Forbes india sonxemay 13 may 2016

AsiA’s Power Businesswomen 2016 PRIce Rs. 110. MAy 13, 2016

The office landlord To beaT By making the workspace his core Business, emBassy group’s Jitu Virwani has Beaten the residential Blues that have Bitten developers across the country

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editor’s note Jitu Virwani’s foresight has resulted in Embassy Group emerging as a force in the office space segment

The Smart Builder

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Best,

Sourav MajuMdar

Editor, Forbes India

sourav.majumdar@network18publishing.com @TheSouravM

4 | forBeS IndIa May 13, 2016

n a sector like real estate, notorious for its choppiness and unpredictability, beating slowdowns and remaining on the growth path over decades is a tough ask. But Jitu Virwani, 50, the Bengaluru-based billionaire, has proved naysayers wrong over and over again with some smart thinking and an innovative approach. Assiduously nurturing relationships and with an eye towards scale and quality, Virwani’s Embassy Group is today one of the foremost names in the office space segment, and is now looking at expanding its horizons to industrial parks and increasing its presence in the residential properties space.

In a sense, Virwani is the quintessential entrepreneur, restless to do things differently even in the wake of challenging circumstances. From the manner in which he convinced his father to allow him to use the Embassy name and grow the brand in his own way to ensuring top-class quality in his office parks, Virwani has traversed a good distance as an entrepreneur. He has forged strong bonds with partners and lenders alike, thanks to his eye for spotting trends early. As private equity firm Blackstone’s Managing Director Tuhin Parikh says, Virwani “understands risk well and knows how much risk he should be taking”. In the business of real estate, this is an invaluable attribute.

Virwani’s story is a part of our annual real estate special issue, which aims to bring you various aspects of a sector which is almost always the subject of animated discussion. Whether it is the slowing demand for homes or the establishment of a new regulatory regime, the Indian realty sector is high on public consciousness. In this issue, helmed by Senior Associate Editor Pravin Palande and Senior Assistant Editor Samar Srivastava, we also bring you, among other things, a story on how some intelligent Chennai developers like Akshaya are seeking to beat the slowdown in that market. Oberoi Realty’s Vikas Oberoi also shares his views on the new regulatory regime in the sector and how it could impact consumers.

Another major offering in this issue is the Forbes listing of Asia’s Power Businesswomen of 2016, a stellar lineup of 50 leading businesswomen who have shown the way through their leadership and innovation. This year’s list has as many as 27 newcomers, and eight Indians on it. Reliance Foundation Founder and Chairperson Nita Ambani debuts on the list this year, with State Bank of India Chairman Arundhati Bhattacharya, Mu Sigma CEO Ambiga Dhiraj, Welspun India CEO Dipali Goenka, Lupin CEO Vinita Gupta, ICICI Bank MD and CEO Chanda Kochhar, VLCC Health Care founder Vandana Luthra and Biocon Chairperson and Managing Director Kiran MazumdarShaw being the other power businesswomen from India.

Contents

/ may 13, 2016

on the Cover real e s tat e special 42 | the WorkspaCe Meister

In the last two decades, Jitu Virwani has emerged as India’s largest premier office space landlord. The Bengaluru-based billionaire now plans to expand his presence in the residential space, and enter industrial parks and warehouses too We value your feedback.

Write to us at: forbes.india@network18online.com letters may be edited for brevity.

Read us online at www.forbesindia.com on the cover & this page: Photograph by mallikarjun Katakol for Forbes India

â—?

Volume 8 Issue 10

may 13, 2016 U pFront speCi a l

20

14 | a neW MarketplaCe

New FDI norms for etailers could bring real profitability in the future

ColU Mn

16 | Mr Market and Mr eConoMy still on the ventilator

Growth remains below trend and deflation remains a cause of concern

Feat U r es enter prise

20 | a nose For noise

By betting big on video, Hungama is looking to become the default entertainment platform in the country

Neeraj roy, managing director and ceo of Hungama digital Media entertainment

60

26 | everyone’s riding the streaMing Wave Video streaming players are queuing up for India, but they may have to brace for a bumpy ride ahead

r ea l estate speCi a l

30 | ‘the neW real estate regUlations Will pUsh priCes Up By 30-50%’

Vikas Oberoi, chairman and managing director of Oberoi Realty, welcomes real estate reforms with a rider

34 | Chennai gets the Chills

The city with one of the lowest demands for housing has forced realtors like Akshaya to adopt innovative strategies

38 | BUilding on trUst

Despite the slowdown, Noida-based realtor ATS Infrastructure is expanding its business and credibility

The Marriott-Starwood merger will lead to more jobs in the sector

76

48 | all i Want is a Bed soMeWhere

NestAway Technologies’ rent-a-bed model has made house-hunting easier for single professionals

51 | the oFFBeat investors

ASK’s realty PE business has generated stellar returns by turning conventional wisdom on its head

