credai magazine

IssueOctoberNovemberDecember2010

Quarterly in house magazine of CREDAI National

HOw DO we strategIze tO

prOvIDe HOmes fOr all

Improving Urban HousingCover Story

- Mukta Naik

- Anil Parameswaran Nair

BetweeNa rOcka sOft place

&

- Akash Deep Jyoti

creatINg symBIOtIc

relatIONsHIps

Office real estate -

creatINg symBIOtIc

relatIONsHIps


- Akash Deep Jyoti

Bluegold- Vivek Menon


Dear members,

Our constant endeavor has been to add new and

valuable content to the magazine on a continuous

basis for the benefit of our members. Hope you

have appreciated the articles on Management and

Spiritual aspects starting from the last issue. This

issue has an article from one of the most respected

brand consultants of the country Mr Harish Bijoor

discussing marketing strategies. You will also have

another piece from Mr. Anil Parameshwaran Nair

who himself is an executive editor of the UBm

India Magazine “Property World”. This issue also

has a bonus - as against one article by a Banker

every issue, we have contributions from 2 leading

Bankers – one on ‘base rate’ and another on ‘future

opportunities of Real Estate’.

Research Organizations and Newspapers have once again started predicting correction in Real Estate prices.

Such predictions can bring about sluggishness. I am not sure how far these reports are correct. On one hand

IT sector is booming again, millions and millions of sq ft of commercial space has been absorbed by IT and

other sectors during this year, IPP and Core sectors have shown better results during the 2nd quarter, RBI has

suggested that the banks should increase deposit rates to encourage savings and to reduce lending rates to

encourage investments, campus selections are back again, hiring by all the sectors is in full swing, income

levels have gone up, consumption seems to have picked up rapidly, the malls are brimming with activity again.

Sum and substance is that the overall atmosphere is vibrant. When the country is showing all round growth

and prosperity, I do not know how Real Estate can move in the opposite direction.

Union Government is targeting an aspirational GDP growth. Support to Real Estate can ensure that the country

kisses this magic figure of 9% growth. If you want to sell a pin you need Real Estate, if you want to sell an

elephant you need Real Estate, if you want to create jobs you need Real Estate, if you want to create infrastructure

you need Real Estate, you need Real Estate for every activity – small or big. Therefore the basic “raw material”

for the growth of the GDP is Real Estate. As such the Real Estate deserves support at the supply side. It is hoped

that RBI and the Government of India take urgent and adequate steps in this regard.

regards,

a Balakrishna Hegde,

editor

the editor is the managing Director of chartered Housing, Bangalore and past president of

CREDAI - Karnataka.

Dear friends,

at the time of writing this, our nation is in

the midst of a number of scams : 2g, cwg,

the Adarsh building plus a number of other

land related issues looming on the horizon,

threatening to join the list.

Politicians are, by the common people, presumed

to be guilty unless proven innocent.

All this is very disheartening and is a matter

of great concern.

We, who are in the business of Real Estate development are vulnerable to many of the ills

that plague players in a ‘License Raj’ – namely corruption and coercion.

It is in our long term interest to push for a Regulatory Act that make Developers plus the

authorities accountable for their actions (or inactions). It is also in our interest to adopt and

implement our code of conduct - in letter and spirit. Not doing these things will be a clear

declaration of being short sighted.

Through CREDAI, we need to make many positive changes in our industry and also force

changes in others – Should we act? Will we act? What is the way forward?

regards,

kumar gera

chairman

Dear friends,

The Indian Real Estate Sector is witnessing a metamorphosis. The

sector, which was grossly neglected, is now taking giant strides

and is all set to dominate the growth curve of the country. And

as our economy grows, the aspirations of the new age nation

grows even faster.

Providing “Housing for All” has become the mandate not only

for the government, but for all of us who are engaged in the

development of this core sector. The moot question that needs

to be answered is how do we achieve this mandate? creDaI

is of the firm view that all stake-holders need to work together

to achieve and fulfill this dream. With this end in view, we, at

creDaI, have organized the 10th NatcON at New Delhi, in

which all the stake-holders, namely the Ministries of Housing,

Urban Development and Finance, will deliberate on what needs to be done. The convention has been aptly

titled as “Housing for All – Working Together”.

Radical policy initiatives are required to be taken. Be it providing finance for creating infrastructure, motivating

the State Governments to frame effective policies for the development of housing, redevelopment of slums or

setting into motion policies by which new townships can be created with the greatest speed. The task, we all

realize, is not easy. We have to be very firm in our resolve, we need to be bold in our approach, we need not

be afraid to think out of the box.

A report published by McKinsey has assessed that the migration to our cities is growing exponentially. India’s

urban population is expected to soar from 340 million in 2008 to 590 million in 2030 and this urban

expansion will happen at a speed quite unlike anything India has seen before. MGI estimates that India needs

to invest $1.2 trillion just in capital expenditure in its cities over the next 20 years. These figures are startling.

It is important for us all to wake up and face the challenge with grit and determination. We shall endeavor to

draw and focus the attention of the Government to play a decisive role in bringing the various wings of the

government together in a single platform to build a strong sustainable and vital infrastructure to support the

growth of satellite townships.

We, friends, have a very substantive role to play, and in the process of expanding our businesses we will be

able to build the very foundation of our great nation. I call upon my fellow developers to stand united in our

resolve to build an India in which we would all be proud to live, with social harmony and respect for our fellow

brethren.

warm regards,

santosh k rungta

president, creDaI

Let us together make India Truly Green!

- Syed Mohamed Beary 12

Recognition 20

NSDC- BANGALORE INITIATIVE

- Suresh Hari 36

Are you Future-Ready?

5 Steps to Building an “Information-Edge” In Real Estate

- Prashant Das, Divyanshu Sharma 38

Service tax -

Realty players caught between Writs and the Department

- S Sivakumar 46

Letters to Editor 55

17Neat INDIa

- Umar Teekay

HOw DO we strategIze tO

prOvIDe HOmes fOr all

Improving Urban

Housing

Cover Story

- Mukta Naik3028

- Akash Deep Jyoti

creatINg symBIOtIc

relatIONsHIps


an egg!three chickens&

19an egg!three chickens&

- Harish Bijoor

New Base Rate System Of Banks- Rathnakar Hegde

24

a lessonHumilityin

professional’s Quote- Subroto Bagchi

1515

editor

A. Balakrishna Hegde

editorial Board

Irfan Razack

Ranjit Naiknavare

Pradeep Jain

Niranjan Hiranandani

Dharmesh Jain

Harsh Patodia

Uzma Irfan

G P Savlani

Design & layout

GAAP Communications Pvt. Ltd.

Email: [email protected]

Printing

Jwalamukhi Mudranalaya Pvt. Ltd.

Please send in your feedback,

contributions and advertising queries to :

GP Savlani,

Resident Director,

Confederation of Real Estate Developers’

Associations of India

CREDAI - National Secretariat

703, Ansal Bhawan,

16, K.G. Marg,

New Delhi - 110001

Ph: 011- 43126262, 43126200

Fax - 011- 43126211

Email: [email protected]

Website : www.credai.org

Inhouse Magazine for Private Circulation.

Not for sale

- Rathnakar Hegde

fUtUre OppOrtUNItIes & BaNk fUNDINg

real estate –

swamI sUkHaBODHaNaNDaOf prasaNNa trUst

- Swami Sukhabodhananda

Bluegold

- Vivek Menon21


BetweeNa rOcka sOft place

&41

44

tHe aNtaND Its

pHIlOsOpHy50

let us together make

India Truly Green!

ndia’s population is projected to be 1.26

billion by the year 2016 and it is expected

to overtake China to be the most populous

country by 2050. Furthermore around 40

crore people are estimated to migrate from rural areas to

urban centres. It is therefore imperative that India plans for

high economic growth in all sectors. Such growth will leave

behind large carbon footprint and green house gases. Another

alarming factor to note is that human consumption of Natural

Resources has doubled in last less than 50 years and presently

we outstrip what the Earth can provide by more than half. Even

If we continue to consume at the present rates, we would need

two Earths by 2030. Vast majority of world population does

not enjoy a fair standard of living while European & American

countries consume far more than their due share of world’s

natural resources. If the developing world were to maintain

a living standard of European countries, we would need two

I

Editor’s BoxAmazing effort by Indian Green Building Council that should

inspire all of us to do our bit and at the end of the day it’s

a win-win both for Developers and for Mother Earth.

- Syed Mohamed Beary

and a half earths, while

we would need six and

a half earths to maintain

the living standard of

U.S.A. To negate this

and in order to facilitate

growth without impairing

the habi tat we have

to conserve resources,

recycle and leave the least

ecological footprint.

the indian Green Building council

(iGBc), a part of cii has taken giant

strides and is successfully leading the

Green building movement in India.

iGBc is consciously striving to teach &

inculcate ‘Green practices’ and believes that its success lies

in changing trends and mind sets to make ‘Green Practices

- a way of life’. Its vision is to sensitize key stakeholders to

embrace green and pave way for India to become a Global

C r e d a i i s s u e - O c t o b e r - N o v e m b e r - d e c e m b e r - 2 0 1 012

leader in Green buildings. To achieve this, it aims to champion

a grass root movement and bring ‘Green sustainability’ to

the Indian mainstream by enlisting members from every walk of

life to participate in various green initiatives and simultaneously

marshal widespread dissemination and awareness campaigns

through local chapters spread across India. IGBC has come a

long way in its endeavour with creditable achievements (some

of which are enlisted below) to place India as a world leader

of Green Building.

IGBC’s achievements & leadership in India is commendable.

From just 1 green building in 2001 measuring a mere 20000

sft, its efforts have helped to remarkably raise the figure to

765 green buildings of over 465 milllion sft. In addition to

the same in the last 9 yrs it has also introduced around 150

varied green building products and equipment and enrolled

over 1046 members (including 90 founding members). Not

only this, it has also successfully made an inroad in Govt.

circles with 33 green buildings of 6.38 million sft.

Furthermore IGBC has launched following rating systems to

suit different asset class:

• IGBC Green Homes

• IGBC Green Factory Buildings

• IGBC Green SEZs (Jointly with Ministry of Commerce &

Industry)

• LEED India Nc (New construction)

• LEED India CS (Core & Shell)

A host of other programmes are on its anvil and IGBC

is working on initiating the following shortly:

n IgBc green cities

n IgBc green schools

n IGBC Existing Buildings (Retrofit)

n IGBC Landscape

to become more forceful and effective the council

needs Government & Industry collaboration and

People Participation. This could be achieved through

augmenting membership and impelling Govt.

partnership through legislation and by introducing

various incentive schemes and simultaneously

galvanizing Stakeholders i.e. Developers, Architects,

Product manufacturers, Corporates, Government

agencies, academia etc to embrace green

initiatives.

Going Green as a community means that we need to

be more responsible and proactive in protecting the earth’s

ecological balance. This environmental consciousness should

be present, whether we are dealing with government policies,

or industrial and economic activities, or in our daily living. On

a larger scale ultimate transformation can only come through

education; therefore we must also encourage and provide

our students with the knowledge, tools, and inspiration to

envision and aspire for a sustainable and peaceful world.

In this way, we would have built the foundations for a more

environmentally-conscious generation. The old adage

‘Waste not Want not’ advocates sustainability in simple

terms. ‘reduce, reuse, recycle’ should be the mantra of

our daily life.

In an enlightened era of global awakening to the need for

proliferating greenery and adopting green practices, IGBC is

a trendsetter and sets the pathway for a Green future. IGBC

beckons one and all to adopt Green practices and be its

ambassador for Green. Come join hands and partner with

IgBc to make India the forerunner of the green Building

Movement. To know more about IGBC and become a member

kindly log on to www.igbc.in

SYED MOHAMED BEARY is the firebrand chairman of IGBC,

Bangalore Chapter and also the C & MD, Bearys Group,

CREDAI Member.


ere is a lovely piece from a professional I have never met but like many of you, keeps in touch over the Internet. Dr. Ramana is a neuro-surgeon from Vizag and he has this absolutely humbling story to share.

“The ghat-road passing through deep jungles on the way from Koraput to Visakhapatnam (Vizag) is dotted with hamlets inhabited by tribal people living in harmony with nature. Medical facilities are not easily available unless they travel to the nearest town - sometimes to a primary health centers through forest paths carrying the sick on a make shift stretcher. Usually the literate among them or patients from small towns who have relatives at vizag come here for specialized treatment. This is how a family of four landed up at our hospital one night.

The father and mother were holding a thin boy of nineteen years in their rough, weather beaten arms. The younger sister was hiding behind the mother’s sari awed by the hospital’s bright lights. The troubled little group radiated innocence, pain and poverty. The boy was shifted to Neuro ICU immediately. He was unconscious for fifteen days and also malnourished due to vomiting and dehydration. Prior to becoming unconscious he was having headache and fever. The boy was diagnosed as having raised intra-cranial pressure. I called aside the boy’s father and spoke to him in Oriya. I told him that his son needed a CT Scan first and later he may require surgery.

The father asked me to go ahead with the treatment and not to worry about expenses, as he had brought five thousand rupees with him.

The answer grounded me. The expenses could run up to more than ten times the amount! I explained this to the father of the boy. We gave him the other option - of shifting him to the government general hospital for continuing treatment. The family members became annoyed at the suggestion and wept. They did not agree and I had to give up persuading them.

Giving up the persuasion trail, I requested the scan center to do free a CT scan of the brain. The scan confirmed hydrocephalus; a condition that required surgery. He needed a shunt tube to

H

Editor’s BoxOne becomes a professional more through the quality of

work he does than due to his qualification, is the essence

of this beautiful real life anectodote.

- Subroto Bagchi a lessonHumilityin

professional’s Quote

be put from the brain to the abdomen.

The hospital administration obliged to treat the patient in the general ward free of cost.

Doctors donated drugs the boy needed; other patient’s attendants and relatives helped them by giving them food and moral support in spite of language barrier.

The boy was operated upon and he made remarkable fast recovery. Even before a week passed, he was eating by himself and walking around the ward. He started gaining weight.

All these happenings gave me a real “feel good” within and appreciation from others.

