Credai Magazine by Animesh Mukherjee

Cover Story

Improving Urban Housing How do we strategize to provide Homes for All

Issue October November December 2010

- Mukta Naik

Blue Gold - Vivek Menon

Between

a rock a soft place - Anil Parameswaran Nair

Office real estate -

Creating symbiotic relationships - Akash Deep Jyoti

Quarterly in house magazine of CREDAI National

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

Office real estate -

Creating symbiotic relationships - Akash Deep Jyoti

Cover Story

Improving Urban Housing

How do we strategize to provide Homes for All

- Mukta Naik

Let us together make India Truly Green!

A Lessonin Humility

- Syed Mohamed Beary

Recognition

NSDC- BANGALORE INITIATIVE - Suresh Hari

Are you Future-Ready?

Professional’s Quote

5 Steps to Building an “Information-Edge” In Real Estate - Prashant Das, Divyanshu Sharma

- Subroto Bagchi

Service tax Realty players caught between Writs and the Department

& an Egg!

Three Chickens

- S Sivakumar

Letters to Editor

- Harish Bijoor

NEAT INDIA - Umar Teekay

New Base Rate System Of Banks - Rathnakar Hegde

21Gold Blue

- Vivek Menon

Editor A. Balakrishna Hegde Editorial Board Irfan Razack Ranjit Naiknavare Pradeep Jain Niranjan Hiranandani

- Swami Sukhabodhananda

Dharmesh Jain

The Ant

50 Philosophy and its

Harsh Patodia Uzma Irfan G P Savlani

Design & Layout

Swami Sukhabodhananda

GAAP Communications Pvt. Ltd.

of Prasanna Trust

Email: mail@gaapcommunications.com

Printing Jwalamukhi Mudranalaya Pvt. Ltd.

Between

41 &

a rock a soft place - Anil Parameswaran Nair

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

REAL ESTATE –

FUTURE OPPORTUNITIES & BANK FUNDING

- Rathnakar Hegde

Fax - 011- 43126211 Email: info@credai.org Website : www.credai.org Inhouse Magazine for Private Circulation. Not for sale

Let us together make

India Truly Green! - Syed Mohamed Beary

Editor’s Box Amazing 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.

and a half earths, while we would need six and a half earths to maintain the living standard of

ndia’s population is projected to be 1.26

U.S.A. To negate this

billion by the year 2016 and it is expected

and in order to facilitate

to overtake China to be the most populous

growth without impairing

country by 2050. Furthermore around 40

the habitat we have

crore people are estimated to migrate from rural areas to

to conserve resources,

urban centres. It is therefore imperative that India plans for

recycle and leave the least

high economic growth in all sectors. Such growth will leave

ecological footprint.

behind large carbon footprint and green house gases. Another alarming factor to note is that human consumption of Natural

The Indian Green Building Council

Resources has doubled in last less than 50 years and presently

(IGBC), a part of CII has taken giant

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

strides and is successfully leading the

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

Green building movement in India.

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

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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 -

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LEED India NC (New Construction)

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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

IGBC Green Schools

IGBC Existing Buildings (Retrofit)

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.

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

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

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

envision and aspire for a sustainable and peaceful world.

of Green Building.

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

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

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.

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

In an enlightened era of global awakening to the need for

varied green building products and equipment and enrolled

proliferating greenery and adopting green practices, IGBC is

over 1046 members (including 90 founding members). Not

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

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

beckons one and all to adopt Green practices and be its

circles with 33 green buildings of 6.38 million sft.

ambassador for Green. Come join hands and partner with

Furthermore IGBC has launched following rating systems to suit different asset class:

Going Green as a community means that we need to

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

•

IGBC Green Homes

•

IGBC Green Factory Buildings

SYED MOHAMED BEARY is the firebrand chairman of IGBC,

•

IGBC Green SEZs (Jointly with Ministry of Commerce &

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

Industry)

Credai Member.

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A Lessonin Humility Professional’s Quote

One 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.

The hospital administration obliged to treat the patient in the general ward free of cost. Doctors donated drugs the attendants and relatives helped them by giving them food and moral support in spite of language barrier.

ere is a lovely piece from a professional I have never met but like many of you, keeps in touch over the

The boy was operated upon and he made remarkable fast recovery. Even before a week passed, he was eating by himself

Internet. Dr. Ramana is a neuro-surgeon from Vizag

and walking around the ward. He started gaining weight.

and he has this absolutely humbling story to share.

All these happenings gave me a real “feel good” within and

“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

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

from small towns who have relatives at Vizag come here for

asked why should he? The purpose of bringing him here

specialized treatment. This is how a family of four landed up

was to have him cured - so why the thanks? If that was not

at our hospital one night.

the case, “Why would I have taken all the pains to shift him

The father and mother were holding a thin boy of nineteen

here?”, he asked me.

years in their rough, weather beaten arms. The younger sister

Then he told me that he had sold all the land he had for five

was hiding behind the mother’s sari awed by the hospital’s

thousand rupees, and for first time entered an unknown place.

bright lights. The troubled little group radiated innocence, pain

Other than his hamlet the only place he had ever visited is the

and poverty. The boy was shifted to Neuro ICU immediately. He

weekly “haat” (open air market) near his village to sell the forest

was unconscious for fifteen days and also malnourished due to

products he collected for the whole week. He wanted to save his

vomiting and dehydration. Prior to becoming unconscious he was

child and that alone made him venture into a big city.