54 | ready to BUild

Precast technology could be the answer to India’s mass housing needs

56 | ‘the Wealthy have gone FroM 32: mexy xaVIeR; 90: Getty ImaGes

Chasing trophies to yield’

Lord Andrew Hay, global head of Knight Frank Residential, says property is an attractive class even today

57 | soMe hoMe trUths

All you wanted to know about the real estate sector

Cor por ate aCCoU nt

60 | the road to tWiCe as good

The Marriott-Starwood merger that’ll create the largest hotel chain in the world spells good news for Indian customers 6 | ForBes india MAy 13, 2016

Nita ambani debuts on the 2016 asia’s Power businessWomen list

84

90

Sam balsara’s ancestral house in Malcolm baug, Jogeshwari

asi a’s poW er BUsinessWoMen 2016

dwayne bravo is a ‘champion’

94

64 | the roll oF honoUr

A rundown of 50 leaders who have shaken things up last year

76 | having it all

Nita Ambani’s role as the first lady of Indian business is just one part of her busy life

80 | dreaM Weaver

A fifth-generation scion has designs on modernising her family’s traditional Indian sari business

82 | a dozen on the rise

young guns who have the potential to make it to the list

liFe r eCliner

84 | a hoMe oF yoUr oWn

Despite soaring prices, buying a house remains an investment, be it financial or emotional

96

92 | the CariBBean pUnCh

Much before his hit single made him the man of the moment, Dwayne Bravo has had a storied career in cricket

a ppr a isa l

The latest version of the luxury car is fancy, fashionable and full of features

r egU l a rs

08 | letters

10 | leaderBoard

96 | nUggets

98 | thoUghts

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84, 90: Joshua NaValKaR

94 | Car: 2016 volksWagen Beetle

letters to the editor

Readers Say no end to water woes

Refer to ‘Drink It Neat’ (Issue dated April 29, 2016). The easiest way to prevent water crisis and make India a water-rich nation is to give Rs 100 tax rebates per year in any tax as desired by the beneficiary for 10 years per cubic metre rain water harvesting structure constructed by him. Everyone, including industries, farmers and businessmen, can avail of this tax exemption. The size of harvesting structure permissible can be 1 cubic metre per 10 square metre of land owned by the beneficiary.

Alok, on the web twitter.com/Forbes_India facebook.com/ForbesIndia linkedin.com/groups?gid=1959962 www.google.com/+ForbesIndia

Why count on a foreign service provider while we are struggling to manage our foreign fund reserves? We have enough brains and institutes to take up this challenge for technology provision.

Devang A Shah, on the web

boon to farmers

Refer to ‘Custodians Of The Harvest’ (Issue dated April 15, 2016). This is what Indian farmers need. Please open these type of storage facilities across India.

Krishna Kumar, on the web Great going by Sohan Lal Commodity Management… wishing them all the best.

G Ranga Rao, on the web Interesting. I’d like to know more about this system and wish we can follow you with your guidance.

Indu Surendranath, on the web

Corrections & Clarifications Issue dated April 29, 2016 On page 24 — In ‘New Rules. Same Players. Games On’, we wrongly attributed the byline to Gunjan Jain.

The error is regretted. the office landlord to beat

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Alternatives to the Annual Performance Review Companies are abandoning the age-old tradition of the annual performance review.

What can possibly replace it?

Givers, Takers or Matchers: Who are most likely to succeed at the workplace?

‘Givers’ can be too self-sacrificing; ‘takers’ can be dominating.

Wharton professor and author Adam Grant talks about the differences between various personality types

Does democracy help or hinder growth?

Regardless of its appeal politically, can democracy be defended on economic grounds alone?

8 | forbes india may 13, 2016

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may 13, 2016 forbes india | 9

LeaderBoard

aperture

Rescue workers search for survivors after a 7.8-magnitude earthquake struck Ecuador on April 17, bringing devastation to cities and villages along the country’s Pacific coast. Death toll from the tremors has crossed 500 and dealt a shattering blow to the South American OPEC nation’s already fragile economy that has been hit by plunging oil revenues.

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Fatal Tremors

$11.5 bln

LeaderBoard Cashless eConomy

not need to set aside funds upfront in an account.

At present, the UPI is in its testing phase and is operational for a closed user group, which includes banks and various technology platforms. It is expected to be launched for the public in two months, an NPCI official said.

In the first phase, at least 30 banks are expected to provide this service to their customers. They just need to download the UPI app of the respective bank and generate a mobile PIN to confirm a payment. “(UPI) is a game changer,” says Sanjay Khan Nagra, a senior associate with Khaitan & Co. Several technological innovations in the US were PC/desktopbased or linked to the internet, Nagra says, but rarely has change taken place at this scale through the mobile platform.

The UPI is built on the country’s existing IMPS (immediate payment system) where funds can

Upi: When Banks Turn Mobile Wallets The Unified Payments Interface will make transfer of funds and eshopping safe as well as hassle-free

the country has taken a massive step towards a cashless economy with the launch of the Unified Payments Interface (UPI) through the National Payments Corporation of India (NPCI). The NPCI is a primary body governing all retail payment systems in India.