But the patient’s father was stone-faced with no expression of happiness nor did he offer thanks. This attitude troubled me throughout their stay in the hospital. On the day of discharge I couldn’t resist asking him if he should be thankful to all us for putting his son back on his feet again and almost free of cost in a modern corporate hospital. He was surprised and asked why should he? The purpose of bringing him here was to have him cured - so why the thanks? If that was not the case, “Why would I have taken all the pains to shift him here?”, he asked me.

Then he told me that he had sold all the land he had for five thousand rupees, and for first time entered an unknown place. Other than his hamlet the only place he had ever visited is the weekly “haat” (open air market) near his village to sell the forest products he collected for the whole week. He wanted to save his child and that alone made him venture into a big city.

The halo around me crumbled.My contribution did not seem too much compared to what he was doing for his son.

after all this I felt some of the elation leaving me, but I still felt like laughing.“

subroto Bagchi is best known for co-founding mindtree in 1999, India’s most admired companies across industries. In 2008, Bagchi took on the role of Gardener at MindTree where he spends one-on-one time with the Top-100 leaders at MindTree to expand leadership capacity. Bagchi is on the Board of governors of the Indian Institute of management, Bangalore. Bagchi has authored three business best-sellers: The High Performance Entrepreneur, Go Kiss the World and The Professional as Penguin Portfolio books. Currently, he writes a column titled “Zen Garden” in Forbes India.


couple of months back I was in Delhi to attend

one of those ostentatious weddings. There

were four mega functions, three in Delhi’s

swanky hotels & one in the bride’s sprawling

mansion in Rohtak, Haryana. For the Rohtak do, we were

ferried from our Delhi Hotel in a fleet of Mercs & I had the

opportunity to travel with an American gentleman called Joe.

This was Joe’s first time in India & in the previous two days he

had only seen the better part of Delhi. Until we hit the road to

Haryana he seemed to have a wonderful image of India from

what he had seen up till then easily complimenting the Indian

IT juggernaut stories that he was fed with back home.

The three hour trip between Delhi & Rohtak was like a rude

shock to him. The filth & the squalor, the dust & the slush, the

aimless crowd & the wandering cattle, the dented buses &

unkempt shop fronts…the overall ugliness that kept hitting our

view with unfailing regularity was evidently too appalling for

his senses. He wanted to know if it was the same with rest of

India as well!!

If any of you have traveled on that road and also across

India, you probably would have replied that it is much worse;

except that we are so used to the mess that our senses have

become numb to it. It takes an occasional foreigner to wake

us up & bring it to focus. No denying the fact that India is a

huge mess.

Joe had another disturbing question- “I know you guys are

taking huge strides in technology & your economy is booming;

I have no doubt that you will be a developed country pretty

soon; but how are you going to clean up this mess?”

Indeed – how are we going to clean up this mess? The uncleared

garbage piles, the irresponsibly left behind construction debris,

the carelessly thrown trash, the ever increasing mounds of

a

Editor’s BoxSwanky India & Dirty India. Two distinctly different sides

of our country, are beautifully picturised in this article. The

author suggests the solution to bridge the two party is in the

hands of the Developer. So true.

Neat INDIa - Umar Teekay

plastic waste, the bowel

churning sight of spit

& human waste in the

middle of our cities, our

badly maintained public

transport & indisciplined

traffic, the haphazardly organized buildings & shabbily

maintained facades, the quagmire of cable mess that is

cluttering our sky-line, the garishly displayed publicity

materials, the unclean roads, the ugly public infrastructure, the

ever mushrooming slums, the smell, the stench, the pollution…

where does one begin? and who will take the initiative to set

this right?

I don’t think there is an easy answer to this. But there is no

harm in discussing some basics.

A very basic requirement of any cleanup drive is to arrest the

spread of filth. Primarily we must find ways & means to prevent

its continued generation. No doubt this is the responsibility of

every single Indian. But in a country where most citizens have

more pressing basic needs, it would be impossible to make

neat & tidy India their priority; not now, not for a couple of

decades! moreover, this is in the domain of habits and old

habits die hard. So obviously, one needs to think of some

doable initiatives that can be the responsibility of a chosen

few and in turn can shape a new Indian habit.

I am reminded of a simple granny’s rule– “Neatness begets

Neatness”. In other words, neatness in the surrounding quite

often induces neat habits. While it may be an Indian habit to

be irresponsible or indifferent in dealing with public spaces,

there is no denying the fact that the human brain is conditioned

to appreciate things that are neat & orderly.

An example that I can think of is- if you travel with our desi

cousins on a Southeast Asia tour, the very same people who

would spit paan & throw trash casually in India would suddenly

behave disciplined in Singapore & become the same

desi guys again the moment they reach Thailand

or Vietnam. I don’t think all of this has

to do with the legendary stringent


punitive measures that Singapore once had. I feel it has more

to do with the general neatness of the country that the mind

quickly appreciates and prevents one from disturbing.

Closer home, I have another encouraging example. Take

a look at Bangalore buildings of the pre nineties. Those

buildings, like anywhere in India, had less emphasis on the

common areas like staircases, lobbies etc. During the nineties,

thanks to the pioneering efforts of some architects and builders,

we started seeing jazzed up common areas with high-end

materials & finishes. And, it is now a recognized fact that with

these changes, there also has been a marked change in the

very same Bangaloreans’ age old habit of spitting in staircase

corners & dirtying the common areas of these buildings.

Keep it neat, and generally people will keep it that way is a

time tested truth. On the contrary, if a place is a mess, even

the most civic among us misbehave. If you travel extensively in

China, you will see the super-duper elevated 8-lane freeways

and most exits from them will lead you to the old economy-small

town-cluttered-roads. The same driver who was an embodiment

of super civic sense on the 8 lane will suddenly behave so

irresponsibly the moment he hits the small town roads. How

else would you explain this?

I am not sure my theory is absolutely right but I would like to

believe that it is, because in which case, there is some hope;

because between the government and some large builders a

lot of this can be taken care of. ‘Saying No to Ugliness’ can

be a national campaign, like Italy did some years back with

a fair degree of success. If governments continue to build

flyovers like the ones that we encounter on our way to the

Bangalore Airport, continue to erect road dividers that are a

visual affront, continue to make public buildings that are a

public shame, continue to ignore the post construction mess,

continue to overlook the need for clean wash rooms in public

places, continue to…well, do an endless list of things the way

they are doing now, it is meaningless to have any hopes.

And as for the builder community, haphazardly organized

buildings, irresponsibly disposed debris...here too, the list

is quite long. Umar Teekay heads Teekays group, which is into corporate

interior fit out across India. Besides designing and fitting out

work places for IT companies and corporates, Teekays is also

known for some of its projects for Govt institutions like NIC,

STPI, IIIT-B etc. which stand out for their non-sarkari, corporate-

class look and feel.

If the government agencies and the builder community can

join hands to spearhead a campaign that can result in visibly

distinct public spaces, we can probably hope for people to

follow suit and maybe, we will be able see a neat India faster

than we imagine. Added to this, if we can train and enroll

the teaching community to inculcate neat habits in our future

generation, it can be far reaching.

Incidentally neatness is a close companion of cleanliness.

Cleanliness invariably follows neatness. While cleanliness

is slightly abstract and difficult to enforce, neatness can

be ensured because it has a perceivable and appreciable

presence. That’s why, probably, it’s always ‘neat and clean’

and not the other way around. Like Green India, Neat India

should be an equally important campaign.

Incidentally, our American friend Joe was greatly impressed

with the opulence of the wedding in Delhi & Haryana. He

was particularly envious of the way an average rich man

gets pampered in India. Our host in Rohtak had a palatial

estate, a battery of uniformed drivers, a large contingent of

well groomed personal attendants and the likes. As long as

we were inside the venue, witnessing the gala rituals, Joe kept

appreciating the comfort that a rich man can afford in India,

which many of the rich in the United States can’t afford, what

with 42 dollars per hour wage bills! But when we came out

and hit the road back to Delhi, Joe’s envy vanished. This is

what he said, before he preferred to take a bumpy snooze

than get disturbed by the mess out side- “Irrespective of the

comfort that you can afford in private, you have to go through

this mess for most part of your waking life. Back home, I may

have to drive my own car, tend to my own gardens, cook my

own food, repair the leaking faucets myself, but when I go

out, I don’t have to meander my way through the mess and

negotiate through the chaos”

How true! The nation that has already arrived continues to

live in filth! How disgraceful!

Time we did some thing towards Neat India.


an egg!

n the several marketing summers I have lived,

fought, sweated and thrived, there is one

insight that has held me in good stead. This

is the insight of Integrity branding.

Integrity branding is all about saying the simple truths in your

brand communication process. Stick to the tone and tenor of

integrity and you can’t do no wrong!

Let me look at it in a manner of detailing the concept at hand.

The point is simple. All consumers are essentially truth seeking

animals. Yes, all of us lie in some small manner or the other.

These are really the small lies that make the fabric of our

modern day lives. Small lies that ward off the inconvenience

of a lie-less society.

Despite all these small lies, we are essentially truth seeking as

consumers. When you buy a toothpaste, you expect honesty

out of the entire exercise. The consumer-brand interaction

process is a relationship. A relationship quite like the many

relationships we go through in our social lives.

When you get into a relationship with a member of the

opposite sex, or let me be politically correct and say member

of the same sex even, you expect just one primary thing out

of the relationship. The truth. There is no relationship you get

into expecting dishonesty and the lack of integrity.

Very simply put, consumers get into brand relationships based

on the expectation of the truth. But does she get it? And how

much of it? And how frequently so?

My belief is that the brand that offers the most of the truth

most of the time in this continuous relationship is the one that

succeeds. The brand that fails on this count is an utter failure

right away, or on the path of a self-fulfilling prophesy of doom

round the corner.

I

Editor’s BoxOne short article ‘shows’ us the marketing ‘tool’ that all of us

have been looking for ever since we started selling.

three chickens&

- Harish Bijoor

let me illustrate this with

an example. Let me choose

my favorite gourmet table

bird for this example, the

chicken! let me take three

of them.

There are really three

chickens in our marketing

lives. And remember, all of us are marketing people, since

there are only two kinds of people in the world. The “marketing

person”, who markets to others. And the “marketed-to person”

at the other end!

Imagine three chickens out there. Each of the chickens is a

manufacturer and a marketer. Each of the chickens has done

something they are very good at. Each has laid an egg. And

each of the eggs looks alike.

Each of the marketer chickens takes a different path to market

their respective eggs.

There is the first chicken, which I call the “Shy chicken”. This

chicken looks at the egg it has laid and finds the product

quality to be all of 100. It then stands up, looks at the target

audience of potential consumers and whispers with a decibel

of shout that is at best 2 on a scale of 100.

This chicken’s whisper is heard by very few of those in the

target audience. Even those who hear of it, hear it as a faint

whisper. The promise offered by the whisper is just 2 on a

scale of 100. Those few who hear the whisper actually come

to see the egg, lured often by the under-shout that creates quite

a bit of mystery in the consumer at hand.

When the few consumers actually arrive to see the product,

there is great joy. The consumer expectation of 2 is rewarded


with a delivery of 100. The positive strokes offered in this

purchase is +98. The negative of this approach of course is the

fact that it scores very low on consumer awareness scores.

Look at the second chicken then. This is what I call the “honest

chicken”. This chicken looks at the target audience and shouts

out the product offer with a shout level of decibel 100. The

shout quality is equal to that of product quality.

The pros of this approach is apparent. Awareness scores are

good. Everyone has heard that the chicken has an egg to offer.

But there is a problem here. Consumers do not necessarily

respect honest chickens. When the consumer has heard the full

story, he does not want to see the egg at all. There is just no

mystery. Only a few arrive to see the egg, and these are the

only ones who actually need an egg. And when they arrive,

they expect 100 and get 100. No positive strokes and no

negative. The potential of a buy is low as well.

The third chicken is waiting. This chicken finds the

competition hot. This chicken gets onto the rooftop and

shouts with a decibel value 400. The darned chicken

has laid an egg but shouts as if it has laid an asteroid!

The awareness scores are terrific. The entire town lands

up to look at the phenomena. The expectation is 400.

The delivery is 100. There is a negative stroke quotient

of -300. And nobody buys!

All these three chickens and their respective approaches are

out there for the marketer to choose from. Each of us makes

this choice every living day.There are variations available in

the gamut of 0-400 in terms of shout levels. Different marketers

choose differently.

But guess what, the chicken that shouts with a decibel of 80

is the one that succeeds the most. Also, after 400 what? Back

to a decibel of 2. In a market where everyone is shouting at

400, the one chicken which whispers the least is the one that

is heard and trusted the most.

Think about it. Which chicken are you as a marketer? And

which chicken are you as a working person? And which

chicken are you as a person living in a family of your own?

The author is a brand-domain specialist and CEO, Harish

Bijoor Consults Inc., a consulting practice with presence in

the markets of Hong Kong, Dubai, UK and India.

Email:[email protected]

ur member from creDaI karnataka,

Mr. M.R.Jaishankar of Brigade Group

was honored by Builders Association

of India, karnataka center during their

Annual Celebrations.

Mr. P.C.Mohan, Honorable Member of Parliament

did the honors in a glittering function. BAI Karnataka

Center deemed it fit to honor Mr. Jaishankar for his

‘dedicated service in improving the Construction

Industry and for creating World

class structures’ in Bangalore

and elsewhere. Mr. Balaveera

Reddy- former Vice Chancellor-

VTU, Mr. Chamaraja Reddy- Past

President & Trustee of BAI , Mr. Appi

Reddy- Vice President- BAI and Mr.

K.Sridhar- Chairman, BAI Karnataka

center were present. The speakers

appreciated the effort of Mr.

Jaishankar in creating exemplary

structures and wished many more

members of the fraternity join his

O

re

cO

gN

ItIO

N

dedication. While thanking the Association for the honor

bestowed on him, Mr. Jaishankar requested fellow builders to

look forward to take more challenges and work with increased

dedication to complete structures that will stand the test of time

and with superior quality. He compared the efficiency and

quality of work turned out elsewhere in the world. His specific

reference to china, where work turnout and the maintenance

of infrastructure, was a noteworthy point.