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.

abdomen.

boy needed; other patient’s

Editor’s Box

- Subroto Bagchi be put from the brain to the

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:

Giving up the persuasion trail, I requested the scan center to do

The High Performance Entrepreneur, Go Kiss the World and

free a CT scan of the brain. The scan confirmed hydrocephalus;

The Professional as Penguin Portfolio books. Currently, he writes

a condition that required surgery. He needed a shunt tube to

a column titled “Zen Garden” in Forbes India.

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NEAT INDIA Editor’s Box Swanky 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.

plastic waste, the bowel churning sight of spit & human waste in the middle of our cities, our badly maintained public transport & indisciplined

couple of months back I was in Delhi to attend

traffic, the haphazardly organized buildings & shabbily

one of those ostentatious weddings. There

maintained facades, the quagmire of cable mess that is

were four mega functions, three in Delhi’s

cluttering our sky-line, the garishly displayed publicity

swanky hotels & one in the bride’s sprawling

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

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

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

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

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

opportunity to travel with an American gentleman called Joe.

this right?

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

I don’t think there is an easy answer to this. But there is no harm in discussing some basics.

what he had seen up till then easily complimenting the Indian

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

IT juggernaut stories that he was fed with back home.

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

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!!

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.

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.

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.

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?”

- Umar Teekay

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

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

desi guys again the moment they reach Thailand

garbage piles, the irresponsibly left behind construction debris,

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

the carelessly thrown trash, the ever increasing mounds of

to do with the legendary stringent

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

If the government agencies and the builder community can

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

join hands to spearhead a campaign that can result in visibly

quickly appreciates and prevents one from disturbing.

distinct public spaces, we can probably hope for people to

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,

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.

thanks to the pioneering efforts of some architects and builders,

Incidentally neatness is a close companion of cleanliness.

we started seeing jazzed up common areas with high-end

Cleanliness invariably follows neatness. While cleanliness

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

is slightly abstract and difficult to enforce, neatness can

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

be ensured because it has a perceivable and appreciable

very same Bangaloreans’ age old habit of spitting in staircase

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

corners & dirtying the common areas of these buildings.

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

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

should be an equally important campaign.

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

Incidentally, our American friend Joe was greatly impressed

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

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

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

was particularly envious of the way an average rich man

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

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

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

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

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

well groomed personal attendants and the likes. As long as

irresponsibly the moment he hits the small town roads. How

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

else would you explain this?

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

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

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”

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

How true! The nation that has already arrived continues to

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

live in filth! How disgraceful!

And as for the builder community, haphazardly organized buildings, irresponsibly disposed debris...here too, the list is quite long.

Time we did some thing towards Neat India. 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, corporateclass look and feel.

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& an Egg!

Three Chickens Editor’s Box

One short article ‘shows’ us the marketing ‘tool’ that all of us have been looking for ever since we started selling. - Harish Bijoor

n the several marketing summers I have lived,

Let me illustrate this with

fought, sweated and thrived, there is one

an example. Let me choose

insight that has held me in good stead. This

my favorite gourmet table

is the insight of Integrity branding.

bird for this example, the

Integrity branding is all about saying the simple truths in your brand communication process. Stick to the tone and tenor of

of them. There are really three

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

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

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

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.

process is a relationship. A relationship quite like the many

Each of the marketer chickens takes a different path to market

relationships we go through in our social lives.

their respective eggs.

When you get into a relationship with a member of the

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

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

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

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

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

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

audience of potential consumers and whispers with a decibel

into expecting dishonesty and the lack of integrity.

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

Very simply put, consumers get into brand relationships based

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

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

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

much of it? And how frequently so?

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

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

chicken! Let me take three

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.

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

When the few consumers actually arrive to see the product,

round the corner.

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

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

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

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

The delivery is 100. There is a negative stroke quotient

fact that it scores very low on consumer awareness scores.

of -300. And nobody buys!

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

All these three chickens and their respective approaches are

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

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

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

this choice every living day.There are variations available in

shout quality is equal to that of product quality.

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

The pros of this approach is apparent. Awareness scores are

choose differently.

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

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

But there is a problem here. Consumers do not necessarily

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

respect honest chickens. When the consumer has heard the full

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

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

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

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

is heard and trusted the most.

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.

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

R e c o g ni t ion

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

The third chicken is waiting. This chicken finds the

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

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:harishbijoor@hotmail.com

ur member from CREDAI Karnataka,

dedication. While thanking the Association for the honor

Mr. M.R.Jaishankar of Brigade Group

bestowed on him, Mr. Jaishankar requested fellow builders to

was honored by Builders Association

look forward to take more challenges and work with increased

of India, Karnataka Center during their

dedication to complete structures that will stand the test of time and with superior quality. He compared the efficiency and

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

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

Industry and for creating World Class structures’ in Bangalore and elsewhere. Mr. Balaveera Reddy- former Vice ChancellorVTU, 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