UPI is set to make eshopping easier and allow

people to transfer funds instantly across banks.

Now, one can transfer money with just the UPI ID (like a virtual address or email) of the receiver.

This would eliminate the need to provide sensitive information like a person’s bank account number, IFSC, debit/credit card and CVV numbers. Also, unlike a mobile wallet, one does

india’s smart move

Smartphone users in the country are set to equal the number of active bank accounts by 2020, according to a report by Motilal Oswal Securities Ltd (MOSL)

162

388 343

FY14

224

304

389 387

364

FY15

Number of non-smartphone users Source: BCG Research, MOSL

386

434

FY16

467

291

FY17

Number of smartphone users

FY18

625 629

577

525

477 332

550

243

FY19

195 FY20

Number of active bank accounts Figures in million

be transferred from one account to another 24x7.

“It will make one’s bank account operate like a mobile wallet,” says Nagra.

RBI Governor Raghuram Rajan calls the UPI ‘a revolution’. “The country has the most sophisticated public payment infrastructure in the world, which can be accessible to anyone who enters the system,” said Rajan. Axis Bank’s MD and CEO Shikha Sharma has called UPI a “WhatsApp moment” and an “audacious” innovation for payments in India.

Mobile banking and online shopping have risen sharply in India’s urban regions. Payment banks are wooing customers through cashback offers while private banks like HDFC Bank (PayZapp), ICICI Bank (Pockets), Axis Bank (Lime) and Kotak Mahindra Bank and state-owned giant State Bank of India (Buddy) have launched their mobile payment systems to battle mobile wallet companies like Paytm and MobiKwik.

But India remains, largely, a cash-led economy.

Cash constitutes 68 percent of consumer payments (in value terms), according to analysts AS Venkata Krishnan, Alpesh Mehta and Dhaval Gada from Motilal Oswal Securities in a March 2016 digital banking report. The “cash intensity”—which the RBI wants to help bring down—is expected to reduce to near 40 percent by 2019, the report says.

-salIl PanChal

May 13, 2016 forBes india | 11

shuTTersToCk

The projected value of India’s mobile wallet market by 2022, according to research and consulting firm 6Wresearch

LeaderBoard top honours

Fisherwoman’s Auto Ride to Global Glory

Joshua naValkar

Fisherwoman and Tuk Tuk, a 15-minute animation film by Suresh Eriyat, has won a National Award this year and is also making waves overseas a halt at a traffic signal in Mumbai many years ago resulted in an idea that has brought national and international glory to Suresh Eriyat, 42, founder and creative director of adfilm production company Studio Eeksaurus. Eriyat was driving to Famous Studios in Mahalaxmi, Mumbai when he saw a group of fisherwomen; he considered their confident stance, and wondered whether they would have pursued a different profession had their socioeconomic situation been different. His curiosity inspired the animation film Fisherwoman and Tuk Tuk (FTT), the story of a middle-aged fisherwoman who dreams of owning an autorickshaw.

The 15-minute film won the National Award for the Best Animation Film this year. Since March 2015, FTT has been screened at over 31 film festivals and won more than 12 awards, including the Award of Excellence at the Tokyo Anime Award Festival in 2016.

“Winning the National Award was a pleasant surprise,” says Eriyat, a graduate from the National Institute of Design.

12 | FoRbES indiA MAy 13, 2016

In his 10-year stint with the animation division of Famous Studios, Kochi-born Eriyat was instrumental in making the memorable Amaron Battery and ICICI Chintamani campaigns. In 2009, he founded Studio Eeksaurus, which created FTT. “In India, animation is largely perceived as a technical skill than a medium of storytelling. Our aim was to prove that we don’t just do the back-end work; we can also do a story,” Eriyat tells Forbes India.

FTT does not conform to the norms of animation films like having “lovable characters”. “My protagonist [in FTT] is outright brash and manly looking,” quips Eriyat.

The accolades may be pouring in, but making the film wasn’t a cakewalk for Eriyat, the recipient of over 100 awards. He began pre-production work on FTT in 2009, but his team at Eeksaurus left the project midway because they didn’t believe in it. Not one to give up easily, he restarted work with a new 10-member team and completed the film in February 2015.

His success will prove to be an impetus for India’s animation industry, which

Kochi-born Suresh Eriyat was instrumental in making the memorable Amaron Battery and ICICI Chintamani campaigns

generated revenues of Rs 5,110 crore in 2015, a growth of 13.8 percent over the previous year, according to a Ficci-KPMG report.

But Eriyat says there is still room for improvement.

“Firstly, most of our writers think live action when they write animation.

Then, there are no funds for animated films in India. Thirdly, there isn’t an established revenue model,” he points out.

The filmmaker, however, is hopeful that the raw, unrefined talent in India will script a turnaround.