S.Suresh Hari


ith twenty percent of the world’s population and six percent of the world’s fresh water resources, India’s current water management policy seems ill equipped to address this

fundamental problem. In a country like ours which is blessed with significant sources of water both in terms of the melted ice from snow capped peaks and adequate precipitation, the solution seems to hinge more on water management than in addressing the statistic. A search in “Google” reveals innumerable theses that have been written by various governmental and non governmental agencies on water management. Pundits and professors alike have suggested various doomsday scenarios to wake up both the polity and bureaucracy to this impending problem. While the ink has dried on many a report, little seems to have been done to address this issue. Every year, drought stricken areas across the country cry for as much help as flood inflicted areas. For once rural and urban India seems to wake up to the same dilemma.

While Dr. K.L. Rao’s proposal back in 1972 to link the Ganga to the Cauvery and Captain Dastur’s proposal in 1977 may have had certain inherent flaws in them, the intent to interlink the rivers through a garland canal has found favor among many a scholar including President APJ Abdul Kalam. While one might argue that hyperopia has never been a virtue of our polity and expecting them to invest so much and see such a gigantic project through to completion may be wishful thinking, the solution should be driven by the fundamental right to life guaranteed under our constitution. The project, if properly planned and executed could kill two birds with one stone.

Coming to the urban scenario, paying fourteen to forty rupees for a sip of aqua addresses more of a fashion statement than a fundamental necessity. “Mineral water or regular” from a white gloved steward says it all about our urban water supply system. While we have looked to the River Cauvery to grant us the elixir of life in Bangalore, we have ignored the huge potential in our own backyards. The garden city (Bangalore) of lakes has been reduced to a city of cesspools, so is the story of most

w

Editor’s BoxMuch has been written about solution to water problems but

has it even served as a wake-up call asks the author.


of our cities in the country. the obvious now stated, where can we find solace? An interceptor sewerage system, for starters, would ensure that all the sewage generated finds its way into a sewage treatment plan (STP). An effective solid waste management system through a global tender, that has eluded the urban dweller thanks to the wrangling within the local municipality, would ensure an eco friendly approach and minimize contaminated landfills. Both of the above, implemented effectively, would keep our storm drains and hence lakes clear of contaminated effluent. As an example, the “slaughter house” at Tannery Road in Bangalore currently spews blood and fecal matter that finds its way into Ulsoor Lake. Sustained efforts from many local groups to shut down the abattoir and/or install an effluent treatment plant at the site have been met with litigation and false promises. Similar situations may be true to other cities also. In the United States, all waterways like our very own “Rajakaluves”, come under the jurisdiction of the US Army Corps of Engineers. This guarantees that no one ever encroaches or contaminates these lifelines.

Most of our country is blessed with adequate rainfall barring the western deserts. While the urban sprawl has depleted our ground water resources, it is time for us to establish aquifer recharge zones, or protected green cover, where all development is prohibited, to ensure adequate infiltration. A storm water pollution prevention and flood mitigation plan for every project that disturbs virgin land, would ensure that urban areas stay free of flooding while construction does not clog or contaminate our storm systems. In the absence of a strong policy to regulate and protect our water systems and the will to act, we may end up contaminating this precious resource that we as a country have been blessed with.

Vivek Menon, P.E., has been an advisor to various governments on public policy related to infrastructure and water management and is currently an infrastructure subcommittee member at the Center for infrastructure, Sustainable Transportation and Urban Planning (CiSTUP) at the Indian Institute of Science.

We had printed the following article by the above author Sri. Vivek Menon in the last issue but a portion went missing while designing. We are reprinting the same with my sincere apologies to the author for the printing error.

editor


t did not have to take the loss of an innocent girl’s life for the engineering world to wake up to the crude reality of mediocrity in the practice of engineering. The compound wall built by a local contractor in Bengaluru

for a government agency, came crashing down during a heavy downpour, claiming an 18 year old victim. While the judicial process plays out in delivering justice to the victims of the family, the engineering community is at a loss for answers, not as to what caused the collapse but how to prevent such mishaps in the future. While private players in the real estate space have chosen the best and brightest to plan, design and build their edifices for them, what has suffered the wrath of incompetence are works in the public domain. Most of us who have traveled abroad have come back starry eyed and bewildered by the progress in the construction of civil infrastructure. Whether it is the chunnel connecting England to the rest of Europe or the Big Dig in Boston, where all the ugly interchanges in downtown Boston were taken underground to make way for green lung spaces, we’ve all been amazed at the quality of workmanship and the adherence to the best practices in construction.

Now zoom back to our very own Bengaluru. Other than the International airport that was built through a public private partnership, most of our modern public infrastructure is not even worth a mention. The magic boxes, fondly referred to by the engineering community as “tragic boxes” or “match boxes”, with built in obsolescence will make most civil engineers hang their heads in shame. Signal free corridors that are an unknown concept for most urban arterials, collectors or distributors, in the rest of the world, are hailed here as the next best idea to sliced bread. The Richmond road flyover, which for the longest time had the dubious distinction of being the only flyover in the world with an intersection until recently, threatened to find its way into the Guinness book of world records. Facts stated, so what’s new, one might ask.

India is today growing at a brisk pace of close to ten percent year on year, with infrastructure spending exceeding over one Lakh crores, by conservative estimates. Currently, the onus of planning, spending and monitoring the outcomes of this initiative rests squarely with governmental bodies at the local, state and central level. The apathy and indifference towards delivering a product that one can be proud of is palpable even to the untrained eye. The Jawaharlal Nehru National Urban Renewal Mission (JNNURM) aimed at closing the disparities in spending capabilities between various Metros and committed a sizeable chunk from the national exchequer to the state and local bodies. For a country that at one time was looked at as a third world economy with foreign exchange reserves languishing at USD two billion, India has come a long way to becoming the fourth largest economy in terms of purchasing power parity. The dearth of financial resources is a thing of the past but the way we are

I

towardsa Better Tomorrow...regulating the practice of engineering

spending these resources is questionable. And that brings us to the crux of the challenge; do we have a regulatory mechanism to ensure that our valuable financial resources are well spent in building for our future generations.

As planners, designers, engineers and constructors our mandate is to be the builders to the Nation. It is hence our responsibility in ensuring that the best practices come to bear on our infrastructure. Quality control, which is such an integral part of any effort, is very often neglected. The timeliness of the effort, referred to in engineering parlance as a “Schedule” is never adhered to. The time value of money is a forgotten concept and most projects see huge cost escalations and overruns. The cost of these misadventures is hence borne by the exchequer or taxpayer ultimately. Without a mechanism to affix responsibility or accountability, the result is an unplanned product of poor quality delayed beyond expectations. That brings me to the next question. How does the rest of the world do it?

To answer that, I would like to cite the example of the system of engineering practice in America. The Engineering Practice Act, that came into being to regulate the practice of engineering and affix responsibility and accountability has done a stellar job in ensuring that works done in the public domain are par excellence. Under the Act, only duly licensed persons may legally perform, or offer to perform engineering services for the public. Furthermore, public works must be designed and constructed under the direct supervision of a licensed professional engineer. The terms “P.E.” or “professional engineer” can only be used by persons who are currently licensed and anyone who violates these parameters is subject to legal penalties. To be eligible for a professional engineering license, engineers must have achieved certain professional milestones. They must have earned an engineering education, performed certain levels of engineering work experience, and passed specific examinations. To keep their license current, engineers are required to complete a certain number of continuing education credits annually.

One need not look very far back to see that we, as a people, had the power to build monuments of uncompromising magnificence. Whether it is the temples of Hampi, the Krishna Raja Sagar Dam on the Kaveri or the Vidhana Soudha in Bengaluru, they stand tall as marvels of our achievements in the field of civil engineering. However, the new crop leaves much to be desired. When pride is lost in the quagmire of deceit, corruption and indifference, the rule of law has to step up. In the absence of self enforcement, the only way to prevent degeneration of value systems is to raise the standard in the face of mediocrity. The key however, will be to regulate the practice without letting the evils of present day society such as corruption override our noble intentions. For that will only lead to a greater “License Raj”.

Lest this initiative fall on deaf ears, the idea has been presented at one of India’s premier institutions with the hope of getting the best and the brightest to formulate the act and enforce it in the true spirit. Hopefully, this will someday help us restore the glory of this halcyon nation that boasts some of the greatest engineering marvels that mankind has ever known.


acKGrOUND. Why Benchmark Prime lending

rate (BPlr or benchmark Plr) did not work?

Before introducing the base rate system, banks used a rate

system called Prime Lending Rate (PLR) to set their lending

rates. The problem with this system was, banks manipulated

their plr to a lower level to offer discounted lending rates for

the borrowers. It may cause loss for banks if they offer loan

with much cheaper price. The real intention of the RBI is to

make banking system much stronger after the global financial

crisis.

The PLR was introduced in 2003 to ensure that banks publish

their lending rates based on their true cost of funds. All lending

was expected to be at or above the BPLR. This was a fair

expectation, as you can’t expect a bank to lend below its cost

of funds. However, over a period of time, competition forced

many banks to do exactly the opposite.

Banks stopped adjusting the BPLR when the interest rates went

down – therefore, the BPLR lost its relevance as a rate reflecting

the cost of funds for banks. And when the RBI allowed lending

at below Bplr rates, the banks started giving out most of their

loans below the plr / Bplr (also known as sub-plr or sub-Bplr

loans). In fact, the loans were priced as “BPLR minus 200 basis

points”! (That is, 2% less than the BPLR)

Base rate system provides more transparency on setting the

rates. Each bank has some criteria to set their base rates. Base

Rate System is for the banks to set a level of minimum interest

rates charged while giving out loans. This Base Rate System

has many advantages over the older method of Prime Lending

Rate (PLR). One advantage is, in the Prime Lending Rate (PLR),

B

Editor’s BoxAll that we all wanted to know about Base Rate System

is explained lucidly in this piece by one of the most

knowledgeable, dynamic and respected Bankers.

New Base rate system Of BaNks

one could sanction the

loan for lower price for

the preferred customer or

the corporate bodies and

retail customers may have

to pay more for the same

type of loans. In the base

rate system, there will not

be much variance on the

loans.

However, the base rate

system will not be applicable for the following type of loans:

• Agricultural Loans

• Loans given to own employees

• Loans against deposit

• Export Credit

Base rate system is arrived at by taking into account, the cost

of deposits and cost of keeping aside cash to meet CLR and

SLR. It is convenient for banks to adjust the lending rates after

the changes on policy rates by the RBI.

the new “Base rate” system

Due to these limitations, a new “base rate” system is being

implemented from 1st July 2010. This new framework would

have two major benefits:

1. Banks would be required to revise the base rate every

quarter.

2. Banks would not be allowed to lend below the base rate

What happens to the existing loans?

the reserve Bank of India (rBI) has given out guidelines which

say that customers of existing loans (based on BPLR) should

be given an option to switch to the new base rate system

without any fee.

Even for banks, maintaining two systems of PLR and base

rate would be administratively difficult – so you can expect

the banks to encourage

you to shift to the

base rate system.

But the golden

- Rathnakar Hegde


question is – will the rate of interest on your loan change if you

switch?

No, it won’t – only the method of calculating the rate would

change. And you would get a benefit immediately if the base

rate is revised downwards (remember – base rate needs to be

revised every quarter).

example:

Let’s say you have taken a floating rate home loan which is at

BPLR minus 200 basis points. (2% less than the BPLR). Right

now, the BPLR is 12%, so your loan is at 10%.

As you would have observed, if the interest rates go down,

the bank does not necessarily reduce the BPLR. So, even if

the overall interest rates go down by 0.5%, your loan would

remain at 10%. Yes, it is unfair, but that’s the reality today.

When you change to the base rate system, the current rate for

your loan would remain the same. So, if the bank’s base rate

is say 7.5%, your loan would be marked as “base rate plus

250 basis points” (or, 2.5% above the base rate). So, there

would be no immediate change for you.

However – and this is important – what would change is how

a change in interest rate is passed on to you. Since banks

have to revise the base rate every quarter, any change in

the interest rate – either downwards or upwards – would be

passed on to you in a maximum of 3 months.

This is a big leap forward, considering the fact that till now;

most floating rate loan customers have only seen an upward

movement in their interest rates.

transparency on Base rate system

Another advantage of base rate system is transparency on

calculation method to arrive at the base rates. Every bank has

to declare to the public how they have calculated the base

rates. For example, SBI has calculated the base rate by taking

into account past six month deposits.

Under the new system, banks have been asked by the RBI to

ensure uniformity and transparency in calculating the base

rate, which is the floor rate for all loans.

each bank will calculate its own base rate taking into account

the cost of funds, possible loss incurred in complying with

the reserve requirements, administrative costs and the profit

element. The actual lending rate to the borrower will be

higher.

To the base rate will be added borrower-specific charges,

product specific operating costs, and premium on account of

credit risks and tenure.

The base rate will set the floor for interest rates on all types

of loans. There would be very few exceptions. Staff loans,

loans under the differential interest rate scheme, advances

against fixed deposits and a few other categories will be

charged interest rates that are quite independent of the base

rate mechanism.

It is this near universal coverage coupled with the transparency

in its computation that is supposed to give the base rate system

an edge over the BPLR (Bench mark prime lending rate). Will

it deliver what the old system could not?

Knowledgeable observers have pointed that the base rate is

actually a resurrection of a system that was in vogue in the

early 1990s. The Prime Lending Rate (PLR) system was diluted

over time as many types of borrowers sought to be exempted

from its review. By 2001 it had become just a reference rate.

The rate charged by banks had very little nexus with the PLR.

In fact, a large proportions of loans have till recently been

made at below PLR rates. Sub-PLR loans in India have very

little connection with loans of the same nomenclature that were

wildly popular in the U.S. Risky lending on a massive scale to

less than credit worthy borrowers was one of the factors that

brought about the collapse of the financial sector in the U.S.

Base rate shall include all those elements of the lending rates

that are common across all categories of borrowers. While

each bank may decide its own Base Rate, some of the criteria

that could go into the determination of the Base rate are:

1. Cost of deposits

2. Adjustment for negative carry in respect of CRR and

SLR.