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Blue Gold Editor’s Box

- Vivek Menon 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

Much has been written about solution to water problems but

generated finds its way

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

into a sewage treatment

plan (STP). An effective ith twenty percent of the world’s population

solid waste management

and six percent of the world’s fresh water

system through a global

resources, India’s current water management

tender, that has eluded

policy seems ill equipped to address this

the urban dweller thanks to the wrangling within the local

fundamental problem. In a country like ours which is blessed

municipality, would ensure an eco friendly approach

with significant sources of water both in terms of the melted

and minimize contaminated landfills. Both of the above,

ice from snow capped peaks and adequate precipitation,

implemented effectively, would keep our storm drains and

the solution seems to hinge more on water management

hence lakes clear of contaminated effluent. As an example,

than in addressing the statistic. A search in “Google”

the “slaughter house” at Tannery Road in Bangalore currently

reveals innumerable theses that have been written by various

spews blood and fecal matter that finds its way into Ulsoor

governmental and non governmental agencies on water

Lake. Sustained efforts from many local groups to shut down

management. Pundits and professors alike have suggested

the abattoir and/or install an effluent treatment plant at the

various doomsday scenarios to wake up both the polity and

site have been met with litigation and false promises. Similar

bureaucracy to this impending problem. While the ink has

situations may be true to other cities also. In the United States,

dried on many a report, little seems to have been done to

all waterways like our very own “Rajakaluves”, come under the

address this issue. Every year, drought stricken areas across

jurisdiction of the US Army Corps of Engineers. This guarantees

the country cry for as much help as flood inflicted areas. For

that no one ever encroaches or contaminates these lifelines.

once rural and urban India seems to wake up to the same dilemma.

Most of our country is blessed with adequate rainfall barring the western deserts. While the urban sprawl has depleted

While Dr. K.L. Rao’s proposal back in 1972 to link the Ganga

our ground water resources, it is time for us to establish

to the Cauvery and Captain Dastur’s proposal in 1977 may

aquifer recharge zones, or protected green cover, where all

have had certain inherent flaws in them, the intent to interlink

development is prohibited, to ensure adequate infiltration. A

the rivers through a garland canal has found favor among

storm water pollution prevention and flood mitigation plan for

many a scholar including President APJ Abdul Kalam. While

every project that disturbs virgin land, would ensure that urban

one might argue that hyperopia has never been a virtue of our

areas stay free of flooding while construction does not clog

polity and expecting them to invest so much and see such a

or contaminate our storm systems. In the absence of a strong

gigantic project through to completion may be wishful thinking,

policy to regulate and protect our water systems and the will

the solution should be driven by the fundamental right to life

to act, we may end up contaminating this precious resource

guaranteed under our constitution. The project, if properly

that we as a country have been blessed with.

planned and executed could kill two birds with one stone.

Vivek Menon, P.E., has been an advisor to various governments

Coming to the urban scenario, paying fourteen to forty rupees

on public policy related to infrastructure and water management

for a sip of aqua addresses more of a fashion statement than a

and is currently an infrastructure subcommittee member at the

fundamental necessity. “Mineral water or regular” from a white

Center for infrastructure, Sustainable Transportation and Urban

gloved steward says it all about our urban water supply system.

Planning (CiSTUP) at the Indian Institute of Science.

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

We had printed the following article by the above author

has been reduced to a city of cesspools, so is the story of most

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

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Towards

spending these resources is questionable. And that brings us to

Regulating the Practice of Engineering

to ensure that our valuable financial resources are well spent in

a Better Tomorrow...

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.

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.

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 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

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 C r e d a i

building for our future generations.

to perform engineering services for the public. Furthermore, public

Now zoom back to our very own Bengaluru. Other than the

the crux of the challenge; do we have a regulatory mechanism

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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.

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NEW BASE RATE SYSTEM OF BANKS - Rathnakar Hegde one could sanction the loan for lower price for the preferred customer or the corporate bodies and retail customers may have

Editor’s Box All 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.

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 ACKGROUND. Why Benchmark Prime Lending

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

Rate (BPLR or benchmark PLR) did not work?

• Agricultural Loans

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

• Loans given to own employees • Loans against deposit • Export Credit

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

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

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

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

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

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

make banking system much stronger after the global financial

the changes on policy rates by the RBI.

crisis.

The new “Base Rate” system

The PLR was introduced in 2003 to ensure that banks publish

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

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

implemented from 1st July 2010. This new framework would

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

have two major benefits:

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

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

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

quarter.

many banks to do exactly the opposite.

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

Banks stopped adjusting the BPLR when the interest rates went

What happens to the existing loans?

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

The Reserve Bank of India (RBI) has given out guidelines which

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

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

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

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

loans below the PLR / BPLR (also known as sub-PLR or sub-BPLR

without any fee.

loans). In fact, the loans were priced as “BPLR minus 200 basis points”! (That is, 2% less than the BPLR)

Even for banks, maintaining two systems of PLR and base rate would be administratively difficult – so you can expect

Base rate system provides more transparency on setting the

the banks to encourage

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

you to shift to the

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

base rate system.

rates charged while giving out loans. This Base Rate System

But the golden

has many advantages over the older method of Prime Lending Rate (PLR). One advantage is, in the Prime Lending Rate (PLR),

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

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

switch?

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

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).

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

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.

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

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

less than credit worthy borrowers was one of the factors that

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

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

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.

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

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.

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

Transparency on Base Rate System

SLR.

Another advantage of base rate system is transparency on

3. Unallocatable overhead cost for banks such as aggregate

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

employee compensation relating to administrative functions

to declare to the public how they have calculated the base

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

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

and premises expenses, depreciation, cost of printing

into account past six month deposits.

and stationery, expenses incurred on communication and

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.

advertising, IT spending, and cost incurred towards deposit insurance 4. Profit margin. 5. Return on Net Worth

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.

