MC Exclusive: Mahindra Lifespaces eyes Rs 500 crore of annual revenue in industrial leasing by 2025

Mahindra World City in Chennai.

Mahindra Lifespaces plans to achieve an annual revenue of approximately Rs 500 crore from the industrial leasing business by 2025. Additionally, the company is in the process of acquiring land for industrial clusters in Chennai and Pune with a total development potential of about 730 acres.

"The annual revenue increased from Rs 298 crore in FY22 to 456 crore in FY23. Currently, we have four projects—World City in Jaipur and Chennai, which are integrated cities with industrial clusters, and Origins in Chennai and Ahmedabad, which are standalone industrial clusters," Rajaram Pai, chief business officer, industrial, told Moneycontrol.

The Mahindra World City in south Chennai is spread across a little over 1,500 acres, while the integrated township in Jaipur covers 3,000 acres.
At Mahindra World City Chennai, out of 1,524 acres, 831.6 acres are industrial and the balance is split between residential, commercial, common area and utilities.

The Origins project in north Chennai is over 307 acres with a leasable area of 227 acres. "The majority of the park’s Phase 1 has leased. Active discussions with several companies across are going on to close our balance soon," Pai said.

In Ahmedabad, the company has a 350-acre industrial cluster at present.

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Further expansion

For World City, the company is expanding its residential portfolio in Chennai. The upcoming development will be plotted developments and also apartments, with about 20-30 percent more than the existing portfolio.

Pai said the company is looking forward to setting up a standalone industrial cluster in the Satara area in Maharashtra. "We are also expanding the Phase II of Origins in Chennai and the upcoming cluster will be of similar size as Phase I, for which a majority of land has already been acquired," he added.

Phase I of Origins in Chennai is a joint partnership between Mahindra World City Developers Limited and Sumitomo Corporation of Japan with an investment of Rs 179 crore.

Additionally, the company has recently signed up with Mitsubishi Electric India Private Ltd to set up an air-conditioner and compressor manufacturing unit with an investment of $222 million in Phase 1 of the Chennai project.

"We have a strong partnership with Sumitomo, sharing similar values and strong growth vision. We are open to Sumitomo's participation in the new phase at Origins Chennai," Pai added.

Industrial leasing remains robust despite challenges

For the industrial clusters across India, Pai said that the company, along with its partner companies, have cumulatively invested over Rs 13,000 crore, with Chennai accounting for the bulk of the share.

He added that policies for industrial and special economic zones (SEZ) remain a challenge. "The upcoming DESH (Development of Enterprise and Service Hubs) bill will provide the necessary push by overhauling the existing SEZ law of 2005," he added.

The new act will allow units to produce both for domestic and international markets, thus reviving interests in the SEZ sector that has remained vacant across commercial verticals in India.

Despite that, Pai said, in FY23 Chennai and Jaipur saw a total export of more than Rs 1,500 crores.

Currently, in Chennai, the company is seeing bullishness in sectors like auto component manufacturing, electronics and services and IT companies, including research and development.

"For upcoming industrial clusters, we are looking at automotive and also a significant expansion in the renewable sector. Electronics, especially board electronics, food processing and data centres are also picking up today. For specific clusters, cycle and doll manufacturing are also promising," Pai said.

Currently, the company has 30-40 percent of offshore companies operating in the existing industrial portfolio. "We are looking at companies from Korea and Taiwan, among others, for their dominance in electronics. Countries like Germany and Italy are also promising for their engineering sector," Pai added.

Among the challenges, high land costs and land availability remain major hurdles in acquisition, especially in southern metros like Bengaluru. "Additionally, today private industrial parks lack several benefits compared to government-run parks. A major policy change with tax incentives will further help reduce the overall cost for end users," Pai concluded.