3. Unallocatable overhead cost for banks such as aggregate

employee compensation relating to administrative functions

in corporate office, directors’ and auditors’ fees, legal

and premises expenses, depreciation, cost of printing

and stationery, expenses incurred on communication and

advertising, IT spending, and cost incurred towards deposit

insurance

4. Profit margin.

5. Return on Net Worth


Why do we need a base / benchmark rate as a reference?

Each bank would have a different cost for the funds – in simple

words, each bank would pay different rate of interest to its

depositors. For example, State Bank of India (SBI) might pay

6% interest on a 1 year FD, whereas a cooperative bank might

pay 9% for the same tenure.

Therefore, the rate at which the banks lend the money would

also be different for different banks. But how would the public

know what the normal lending rate of the bank is?

This is the reason why a reference rate is required. It is a

rate that is derived based on the actual cost of funds to the

bank. This is the rate based on which all loans of a bank are

supposed to be priced.

Bank Name Base rate%

STATE BANK OF INDIA 7.50

HDFC 7.25

ICICI 7.50

PUNJAB NATIONAL BANK 8.00

UNION BANK OF INDIA 8.00

CENTRAL BANK OF INDIA 8.00

AXIS BANK 7.50

ALLAHABAD BANK 8.00

ANDHRA BANK 8.25

BANK OF BARODA 8.00

BANK OF INDIA 8.00

BANK OF MAHARASHTRA 8.25

CANARA BANK 8.00

CORPORATION BANK 7.75

DENA BANK 8.25

INDIAN BANK 8.00

INDIAN OVERSEAS BANK 8.25

ORIENTAL BANK OF COMMERCE 8.00

SYNDICATE BANK 8.25

UcO BaNk 8.00

VIJAYA BANK 8.25

IDBI BaNk 8.00

Base Rates are different for different banks. The following table presents the base rates announced for some of the Leading Banks.

calculation of final rate of Interest

Every bank calculates their Final Rate of Interest with some

points in it. Amongst all those points “Base Rate” plays

Vital Role. Base rate is different for ‘Rated’ & “Non-Rated”

organizations. The calculation is as under:

Base Rate (As per Bank) 8.00%

Add: Risk Premium 0.15

Tenor Premium 0.25

Product Cost 1.75

Final Rate of Interest 10.15%

risk premium is calculated on various ratings of the said

organization. It represents opportunity cost of the regulatory

capital allocated against the loan offered and expected

loss due to the risk of default. It considers of Rating of Bank,

External ratings. Incase there is any difference between the

internal and external rating, the risk premium as applicable

to internal rating only will be reckoned for arriving at the final

rate of interest.

Tenor premium represents cost of outlay of funds for a specified

tenor. Premium is also decided by the concerned banks.

Product cost represents allocable facility handling cost incurred

at branch level.

cONclUsION:

Whether Base Rate is beneficial?

Base Rate is decided by Banks. Also Base Rate is subject

to change at quarterly intervals. Also, it goes hand in hand

with different terms like risk premium, tenor premium and

Product Costs. Base Rate is certainly beneficial to strong

companies and for those who maintain high financial

and credit discipline who will have the natural strength to

negotiate the cost of borrowing

and obtain loans at base or

slightly above base rate.

Mr. Rathnakar Hegde is

the former Executive

Director of Union Bank

of India.


evelopers, occupiers and investors are three

critical components of the office real estate

segment. While developers promote the property

and give it on lease, occupiers use and maintain

it, and investors fund it for maximum returns. It is important

that office property provide sustainable returns to occupiers, if

developers are to ensure maximum occupancy, and investors can

maximise returns. In this opinion piece, we seek to understand

what the occupier expects from office property.

The occupier’s primary expectation from an office building is

good quality construction at a reasonable cost, and within the

targeted timeline. Construction quality not only means structural

safety against natural disasters, but also usage of innovative

construction materials and technologies. The building should

be resilient to extreme environmental conditions, earthquakes,

floods and other catastrophes. Construction materials and

technologies should ensure structural resilience against cracks

and damages. Occupiers will wish to ensure that the building

facilitates smooth business operations at a maximum value for

money. If the building is still under construction, occupiers will

expect it to be completed and handed over on time to ensure

that their overall business plans are not affected.

D

Editor’s BoxArticle deals with the expectations of an occupier and

investor from the Developer of a commercial building. Simple

language without jargons is the highlight of this writing.

- Akash Deep Jyoti

the bu i ld ing shou ld

have a high degree of

adaptability to ensure that

it not only meets occupiers’

current requirements but

also future needs. The

business requirements

can change over time

due to managemen t

reorganisation, personnel

shifts, changes in business

models, or the advent of technological innovation. Occupiers

will want to retain flexibility to ensure alternative ways of utilising

building space. Adaptability in the building will ensure a long,

useful life for it, and maximise returns on initial investment.

The building should have high efficiency in terms of space and

energy. Space efficiency implies optimal utilisation of horizontal

and vertical areas. Energy efficiency means optimal utilisation

of power, and maximum use of natural light and heat. It can be

achieved through adoption of bioclimatic architectural principles

responsive to the climate of the particular location, use of

construction materials with low embodied energy, incorporation

of efficient structural design and effective utilisation of renewable

energy sources to power the building. The individualised

climate controls should permit users to set their own, localised

temperature, ventilation rate, and air movement preferences.

The occupier expects the building to be ‘intelligent’ and well-

integrated. It should have a superior building management system

with tightly integrated mechanical as well as electrical systems

to enable control of the building’s security, high-speed networks

creatINg symBIOtIc

relatIONsHIps


creatINg symBIOtIc

relatIONsHIps



and power operations. It should deploy energy-saving controls

such as automatic switching-off of lights and air-conditioners in

vacant rooms through occupancy sensors. The security of the

building should be ensured through a card-access system and

sensor. The building should have a well-distributed, robust, and

flexible IT infrastructure, which allows technological access in

virtually the entire space.

the design of the building should ensure good light,

ventilation and natural environment. The building should

either provide a view of nature to occupants or an inner

courtyard with a view to nature. This would definitely

improve the employees’ concentration, efficiency and

health. The acoustics of the building must be designed

and integrated with the other architectural aspects and

furnishings of the office.


or the first time this year there was an

Exclusive “Indian Real Estate Pavilion”

by CREDAI Bengal in Banga Mela 2010

(MABA) from July 2nd - 4th, 2010 at

Sheraton Music City Hotel, Nashville, Tennessee, USA

and Banga Sammelan 2010 (NABC) from July 9th - 11th,

he Programme, Events and Fellowship committee of creDaI Bengal had organized an interactive session on ‘Implication of Service

Tax on Real Estate Industry’ by Ernst & Young on Thursday, 19th August 2010 at Bengal club for creDaI Bengal members.

The speakers from ‘Ernst & Young’ were as follows:

Mr. Bhaskar Thakkar: Associate Director

Mr. Amit Bhagat: Senior Manager

the discussion was about the various issues on Service Tax imposed by

f

t

MABA And nABC 2010 (ProPerty exhiBition in U.S.A)

rePort on ‘iMPliCAtion of ServiCe tAx on reAl eStAte indUStry’

ev

eN

t

2010 at Atlantic City, Convention Centre U.S.

CREDAI Bengal pavilion made a mark at MABA and NABC

2010 since this was also the first time proper stalls were

made for real estate pavilion which was standing out in

the large exhibition area of the auditorium

the Central Government in the current year’s union budget.

the session had a large attendance and the interaction between ‘Ernst & Young’ and the members was highly enlightening.

CredAi BengAl


finally, the building should have high sustainability levels in terms of environmental friendliness and ecological harmony. Most ongoing office building projects in India now target green building certification in this regard. The main objectives of sustainable design are to avoid resource depletion of energy, water, and materials; prevent adverse environmental impact; and create an environment that facilitates life that is comfortable, safe, and productive.

In other words, developers of office buildings need to be receptive to occupiers’ needs, and strive to create buildings that cater to the occupiers’ requirements. The extent to which developers are receptive to occupiers’ interests, and maximise returns for investors will be key determinants of demand and pricing of office buildings.

Mr. Akash Deep Jyoti, a realty expert with 15 years’ experience, is Head - Ratings, CRISIL Ltd

indings from two recent government surveys offer glimpses into the overall urban housing scenario in the nation, with special reference to slums. However, far more detailed city specific data is required if private real estate developers are to

prepare strategies to partner with local governments or non-profit organizations to prepare projects that build homes for lower income groups. Mukta Naik throws up some ideas on if and whether this is an opportunity for developers.

What with the Adarsh Society and the housing finance scam, housing has got more than its share of print column space this past fortnight. What that tells us, besides the politics and scandal, is that housing gets precious little media exposure otherwise compared to the huge part housing stocks and prices play in the evaluation of economic conditions in Europe and the United States. In fact, using housing as a barometer to gauge economic growth and predict economic trends is a sure sign of a mature economy.

In India, of course, the scenario is vastly different. Politically, we are not a federal system; yet states can choose to adopt, adapt and sometime ignore the policy decisions of the central government. The housing scenario is therefore very different from state to state, depending on the pressure on urban centres, the stability of the government and the buying power of the population.

Its clear that there is an acute shortage of housing in India’s urban centres (24.7 million, by government estimates) and that the majority of this shortage lies in the economically weaker and low-income group sections. It is also clear that it is impossible to address the problem of urban housing without more city-specific data and a detailed assessments of needs, not only for the dwelling units per se, but about the conditions required to live a decent life—amenities like water, power, sanitation, transport, access, health facilities, education and so on and so forth. Two recent government studies shed a considerable amount of light in this direction.

NssO findings

The National Sample Survey Office (NSSO) has recently released Report no. 535 titled ‘Housing Condition and Amenities in India, 2008-2009’ based on the household surveys conducted across the nation in its 65th round of data collection. Some of the findings pertaining to India’s urban areas are notable in the context of housing. Particularly, these results give considerable insight into the quality of life offered by India’s urban centres to the citizens.

FHOw DO we

strategIze tO prOvIDe HOmes

fOr all

Improving Urban Housing

Cover Story

financial indicators

• 63% of urban households live on owned premises and 30% of urban household live in hired dwellings. In fact, 5% of urban households reside in their employers’ premises!

• 92% of urban households live in pucca structures, 6% live in semi-pucca structures and 2% live in katcha structures.

• Average monthly rent of rented dwellings in urban areas is Rs 1149 as opposed to Rs 590 in rural areas.

The percentage of home ownership gives an idea of the tremendous pent-up demand in urban markets. If detailed data regarding the distribution of this data across specific cities were available, it would enable the creation of detailed market studies to facilitate the housing industry.

While the construction of homes appears to be overall good in the survey, this belies the large populations that live in slums that are largely impermanent structures highly prone to collapse in disasters like a fire, flood or earthquake. The data seems out of sync with reality.

Health-related indicators

• Urban households have a per capita floor area of 9.45 sq m and• Nearly 13% of urban households had a per capita floor

area of over 20 sq m.• 6% of urban households have katcha drainage, 15% have

no drainage!• 21% of urban households have no garbage disposal facility.• 6% of urban households have no direct opening to a road• 75% of urban households do not have access to drinking

water within their premises

- Mukta Naik


While the per capita availability of space is generous, the truth is that the disparity between high income and low-income households is increasing year on year. The conditions of overcrowding in slums and squatter settlements continues to impact the health of the city’s poorest residents and its base level workforce.

the conditions for drainage and garbage collection need drastic investments into the overall physical infrastructure of India’s urban areas. While these have been facilitated by government schemes like the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), these upgrades and the long-term operations and maintenance (O&M) of the city’s infrastructure require cities to invite private sector investment, participation and consequent benefits.

construction-related indicators

• 4% of urban households took up some form of home improvement/construction during the 365 days preceding the survey.

• Average cost per completed activity was Rs 58,000 in urban areas.

• 14% of these constructions related to a new building• 25% of these were financed from non-institutional entities,

while 15% were financed from institutional agencies

Both the high cost of construction, considering most of these were repair or improvement jobs, as well as the high percentage of dependence on informal sources of credit are alarming. They point to the unorganised situation of credit and construction in urban India.

findings of the slum committee

Recognising that the first hurdle in truly addressing the Committee of Slum Statistics/Census has been set up by the Ministry of Housing and Urban Poverty Alleviation.

The report sums up the data collected by the Registrar General of India (rgI) within the 2001 census, NssO and UN and then goes on to make its own estimates.

Slum population, as per the RGI, constitutes 5.1 % of the country’s total population and 18.5% of the urban population of India. In the 1743 cities studies, 52.4 million people living in 10.2 million households lived in slums. However, the UN pegs India’s slum population to be about 158.42 million people. NSSO reported yet another figure. The discrepancy in data is due to different definitions of slums used by all three organisations. Some of the fallouts of the lack of data has been disproportionate allocation of funds in JNNURM’s sub-missions. Clearly there was a need for detailed and coherent data using the same definition across the country and the above-named committee was set up.

However, there is value in the fact that actual survey-based slum data was collected in the 2001 Census. Using appropriate statistical techniques and based on census and NssO data, the committee has come up with an estimate of slum populations and the projections for years ahead.

Unsurprisingly, the states of Maharashtra and Uttar Pradesh are estimated to have the largest slum populations (18,151,071 and 10,878,336 respectively) for the year 2011. Tamil Nadu (8,644,892), West Bengal (8,546,755), Andhra Pradesh (8,188,022) and Madhya Pradesh (6,393,040) follow suit. Large states like Bihar and Rajasthan with lower urbanization

rates show relatively modest slum populations.

Clearly, the factors that determine the growth of slums are varied and complex. The next step would be to arrive at city-specific estimates that would help the planners as well as private developers interested in partnering with local governments to plan their strategies.

is there an opportunity for developers here?

At present, private sector real estate developers are focusing on the affordable housing segment, which largely addressed the needs of the middle class in Indian cities. The determinants of this type of housing is the cost of land, construction technology, materials used, density and house size and design. With consumers becoming savvier, developers are continuously challenged to be able to provide decent, aesthetically pleasing homes at affordable prices.

However, developers are yet to en-masse conquer the last bastion for urban housing—housing for the urban poor. This means that, in an ideal situation, developers should be able to partner with the local government or non-profit organizations in specific cities to prepare projects that provide homes that are viable alternatives to slum dwellers.