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

Base Rate%

Calculation of Final Rate of Interest

STATE BANK OF INDIA

7.50

HDFC

7.25

ICICI

7.50

PUNJAB NATIONAL BANK

8.00

UNION BANK OF INDIA

8.00

Base Rate (As per Bank)

8.00%

CENTRAL BANK OF INDIA

8.00

Add: Risk Premium

0.15

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

capital allocated against the loan offered and expected

CANARA BANK

8.00

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

CORPORATION BANK

7.75

DENA BANK

8.25

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

INDIAN BANK

8.00

rate of interest.

INDIAN OVERSEAS BANK

8.25

Tenor premium represents cost of outlay of funds for a specified

ORIENTAL BANK OF COMMERCE

8.00

tenor. Premium is also decided by the concerned banks.

SYNDICATE BANK

8.25

Product cost represents allocable facility handling cost incurred

UCO BANK

8.00

VIJAYA BANK

8.25

CONCLUSION:

IDBI BANK

8.00

Whether Base Rate is beneficial?

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.

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:

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

External ratings. Incase there is any difference between the internal and external rating, the risk premium as applicable

at branch level.

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

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

and obtain loans at base or

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

slightly above base rate.

know what the normal lending rate of the bank is?

Mr. Rathnakar Hegde is

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

the former Executive

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

Director of Union Bank

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

of India.

supposed to be priced.

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Office real estate -

Creating symbiotic relationships - Akash Deep Jyoti The building should have a high degree of adaptability to ensure that it not only meets occupiers’

Editor’s Box Article 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.

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

also future needs. The business requirements can change over time due to management 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.

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

The building should have high efficiency in terms of space and

what the occupier expects from office property.

energy. Space efficiency implies optimal utilisation of horizontal

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

current requirements but

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.

facilitates smooth business operations at a maximum value for

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

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

integrated. It should have a superior building management system

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

with tightly integrated mechanical as well as electrical systems

that their overall business plans are not affected.

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

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and power operations. It should deploy energy-saving controls

Finally, the building should have high sustainability levels in

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

terms of environmental friendliness and ecological harmony.

vacant rooms through occupancy sensors. The security of the

Most ongoing office building projects in India now target

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.

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.

The design of the building should ensure good light,

In other words, developers of office buildings need to be

ventilation and natural environment. The building should

receptive to occupiers’ needs, and strive to create buildings

either provide a view of nature to occupants or an inner

that cater to the occupiers’ requirements. The extent to which

courtyard with a view to nature. This would definitely

developers are receptive to occupiers’ interests, and maximise

improve the employees’ concentration, efficiency and

returns for investors will be key determinants of demand and

health. The acoustics of the building must be designed

pricing of office buildings.

and integrated with the other architectural aspects and

Mr. Akash Deep Jyoti, a realty expert with 15 years’

furnishings of the office.

experience, is Head - Ratings, CRISIL Ltd

CREDAI Bengal

EVE N T

MABA and NABC 2010 (Property Exhibition in U.S.A)

or the first time this year there was an

2010 at Atlantic City, Convention Centre U.S.

Exclusive “Indian Real Estate Pavilion”

CREDAI Bengal pavilion made a mark at MABA and NABC

by CREDAI Bengal in Banga Mela 2010

2010 since this was also the first time proper stalls were

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

made for real estate pavilion which was standing out in

Sheraton Music City Hotel, Nashville, Tennessee, USA

the large exhibition area of the auditorium

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

Report on ‘Implication of Service Tax on Real Estate Industry’ the Central Government in the current year’s union

budget.

he Programme, Events and Fellowship Committee of CREDAI Bengal had

The session had a large attendance and the interaction

organized an interactive session on

between ‘Ernst & Young’ and the members was highly

‘Implication of Service

enlightening.

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

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Cover Story

Improving Urban Housing

How do we strategize to provide Homes for All

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 nonprofit 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.

- Mukta Naik

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.

Financial indicators

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.

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

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.

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.

NSSO findings

Health-related indicators

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.

• 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

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• 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!

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

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.

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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.

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 cityspecific 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!

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 submissions. 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

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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.

• 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!

Strategy for developers: Points to ponder

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

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.

planning research and advisory practice at the Institute for Competitiveness. Her interests centre on housing, equitable development and policy.

CREDAI – TAMIL NADU

CREDAI Tamil Nadu & Habitat for Humanity

redai Tamil Nadu had as a CSR Initiative

alongside poor families and thus giving hope and lending

joined hands with Habitat for Humanity an

the sense of solidarity to the cause, our Members did just

NGO concentrating on providing decent

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

by inviting its Members to come forward and sponsor at

way, literally donned the hard hats and worked alongside

least 5 units each.

families building homes around Thiruvallur giving the much

CSR

and affordable shelter to the needy and

had offered to sponsor 300 such units at 5 lakhs each

needed hope to around 300 families in that region.

