Jitu Virwani: The man behind Embassy Group's success

MUMBAI/BENGALURU: Business cycles are a usual challenge for any entrepreneur. But in real estate, they can pose an existential risk. It has been proven time and again as several big names have nearly disappeared in every single downturn the sector has faced.Jitendra Virwani, founder and chairman of India’s fastest growing and aggressive office landlord Embassy Group, was also on the verge of bankruptcy in 1996. The company, which is now behind India’s maiden Real Estate Investment Trust (REIT), managed to rise like a phoenix aided by Virwani’s vision, execution capability and right alliances."He (Virwani) has this disproportionate ability to evaluate risk. He has this ability to see beyond risk, evaluate opportunity without losing focus; it's phenomenal," says Ranjan Biswas, Partner and National Director, Technology, Media, Telecom and South, EY.Early learningsThe mid-1990s was a tough time for most builders across the country and for Virwani, who was also going through a family split at that time, things had turned even more complicated.The business was started way back in 1978 when the family moved to Bengaluru and Virwani, who is known in real estate circle as Jitu, joined his father’s existing third-party construction work. While his brother separated in 1988, Jitu ventured on his own in the second half of 1990s owing to some litigation with his father and brother.Virwani, who is 53 year old now, recounts the ordeal he had to go through during this period both on personal and business front."The biggest thing for me was the family separation in 1996, which I had to survive. We were running negative that time and had Rs 27.5 crore of NPA (non-performing assets). Around 90% of the employees stayed with me post separation. I had to build the company step by step," Virwani said.He did not want banks to sell off the assets to recover dues, so he focused on paying back and reached a Rs 22.6-crore settlement with Central Bank of India."That time many investors felt that we will turn bankrupt and wanted money back, but we sailed through that period too," he recalls. "Nobody as a builder wants to take loss. I was willing to take loss and build back the company."Calculated betsThis ability and willingness on Virwani's part to assume higher risks have propelled Embassy Group to become one of India's top developers. Alliance partners vouch as much for this as they do for his execution skills and his knack of striking the right partnerships."Jitu is a rare Indian entrepreneur with a vision to turn ideas into action. His execution skills and attention to quality is what got us into a partnership in the first place. Over the years, I have keenly noticed how he nurtures relationships and people. His style resonates with Blackstone’s philosophy of being ambitious, growing faster than most, building in scale and style," said Tuhin Parikh, Senior Managing Director, Real Estate – India at Blackstone Group.The US-based private equity major Blackstone, which holds India’s largest office properties portfolio, has been a partner of Embassy Group since 2012 and together they have created a portfolio of 33 million sq ft of commercial projects. Their alliance, Embassy Office Parks, listed this platform as a REIT in April, marking India’s debut on global REIT map.According to real estate veteran and Chairman of ANAROCK Property Consultants Anuj Puri, who has worked with Virwani since the mid-1990s, he might appear rash and aggressive on the outside, but is actually extremely conservative. So even when it looks like he is making a risky bet, he is actually very calculated and conservative.Striking right partnershipsForming alliances and retaining them successfully comes naturally to Virwani, who counts some of the biggest global names like Warburg Pincus, Four Seasons and WeWork as his partners apart from Blackstone.Puri, who is also part of Embassy Office Park REIT’s board, lauds Virwani’s ability to maintain relationships, a quality that has aided the company in attracting funding, alliances and good talent."He is extremely good at delegation. Unlike many other developers, he delegates both responsibility and authority. He allows his CEOs to run the business as if they are Jitu Virwani," Puri said. "Also, 60%-70% of his tenants are repeat clients. He is good at relationships. For example, IBM, since the day it entered Bengaluru, has only expanded with Jitu."People who know Virwani closely are of the view that the family split in the mid-1990s has raised the empathy quotient in him."He has built the business and have professionals run them. He empathizes with people. Anybody can provide the finances but what makes Virwani special is his ability to connect with people at different levels. He is a man of his word. If he has called you, he will close that transaction. He has done many deals over a handshake or by merely giving his word," Biswas said.Inflection pointThe development of the 2.7-million-sq-ft Embassy Golf Links Business Park in Bengaluru proved to be a key inflection point for the company.In Virwani’s own words, when big commercial builders from Bengaluru were not willing to sign a joint venture deal with KJ George, a politician from Karnataka, Embassy decided to take it up in 2001-2002. It was a 5-acre land parcel and Virwani got ANZ and IBM as anchor tenants then."Eventually, I convinced George to sell some buildings in the same campus and plough it back into building Embassy Golf Links. Those days nobody invested in land, but Deepak Parekh agreed to lend Rs 40 crore at 8% interest including land cost," Virwani added.According to him, because raising debt was a taboo those days, people used to ask him how he could sleep peacefully. "But I wasn't worried as I could make more than what I had raised as loan."Embassy Group has developed over 55 million sq ft commercial, residential, industrial & warehousing, hospitality, education, and retail spaces and holds an extensive land bank of over 1,000 acres across the country. The company’s operations span across Indian and International markets that include Bengaluru, Chennai, Hyderabad, Trivandrum, Mumbai, Pune, Delhi NCR, Serbia in Eastern Europe and Malaysia.In the office segment alone, Embassy has developed over 40 million sq ft including marquee commercial assets such as Embassy GolfLinks, Embassy Manyata Business Park, Embassy TechVillage and Embassy TechZone that house several multinational and Fortune 500 companies such as Google, IBM and Facebook.Embassy Group exclusively partnered with and launched WeWork — which provides energetic, beautiful, modern co-working spaces — in India. WeWork India is currently operating with 35,000 desks and aims to reach 90,000 by end of 2019.In the residential segment too, some of the most premium luxury living spaces in Bengaluru developed by Embassy include the Four Seasons Private Residences, Embassy Boulevard and Embassy Grove.Another addition to its portfolio is Embassy Industrial Parks, which is a joint venture between the Embassy Group and American private equity firm Warburg Pincus.Virwani, who grew up in Mumbai riding horses, owns and maintains a state-of-the-art international riding academy — the Embassy International Riding School, spread over 225 acres in Bengaluru. He believes in balancing his time between work, passion and family."When I take long breaks and go on a holiday, I don't really worry (about business). My kids encourage me to expand the business and I know my business is in the right hands," Virwani said.Out of four of Virwani’s kids, two sons and a daughter — Aditya, Karan and Natalia — are helping their father take the business further. Virwani, who frequently shuttles between Bengaluru and Dubai, ensures his weekends are spent with family.

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