Is this a possibility? In the current frame of thinking, probably not. But with the pressure of meeting (or at least appearing to meet) the Millenium Development Goals (MDGs) set down by the UN and to which India is also a signatory, the government is waking up the fact that addressing the needs of the urban poor is a vital necessity if we are to avoid political, economic and diplomatic disaster!


reDaI tamil Nadu had as a csr Initiative joined hands with Habitat for Humanity an NGO concentrating on providing decent and affordable shelter to the needy and

had offered to sponsor 300 such units at 5 lakhs each by inviting its Members to come forward and sponsor at least 5 units each.

following this initiative and having embraced this opportunity with a spirit of compassion it only seemed befitting that on the occasion of World Habitat Day on October 4th ( as recognized as by the United Nations as a day of reflection on the basic right to adequate shelter for all and of the world’s collective responsibility for the future of the world habitat ), which marked the beginning of a week to advocate and educate the importance and the need for affordable housing with adequate sanitation for the marginalized, that credai tN do something noteworthy to promote the cause with the theme being “shelter for all’

Habitat for Humanity called for a unique Partnership with credai tN members in a drive to address the collective Responsibility of key Members/Stakeholders of the Industry in creating an equitable habitat where simple, safe and affordable shelter is made possible for approx. 315 million Indians who lack the means to a decent home. In response to this appeal to MDs and CEOs of our Member Organizations to participate in this drive of a day of grass roots house building activity by working

cCredAi tAMil nAdU & hABitAt for hUMAnity

cs

r

CredAi – tAMil nAdU

To this end, the Rajiv Awas Yojana (RAY) is being rolled out and several other inititiaves are in the offing. However, serious though the government may be addressing this monumental task, the truth is that the solutions lie in empowering local governments in several ways.

first, local government need to have the funds to invest in such projects. Then, they must be willing to partner with private sector players by putting on the table the most expensive resources, the land. Third, they must also be willing to provide incentives like reduction of taxes and duties and fast-track approvals to these priority projects. Last, and most difficult, they must be in the frame of mind that the developer is here to do business and not as a philanthropic gesture. Therefore, the business model must also permit the developer to make profits—in this context low profits per unit but large-scale projects should work.

strategy for developers: Points to ponder

There are several areas that a developer organization needs to be sure about before joining the bandwagon. Here are some indicative questions that could help think through whether this opportunity is right for your organization.

• Is this an opportunity that suits the way your organization functions?

• Can you restructure your organization’s DNA to work on a low margin and high volumes game?

• Do you have access to the right construction and project management technologies?

• Are you willing to invest in the R&D required to customize the technology for Indian conditions and more importantly project-specific factors?

• Are you willing to invest in planning and design innovations that are cutting edge?

• Does your organization have the human resources required to partner and work with government and NGOs?

• Are you willing to risk a new business model?

Happy pondering!

Mukta Naik is an architect and urban planner. She heads the

planning research and advisory practice at the Institute for

Competitiveness. Her interests centre on housing, equitable

development and policy.


alongside poor families and thus giving hope and lending the sense of solidarity to the cause, our Members did just that. By moving out of their comfort zone for a worthy cause TN Members beginning with the President, Secretary and vice president National and other ec members leading the way, literally donned the hard hats and worked alongside families building homes around thiruvallur giving the much needed hope to around 300 families in that region.

The satisfaction and gratitude felt and expressed by the villagers and inhabitants of Thiruvallur District provided Credai TN Members with the feeling gratification that comes out of giving back to society by way of acting on a tangible social responsibility by demonstrating in actions and service its collective commitment to the shelter requirements of the less priviledged in the State especially when juxtaposed with the booming Real Estate Industry.

ith a stabilizing economy and upward movement in demand, the construction Industry is seeing rapid and phenomenal growth across the country. The challenge

today for the Industry is shortage of trained labour with good skill. The challenge of achieving quality work in specified timeline has to be addressed by the Industry on a war footing.

NSDC is a first of its kind Public Private Partnership in India that facilitates skill development. A large part of its efforts are directed at skill development programmes in the unorganized sector. NSDC acts as a catalyst in skill development by providing viability gap funding to enterprises, companies and organizations that provide skill training. It will also develop appropriate models to enhance, support and coordinate private sector initiatives.

It’s the privilege of CREDAI that our Chairman Mr. Kumar Gera, is one of the board members of NSDC. Ever since its inception, Sri Kumar Gera has been keen that Bangalore should play a vital role in taking forward the NSDC initiative. And as such CREDAI Karnataka has taken the step forward taking advantage of the NsDc initiative and has embarked on the task of undertaking skill development to workers connected with construction Industry.

The inspiration for the scheme of things is from CREDAI Pune spearheaded by Mr. Ranjit Naiknavare and persistent persuasion by our Chairman Mr. Kumar Gera.

Potentially, the target group for skill development comprises all those in the labour force, including those entering the labour market for the first time (12.8 million annually), those employed in the organized sector (26.0 million) and those working in the unorganized sector (433 million) in 2004-05. The current capacity of the skill development programs is 3.1 million. India has set a target of providing skill to 500 million people by 2022.

even before the formation of NsDc, creDaI karnataka had planned similar activity when Mr.Balakrishna Hegde was the President and to this end an approach was made to the government of karnataka for the allotment of required land to house the Training Centre. Again I should place on record my appreciation to Mr. Balakrishna Hegde for initiating the process and also to Mr. Raj Menda and Mr. Sushil Mantri for taking the effort forward in addressing this very essential requirement of Construction Industry.

Given the nature of Industry - mostly unorganized with poor affordability of the workers to pay for the training (foregoing their daily wages) most of the development needs to be imparted at convenient time and location. Similar efforts

wNsDc- BaNgalOre INItIatIve

are on by a few training institutions over a long period of time (NICMAR, INSTRUCT etc.,) who have taken more of advance level training in class room like situation. Since workers skill development needs site interface, it is imperative the training goes to their door steps. also to have a successful long lasting effor t in achieving the desired results, the economy of operation is vital. Hence at the start of the programme, large sites with sizable workforce involved, will be addressed. Smaller sites and few workers needing training need to be addressed immediately on getting the confidence of start. Model of small groups will be worked out once experience input is analyzed

Some of the related fields of training to be imparted to start with are:1. Masonry (all related work), Plastering and Tiling.2. Plumbing and Sanitation.3. Carpentry 4. Site keeping and supervision/management 5. Hands on experience to fresh graduates / diploma holders prior to employment

The entire training programme will encompass Safety and basic communication skills.

Since this training can be of two pronged, the just out Engineering / Diploma graduates from Civil and connected discipline will also be trained hands on at work situation along with unskilled workers to take up next level of activity which is not in the framework of NSDC but an independent initiative to be taken up by CREDAI Karnataka. Two goals can be achieved through this

1- improving the working condition of existing labor

along with enhanced efficiency

2- training and finding fresh engineers for productive

employment

To get better result and sustainable programme, pilot projects at few large construction sites are planned. The training needs to be 100% at site, since the office interface of skilled workers is a corollary. To create stimulating situations, mobile models will be created on the lines of ‘mobile demo models’ on wheels. This vehicle will be taken to different sites depending

- Suresh Hari


on need and situation. The training will be date specific and cannot run for months to start with.

Interfacing with other similar associations is vital for the successful implementation of the programme. BAI Bangalore center at present has specific programmes to train fresh graduates and certificates are issued under the authority of VTU (Visweswaraya Technological University, the authority who controls all Engineering colleges in Karnataka). These graduates, once trained are an asset to any construction firm who look for effective engineers who not only takes care of technical aspects, but also the administrative part. Partnership for the execution of project with these similar Associations will enable greater success and reach.

We will look at advanced training once the pilot project takes shape. CREDAI Karnataka needs to procure suitable land for putting up such a center for class room benefit and training different disciplines of labor force.

Even though NSDC contemplates basic Skill development, we will embark on advanced programmes once the needed experience is achieved.

1. Grade III as Trainee Worker :- 3 months course2. Grade II as Junior skilled worker : 6 months course3. Grade I as Senior skilled worker: short term advance course with greater focus for individuals already qualified or one who has gone through skill development.

Employers of workers will be made to play a vital part in

this programme. They need to relieve workers to enable skill development and also provide them with the wages lost. Site support for conducting the course is a must.

Partnership with other organizations like state governments, especially ‘Cess Board’ will make the programme very effective. the cess collection utilization is one of the nagging issues faced by the Board. An effective interface with them will enable part funding of the programmes. Karnataka is one of the early States to have initiated the Labour Cess charges and huge corpus is available. Though Tackling Government Funding has its own limitation, a prudent mix of funds and involvement from them will enable more authenticity to the Programmes.

Initially CREDAI Karnataka will allot budget for the programme as CSR initiative, but huge outflow will be required once the programme takes shape. Detailed costing will be worked out once the various parameters are put in place. When CREDAI Karnataka launches the full fledged programme with established center for training, etc., the rough Budgetary Estimate of around Rs.15 crores will be tapped through NSDC.

The programmes will be implemented through identified agencies who have specialized teams handling similar efforts. Due discussions have been initiated.

The pilot programme will take shape within 3 months.

S. Suresh Hari, Former Secretary, CREDAI Karnataka and currently, Chairman- Skill Development Cell

s part of the CSR activities, CREDAI Kochi formed a nodal agency called CREDAI Clean City Movement to take up social projects. The movement undertakes projects for the benefit

of the city and its citizens. CREDAI Kochi’s objective is to identify areas where its assistance will be helpful to improve up keep of city with the involvement of civic authorities. As a part of total sanitation campaign of Dist. Administration, the Dist. Collector requested CREDAI Kochi to construct and maintain a public toilet at the Collectorate. Space was allotted in the Collectorate complex at Kochi.

BPCL Kochi Refinery and CREDAI Kochi jointly met the cost of Rs.15 lakhs for construction of the toilet complex and the collector signed the agreement with creDaI kochi for maintenance of the toilet under the management of creDaI

CSr initiAtive of CredAi KoChi

CredAi KoChi

cs

r

a

37 C r e d a i i s s u e - O c t o b e r - N o v e m b e r - d e c e m b e r - 2 0 1 0

Clean City Movement for 15 years.

Specialty: - A World class toilet facil i ty is today available for Ladies, Gents & physically handicapped.

A nominal fee of Rs.2/- will be collected from the users while there is no entrance fee for physically handicapped persons.

eal estate development is an evolutionary process; so no two developments are exactly alike. Perhaps, this is what led some developers to believe that it is better to be “lucky” than to

be “good” when it comes to being successful in the business. Gone are those days, though. “Strategy” is picking up as a buzz word in Indian real estate with globally acclaimed business schools and groups organizing workshops and crash courses in India on these lines. It is a whole new world today, especially after the recent global economic crisis. The world looks forward to opportunities in India as do we Indians in the rest of the world. That has clear implications on Indian developers. Real estate is local and local developers, definitely, have advantages over others. But close your eyes for a moment and ask yourself: is this advantage perpetual? If you are a realist, you will see competition knocking at your door sooner than you would want it to. They will leave you with two options: wait for your “lucky” moment or become “better” than the others in the market.

In the development business, today’s successfulness does not have much bearing on whether you are going to be successful tomorrow. The business landscape is changing and you must adapt to it. Professor Michael Porter of Harvard Business school said of developers a long time ago: “…past modes of behavior probably will not carry you through the next decade. The questions are how you think about the question of strategy for your business and how do you do that in a constructive way…no matter where you are operating, you are going to have to decide exactly how your company is going to compete and how you are going to position your company to be a superior performer…” The message is clear: to remain competitive with increasingly more sophisticated competitors in the market, Indian developers need to adopt the best practices of real estate development, an area where India lacks a formal knowledge system.

r

Editor’s BoxThis piece tells us the criticality of the most important tool

– the “data” – where to get it, how to analyse it and how

to use it.

are yOU fUtUre-reaDy?

5 STEPS TO BUILDING AN “INFORMATION-EDGE” IN REAL ESTATE

Any strategic improvements would be contingent upon our understanding of the current state. So, our research team recently conducted a pilot study on a sample of small and medium sized real estate developers across India to understand their business processes. One of the findings of the study was that Indian developers need to strengthen their “Information-Edge”.

In other words, one of the critical strategies to remain competitive in the market is to understand that “Knowledge is King”. Obviously, it has to be the knowledge that is exclusive to your own firm. The question is: how to acquire that knowledge? “Create it” would be our answer if you are serious about differentiating yourself. One of the biggest sources of knowledge is information. And anyone can tell: Information is made of data. Evidently, data remains focal to the remaining of this article. It is a misconception that dealing with data is an

irrelevant activity for small and medium sized developer firms. In fact, these are the firms that would benefit the most from this competency. In the context of Indian real estate developers, here are the five steps that we recommend:

1. Collect: Secondary data (data collected by others) from government agencies is available abundantly in India; and at

- Prashant Das - Divyanshu Sharma


no cost. You need an explorer’s eye to find them, though. The publicly available data is actually meant for your use; and they have great application in real estate (and, for that matter, any other business) beyond academics and policy makers. Moreover, the argument that public data is usually “old” and, therefore, “useless” pertaining to your real estate project is only partially true, as we remain obsessed with census data. We often fail to explore the sampled survey data released by numerous central and state government agencies. Remember, census and survey usually refer to similar but inherently different methods of collecting data. In census, the attempt is to collect the complete data of the population whereas a survey typically attempts to collect the data of a smaller sample that is carefully chosen to represent the overall population. Due to this reason, it is far less difficult to collect more up-to-date data through sampled surveys. Explore some of these sources and you would be surprised at the availability of recent and relevant data.