Following this initiative and having embraced this opportunity with a spirit of compassion it only seemed

The satisfaction and gratitude felt and expressed by the

befitting that on the occasion of World Habitat Day on

villagers and inhabitants of Thiruvallur District provided

October 4th ( as recognized as by the United Nations as

Credai TN Members with the feeling gratification that

a day of reflection on the basic right to adequate shelter

comes out of giving back to society by way of acting

for all and of the world’s collective responsibility for the

on a tangible social responsibility by demonstrating in

future of the world habitat ), which marked the beginning

actions and service its collective commitment to the shelter

of a week to advocate and educate the importance and

requirements of the less priviledged in the State especially

the need for affordable housing with adequate sanitation

when juxtaposed with the booming Real Estate Industry.

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

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NSDC-

BANGALORE INITIATIVE

ith a stabilizing economy and upward

are on by a few training

movement in demand, the Construction

institutions over a long

Industry is seeing rapid and phenomenal

period of time (NICMAR,

growth across the country. The challenge

INSTRUCT etc.,) who have

today for the Industry is shortage of trained labour with good

taken more of advance

skill. The challenge of achieving quality work in specified timeline

level training in class

has to be addressed by the Industry on a war footing.

room like situation. Since

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.

workers skill development needs site interface, it is imperative the training goes to their door steps. Also to have a successful long lasting effort 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

Itâ&#x20AC;&#x2122;s the privilege of CREDAI that our Chairman Mr. Kumar

workers needing training need to be addressed immediately

Gera, is one of the board members of NSDC. Ever since its

on getting the confidence of start. Model of small groups will

inception, Sri Kumar Gera has been keen that Bangalore

be worked out once experience input is analyzed

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.

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

The inspiration for the scheme of things is from CREDAI

4. Site keeping and supervision/management

Pune spearheaded by Mr. Ranjit Naiknavare and persistent

5. Hands on experience to fresh graduates / diploma holders

persuasion by our Chairman Mr. Kumar Gera.

prior to employment

Potentially, the target group for skill development comprises all

The entire training programme will encompass Safety and

those in the labour force, including those entering the labour

basic communication skills.

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.

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

Even before the formation of NSDC, CREDAI Karnataka had

initiative to be taken up by CREDAI Karnataka. Two goals can

planned similar activity when Mr.Balakrishna Hegde was

be achieved through this

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

1- Improving the working condition of existing labor along with enhanced efficiency

my appreciation to Mr. Balakrishna Hegde for initiating the

2- Training and finding fresh engineers for productive

process and also to Mr. Raj Menda and Mr. Sushil Mantri

employment

for taking the effort forward in addressing this very essential requirement of Construction Industry.

- Suresh Hari

To get better result and sustainable programme, pilot projects at few large construction sites are planned. The training needs

Given the nature of Industry - mostly unorganized with poor

to be 100% at site, since the office interface of skilled workers

affordability of the workers to pay for the training (foregoing

is a corollary. To create stimulating situations, mobile models

their daily wages) most of the development needs to be

will be created on the lines of â&#x20AC;&#x2DC;Mobile demo modelsâ&#x20AC;&#x2122; on

imparted at convenient time and location. Similar efforts

wheels. This vehicle will be taken to different sites depending

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on need and situation. The training will be date specific and

this programme. They need to relieve workers to enable skill

cannot run for months to start with.

development and also provide them with the wages lost. Site

Interfacing with other similar associations is vital for the

support for conducting the course is a must.

successful implementation of the programme. BAI Bangalore

Partnership with other organizations like state governments,

center at present has specific programmes to train fresh

especially ‘Cess Board’ will make the programme very effective.

graduates and certificates are issued under the authority of

The cess collection utilization is one of the nagging issues faced

VTU (Visweswaraya Technological University, the authority

by the Board. An effective interface with them will enable part

who controls all Engineering colleges in Karnataka). These

funding of the programmes. Karnataka is one of the early States

graduates, once trained are an asset to any construction firm

to have initiated the Labour Cess charges and huge corpus is

who look for effective engineers who not only takes care of

available. Though Tackling Government Funding has its own

technical aspects, but also the administrative part. Partnership

limitation, a prudent mix of funds and involvement from them

for the execution of project with these similar Associations will

will enable more authenticity to the Programmes.

enable greater success and reach.

Initially CREDAI Karnataka will allot budget for the programme

We will look at advanced training once the pilot project takes

as CSR initiative, but huge outflow will be required once the

shape. CREDAI Karnataka needs to procure suitable land for

programme takes shape. Detailed costing will be worked

putting up such a center for class room benefit and training

out once the various parameters are put in place. When

different disciplines of labor force.

CREDAI Karnataka launches the full fledged programme

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 course 2. Grade II as Junior skilled worker : 6 months course 3. 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.

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

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

currently, Chairman- Skill Development Cell

CREDAI KOCHI

CSR INITIATIVE OF CREDAI KOCHI

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

CSR

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

Clean City Movement for 15 years. Specialty: - A World class toilet facility 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.

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

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Are you Future-Ready?

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

- Divyanshu Sharma

Editor’s Box This 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.

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. C r e d a i

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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 -

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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

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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

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Between

a rock a soft place 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.

he latest video on youtube.com (http://www. yout ub e. c om / wa tch ? v = Ps 0 DS i h g g io ) 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.

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 central bank capped the loan-to-value ratio for housing loan exposure at

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.

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.

loans worth Rs75-lakh or more by 125 per cent.

wisdom raised the 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’.

