We need hundreds of these factories.

Besides, this is the way forward. Look at the benefits – if we build 20 million homes with this technology, the cost will go down by 40 per cent – which means that the government will have a net saving of 40 percent which could be used for other development activities or to construct 40 percent more homes – say 28 million homes.

Secondly, the homes could be delivered well in time, as our factory delivers projects at half the time, compared to traditional build. Thirdly, we reduce industrial waste – from 12 percent down to less than two percent.

How does the overall technology work to deliver the benefits?

We are a technology company engaged in design and build activities to deliver the best projects within the shortest possible time and with the least cost.

We have integrated several technologies under one roof that helps to conceptualise, design, construct and develop a variety of concrete civil structures, buildings and facilities at about 40 percent less cost and within less than half the construction time. This will change the way people build homes, buildings, offices, shopping malls, educational institutions and theatres. Now the question is how does the process work?

We are using smart building information modelling (BIM) systems that cover every aspect of civil engineering and construction activities, namely concrete, woodworks, aluminium, mechanical, electrical and plumbing (MEP), joinery, interiors, HVAC, etc. We have the in-house capability covering all aspects of the development of a construction project – starting from concept design to delivering the building – all under one roof through a one-stop service.

So, we design and manufacture all the components of a building and its interiors offsite and transport everything to assemble the building on-site. We do everything under one roof. It is like manufacturing a building at the factory and installing it on-site.

All these are done by the efficient use of computer-aided design (CAD), and computer-aided manufacturing (CAM) technology managed by specialised human capital. Almost all the works are done by robotic technology that requires the least human intervention.

This way, the client does not have to deal with numerous contractors, sub-contractors and suppliers. We do everything in-house and deliver as per desire and design, and at 25 per cent less the cost and at least 50 per cent less the time.

Prefabrication technology has been in existence for a few decades. We have taken it to the next level, by incorporating the CAD, CAM and robotic technology and integrating everything under a new BIM system to reduce costs, time, wastage and money.

This is one of a kind solution to address the challenges posed by a highly labour intensive and unorganised industry. Our technology will make the industry more organised and reduce waste, and make it greener and environmentally sustainable. We are also bringing in transparency to the entire sector.

Is this why you are planning to expand the production capacity?

Regardless of the PMAY scheme, we see a natural growth in demand for offsite manufacturing.

Builders and developer communities are seeing the benefit offered by us, they will soon shift projects from the traditional time-consuming, labour-intensive and waste-generating process to a cleaner, greener, environmentally-friendly, time and cost-saving process that we are offering.

And this is already happening. We were requested by the Karnataka Government to undertake the Indira Canteen project – 200 of them to be delivered within a short span of time. We are now delivering a canteen every three to four days.

Did you set up the industry eyeing these large government contracts?

No. In fact, when we entered the Indian economy in 2013, the PMAY plan did not exist then.

It was announced in 2014-15. So, our plan had nothing to do with public projects.

Besides, as an ethical business, we try to avoid getting into tendering and backroom negotiation, I have always tried and avoided these practices.

We entered India with an eye for philanthropic activities. I graduated in industrial engineering from the United States and started my career in the scrap metal and recycling trade in the United Arab Emirates, first collecting scraps, sorting them and selling them or exporting them to other countries.

I then started thinking of developing a business concept that could use scrap metal as feedstock for developing value-added products.

So, later in the 1990s, I created a company that recycled scrap metals collected from industrial wastes and developed world-class industrial valves for the oil and gas industry. It was a green concept and we were very good at what we produced – so much so – that a global conglomerate bought it for US$400 million in 2012.

While a significant portion of that money has been channelled into portfolio investment, I then decided to invest the rest of the amount in ventures that could make a difference in societies and economies. For me, money-making is the secondary or tertiary objective, not the prime consideration – because I had already gone through that phase in the UAE.

Making money does not excite me anymore. What excites me and my family is the difference we can make to the societies in which we operate and to the lives of people.

So, at the end of 2012, I started planning my future ventures with a focus on social issues. Education and healthcare are two areas where I found problems – quality of facilities and services.

While in Kerala on a visit, I came across a public school with dilapidated infrastructure and that disturbed me. I then started talking to the relevant people to re-develop the school without disturbing the academic calendar.

We demolished the entire school premises and re-built it in 95 days – while the students were enjoying summer vacation. When they returned, they saw a completely different setup, state-of-the-art facilities, amenities, lab and gymnasium. The students’ performance started improving and it has become one of the top schools in Kerala.

This experience encouraged me to use my knowledge, resources to set up an industry that will change the building sector. The result is the KEF Infra One factory at Krishnagiri – that has become a most sought-after choice for real estate developers who now want us to build their projects.

Going forward, how are you planning to develop the industry further?

Similar to the Catalogue Hospital concept that we launched for healthcare a few years back, this year KEF will create catalogue, and website and app-enabled homes. which will be managed by my eldest daughter Sophiya.

As a customer, you could choose to order a home – a villa or a townhouse – be it a three-bedroom villa or a five-bedroom bungalow – you can customize it on our website or app and order it online. KEF will then manufacture and deliver it to your site.

Since your technology cuts cost and human efforts and it seems good for affordable homes, how far could you bring down the cost of a home?

We have built a prototype of a two-bedroom affordable home that is ready for deployment and we could deliver it within INR 600,000 or just about US$8,000 a piece. It is a spacious home with two bedrooms, a small living room, a kitchenette and a bathroom with toilet.

If the assignment involves a large number of affordable homes and we achieve economies of scale, then the price could come down further. We can create variations within a specific range.

How strong are these buildings, since they are coming out of a concrete batch plant where beams and columns are constructed separately and connected through grouting technology? How safe are these structures, in terms of earthquake resistance?

Very strong. In fact, since the re-bar mesh and concrete are machine-made they are made with precision and to perfection. We use steam curing which makes the concrete more durable as well.

There is very little human intervention in the entire process so there is less room for error – everything is factory-controlled.

The building life of a precast structure is longer and more earthquake-resistant than those built through the traditional construction process because of the seismic design and engineering that goes into it.

Tall buildings and skyscrapers could be built with prefab technology and it could go up to as high as 80 storeys.

You are doing precast construction that might just cover the structure. What about the rest of the works – mechanical electrical and plumbing (MEP), interiors, fittings, etc? Who would you depend on delivering these?

We do everything in-house. Modular MEP is part of our in-house expertise.

We have pre-engineered certain products – such as bathrooms, kitchens and hotel rooms with all the amenities and fittings pre-fabricated – that could be just transported onsite and installed as a pod within the specified slot in a building– which makes it look like a plug-and-play affair for users.

We also have one of the largest joinery factories in Asia that, in addition to delivering the interiors, can also manufacture furniture to suit the client’s requirements and specifications.