2. Create: While an awareness of the secondary data sources will provide you an advantage of a relatively “inefficient” Indian

some sources of latest survey data:

Ministry of Statistics: http://mospi.nic.in

Economic Survey: http://indiabudget.nic.in/

Redix for multiple cities: http://nhb.org.in/Residex

Andhra Pradesh: http://www.apdes.ap.gov.in/

Maharastra: http://mahades.maharashtra.gov.in

Tamilnadu: http://www.tn.gov.in/deptst/


real estate markets, creating your own, “primary” data would enable you with an unparalleled information-edge. Take it easy, you can do it in-house with some planning! All you need is some brain storming. If you can afford, seek a few hours of expert advice (preferably, from a quantitative researcher who loves statistical modeling). Review your touch points (opportunities to interact with your clients/end users) and make a note of how you interface with your customers. They need not be only the prospects that you were able to convert. In fact, collecting data about the ones that you could not convert into your customers would be more insightful. Now, design a well-laid out questionnaire that helps you create customer “profiles” with demographic data, preferences, etc. Collect them through a website or paper-based survey. Later, add some observations from your own side; for example, did they really make the purchase, what price was negotiated upon, and so on. Do not forget to digitize your data in a spreadsheet.

3. Analyze: Most analysts stop after calculating statistics (mean, median, etc). However, with the same set of data, possibly, they would have been able to draw numerous conclusions critical to your business strategies. As your data set gets richer with time, you can conduct more sophisticated analyses with your data. For example, such analyses may help you ascertain which factor is more critical to a prospect’s decision to buy from your firm: the difference between quoted and offered price or the method used by your sales force for

the initial pitch. Knowing this will enable you to optimize your resources and develop efficient strategies. As a thumb rule, you would need 30-50 data points (number of prospects from which you will collect your data) for each such factor you plan to examine. Also, if you often fail to price your products appropriately (may be, because you do not find a close comparable property), such an analysis will become your crystal ball for putting the prices on the properties which you develop that truly “work”. Developers across the globe are known to use “hedonic modeling” in order to optimally price the properties they develop or acquire. Remember, these analyses will give you insights that you would not find in books. Books are aimed at covering “broad” spectrums in contrast to your own projects that, perhaps, serve a niche.

4. Learn: OK! This is where you need some serious work. Well designed datasets (primary or secondary) empower you with unparalleled capacity to optimize your investments, both in terms of time and money. But analysis methods come in all colors, sizes and shapes. Moreover, they need some understanding of statistical methods and software tools. Do not let these words scare you! If you are a developer, you are smart enough to learn what it takes to become a developer. Remember, you always have an option to delegate this task to someone else in your firm (or simply hire an expert!). Yet, interpreting the results would, again, require some basic understanding. Consider taking a crash course in “Business Analysis” which includes basic regression. SPSS, Minitab, JMP are some popular, user friendly software for statistical analysis; and you may learn some basics from Professor Google. Some free software are available too (visit: http://www.realism.in/stat); but they may not be as intuitive. In fact, MS Excel has a wide range of in-built functions, although it is usually not a top choice for regression-like analyses. In future, as your firm grows, you may decide to implement Customer Relationship Management (CRM) packages. With your understanding of the potentials of data, you will be far better equipped to exploit your investments in CRM-like solutions.

5. Sell: Achieving the “Information-Edge” means a lot more to you than developing insights for business strategies. A deeper understanding of the dynamics of real estate development business, customers and product strategies set you apart as “experts”. Your firm can showcase its “knowledge” through impressive white papers and corporate presentations at reputed forums. You add weight to your brand image which may help you build relationships for collaborative projects and win large-scale partners who might be seeking to leverage on your capabilities for upcoming projects in the region.

Divyanshu Sharma - Partner, Realism.IN (a research & education firm focused on Indian real estate)

Prashant Das - Head of Research, Realism.IN & Editor, India China America Institute, Atlanta

he latest video on youtube.com (http://www.youtube.com/watch?v=Ps0DSihggio) on constructing a 15-storey building in six days in Shanghai is probably the most forwarded

link among the real estate professionals today. It would be instructive if critics of teaser loans and 10-90 loan schemes saw it.

The central bank of India in early November tightened the provisions for housing loans which singularly created a dent in the real estate growth story. The higher provisioning requirement for teaser loan rates will, in all probability, affect the sector in the short term.

The motive behind the move by Reserve Bank of India (RBI) is essentially to prevent excessive leveraging by banks. Most market watchers are of the view that if the rBI starts to take such punitive action against financial instruments brought out by innovative thinking, the real estate sector as a whole will suffer. It is true that the regulators have held the industry in good stead in the past and have prevented market bubbles, but the over-caution might be uncalled for.

The fact of the matter is that asset prices might be rising inexorably in some markets though in others it is more sobering, mostly due to demand. A market like Goa has seen stabilised pricing for the last decade, even during the last economic downturn, so much so that asset buyers and investors have increasingly flocked to these markets in tandem with the construction activity.

“The asset prices will not be brought down by simplistic moves like higher provisioning requirements for loans in a demand-led economy. The government has to increase FSI across the board and improve infrastructure development to control prices”, said a leading NCR-based real estate developer during a recent conference on hotels and organised retail in Mumbai.

The regulators have an uncanny detailing of the property sector

the government has a two-pronged approach to housing

sector, one that of preventing bubbles, which ends up

strangulating the industry and second, complete apathy

towards formulating policies to help meet the burgeoning

demand.

t

BetweeN


than any other industry. The central bank capped the loan-to-value ratio for housing loan exposure at 80 per cent, even while increasing risk weightage for residential housing loans worth Rs75-lakh or more by 125 per cent.

the rBI in its combined wi sdom ra i sed t he standard asset provisioning by commercial banks for teaser loans to 2 per cent from 0.4 per cent. This step seems wholly unnecessary in view of the sector’s struggle to come out of the slump seen a year ago. Even stock markets gave RBI a thumbs-down when the markets tanked after its decision mostly because of the ‘negative surprise’.

In other words, for all outstanding teaser loans the banks will have to make a one-time additional standard provisioning of 1.6 per cent. Also, in future they will need to take into account these additional standard provisioning norms if they continue with the teaser loan schemes.

It is not just the developers and intermediaries which are cut up with the decision of the central bank. Commercial banks which have been forced to look the other way when developers seek debt financing, have also expressed their chagrin at measures like tightening provisions for loans.

In the mid-term review of monetary policy, RBI raised provisions for standard assets of teaser loans five fold. The ostensible reason is that last time the rBI tried to control teaser loans the banks conveniently bypassed it and continued to selective offer teaser loans. This is not to say that all such loans are above

a rOcka sOft place

&


re

pO

rt

he CREDAI Nagpur in its Annual General

meeting formed a customer grievance redressal

Cell for the benefit of the flat purchasers from

the builders who are the members of the

Association. More than 100 builders attended the AGM and

unanimously decided to follow the Code of Ethics to bring

in more transparency. Hon. Gen Secretary Prashant Sarode

assured that the Redressal Cell will be made operational very

soon and customers of our member builders can contact this

cell for any grievances.

CredAi nAgPUr SetS UP A CUStoMer grievAnCe Cell

CredAi-nAgPUr

Many builders, including Vice President Mr. Anil Nair

and mahesh sadhvani, gaurav agarwal, ramesh

Pise, Pradeep Khandwani, Siddharth Saraf, Satish

Bais, Anil Sahasrabjojanee, Suresh Wadwhani,

Ashok Chandak, Vijay Kandode, Rajesh Bajaj,

Mahendra Tayawade, Pahilaj Sachani, Eaktavya

Wasekar, R A Sahu, Shashikant Gosavi, Rajendra

Bose and Milind Bhombe were present.

t

board, but to club them all in one basket is a mistake that rBI commits with impunity.

The higher provisioning will jack up cost of funds for banks and discourage them from aggressively pushing for teaser loans. the reason for such tight measures is that such loans affect the quality of assets and chances of defaults by borrowers are high. The RBI might also be playing into the SBI versus HDFC game being played out in public for a long time now.

the home loan default for sBI, for instance, is known to be about 3 per cent and that can be considered an industry average. This kind of default in payments does not usually affect the balance sheet of banks like sBI because mortgages as a percentage of total assets are very low. Of the total loan portfolio of Rs80,000-crore, special loans would be in the vicinity of Rs20,000-crore.

Even HDFC’s teaser loan portfolio is about 27 per cent of its retail home loans provided. HDFC’s mortgage book, it is known, is around Rs1.06-trillion and retail loan makes up about 68 per cent of that.

In regulation of loan to value (ltv) ratios the rBI has said that banks will be able to give up to 80 per cent loans to Rs50-lakh worth property. Till now the LTV was unregulated and banks used to give up to 85 per cent loans. In many of the developed and a few developing countries the LTV is regulated, but the government also helps people to buy houses in terms of down payment assistance for first time buyers.

In India the government has no such plans or provisioning and hence the lower end of the market, where the demand is real

and bereft of investor-buyers, will be adversely affected. In the higher end of the market, which includes even affordable homes in some metro cities and luxury in smaller cities, the new regulation will not mean any thing.

There is little speculation in the higher end of the market even today and hence the increase in risk weightage will dampen the 10-90 schemes popular in cities like Mumbai where the down payment is broken into two parts – 10 per cent while booking and 5 per cent while taking possession.

But most big developers any where in the country are not quite given to taking these measures as a bad thing, more because the economy is growing and the demand will only firm up even more. The price and demand have not been affected in the festive season which ended recently.

Pricing in real estate can only be controlled by increasing supply in housing segment. Even if the floating rates for housing loans are likely to rise, developers don’t see any denting in the demand – it is almost like the shanghai building which rises tall in six days to 15 storey. But the point that is moot is: will the approvals in India come so fast to build a structure of that kind?

Anil Parameswaran Nair is Executive Editor of Property World magazine, based out of Mumbai. He has been a business journalist for the last 19 years and has worked as Associate Editor of the Indian Express Group, News Head of Real Estate Television, News Channel Head of India.com and Assistant Editor of Express Exim Review. Though most of his time is spent in pursuing professional calls, Anil Nair’s favourite pastime is making short films and photography.


t has been widely acknowledged that with

the liberalization of Indian Economy and the

economic reform programmes, Real Estate sector

has made rapid changes. Real Estate, with its

contribution to the GDP has emerged as one of the major

indicators of the economic health of the country. Real GDP

from real estate, ownership of dwellings and business services

increased at a 5-year CAGR of around 8.5% between 2005-

2009. At current prices, the 5-year CAGR was around 15%

The sector generates huge employment opportunities in the

country directly, including self employment opportunities to

unskilled/semi-skilled and skilled workforce, such as plumbing,

masonry, electrical, etc. Indirectly it also generates substantial

business opportunities and consequently employment in other

segments of economy, such as Iron & Steel, Cement, Mining,

Manufacturing, etc. Investments in real estate, like any other

industry, have a multiplier effect on income and employment.

It is estimated that the overall employment generation in

the economy due to additional investment in the housing/

construction sector is eight times of the direct employment.

The banks have always played a crucial role in development of

the real estate sector. Their pivotal role in the shape of financing

of housing sector initially has given a huge boost to the real

estate. It would not be incorrect to say that banks’ financing

of housing sector has resulted in more planned expansion

of towns and cities. Similarly, emergence of commercial

complexes, which have improved visual aesthetics not only

of the buildings but of the towns and cities also, owe a lot to

the financing from banks.

I

Editor’s BoxHere is a piece with past, present and future of and

opportunities in Real Estate clearly enunciated with

ofcourse a hint as to what a Developer should do to tap

Bank finance by one of the most pro-active and practical

Bankers of the country.

fUtUre OppOrtUNItIes & BaNk fUNDINg

The overall funding by

banks is regulated by

reserve Bank of India,

who has played a pro-

active role in financing

of various sectors of the

economy including real

estate.

reserve Bank of India,

had in June 2005 laid

down guidelines for banks

to classify their funding to real estate sector under different

classification viz., Direct and Indirect exposure. Residential

mortgages, commercial real estate and Investment in

mortgage backed securities were included under Direct

exposure, whereas exposure to National Housing bank (NHB)

and Housing Finance Companies (HFCs) was included under

Indirect exposure.

Banks have been encouraged to lend to Housing sector

and have been permitted to include their direct exposure

upto Rs.20.00 lakhs to a single unit, under priority sector

lending. Indirect exposure of banks to housing sector by way

of refinance to governmental/non-governmental agencies or

Housing Finance Companies, subject to certain conditions

has also been permitted to be included under priority sector

lending. Government of India, by providing tax benefits/

incentives to individuals as well as to developers has driven

the growth in the sector. Allowing Foreign Direct Investment, is

also an endeavour to give boost to the real estate sector.

However, after sub-prime crisis in USA, Reserve Bank of India

as well as Banks in the country have been taking a cautious

approach in lending to Real Estate Sector. The caution is not

unfounded, as it has been observed that a lot of projects

were delayed, due to shortage of genuine buyers, speculative

nature of transactions, etc. Indian real

estate sector too witnessed

downturn, forcing

- Rathnakar Hegde

real estate –


RBI to extend special regulatory benefits to banks, on first

restructuring of advances to real estate, upto 30.06.2009.

reserve Bank of India rationalized the guidelines to be

followed by banks with regard to lending to real estate in

September 2009. It seems that RBI made an effort to exclude

all such components from the definition of real estate, where

the element of speculation was minimum and ensure smoother

flow of bank credit to them.

the sector has started to see some light after the downturn and

looks forward to gain growth momentum in the coming years.

The sector has recorded a healthy recovery during the current

financial year, compared to the sluggish demand observed

during the last year. With other segments of economy such as

manufacturing and services recovering from the downturn, the

demand for office space, commercial space as well as housing

can be expected to improve. The oversubscription of recent

IPOs from Prestige Estates, a real estate firm, from Bengaluru,

and Oberoi Realty a Mumbai based real estate company is

testimony to the fact that the mood with regard to real estate

business has improved.

The developers, however, have to be cautious in their optimism.

It has been observed that with pick up of demand, prices have

registered a steep rise more so in metros and large cities. The

Indian customer, known globally for his ‘value for money’

attribute, is sure to adopt wait and watch policy, if price rise

is steeper. The developers would be well advised, if they

adopt a more customer friendly policy and do not go all out

for increasing prices. This is expected to keep the momentum

going over a longer period.

Recent entry of large corporates into the real estate business

sector has made the sector exciting and shakeout and

consolidation, if expected, cannot be out of place. Hence to

remain in business, smaller yet earlier players in the industry

will have to gear up for the challenge and set new benchmarks,

for new entrants to emulate.