He has himself led from the front with his animation film Fateline, produced for the Rotary International in collaboration with J Walter Thompson (JWT) Kolkata, winning the

Annecy Cristal Award in the Commissioned Film category at the Annecy International Animation Film Festival in 2015. “It was fantastic working with Suresh. His enthusiasm and creativity took the film to the next level,” says Raji Ramaswamy, senior vice president and managing partner, JWT Kolkata.

Eriyat isn’t done yet.

His upcoming projects include a 12-minute clayanimation film called Tokri, which is likely to release by 2016-end, and a fulllength thriller. With these, he wishes to change the perception of animation as a ‘kids-only’ genre. His record suggests he might be readying himself for some animated celebrations.

-shruti Venkatesh

25%

aGaiNSt the oDDS

Making it Big, in Nepal Billionaire Binod Chaudhary’s autobiography is a candid account of the costs and compulsions of doing business in the Himalayan nation an earthquake on February 27, 2010, struck the Chilean coast, triggering a tsunami that caused widespread destruction.

In the capital Santiago, Nepalese businessman Binod Chaudhary and his wife Sarika found themselves trapped in their hotel. “I didn’t even think of getting up and running,” he recalls. “When things returned to normal, I realised that life could end any moment and I should share my story.”

Born on April 14, 1955, to a wealthy businessman in Kathmandu, Chaudhary has built a billion-dollar empire under the Chaudhary Group and Cinnovation banners. He is also the only Forbes billionaire from the Himalayan nation, with a net worth of $1.16 billion (as of April 20, 2016).

Chaudhary’s autobiography, Making it Big, published

by Penguin Books India, takes a look back at his tumultuous journey.

“When I made up my mind to write this book, I also decided that I would not manipulate it,” he says. The result then is a candid portrait of a businessman not willing to take no for an answer.

Nothing perhaps

typifies this as well as the story of Chaudhary’s partnership with Prince Dhirendra, brother to the former King of Nepal, Birendra Bir Bikram Shah.

In the early 1980s, to counter setbacks caused by political animosity from certain sections of the royal palace, Chaudhary struck a deal with Prince Dhirendra. “In order to protect me, he offered that I take a majority stake in a

new company and signed a paper that confirmed that the money I was investing for his share was a loan,” says Chaudhary. The result was the creation of a company called Apollo Steel Industries. It gave him significant influence, thanks to the governance structure that he describes in the book: “In those days, all government ministries were divided among, and controlled by, the secretaries at the royal palace.

However, these secretaries were subordinate to the King’s brothers, who had divided the ministries among themselves.” The details

of the partnership and a subsequent standoff with the Prince’s wife make for a surreal display of power and corruption in the former kingdom.

Seated in a suite at the Taj Lands End hotel in Mumbai, Chaudhary recounts this episode with a wry smile. “There were also good souls in the royal family,” he says of Prince Dhirendra, who was killed in a massacre in Kathmandu in 2001.

Chaudhary, the consummate salesman, often likes to tell the story of how, as a 16 year old, he stood outside The Taj Mahal Palace hotel in Mumbai and marvelled at it, too afraid to walk in.

It also finds mention in the book. So does the fact that his group has since gone on to partner with Taj Hotels Resorts and Palaces in a number of countries.

While Wai Wai, the popular brand of instant noodles is perhaps his best known asset, a significant share of Chaudhary’s estate comes from the group’s stake in Nepal’s Nabil Bank. The candour that Chaudhary promises in the book is also evidenced in his personality. “That’s one of the things about people like me,” he says. “I persevered and I wouldn’t give up.”

For now, with his group’s expansion into Southeast Asia and the Middle East, he is doing just that.

-aNGaD SiNGh thakuR

may 13, 2016 forBes iNdia | 13

mexy xavieR; toP: Getty imaGeS

Share of remittances from abroad in Nepal’s GDP, according to data from the Nepal Rastra bank—the country’s central bank

special ecommerce regulatioNs

A New Marketplace

FDI-related regulations for ecommerce players will benefit some and hinder others, but could bring about real profitability in the long term

By Deepti ChauDhary & DeBojyoti Ghosh

Joshua Navalkar

T

he contours of competition in India’s ecommerce industry are all set to change after regulations around foreign direct investments (FDI) were announced on March 29. The Department of Industrial Policy and Promotion announced regulations that provide both clarity and restrictions related to ecommerce players who operate on the marketplace model.

Clear definitions of what a marketplace can and cannot do are good for the industry and investors.

Experts believe the new norms may well set ecommerce players on a road 14 | forbes iNdiA may 13, 2016

to profitability, but at the cost of the growth of over 300 percent that some of them have been experiencing, riding on the massive discounts they offer.

It remains to be seen what impact the norms will have on the ecommerce companies on their already-sluggish valuations. They are also expected to benefit a new category of players in the ecommerce fray—large, wellestablished business houses.

Advantage Corporates?

The new regulations allow 100 percent FDI through the automatic route in online retail of products and services under the marketplace model. The

regulations define what a marketplace is—an information technology platform run by an ecommerce firm to act as a facilitator between buyers and sellers—and how it should operate. The regulations clearly restrict ecommerce companies from directly or indirectly influencing the sale price of goods and also mandate that such companies cannot generate more than 25 percent of total sales from a single merchant or vendor.