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

“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 -

for residential housing

In other words, for all outstanding teaser loans the banks will

The fact of the matter is that asset prices might be rising

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increasing risk weightage

The RBI in its combined

The motive behind the move by Reserve Bank of India (RBI)

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80 per cent, even while

The central bank of India in early November tightened the

- Anil Parameswaran Nair

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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 -

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board, but to club them all in one basket is a mistake that RBI

and bereft of investor-buyers, will be adversely affected. In

commits with impunity.

the higher end of the market, which includes even affordable

The higher provisioning will jack up cost of funds for banks and discourage them from aggressively pushing for teaser loans.

homes in some metro cities and luxury in smaller cities, the new regulation will not mean any thing.

The reason for such tight measures is that such loans affect

There is little speculation in the higher end of the market even

the quality of assets and chances of defaults by borrowers are

today and hence the increase in risk weightage will dampen

high. The RBI might also be playing into the SBI versus HDFC

the 10-90 schemes popular in cities like Mumbai where the

game being played out in public for a long time now.

down payment is broken into two parts – 10 per cent while

The home loan default for SBI, for instance, is known to be

booking and 5 per cent while taking possession.

about 3 per cent and that can be considered an industry

But most big developers any where in the country are not quite

average. This kind of default in payments does not usually

given to taking these measures as a bad thing, more because

affect the balance sheet of banks like SBI because mortgages

the economy is growing and the demand will only firm up

as a percentage of total assets are very low. Of the total loan

even more. The price and demand have not been affected in

portfolio of Rs80,000-crore, special loans would be in the

the festive season which ended recently.

vicinity of Rs20,000-crore.

Pricing in real estate can only be controlled by increasing

Even HDFC’s teaser loan portfolio is about 27 per cent of

supply in housing segment. Even if the floating rates for housing

its retail home loans provided. HDFC’s mortgage book, it

loans are likely to rise, developers don’t see any denting in

is known, is around Rs1.06-trillion and retail loan makes up

the demand – it is almost like the Shanghai building which

about 68 per cent of that.

rises tall in six days to 15 storey. But the point that is moot is:

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

will the approvals in India come so fast to build a structure of that kind?

worth property. Till now the LTV was unregulated and banks

Anil Parameswaran Nair is Executive Editor of Property World

used to give up to 85 per cent loans. In many of the developed

magazine, based out of Mumbai. He has been a business

and a few developing countries the LTV is regulated, but the

journalist for the last 19 years and has worked as Associate

government also helps people to buy houses in terms of down

Editor of the Indian Express Group, News Head of Real Estate

payment assistance for first time buyers.

Television, News Channel Head of India.com and Assistant

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

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.

REP O RT

CREDAI-NAGPUR

CREDAI Nagpur sets up a Customer Grievance Cell

he CREDAI Nagpur in its Annual General

Many builders, including Vice President Mr. Anil Nair

Meeting formed a Customer Grievance Redressal

and Mahesh Sadhvani, Gaurav Agarwal, Ramesh

Cell for the benefit of the flat purchasers from

Pise, Pradeep Khandwani, Siddharth Saraf, Satish

the builders who are the members of the

Bais, Anil Sahasrabjojanee, Suresh Wadwhani,

Association. More than 100 builders attended the AGM and

Ashok Chandak, Vijay Kandode, Rajesh Bajaj,

unanimously decided to follow the Code of Ethics to bring

Mahendra Tayawade, Pahilaj Sachani, Eaktavya

in more transparency. Hon. Gen Secretary Prashant Sarode

Wasekar, R A Sahu, Shashikant Gosavi, Rajendra

assured that the Redressal Cell will be made operational very

Bose and Milind Bhombe were present.

soon and customers of our Member builders can contact this cell for any grievances.

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- Rathnakar Hegde

REAL ESTATE –

FUTURE OPPORTUNITIES & BANK FUNDING

The overall funding by banks is regulated by Reserve Bank of India, who has played a proactive role in financing of various sectors of the economy including real estate. Reserve Bank of India,

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

had in June 2005 laid

opportunities in Real Estate

down guidelines for banks

clearly enunciated with

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

to classify their funding to real estate sector under different

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

classification viz., Direct and Indirect exposure. Residential

Bankers of the country.

mortgages, Commercial real estate and Investment in

mortgage backed securities were included under Direct 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 20052009. 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

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

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

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RBI to extend special regulatory benefits to banks, on first

urban areas is only 28 per cent. The pace

restructuring of advances to real estate, upto 30.06.2009.

of urbanisation is now set to accelerate as

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 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 Indiaâ&#x20AC;&#x2122;s

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 â&#x20AC;&#x2DC;value for moneyâ&#x20AC;&#x2122; attribute, is sure to adopt wait and watch policy, if price rise

urban population will place enormous stress on the system. According to the report of the technical group on estimation of h o u s i n g s h o r t a g e, 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.

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

Keeping in view that the real estate sector is considered

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

as a sensitive sector for lending by the banks, it becomes

for increasing prices. This is expected to keep the momentum

necessary for the developers to improve their credibility, so

going over a longer period.

that they continue to have access to bank credit. The rating

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,

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

for new entrants to emulate.

momentum of growth is maintained, keep the cost low, prices

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

to raise finances both from banks as well as from public

November 2010, has put a regulatory ceiling on housing loans

and continue setting new benchmarks in ethical business

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

practices.

moderate, provide value for money to customers and be able

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

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

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

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Service tax -

Realty players caught between Writs and the Department

Editor’s Box The 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

services. The text of the

with court decisions attack them.