RBI in its 2nd quarter review of monetary policy on 2nd

November 2010, has put a regulatory ceiling on housing loans

by commercial banks as a result of which banks shall not be

able to lend above 80% of value of the property. RBI has also

increased the cost of lending by banks, for residential housing

loans by increasing the risk weight. The loans for acquisition

of high end housing units where loan component shall exceed

Rs.75 lakhs will become more expensive. This is expected to lead to moderation in demand for housing units especially high end housing units.

As per the mid-term appraisal of 11th five year plan, urbanisation in India has occurred more slowly than in other developing countries and the proportion of the population in

urban areas is only 28 per cent. The pace of urbanisation is now set to accelerate as the country sets to a more rapid growth. 300 million Indians currently live in towns and cities underserved by utilities, with inadequate housing and now choking in traffic. Within 25 years, another 300-400 million people will be added to Indian towns and cities. If not well managed, this inevitable increase in India’s urban population will place enormous stress on the system. According to the report of the technical group on estimation of hous ing shor tage, a shortage of 26.53 million houses during the 11th five year plan was estimated. Over a longer term, it has been estimated that upto year 2021, there will be demand for around 140 million houses requiring investment of Rs. 200000 crore.

this though being an area of concern, for state as well as Central Government, is an area of vast business opportunity for the industry as a whole, as this can be expected to give impetus to the residential mortgages as well as to the commercial real estate.

Keeping in view that the real estate sector is considered as a sensitive sector for lending by the banks, it becomes necessary for the developers to improve their credibility, so that they continue to have access to bank credit. The rating of the real estate projects by external agencies has recently been introduced, which should be utilized by the developers, not only to sell the projects, but also to provide comfort to the bankers and seek competitive pricing.

The challenge before industry, therefore, is to ensure that momentum of growth is maintained, keep the cost low, prices moderate, provide value for money to customers and be able to raise finances both from banks as well as from public and continue setting new benchmarks in ethical business practices.

Mr. Rathnakar Hegde is the Executive Director of Oriental Bank of commerce


ubsequent to the introduction of certain highly

controversial amendments in the finance act,

2010, in respect of construction services and

renting services, the High courts have been

swamped with writ petitions filed by the Industry Associations

as well as by the aggrieved parties. Many of these writ

petitions have included the Developers as respondents, a

new phenomenon.

While numerous writs are getting filed in the Courts and some

Courts have been giving stay orders, the Department, on its

side, has been vigorously pursuing the Developers and Builders

for collection of service tax.

This piece is an attempt to get an understanding of the current

issues and on how Developers can think of protecting their

interests in this highly surcharged atmosphere.

Let’s look at Construction services, first.

the finance act, 2010 has introduced certain fundamental

changes in the levy of service tax on the Realty players. A new

concept of making the Developer a ‘deemed service provider’,

a concept which is till now unknown in the service tax law,

was introduced with effect from July 1, 2010. The Budget for

2010-11 has incorporated the insertion of the Explanation to

Sections 65(105)(zzzh) of the Finance Act, 1994, according to

which, the scope of ‘Construction of Complex’ services is now

expanded to provide that, unless the entire payment for the

property is received post the completion of the construction of

the flat/commercial property, as evidenced by the Occupation

Certificate, all contracts, irrespective of whether they are

agreements of sale or agreements of construction, would

s

Editor’s BoxThe author has tried to clear the mess relating to Service

Tax issues and also has given his suggestions as to how to

tackle situations when the Department or the clients armed

with court decisions attack them.

realty players caUgHt BetweeN

wrIts aND tHe DepartmeNt

- S Sivakumar

be ‘deemed’ as taxable

services. The text of the

Explanation, as passed

by the Parliament is as

follows:

“Explanation.—For the

purposes of this sub-

clause, the construction

of a new building which is intended for sale, wholly or partly,

by a builder or any person authorised by the builder before,

during or after construction (except in cases for which no sum

is received from or on behalf of the prospective buyer by the

builder or the person authorised by the builder before grant of

completion certificate by the authority competent to issue such

certificate under any law for the time being in force) shall be

deemed to be service provided by the builder to the buyer;”

Till this amendment, the prevailing view, which has been

accepted by the Department is that, pure Developers, who

were not constructing the residential complexes, are not liable

to service tax. After all, in terms of the statutory provisions, the

service tax levy is on ‘construction’ of residential complexes

and by no stretch of imagination, can a Developer

who has contracted out the construction activity

be treated as one who is ‘constructing’ the

residential complexes, as contrasted

to the contractor. The Board had, in

its Master Circular No. 96/7/2007

dated 23rd August 2007, in Para 079.1,

clarified that, where the builder, promoter,

developer or any such person builds

a residential complex by engaging

a contractor for construction of

the said residential complex, it is

the contractor in his capacity as

service tax -


a taxable

s e r v i c e

p r o v i d e r

(to the builder/

promoter/developer/

any such person) who is liable

for payment of service tax. The Board

has been expressing a similar view in its earlier

circulars also.

Writs have been filed in many High Courts, challenging the

amendments carried out to ‘Construction of Complex’ services

and ‘Commercial or Industrial Construction’ services. The

Bombay High Court, in the writ filed by the Maharasthra

Chamber of Housing Industry 2010-TIOL-526-HC-MUM-ST

and the Madras High Court, in A P Ravi v. Union of India and

others 2010-TIOL-604-HC-MAD-ST have stayed the operation

of the amendment. The Karnataka High Court has also given

an interim stay, in respect of a writ petition filed by the CREDAI,

pending further hearings. What is extremely surprising in the

A P Ravi case is that, the Developer has also been included

as a respondent, as aforesaid. The Madras High Court has

restrained both the Service Tax Department and the Developer,

from collecting service tax, on construction services.

Not withstanding the fact that the High courts are granting

stay orders, the Service Tax Department has been quite busy

pursuing the Developers and Builders for collection of service

tax. The Service Tax Commissionerates in some Southern

cities have sent written notices to even pure Developers who,

as aforesaid, have been outside the purview of service tax

even by the admission of the Board, demanding service

tax from June 16, 2005 on a rather perverse interpretation

that the amendment introduced in the finance act, 2010, is

retrospectively applicable. I’ve reproduced below, the typical

wordings used in the communications sent by one of these

Commissionerates, viz.

“It has been clarified in Budget 2010, by way of insertion of

an explanation under the definition of Construction of Complex

Service, which states that, unless the entire payment for the

property is paid by the prospective buyer or on his behalf, after

the Completion of Construction (including its certification by

local authorities), the activity of construction would be deemed

to be a taxable service provided by the builder/promoter/

developer to the prospective buyer and the service tax would

be charged accordingly. Since, this explanation does not alter

or amend the scope of the service, it will have effect as if the

same if part of the service since beginning”.

Now, how does the Developer protect himself in a situation

like this, where on the one hand, his customers, armed with

interim orders from the Courts, are not willing to pay service

tax, while, on the other hand, the Department is asking for

service tax to be paid from Day One?

Firstly.... it must be borne in mind that the remedies against

writs are available only to the petitioners. Thus the benefit

arising out of a stay order cannot be extended to third parties,

who are not petitioners.

Secondly....when Developers are included as Respondents,

they would need to approach the Court for clear directions

on discharging their liability to the Department. While the

individual flat buyers are entitled to approach the Courts

on service tax matters, a stay given to them would not

automatically cover the Developers, unless the orders of the

Court specifically cover them (in addition to the Service Tax

Department), as well, as is the case in the stay given by the

Madras High Court, referred to above.

Thirdly....we would need to bear in mind the fact that writs

that are being filed are only in respect of the amendment to

‘Construction of Complex’ services. Budget 2009-10 has not

tinkered with the provisions applicable to ‘Works Contract’

services, which came into effect from June 1, 2007. Most

Developers and Builders have already switched over to the

Works Contract services in respect of the new projects. In these

cases, service tax would need to be collected and paid to the

Department, in accordance with the Composition Scheme.

Fourthly....in cases where the individual flat buyers have

obtained stay orders from the Courts, it would be important

for the Developers and Builders to protect themselves against

any future liability, by insisting on a legal indemnity from the

flat buyers. A typical indemnity format covering the Developer

for a possible service tax liability, in the future, along with

interest, would greatly help.

Fifthly.... Realty players would be well advised to keep the

Service Tax Department informed of the stay orders received by

their customers, so as to completely avoid any

chances of being slapped with penalties at

a later point of time.

And lastly..... Developers and

Builders would be well advised to

keep a track of the developments

emanating from their respective

Service Tax Commissionerates. Very

recently, a prominent online tax portal


carried a story of how the Service Tax Commissionerate of a

Southern metro, had openly taken a stand against the Circular

No. 108/02/2009-ST dated January 2009 in a show cause

notice issued to a Developer. I am informed that the Joint

Secretary of the Ministry of Finance had had to pull up this

particular Commissioner for taking an open stand, against the

views of the Board. It seems to me that non-implementation

of the Board Circulars by the Departmental officers is not

a crime, so long as it is not done in a brazen manner as

is perhaps the case with the Commissioner of the Southern

metro, referred to by me.

Let’s now discuss the issues related to the writs filed in respect

of the amendment effected to the renting services.

As we know, the Government’s attempts to legalize the levy

of and collection of service tax on commercial rentals, on a

retrospective basis, from June 1, 2007, would seem to have

met with some judicial residence, at least in so far as the

retrospectivity of the levy is concerned. While the Delhi High

Court has given a stay in the Home Solution Retail Ltd v. Union

of India and others 2010-TIOL-341-HC-DEL-ST, the AP High

Court, in Trent Limited v. Union of India and Others 2010-TIOL-

402-HC-AP-ST, has stayed the recovery of service tax only for

the period June 1, 2007 to March 31, 2010. Further, while the

Karnataka High Court has been giving blanket stay in respect

of the writs filed before it challenging the constitutional validity

of the levy of service tax on rentals, the Allahabad High Court,

in a very recent decision, viz. Orient Craft Limited v. Union of

India and others, has refused to stay the prospective operation

of the service tax levy on rentals.

As is the case with regard to the writs filed in the case of

construction services, Realty Developers are being included as

respondents in many of these writs. It becomes very important for

the Developers and Lessors, to approach the Courts for specific

directions on their statutory obligation to discharge the service

tax liability in respect of renting services, as most of the stay

orders that I have come across have not specifically stayed the

collection of tax by the Developers-respondents, as contrasted to

the Government/Service Tax Department who are also named

as respondents.

In a very recent interesting development,

the Supreme Court has, in its orders

dated November 19, 2010, refused to

restrain the High Courts from passing stay

orders, in respect of the levy of service tax

on renting services, in an appeal filed by

the government against Delhi High court’s

order in the

Home solutions

case.

The Supreme Court in its

order on 19.11.2010, has held as

under:

“Counsel appearing for the parties agree that they would all

make efforts for getting the writ petition, pending in the High

Court, disposed of on the next date and therefore, no order

is required to be passed on this, for the present. We request

the High Court to dispose of the writ petition itself since an

interim order is passed, which according to the petitioners,

is creating prejudice to their interest. Re-notify in the second

week of January, 2011.”

How do the Developers protect themselves, in the case of the

service tax levy on renting services?

Well... the suggestions given in the earlier paragraphs would

pretty much apply here. In addition, in the light of the fact that

some High Courts have stayed only the retrospective operation

of the service tax levy on renting services, Developers would

need to bear in mind that an order passed by a High Court

on a writ petition questioning the constitutionality of a statutory

provision under Article 226 of the Constitution will have effect

only in the particular State or States covered by its jurisdiction.

I also understand that the Punjab and Haryana High Court has

already passed orders, upholding the constitutional validity of

the retrospective levy of service tax on renting services.

And, in the case of renting services, Developers would need to

bear in mind that what is covered by the writs are cases where

the Developers are only involved in the renting/leasing of the

bare shells. When additional services like air-conditioning are

provided service tax is very much applicable, as has been held

by the Delhi High Court, in the famous Home Solutions case.

Before concluding....

It would need to be appreciated with concern that, in the

event that the Courts uphold the constitutional validity of the

amendments brought about to construction services and renting

services, it would be the Developers who would have to cough

up the tax liability, along with interest, not withstanding the

fact that the Realty players may not be in a position to recover

this liability from their customers. Hence, it becomes extremely

critical for the Realty players to legally cover themselves with

indemnities from their customers.

Mr. S Sivakumar, CA & Director, S3 Solutions Pvt. Ltd.


his is a typical narration from what I recently

encountered.

A person who met me said, ‘I was born in

Bombay, and am now settled in New York. I leave home at

7.30 a.m. for work and am back only at 8.30 p.m. I have to

achieve my organisational goals and at the same time give

quality time to my wife and family. I am tense and I don’t

know how to go about organising my life… and I find that

my life is imbalanced.’

I said, ‘The fact of life is, you are busy and have chosen to be

in a busy city. It is your choice. Now add one more dimension

to your choice . . . inspite of this fact I will learn to be relaxed,

balanced and make my relationship work beautifully. Life is

like painting and not arithmetic. The painter chooses to create

his own world through his art.’

The person asked, ‘What should I do, in spite of my busy

schedule, to give quality time to my wife & family, still be relaxed

and proactively go about reaching my organisational goals?’

I said, ‘you should observe an ant and learn to organise

your life. Ants overcome life-threatening obstacles in this

vast world.’

t

Editor’s BoxThis Management lesson from Swamiji, though general in

nature, is very very appropriate for Real Estate which goes

through cycles of depression and buoyancy. If we follow the

8 simple principles enunciated in this article, all our affairs

can be handled efficiently and with peace of mind.

tHe aNtaND Its

pHIlOsOpHyswamI sUkHaBODHaNaNDa

Of prasaNNa trUst

- Swami Sukhabodhananda ‘An ant?’ he questioned.

If you observe an ant, you can learn a lot.

• Whatever obstacles you place in front of an ant, it is so

flexible that either it goes around it, under it or above it.

Flexibility is a great quality in an ant.

• An ant never quits and it is focused on its goal. It has the

attitude of ‘Winners never quit; Quitters never win.’

• When it is summer, it plans for winter – Tremendous

planning ability.