“This might affect companies that work with one large client and get most of their sales from that client. There are some anomalies that need to be dealt with. But, keeping

that aside, the government wanted to have a pure play marketplace whereby the transactions are not done through related parties,” says Vivek K Chandy, partner, J Sagar Associates, a law firm. For example, WS Retail is the single largest seller on Flipkart, contributing to more than 25 percent of it total sales (recent reports suggest Flipkart will cut shelf space for WS Retail). Similarly, Cloudtail India (a joint venture between Amazon India and NR Narayana Murthy’s Catamaran Ventures) is the largest seller on Amazon.in.

These restrictions apply only to companies that have raised any amount of foreign funding, which would include almost all large ecommerce firms in India, such as Flipkart, Snapdeal and Paytm. This new rule provides an unexpected advantage to captive ecommerce platforms of deep-pocketed Indian corporations. “In terms of the flexibility of doing business, new ventures by Indian corporate houses stand on a stronger footing when compared to entities with foreign investments,” says Amarjeet Singh, partner, tax, at KPMG in India.

Aditya Birla Group, late last year, launched fashion portal abof.com, while Reliance Industries started ajio.com (Disclaimer: Reliance Industries is the owner of Network 18, the publisher of Forbes India).

ITC Ltd, too, recently announced its plans to start a marketplace and the Tata Group is also expected to launch its ecommerce business soon.

In India, ecommerce businesses have differentiated themselves on price point and service quality. But not many corporate houses have adopted strategies like deep discounts and customer acquisition to grow their businesses. When they enter the ecommerce industry, they bank on the manufacturing base, brand recall and strong distribution networks of the mother ship. Which means that

despite being late entrants and offering services that may be underwhelming compared to digital natives, the ecommerce arms of older businesses could attain substantial market share.

Besides, these businesses, which don’t have foreign investments, are allowed to offer discounts, have sales of over 25 percent from one vendor and can even have a mix of an inventorybased and a marketplace model.

But many marketplace owners are unwilling to accept that these corporate houses have a competitive edge. “The advantage comes to them in the shape of what others can’t do.

Nothing makes it easy for them. The existing companies are required to change their ways of doing things.

despite being late entrants, ecommerce arms of older businesses could attain substantial market share But these new entities [corporate businesses] have to create a space for themselves,” says Sanjay Sethi, co-founder, ShopClues.com.

better service

Ecommerce in India is a battlefield, with large firms like Flipkart, Amazon, Snapdeal and Paytm fighting it out for the top slot. With China’s behemoth Alibaba and Japan’s Rakuten gearing up to enter the Indian market and Indian corporate houses paving their way into the industry, the competition is getting stiffer. But given the hammer on discount strategies, the companies will now have to use service standards—like customer satisfaction, delivery standards, and

authenticity of products, among others—as key differentiators.

However, it’s possible for online firms to look at alternative routes to circumvent the restrictions on discounts. Merchants or brands are allowed to offer discounts on online platforms. Think of it as a mall, where the mall owner has been banned from offering freebies, but not the individual shops inside the mall. Besides, to build loyalty and interest, an online marketplace can even give coupons or points for future purchases.

“People can find simple, not even smart, ways to go around them [the new rules],” says Harminder Sahni, founder and managing director, Wazir Advisors, a retail consulting firm.

“No one can track who is really offering the discount—the marketplace or the individual merchant. It can’t be done unless a technology comes in to cover each deal and see what’s discounted.”

Marketplaces can also slash the commission they charge from merchants (currently they charge something in the lower teens) and allow them to pass on the benefit to buyers.

But despite the escape hatch, the new norms mean that ecommerce firms will have to apply the brakes on their skyrocketing growth and valuations. “Funding was already difficult, it will be more stringent now, investors will look at the bottomline and ask harder questions,” says Ashish Jhalani, founder of eTailing India (India’s largest ecommerce knowledge platform).

But Singh of KPMG expects that impact to even out in the longer term and feels that the companies may even begin to look at profitability in real terms.

“The strength of these companies is their brand value and once structured as per the regulations, such business will prosper like before,” he says. may 13, 2016 forbes iNdiA | 15

das capital The price of everything you buy increases, but that of what you don’t buy is falling

Mr Market and Mr econoMy still on the ventilator Growth remains below trend, business activity levels do not match up to forecasts and deflation continues to be a concern

By Satyajit DaS

the condition of conjoined twins Mr Market and Mr Economy remains uncertain. Mr Economy has spent much of the last seven years in an induced coma, with only a modest recovery from the Great Recession. The root causes of that episode remain unaddressed. Debt levels are higher now. Global imbalances remain. The financialisation virus has proved resistant to available medicines.

Structural changes have proved difficult.

Growth, a vital sign, remains below trend. The International Monetary Fund (IMF) has slashed global growth forecasts four times in the last year. Further downgrades seem inevitable.

