From Rs 46k to Rs 23 cr, how this college dropout built a successful construction company
In India, concrete jungles are expanding rapidly. The largest civil engineering and construction companies are working on an increasing number of large-scale projects. However, Bengaluru-based entrepreneur Sharath Somanna has taken it upon himself to deliver uncompromising quality to the industry’s midsegment, often overlooked by construction behemoths.
Somanna’s startup Blue Oak Construction targets civil engineering and interiors projects in this section, which range from Rs 1 crore to Rs 20 crore. Launched with just Rs 46,000 when Somanna was still in college, Blue Oak Construction has gone on to become a Rs 23-crore turnover company, and is looking to keep the momentum going.
Twenty-six-year-old Sharath Somanna says, “It is a great journey with a lot of challenges. I don't come from a business background, and I learnt that the number one lesson in this industry is to never give up.”
“I always felt that I had leadership qualities. I was a national athlete, and this helped me with the foundations of leadership. In construction and contracting, I saw a lot of opportunity in the midsegment,” he adds.
Somanna had noticed there weren't any midsegment contractors who were giving quality service. Midsegment projects could range from Rs 1 crore-Rs 20 crore. Above Rs 50 crore, there were a lot of contractors. But below Rs 25 crore, there were no professional contractors.
Looking at this, Somanna thought that he could bridge this gap. This inspired him to start the company in 2014 when he was still in college. “I really wanted to start a company that delivered value for customers,” he says with a smile.
Taking the first step
Somanna approached a few potential clients while he was in college, and out of 10 attempts, he landed one project: Mount Galilee in Hennur. He also dropped out of college. “I don't come from a business or related background as my dad is an Army person, and this was completely new for me. I made a lot of mistakes on the way and learnt from them,” he adds.
Blue Oak started with two employees in 2014, and now has around 18 staff and 180 workers on site. From a Rs 1 crore turnover in the first year, it is now at Rs 15 crore turnover. For the next year, it states it has ongoing projects worth Rs 23 crore.
Their clients range from corporate, residential, and other commercial entities.
Somanna places emphasis on managing talent. “We basically did contracting related to interiors or civil engineering. Through the journey, we became good at managing people, and had quality leadership from the start, and we were able to manage talent from other states such as West Bengal and Odisha,” he states.
“We were all in our 20s and saw many ups and downs. There was nothing to lose, and we never gave up, and it keeps us going. The people I started with have remained the foundation of the company,” he says.
Blue Oak also delivers housing facilities for its workers and their families. On-site workers' kids are taken care of with the company paying for their education at nearby schools.
Clearing the hurdles
According to Somanna, in the first year, a few clients weren't paying on time and the company also had issues with delivering quality service. They were unable to pay the employees on time. There was a delay in payment for two-three months and also an on-site strike.
“We learnt so much from this, such as timely payments, generation of cash flow, etc. We dreamed of a day when we would have the funds to pay salaries for the next three years. Today, we are in such a position, and we feel good about it,” he beams, adding, “We also realised that delivering on time and with quality are the biggest challenges while working with corporate clients.”
Another challenge is that Blue Oak Construction is “very young for the industry”. The industry is usually dominated by the more experienced companies. Being young is a slight disadvantage, but there were people who gave Blue Oak a chance because they believed in young leaders. Sometimes, they didn’t completely believe in the company. But Somanna says, “However, we proved ourselves over time and can show our completed projects as proof of our quality.”
Commenting on other hurdles he needed to cross, Somanna says, “Because of a lack of experience in the industry, we also failed in a couple of initial projects when it came to handling project managers and workers. People used to overcharge us. However, we succeeded by learning from these failures, and we have faith in our standards of quality. Looking back at it, the failures and learnings were the best things which happened to us.”
Planning for the future
The company has not raised funds. It started off with just Rs 46,000, and then incorporated project payments into running the business. However, it does have plans in 2020 to raise funds to take its business online.
Through this, they want to become a one-solution platform where clients don't have to go to different parties and coordinate with different agencies to get a project done. Blue Oak will be a single agency delivering a project, build an in-house team to deliver such projects, and raise funds for such a venture.
“We already have a reputation in the industry with corporate clients. We are going to connect the dots and approach the same clients we've worked with, the ones we are going to work with, and get projects from them, and slowly build momentum. We are providing business-to-business services, so it's going to be different from other models,” Somanna adds.
He aims to have a turnover of Rs 50 crore by 2020. And at the same time, he is also focusing on their interior designing projects.
The construction industry is an ocean of opportunity and Somanna’s company has worked with Prestige Group, Millenia Group, Zuari Cement, Norwest Venture Partners, and more. They have worked on new built projects, refurbishments, fit outs, and construction management.
Talking about plans for taking up overseas projects, Somanna says, “There are Indian companies working abroad, and we are also considering such opportunities. However, we want to first build a name for ourselves pan India and then consider overseas opportunities. It's a billion dollar industry.”
At present, Blue Oak has an office in Vasanth Nagar, Bengaluru, but Somanna spends more time in offices on-site at project locations.