Explanation, as passed

by the Parliament is as 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

follows: “Explanation.—For the purposes of this subclause, 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,

new phenomenon.

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

While numerous writs are getting filed in the Courts and some

builder or the person authorised by the builder before grant of

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

completion certificate by the authority competent to issue such

side, has been vigorously pursuing the Developers and Builders

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

for collection of service tax.

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

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

Till this amendment, the prevailing view, which has been

issues and on how Developers can think of protecting their

accepted by the Department is that, pure Developers, who

interests in this highly surcharged atmosphere.

were not constructing the residential complexes, are not liable

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

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

Let’s look at Construction services, first.

- S Sivakumar be ‘deemed’ as taxable

service tax levy is on ‘construction’ of residential complexes

The Finance Act, 2010 has introduced certain fundamental

and by no stretch of imagination, can a Developer

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

who has contracted out the construction activity

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

be treated as one who is ‘constructing’ the

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

residential complexes, as contrasted

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

to the contractor. The Board had, in

2010-11 has incorporated the insertion of the Explanation to

its Master Circular No. 96/7/2007

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

dated 23rd August 2007, in Para 079.1,

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

clarified that, where the builder, promoter,

expanded to provide that, unless the entire payment for the

developer or any such person builds

property is received post the completion of the construction of

a residential complex by engaging

the flat/commercial property, as evidenced by the Occupation

a contractor for construction of

Certificate, all contracts, irrespective of whether they are

the said residential complex, it is

agreements of sale or agreements of construction, would

the contractor in his capacity as

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Now, how does the Developer protect himself in a situation a taxable

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

service

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

provider

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

(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

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

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

Madras High Court, referred to above.

pending further hearings. What is extremely surprising in the

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

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.

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

Not withstanding the fact that the High Courts are granting

Developers and Builders have already switched over to the

stay orders, the Service Tax Department has been quite busy

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

pursuing the Developers and Builders for collection of service

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

tax. The Service Tax Commissionerates in some Southern

Department, in accordance with the Composition Scheme.

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

service tax to be paid from Day One?

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.

local authorities), the activity of construction would be deemed

And lastly..... Developers and

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

Builders would be well advised to

developer to the prospective buyer and the service tax would

keep a track of the developments

be charged accordingly. Since, this explanation does not alter

emanating from their respective

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

Service Tax Commissionerates. Very

same if part of the service since beginning”.

recently, a prominent online tax portal

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carried a story of how the Service Tax Commissionerate of a

ord er i n t h e

Southern metro, had openly taken a stand against the Circular

Home Solutions

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

case.

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

The Supreme Court in its order on 19.11.2010, has held as under:

of the Board Circulars by the Departmental officers is not

“Counsel appearing for the parties agree that they would all

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

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

is perhaps the case with the Commissioner of the Southern

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

metro, referred to by me.

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

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

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

of the amendment effected to the renting services.

interim order is passed, which according to the petitioners, is creating prejudice to their interest. Re-notify in the second

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

week of January, 2011.”

of and collection of service tax on commercial rentals, on a retrospective basis, from June 1, 2007, would seem to have

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

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

service tax levy on renting services?

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-TIOL402-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

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.

orders that I have come across have not specifically stayed the

Before concluding....

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

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

the Government/Service Tax Department who are also named as respondents.

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event that the Courts uphold the constitutional validity of the amendments brought about to construction services and renting

In a very recent interesting development,

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

the Supreme Court has, in its orders

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

dated November 19, 2010, refused to

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

restrain the High Courts from passing stay

this liability from their customers. Hence, it becomes extremely

orders, in respect of the levy of service tax

critical for the Realty players to legally cover themselves with

on renting services, in an appeal filed by

indemnities from their customers.

the Government against Delhi High Court’s

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

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

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The Ant and its Philosophy Swami Sukhabodhananda of Prasanna Trust

Editor’s Box This 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.

his is a typical narration from what I recently encountered.

- Swami Sukhabodhananda ‘An ant?’ he questioned. If you observe an ant, you can learn a lot. •

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.’

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

When it is summer, it plans for winter – Tremendous planning ability.

•

achieve my organisational goals and at the same time give

When it is winter, it waits patiently for summer – Patience.

•

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

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

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

my life is imbalanced.’

invalidates its strengths – Commitment to do its best.

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

•

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 –

his own world through his art.’

Team and Team Intelligence.

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

•

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

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

to send feedback to the ants following them about the

and proactively go about reaching my organisational goals?’

path they are treading on. This communication chain has

I said, ‘You should observe an ant and learn to organise your life. Ants overcome life-threatening obstacles in this vast world.’

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

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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:

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Flexibility: Are you flexible in giving quality time to your

By following this philosophy, let the results speak.

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

Have you created a successful ant-hill?

life nourishing? Can you see flexibility is the mother of creativity? 2 3

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

Yoga of Wisdom

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

Life is like Painting and not Arithmetic.

enough to develop the quality of patience and have an

Create your world of Joy.

Enjoy each moment: Can you consider every incident as joyous and totally rejoice in the present rather than

permanent?

What the human mind can conceive, believe and dare,

Commitment: Are you giving your best to the present

it can surely accomplish.

moment? Are you allowing yourself to better your best

Our struggles have a cosmic purpose.