Trade growth, another key indicator, is weak. In recent history, it has averaged double of economic growth rates.

Now trade growth is below economic growth rates, suggesting further falls in activity. It may also signal a slowdown in cross-border financing of trade and a shift towards autarky, or closed economies, as the benefits of globalisation diminish.

Businesses are experiencing activity levels lower than official forecasts, suggesting that the latter reflects an optimistic bias designed to maintain confidence. Ultimately, Mr Economy’s condition will depend on facts rather than forecasts. As Aldous Huxley observed: “Facts do not cease to exist because they are ignored.”

Disinflation or deflation concerns remain. Normally, stable or falling prices would not be problematic.

However, Mr Economy’s high debt levels would become unmanageable under such conditions.

Efforts to boost inflation have failed. With oil prices around $40 per barrel, sharply lower commodity prices and over-capacity in many industries, the chances of improvement are low. Low or negative interest rates, in part engineered to manage Mr Economy’s elevated debt levels, signal that higher inflation is unlikely.

Consulting physicians are disappointed that lower oil prices did not provide the expected increase in activity. The damage to exporters, like OPEC members as well as Russia 16 | forbes india May 13, 2016

and Brazil, appears to have been greater than the benefit to oil importers with the possible exception of India.

Over-production, an unprecedented amount of stored crude (some afloat on tankers) looking for buyers and a fight to the death for market share led by Saudi Arabia suggest prices will remain under pressure. Even the occasional threat of disruption to supplies due to conflict, increasing military consumption and some modest consumption increases seems unlikely to reverse the situation.

Uneven performance

US growth, at around 2 percent, remains below par.

Producing things, which end up in inventory or are bought with sub-prime auto loans, does not seem viable in the long run. America’s improvement was driven by a lower dollar, growth in emerging markets and a revitalised energy sector.

Much of this is now reversing.

The extent of long-term damage to the energy industry from lower prices remains unclear. Profits and cash flows have fallen, especially for shale oil and gas firms. Frantic restructuring, cost cutting (read over 250,000 jobs lost globally) and suspending investment have bought time. But if prices remain low, more problems are expected.

The misery index (inflation rate plus unemployment rate) remains at its lowest level since the 1950s. But faith in statistics is flagging. The price of everything you buy increases, but that of what you don’t buy is falling. Employment gains are overstated by falls in the participation rate and part-time jobs. Employment as a percentage of population has not recovered. The bulk of new jobs are poorly paid, lack security and progression.

Hours worked and wage growth is weak. As a consequence, consumption and investment remain fragile.

The expectation was that, in 2016, America could be taken off its low interest rate medication. This still remains a plan. But higher rates may curtail progress. Investment, already slow, may fall. A stronger dollar, already up by

EU and a rancorous decision-making process. Serious opposition to immigration and free movement of people required by the Schengen treaty has emerged.

Questions about the EU and euro continue. The former poster child of European integration—Finland—is in recession. Its options are limited as it is unable to respond by adjusting its currency or interest rates. The Finnish parliament is to hold ‘Fixit’ hearings next year, debating an exit from the monetary union and a return to the markka.

Britain will vote in June in a closely-contested referendum about their participation in the EU. Japan has entered its fifth technical recession in seven years, casting doubts on the ability of Abe-nomics to arrest its two decades of economic stagnation.

No one believes that China is growing at around 6-7 percent per annum. Official growth does not reconcile to underlying individual statistics, such as trade, investment, consumption or real production. It is incompatible with policy actions, which include six interest rate cuts since November 2014 to record lows, steps to increase bank lending and devaluation of the yuan.

A massive credit expansion, mal-investment, overcapacity in many industries and property and stock market bubbles are proving increasingly difficult to contain. Chinese economic managers are also finding it difficult to shift towards domestic consumption as a new source of growth.

The only debate is whether the adjustment will be a soft or a hard landing.

With it contributing around one-third to half of global growth, a deceleration in China will set off negative feedback loops in the global economy. Other countries are reliant on China as a source of demand, with around 40 countries having it as their largest export destination.

Like China, once a beacon of hope for Mr Economy, emerging markets face several headwinds. SubMay 13, 2016 forbes india | 17

chaitanya dinesh surpur

over 20 percent, will affect corporate profits and export competitiveness. It may trigger financial market instability.

The condition of Europe and Japan is more desperate.

Europe’s tentative recovery was driven by negative short term rates, massive QE, a weaker euro (driven in part by these policies) and low oil prices. But the continent has a deteriorating outlook with economists hunting for second decimal points of improvement with microscopes.

German exports to emerging markets are slowing. The Volkswagen emissions scandal has brought into question Europe’s much-vaunted technical prowess. European debt problems and the banking sector’s high level of nonperforming loans (€1.2 trillion) remain unresolved. In the aftermath of the attacks in Paris, the French government has announced that it will not abide by deficit and debt limits. Italy refuses to bring public finances under control, despite a worsening debt-to-GDP ratio.