• When it is winter, it waits patiently for summer –

Patience.

• At any given point of time, it does all that is possible; it

is holistic in whatever it does, however small it is, never

invalidates its strengths – Commitment to do its best.

• It operates in a TEAM – Team is Together Empowering

to Achieve More.

• Ants have the humility to follow the Leader- Humility is

Strength; not Weakness.

• United they build an ant-hill - an engineering feat – where

even cooling effect is taken care of, inside an ant-hill –

Team and Team Intelligence.

• Ants, while moving in a chain, have perfect co-ordination

to send feedback to the ants following them about the

path they are treading on. This communication chain has

perfect networking – Communication Chain.

‘Can you organise and balance your life like an ant?’, was my

advise. I elaborated further saying we can ask these questions

by comparing an ant’s qualities:


re

pO

rt

he show of solidarity expressed by CREDAI Tamil

Nadu at the unjust hike of cement prices and the

strike organized to demonstrate protest was a

grand success.

This show of protest was initiated post the EC meeting held

on September 28,2010 during which it was decided to

escalate the issue which effects the business. Subsequently

CREDAI Tamil Nadu mobilized opinion from across the

Industry bodies including National Association of Realtors,

crea, BaI and federation of civil engineers association,

all the Flat Promoters Association of Tamil Nadu etc. This

was followed by a press conference initiated on September

29, 2010 highlighting the unjustness of the move by cement

manufacturers.

Subsequently the team met the Finance Secretary of Govt

of Tamil Nadu to represent our concerns. During the period

leading to the protest, the members were in constant touch

with other Industry associations to mobilize opinion. The

oCtoBer 28,2010 will Be MArKed AS A red letter dAy in the AnnAlS of CredAi tAMil nAdU.

CredAi tAMil nAdU

intention to go public with the strike was made during

the press conference.

There was a huge show of support to the strike

and work at sites came to a virtual standstill. In

fact there was representation from the employees

of construction companies and the laborers too.

CREDAI Tamil Nadu was present in strength with

representation by 42 members from Chennai and 20

members from Madurai/Coimbatore/ Trichy.

the cement manufacturers and the state government

will surely take cognizance of CREDAI Tamil Nadu’s

just stand and in turn will lead to a rollback of the

cement prices.

The demonstration today has exhibited that CREDAI

Tamil Nadu is in the forefront to protect the interest

of our sector and our consumers and when required

can take the Bull by the Horns.

t

1 Flexibility: Are you flexible in giving quality time to your

family? Can you appreciate your wife in a way that is

life nourishing? Can you see flexibility is the mother of

creativity?

2 Planning: In summer, when everything is going well, are

you planning for winter? Or are you lost in your joy?

3 Patience: In winter, during difficult days, are you wise

enough to develop the quality of patience and have an

understanding of the seasonal changes?

4 Enjoy each moment: Can you consider every incident

as joyous and totally rejoice in the present rather than

desiring that one or some of your joyous moments be

permanent?

5 Commitment: Are you giving your best to the present

moment? Are you allowing yourself to better your best

and make it a habit to be fully involved in everything?

6 TEAM: Can you drop the ‘I’ in you and operate from

‘WE’ and make your family a team?

7 Humility: Can you be humble to follow the rules of life

rather than treat rules as binding forces? Can discipline

become a harnessing force?

8 Networking ability: Can you meticulously network with

people in accomplishing higher tasks?

By following this philosophy, let the results speak.

Have you created a successful ant-hill?

Oh, mind relax please! and allow relaxation to create balance

and peace thus making your struggles sacred.

yoga of Wisdom

Life is like Painting and not Arithmetic.

Create your world of Joy.

yoga of action

Follow the Wisdom of the Ants.

contemplation

what the human mind can conceive, believe and dare,

it can surely accomplish.

Our struggles have a cosmic purpose.

Swami Sukhobodhananda is not only one of the most respected

spiritual preachers of our country but also nicknamed as

‘Corporate Swamiji’ because of the highly motivating and

successful corporate programmes offered by him.

For Swamiji’s tailor made corporate interventions

and seminars contact 9901777006, 4153 5832-35.

www.prasannatrust.org


n Only full page or double spread advertisements accepted.

n Dimensions

Confederation of Real Estate Developers’ Associations of India (CREDAI) is the apex body for

private Real Estate Developers in India. CREDAI Real Estate Review is the official quarterly

magazine of CREDAI which reaches out to more than 5000 prominent Developers all over the

country. The magazine has a captive audience who are users of basic construction products in

general and your product in particular. The product, if advertised, will attract special attention

of the topmost executive in the Developer companies. The magazine is generally retained by

the decision makers as a reference booklet. Therefore, the magazine will be the most effective

tool to reach out to the decision makers of the Developer community.

The tariff and other details for advertising in the magazine are ;

Position Single Insertion 4 Insertions (One Year)

Back Cover - Full page Rs. 75,000/- Rs. 2,50,000/-

Inside Cover - Full Page Front or Back Rs. 50,000/- Rs. 1,50,000/-

Double spread (inside) Rs. 50,000/- Rs. 1,50,000/-

Full Page (inside) Rs. 30,000/- Rs. 1,00,000/-

To place your advertisement in the magazine, please send the material to the address mentioned below.

Hope you will utilize this wonderful opportunity to showcase your products.

A. Balakrishna HegdeEditorCREDAI Real Estate Review

Advertise in CREDAI Magazine to enlist attention of the top Management of the top developers in the country

EDITORIAL BOARD

Irfan Razack

Ranjit Naiknavare

Pradeep Jain

Niranjan Hiranandani

Dharmesh Jain

Harsh Patodia

Uzma Irfan

G P Savlani

Advertisement cheques (favouring CREDAI) and material may please be sent to : A. Balakrishna Hegde (Editor, CREDAI Real Estate Review), Chartered Housing, #27, Victoria Road, Bangalore 560 047. Ph: 080 – 25567333 / 34, fax : 080 25567322, email : [email protected]

n The rates are for colour advertisements (B/W ads are not accepted)

n Paper : Cover page 300 gsm, Inner page 170 gsm art paper

n Artworks to be submitted in high resolution (300 dpi) in CMYK color and in one of the following formats - PDF, EPS Tiff, Corel Version 9 or Illustrator Version 9 and must be accompanied by a color proof.

n Payments in favour of CREDAI by at par cheques or those payable at Delhi.

Full PageBleed: 216 x 303 mmNon Bleed: 180 x 265 mmTrim size: 210 x 297 mm

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PROJECT : SD TOWERS

LOCATION : MUMBAI

CLIENT : SD CORPORATION

ARCHITECT : HAFEEZ CONTRACTOR

PRODUCT : CAPPED CURTAIN WALL,WINDOW, SKYLIGHT

TOTAL AREA : 18250 SQM.(UNDER EXECUTION)

SP FABPROJECT

letters tO eDItOrYou have taken CREDAI’s in house magazine to new heights. Without a doubt the last issue is the best we have ever produced. It has become a great vehicle for advertisers of building materials in addition to the excellent content for Developers

kumar gerachairman, creDaI National

Day by day content is improving and becoming more and more informative.

sushil mantriChairman & MD, Mantri Developers

I was pleased to go through the latest edition of the Magazine, which has improved dramatically in terms of the quality and the contents. We should have a dedicated section focusing on the Technology, Innovation & Efficient Techniques in the construction sector – with elaborate case studies and the benchmarks created in the burgeoning real Estate Sector in India. We can also support this section by inviting the special guest columns from the renowned experts at the world’s foremost real estate institutes

getamber anand,Managing Director, ATS Groupvice-president, creDaI

CREDAI – REAL ESTATE REVIEW has come out with an International class printing and presentation. Kudos to the editorial team for the quality of content. May I suggest that the review should have section devoted to builders and developers from every region where they could share their feedback on newer technologies and materials.

S.K. Jhawar SuSampada, Indore

I have just flipped thru the pages of the latest CREDAI Magazine and I should confess, it is one of the best produced magazine, with innovative formats, specially editors note in

each of the face page of articles.

Specially the articles by Shri. Subrotho Bagchi, about the most humanitarian - professional work being done by , who has given a decent burial to 42,000 ( mind

boggling indeed) claimless bodies. It is JUST GREAT, indeed and it will take only authors like Shri. Bagchi, to recognise such selfless work. Of course, Swami

Sukhabodhananda’s article on good parenting, specially the story of the boy who tries to demand money from his mother, for the chores done by

him, in his own house, is thought provoking.

Congratulations to your finest efforts in bringing such a magazine into light.

Gouraswamy Krishna murthyBangalore

REDAI Maharastra organised a very successful Property Expo titled “Mera Shahar, Mera Ghar” at the Bandra Kurla Complex Ground in Mumbai on 26-28 November 2010. The expo

was held in a huge air conditioned hangar which provided all facilities both for participants and home seekers. The highlight of the expo was the fact that properties from 10 cities outside Mumbai were showcased; and hence the title. DHFL was the principal sponsor of the event.

Over 125 stalls with developers from Akola, Amravati, Aurangabad, Kolhapur, Nagpur, Nashik, Pune, Pimpri Chinchwad & Solapur displayed over 500 projects from across the state.

The Expo was inaugurated by Mr. Gautam Chatterji, Hon. Principal Secretary, Housing, Government of Maharashtra with the traditional lamp lighting and ribbon cutting in the presence of Mr. Lalitkumar Jain, Vice President, CREDAI.

Mr. Rajan Daryani, President, CREDAI Maharashtra explained that since Mumbai is a city consisting of large migrant citizens from all cities, this expo tried to reach out to the people wanting to own a house in their hometowns. It also aimed to showcase the progress of the various towns and cities in Maharashtra to the Mumbaikars. Present at the inauguration were Vice Presidents Mr. Satish Magar & Mr. Anant Rajegaonkar, Hon Secretary Mr. Pradeep Pimparkar, Hon. Treasurer Mr. Shantilal Kataria ; and Mr. Atul Goel, the Hon. Joint Secretary & Convener of the Exhibition. Besides, the Presidents and members of various

c city associations were present along with Mr Rajesh Rane, Editor of Metroscan.

Mr Gautam Chatterji complimented CREDAI Maharashtra on conducting this exhibition in mumbai and said how this initiative would help decongest Mumbai. He praised CREDAI Maharashtra for having a proper Code Of Conduct with its efficient redressal system, which ultimately benefitted the consumers. While talking about the rapid urbanisation and housing shortage, he mentioned that the state government was looking to fruitful partnership with private sector to fulfil the need for housing. He said the government looked forward to working closely with CREDAI Maharashtra in the days to come and assured the organisation of his assistance in resolving issues pending with the government.

Mr Rajan Daryani spoke about the various initiatives of creDaI maharashtra and elaborated on the code Of Conduct. Mr Atul Goel spoke about the various cities and projects that participated in the expo. He also introduced and complimented the Exhibition Team of Mr Rinku Shewani, Mr Samir Sagar & Mr Rupesh Banthia.

Mr Lalitkumar Jain and Mr Rajan Daryani also conducted a press meet at the venue. The expo and the press meet was widely covered extensively in the Print & Electronic Media including Indian Express, Hindu Businessline, maharashtra times, sakaal, Nav Baharat times, saamna, etc. A special edition of Metroscan was distributed to all visitors at the exhibition.

prOpertyeXpO 2010CREDAI MAHARASHTRA’S

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MaNaGeMeNt lessONOne fine day, a bus driver went to the bus garage, started his bus, and drove off along the route. No problems for the first few stops - a few people got on, a few got off, and things went generally well.

At the next stop, however, a big hulk of a guy got on. six feet eight,built like a wrestler, arms hanging down to the ground. He glared at the driver and said, “Big John doesn’t pay!” and sat down at the back.

Did I mention that the driver was five feet three, thin, and basically meek? Well, he was. Naturally, he didn’t argue with Big John, but he wasn’t happy about it. The next day the same thing happened - Big John got on again, made a show of refusing to pay, and sat down. And the next day, and the next.

This grated on the bus driver, who started losing sleep over the way Big John was taking advantage of him. Finally he could stand it no longer. He signed up for body building courses, karate, judo, and all that good stuff.

By the end of the summer, he had become quite strong; what’s more, he felt really good about himself. So on the next Monday, when Big John once again got on the bus and said, “Big John doesn’t pay!”

The driver stood up, glared back at the passenger, and screamed, “And why not?”

With a surprised look on his face, Big John replied, “Big John has a bus pass.”

Management Lesson: “Be sure there is a problem in the first place before working hard to solve one.”

Adapted from http://www.fropki.com/management-lesson

the Donkey and the Dog New story

there was once a washer man who had a donkey and a dog.

One night when the whole world was sleeping, a thief broke into the house,

the washer man was fast asleep too but the donkey and the dog were awake. The dog

decided not to bark since the master did not take good care of him and wanted to teach him a lesson.

The donkey got worried and said to the dog that if he doesn’t bark, the donkey will have to do something himself. The dog did not change his mind and the donkey started braying loudly.

Hearing the donkey bray, the thief ran away, the master woke up and started beating the donkey for braying in the middle of the night for no reason.

Moral of the story “ One must not engage in duties other than his own”

Now take a new look at the same story...

The washer man was a well educated man from a premier management institute. He had the fundas of looking at the bigger picture and thinking out of the box. He was convinced that there must be some reason for the donkey to bray in the night. He walked outside a little and did some fact finding, applied a bottom up approach, figured out from the ground realities that there was a thief who broke in and the donkey only wanted to alert him about it. Looking at the donkey’s extra initiative and going beyond the call of the duty, he rewarded him with lot of hay and other perks and became his favorite pet. The dog’s life didn’t change much, except that now the donkey was more motivated in doing the dog’s duties as well. In the annual appraisal the dog managed “ME” (Met Expectations)

Soon the dog realized that the donkey is taking care of his duties and he can enjoy his life sleeping and lazing around. The donkey was rated as “ star performer”. The donkey had to live up to his already high performance standards. Soon he was over burdened with work and always under pressure and now is looking for a NEW JOB ...

Disclaimer: All characters in the story are not at all imaginary. Any resemblance to person living or dying of work is purely intentional

Adapted from idle-hours.blogspot.com

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