TEAM: Can you drop the ‘I’ in you and operate from Humility: Can you be humble to follow the rules of life rather than treat rules as binding forces? Can discipline

Follow the Wisdom of the Ants. Contemplation

‘WE’ and make your family a team? 7

Yoga of Action

desiring that one or some of your joyous moments be

and make it a habit to be fully involved in everything? 6

and peace thus making your struggles sacred.

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

understanding of the seasonal changes? 4

Oh, Mind Relax Please! and allow relaxation to create balance

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.

become a harnessing force?

For Swamiji’s tailor made corporate interventions

Networking ability: Can you meticulously network with

and seminars contact 9901777006, 4153 5832-35.

people in accomplishing higher tasks?

www.prasannatrust.org

REP O RT

CREDAI Tamil Nadu

October 28,2010 will be marked as a red letter day in the annals of CREDAI Tamil Nadu.

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

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

manufacturers.

cement prices.

Subsequently the team met the Finance Secretary of Govt

The demonstration today has exhibited that CREDAI

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

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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.

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

EDITORIAL BOARD Irfan Razack Ranjit Naiknavare Pradeep Jain

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

Niranjan Hiranandani

Position

Single Insertion

4 Insertions (One Year)

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Back Cover - Full page

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Only full page or double spread advertisements accepted.

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Dimensions Double Spread Bleed: 426 x 303 mm Non Bleed: 360 x 265 mm Trim size: 420 x 297 mm

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Full Page Bleed: 216 x 303 mm Non Bleed: 180 x 265 mm Trim size: 210 x 297 mm

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The rates are for colour advertisements (B/W ads are not accepted)  Paper : Cover page 300 gsm, Inner page 170 gsm art paper 

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.

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

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 Hegde Editor CREDAI Real Estate Review 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 : info@charteredhousing.com

SP FABPROJECT

PROJECT : SD TOWERS LOCATION : MUMBAI CLIENT : SD CORPORATION ARCHITECT : HAFEEZ CONTRACTOR PRODUCT : CAPPED CURTAIN WALL,WINDOW, SKYLIGHT TOTAL AREA : 18250 SQM.(UNDER EXECUTION)

Letters to Editor You 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 Gera Chairman, CREDAI National

Day by day content is improving and becoming more and more informative. Sushil Mantri Chairman & 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 Group Vice-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 murthy Bangalore

T N

CREDAI MAHARASHTRA’S

EVE

PROPERTY REDAI Maharastra organised a very successful

city associations were present along with Mr Rajesh Rane,

Property Expo titled “Mera Shahar, Mera

Editor of Metroscan.

Ghar” at the Bandra Kurla Complex Ground in

Mr Gautam Chatterji complimented CREDAI Maharashtra

Mumbai on 26-28 November 2010. The expo

on conducting this exhibition in Mumbai and said how

was held in a huge air conditioned hangar which provided all

this initiative would help decongest Mumbai. He praised

facilities both for participants and home seekers. The highlight

CREDAI Maharashtra for having a proper Code Of

of the expo was the fact that properties from 10 cities outside

Conduct with its efficient redressal system, which ultimately

Mumbai were showcased; and hence the title. DHFL was the

benefitted the consumers. While talking about the rapid

principal sponsor of the event.

urbanisation and housing shortage, he mentioned that

Over 125 stalls with developers from Akola, Amravati,

the state government was looking to fruitful partnership

Aurangabad, Kolhapur, Nagpur, Nashik, Pune, Pimpri

with private sector to fulfil the need for housing. He said

Chinchwad & Solapur displayed over 500 projects from

the government looked forward to working closely with

across the state.

CREDAI Maharashtra in the days to come and assured the organisation of his assistance in resolving issues pending

The Expo was inaugurated by Mr. Gautam Chatterji, Hon.

with the government.

Principal Secretary, Housing, Government of Maharashtra with the traditional lamp lighting and ribbon cutting in the

Mr Rajan Daryani spoke about the various initiatives of

presence of Mr. Lalitkumar Jain, Vice President, CREDAI.

CREDAI Maharashtra and elaborated on the Code Of Conduct. Mr Atul Goel spoke about the various cities and

Mr. Rajan Daryani, President, CREDAI Maharashtra

projects that participated in the expo. He also introduced

explained that since Mumbai is a city consisting of large

and complimented the Exhibition Team of Mr Rinku

migrant citizens from all cities, this expo tried to reach out

Shewani, Mr Samir Sagar & Mr Rupesh Banthia.

to the people wanting to own a house in their hometowns.

EXPO 2010

It also aimed to showcase the progress of the various towns

Mr Lalitkumar Jain and Mr Rajan Daryani also conducted

and cities in Maharashtra to the Mumbaikars. Present at

a press meet at the venue. The expo and the press meet

the inauguration were Vice Presidents Mr. Satish Magar

was widely covered extensively in the Print & Electronic

& Mr. Anant Rajegaonkar, Hon Secretary Mr. Pradeep

Media including Indian Express, Hindu Businessline,

Pimparkar, Hon. Treasurer Mr. Shantilal Kataria ; and Mr.

Maharashtra Times, Sakaal, Nav Baharat Times, Saamna,

Atul Goel, the Hon. Joint Secretary & Convener of the

etc. A special edition of Metroscan was distributed to all

Exhibition. Besides, the Presidents and members of various

visitors at the exhibition.

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S e r i o u s Humour 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.

MANAGEMENT LESSON One 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.

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.

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.

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”

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.

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)

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

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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