Greece is likely to be in the spotlight, with a probable relapse. The government will find it difficult to meet bailout conditions raising the issue of default, Grexit, or both, amid growing reluctance for further support. Portugal’s new government, an uneasy coalition between foes, has sworn allegiance to the European Union (EU) and the euro but is seeking major concessions. With the highest total debt-to-GDP in the EU, a Portuguese debt restructuring, explicit or de facto, is not unimaginable.

Despite positive talk, Spain’s public finances remain poor and unemployment unsustainably high. The recovery stays uneven with excessive reliance on domestic consumption and exports, primarily automobiles, to other European countries.

Spain has been without a government since December 2015 and new elections seem the likely next step, making the nation vulnerable to political instability.

Europe’s refugee crisis may boost economic activity, but is expensive, at around €10,000 per refugee per year initially, pressuring weak finances. It has also highlighted deep divisions within the

das capital // satyajit das par growth in developed markets and China combined with low commodity prices are key sources of weakness.

Deep-seated structural problems, including inadequate infrastructure, lack of institutions, corruption and environmental degradation, are now impinging on activity.

Mr Economy also faces one of the three strongest El Niños since 1950, which will create severe weather conditions leading to a reduced economic activity.

Mr Market has regained his irrational exuberance. He has bounced back from the depressive episodes of August 2015 and early 2016, though more on short covering than fundamentals.

Mr Market’s continued health requires improvement in Mr Economy’s condition, as the twins share vital organs.

But Mr Market insists that he doesn’t need growth or inflation to prosper. He told his psychiatrist that financial instruments are not merely claims on real assets and cash flows but represent a separate reality.

elevated valuation levels

The S&P 500 trades at 17-18 times earnings, inconsistent with stagnant revenues and slowing earning momentum.

Small capitalisation stocks trade at higher valuation; the Russell 2000 is at PE multiples of 20-22 times. Weak commodity prices weigh heavily on resource companies. Share buybacks, capital returns, unsustainable dividend payouts and debt financed mega-mergers cannot continue to hold up values forever.

Unicorns (startups with valuations greater than $1 billion) in technology and biotechnology sectors reflect the desperate search for growth and dangerous optimism about prospects.

Valuations, such as Uber’s private market valuation of $50+ billion, are not supported by economics, but rely on promotion by shrewd principles, venture capitalists and investment bankers.

With negative yields, investing in government bonds requires ever larger negative rates to provide capital gains.

Investors who chased higher returns in corporate and emerging market debt face problems. Credit spreads have increased, especially in high yield bonds. They still do not provide adequate compensation for potential future rises in default rates. Feted earlier as astute investors, holders of debt of frontier countries like Ukraine, Zambia, Rwanda and Sri Lanka now face losses on their investment as booms turn to bust in a familiar cycle.

Real estate prices have risen, driven, in some cases, by the sharp fall in the last crisis. Disillusion with other asset classes, cultural biases that favour property and the inexorable flow of capital fleeing unrest or risk have boosted values, especially in desirable world cities.

Mr Market’s dysfunction is evident in analyst David Rosenberg’s sardonic observation that today investors purchase bonds for capital gains and shares for income.

Mr Economy’s stresses are increasingly being seen in volatile currency values. Countries are using a mixture of low interest rates, QE and direct intervention to manage the exchange rate. It is designed to reduce the value of outstanding debt held by foreigners. It also increases competitiveness and a nation’s share of global exports and growth. Mr Market’s ability to withstand the fluctuations and pressures of such currency wars is questionable.

A stronger dollar pressures US corporate earnings and competitiveness, in turn affecting equity values and economic activity. A higher US dollar, higher interest rates and tightening global liquidity conditions represent a major challenge for emerging markets. Capital outflows have weakened emerging market currencies. It has reduced the availability of and increased the cost of finance. Weak export revenues, falling currency reserves and unhedged US dollar currency combined with around $9 trillion of debt will squeeze these economies and drive instability.

But a weaker dollar means a stronger euro and stronger yen with consequences for these economies.

Confident of their ability to juggle grenades with their pins pulled out, analysts are trying to pick bottoms in weak emerging markets. They ignore the fact that the recent rise in the US dollar may be part of a longer term trend, which parallels a similar trajectory in the late 1990s which triggered the Asian monetary crisis, Russia’s default, and a plunge in crude oil prices to $10.

Much of the improvement in the condition of Mr Economy and Mr Market, especially the latter, is due to the administration of ample amounts of vital liquids. The treatment addressed symptoms rather than the underlying disease. While doctors have not lost hope, they fear that the therapies have reached a point of diminishing returns. More of the same—QE, negative interest rates, additional fiscal stimulus—are increasingly difficult. There are technical challenges as central banks reach operational limits without a significant change in their rules of engagement. Quantitative easing has morphed into quantitative exhaustion or perhaps QE infinity.

