Vasu is a first generation entrepreneur. He did his civil engg from COEP – as it was the easiest to get in. Joined corporate life immediately thereafter. When after 7 years of work, he had accumulated enough capital, he decided to buy an apartment. He found the building quality extremely shoddy, the builder attitudes to customers snobbish and their behavior unpleasant.

Vasu has been raised up in Mumbai, but when it came time to start, he preferred Pune – as it was cheaper – and funnily Pune construction quality on the average was better than Mumbai. He started off as a contractor, and later diversified into residential projects. The first land deal that he attempted was in Bengaluru, but that fell through. The second deal was in Pune – and that is the reason he calls it home today.

But that’s jumping the gun. Let’s get back to Vasu’s childhood. He grew up in a society which was dominated by Jains. So he was kind of bred into entrepreneurship. Out of 15 kids in the society cricket team, only 4 went to college. The rest went in to business. Vasu was a wee bit different by going to COEP. Like every good engineer he was also smitten by the US bug. He applied for grad program in the US and got 3 admits – but alas, no scholarships. So he went in for the campus option. He had jobs with HCC and a Kuwait based company. The salary in Kuwait was 15 times that in India, but for a mysterious reason he chose to remain in desh.

HCC was a big disappointment. He was a very small drop in a big ocean. It almost did not matter whether he worked or not. Disillusioned he switched over to a small contgracting firm. In the three years that he spent with the contractor, he actually ended up doing a real life MBA. Contracting quality is a chicken and egg story. You end up with bad quality because you don’t get good people and vice versa. The contractor was doing projects at Patalganga and Kurkumbh. He could not find mechanical / electrical engineers, so Vasu, a civil engineer, was made project in charge. The owners of the Patalganga factory – Cipla – were so happy with Vasu that he was offered a post of Chief Engineer at the factory. Vasu realized that projects was his DNA by now, and he may not feel very happy as a maintenance man. He turned down the offer.

He decided to do residential projects as a contractor.

His first EPC jobs was a gigantic Rs. 20 crore. Vasu could manage it primarily because of the faith vendors had developed in him. The next project was 4 times bigger – at 80 crore. For this he had to raise funding. So in 1986 he raised Rs. 1 lakh as capital – and executed this pharmaceutical factory project. Cutting his teeth in pharma construction, he developed a good sense of quality – as the requirements were always for clean buildings – with good finishes. Another requirement of this sector was the speed of the work – they wanted it to finish fast. These were of immense help when he would get into residential projects. He was amongst the first builders who actually invited customers to inspect the flat. Everyone loves to do a good job, but very few set standards. Vasu concentrated on the standards – and his employees lived up to those standards.

In the nineties he ended up with a land parcel of 50 acres near Kalyani nagar – which went on to become Marigold. He, along with Satish Magar, promoted the concept of mixed housing and work to the IT industry.

Another interesting Vascon scheme is Paradise – a mixed development of Bungalows and High rises. They started with Bungalows because they are easier to sell if bookings did not happen. More profitable. But the fact that less FSI was consumed made this project a premium one.

We asked Vasu about the reason he is still stuck only to Pune. He mentioned that scaling across the country is not easy. There have been no successes so far on the national level. (Methinks L and T could be a counter-example) Real estate requires local knowledge. Which locations are picking up and which are not. Not only does your building have to be in the best location, but that location has to be the best location for the next 3-4 years! He learnt about local insights the hard way in Hyderabad, when 3 wings of a building got sold promptly, but there were no buyers for the fourth. The problem that Vasu overlooked – Vastu..

Builders have to work hard to create a non-badmash reputation. For Vasu, one of the important milestones in acquiring this reputation was Deepak Parekh’s (of HDFC) visit to a Vascon site. Deepak was impressed with Vascon. Whereas Vascon had asked for a loan, Deepak insisted on investing in its equity. So how has the equity story been so far? Vascon went on to list the company on the stock exchanges – thanks partly to pressure from Deepak. Vasu maintains that equity is like a virus. In the initial days they had a deal with HDFC where they could buy back their stake. But the euphoria generated by DLF et al in their heydays made the Vascon team quite bullish on the sector. And they did not buy back their equity. For entrepreneurs who want to stay invested, Vasu believes an IPO is not a good idea. Vasu feels that public shareholders and legal restrictions are a shackle for entrepreneurs. Being public also forces the company to grow fast. You look at all kinds of opportunities, without having processes in place to scrutinize them.

There was a question related to low cost housing. Vasu considers the whole concept of low cost housing a joke when land is 60% of a project cost. If land is cheap, people end up spending much more on commuting. Another thing which makes project cost go up is taxes. Of every 2000 Rs of construction cost, 1000 goes to taxes. One thing that helps keeping costs in rein in urban development is ring roads. A city like Ahmedabad has 3 ring roads – interconnected beautifully. This ensures that land is available for development. Pune does not have a single ring road till date!

Technology has still not impacted the real estate sector much. A little bit of CAD, precast concrete, anti collision devices on cranes. More than technology the enabling factor for the sector is infrastructure: roads, public transport, power supply, sewage lines. The higher the population density, the easier it is for infrastructure development.