Rajeev Goel, COO, Kinetic Escalator & Elevator Limited, talks to V Jagannathan on his company's launch of multilevel auto parking systems

Multi level auto parking systems are a new concept in India, says Rajeev Goel, chief operating officer, Kinetic Escalator & Elevator Limited. It costs around Rs9.3 lakh at Rs2,500 per sq.ft to provide a 375 parking space for each car. "We are now selling a concept in the minds of real estate promoters," says Goel and adds, " It may take a couple of years for an order to materialise from a prospect."

Part of the Pune-based two wheeler Kinetic group, the company sells car parking shelves under the brand K Park in collaborating with Korea's Shin Shin Company Limited. Kinetic Escalators has installed automated parking systems, four in Mumbai and one each in Jaipur and Bangalore, with the size ranging from nine to 104 pallets at each installation. Apart from these mechanised parking systems, Kinetic Escalators & Elevators also installs and maintains the Hyundai brand of elevators and escalators in India.

According to the company's assessment, Mumbai, Bangalore, Delhi, Kolkata, Hyderabad, Chennai, Ahmedabad, Surat and Cochin have market potential," says Goel in an interview with domain-b. Excerpts:

What challenges do you face while marketing this concept?
Creating awareness about the product itself is a challenge. The big challenge is to convince the promoters of a building about the opportunity cost-loss in not being able to realise the target price of the built up area due to a lack of parking capacity. There will be a delay in actually bagging orders from the time that we pitch for a project. It may range from anything between a few months to a couple of years from the time a builder incorporates our system in his plan.

Getting an order also depends on the pace at which the project progresses. Orders often depend on the speed at which the building is occupied and the consequent demand for parking space. Moreover, whether an order will materialise at all is uncertain. Further, building regulations in most cities limit the height of the basement or the stilt to levels much lower than those required for installing the automated parking systems.

What is the market for this concept? At what land price would K Park be economically viable?
Wherever there is a high density of parked cars or there is a need to expand parking capacity, there is potential for us. For a building to realise its full market potential, it should need a substantially higher parking capacity than what it currently has. The actual viability has to be evaluated in terms of 'opportunity cost'. For example, a building's promoter may target a price of Rs5,000 per sq.ft. But buyers may be willing to pay only half as much. Therefore, the investment in parking systems has to be compared to the opportunity cost of not realising the price of the target built up area. It is only with multi-level parking that one can create additional parking capacity.

Since there is an acute shortage of parking space in most public places, railway and bus stations and airports, are you looking at these areas apart from residential and commercial buildings?
Creating parking capacity at public places normally requires execution as a turnkey project involving not just the supply and installation of parking systems but also the related civil work. Tenders for such projects are normally offered on a build-operate-transfer / build-own-operate-transfer (BOT / BOOT) basis. Our forte is the technology for parking systems and its installation and maintenance, not turnkey project execution or investing for BOT / BOOT projects.

Would the investment recovery be faster for public parking lots with mechanised parking systems?
Creating capacity for public parking is not amenable to traditional recovery calculations. Most public bodies prefer the BOT / BOOT route. Except in areas with high parking fees, normally parking charges help pay back only a fraction of the investment after recovering the maintenance and operation costs. Bidders have to be attracted by the avenues offered to recover their investments such as floor space index (FSI) for commercial exploitation (over the parking itself or elsewhere), maybe coupled with the right to advertise at public places, etc.

What is the size of the market for automated parking systems in India?
The concept is new to India and it is too early to estimate its market size. It is also difficult to project the growth rate as the number of buildings that incorporate such parking systems are more than the actual installation and order bookings.

What is your marketing strategy?
Our strategy is to create awareness about the product in the target cities. Getting the building plans from the promoters or their architects in whatever manner car parking has been conceived by them does this best. We then send back an alternate parking plan showing the possible parking capacity or the possibility of creating the target parking capacity without the number of basements or slabs they had planned for by simply using K Park. There is no obligation on their part to buy the system from us.

What markets are you currently looking at?
We have already done some initial promotion at Bangalore, Hyderabad and Chennai in the South, apart from Mumbai, Delhi, Pune, Ahmedabad and Surat, and will gradually expand our reach in these markets.

What is your target for this year?
It is still early days for the business in terms of actual sales. K-park system installations this year are expected to be 300 pallets totalling about Rs6.5 crore.