The ability to withdraw support already resembles the game of Jenga. Policymakers fight gravity as they seek to withdraw each block one by one without causing the entire structure to crash.

valuations are not supported by economics, but rely on promotion by shrewd principles, vcs and bankers

18 | forbes india May 13, 2016

Satyajit Das is a former banker whose latest book, The age of Stagnation, was released in India in January 2016

enterprise hungama

a nose for noise

neeraj roy is betting big on video, original content and deals with smartphone vendors to transform Hungama into a successful entertainment platform

By HaricHandan arakali

photographs: mexy xavier

L

ong before smartphones and ecommerce came of age in India, Neeraj Roy was betting his digital entertainment and marketing business Hungama Digital Entertainment, then called Virtual Marketing India, on Amazon.com’s elastic cloud and web services. He has been so successful in leveraging the cloud that today a simple keyword search for his group company Hungama Digital Media Entertainment brings up an ad of a case study highlighting its shift from in-house computer infrastructure to Amazon Web Services: The world’s largest internet-based computing and storage network that businesses can rent.

The cloud computing push in 2008-09, after nearly a decade of operations, was in part urgent business need—the company’s business clients wanted quick and flexible options for marketing campaigns, for instance. It was also informed foresight. The following year would see Saavn—then a joint venture between Hungama Mobile, a division of Roy’s Virtual Marketing India Pvt Ltd and New York’s 212 Media—break away into a separate company focusing on the consumer segment, a departure from serving largely business customers until then.

Even as Saavn’s birth as a business-to-consumer (B2C) music streaming company was under way, Virtual Marketing India was seeing its own transformation. It would soon metamorphose into its current

20 | forbes india May 13, 2016

avatar: The group Hungama Digital Media Entertainment. And Hungama Mobile would soon become hungama. com, a provider of high-quality streamed music and video from regional and international sources.

The rapid shift from a B2B (business to business) to a consumeroriented company is the perfect testament of Roy’s technology savvy and his passion for entertainment distribution, a combination that has formed the underpinnings of Hungama’s success so far. The two traits are even more critical now as Hungama is evolving to stay ahead of the game in a future that will be dominated by on-demand digital content, especially video.

“I see entertainment becoming the next big catalyst for internet penetration,” says Roy, 48, who contends that significantly more Indians will be willing to pay for video streaming.

Simultaneously, Hungama is embarking on a series of partnerships—most recently with China’s Xiaomi Corp—that re-envisage the way Indians view entertainment, by putting the smart device at the heart of every transaction.

These partnerships are also early evidence of the potential of the Internet of Things (IoT). For instance, Hungama is aware of the potential of biometrics in bringing up a driver’s favourite playlist in a vehicle’s entertainment system. Along with its many partners, Hungama is helping build an ecosystem where

neeraj roy, managing director and cEO of Hungama digital Media Entertainment

the customer doesn’t just stream or download a song on to his/her phone.

It’s about opening a banking app on a smartphone to choose a video, paid for through a mobile wallet, which will then be streamed seamlessly into a car’s entertainment system. In the unified ecosystem that Hungama envisages, gaming concepts such as rewards for various actions are already being built in, and users will get to trade their points and credits

across online games, entertainment, and discounts in offline purchases.

“At the core, Hungama is going to be the default entertainment platform for India, whether you run the stereo system in a connected car, or on your desktop or a smartphone,” says Vishal Gupta, managing director in India of the global venture capital firm Bessemer Venture Partners, which has invested twice in the company. “The shift to video is the

biggest pivot,” Gupta adds. “Going into 2016 and 2017… a big theme is going to be video,” concurs Roy. There were 31.9 million unique online video viewers in India in March 2011 who watched 1.86 billion videos, according to consultancy firm Deloitte in a 2015 report titled, ‘Digital Media: Rise Of On-demand Content’. The number of online video viewers increased by 69 percent to 54 million in March 2013 and they

watched 3.7 billion videos. By end2014, online video viewers crossed the 200 million mark, adds the report.

Today, Mumbai-based Hungama reaches about 64 million consumers each month “through Hungamabranded services,” Roy says, adding that about 16 million people transact with the company in some form every month. Currently, most users consume music, but Roy says video is where the serious apps will be differentiated May 13, 2016

forbes india | 21

enterprise

hungama

from the also-rans. “We’re very excited that this is the category that consumers are now ready for,” he says, playing a scene from the Salman Khan movie Prem Ratan Dhan Payo on the Hungama Play mobile app.

“And this [the movie] is running on a 3G network,” he adds. That he was demonstrating it on an iPhone 6 Plus helped, but the point was well made: Hungama is offering content encoded in seven formats, from ones light enough to work on an EDGE network all the way to HD formats that play when high speed 4G is available.

The objective is to move the consumer to the most optimal format based on signal strength, says Siddhartha Roy, CEO of hungama. com, the flagship company of the Hungama Digital Media group, and Neeraj Roy’s cousin. (Celebrity site Bollywood Hungama, online games joint venture Vroovy and Artists Aloud, a platform for independent artists are among the group’s other ventures.)

“We are a homegrown digital content company that has served a quarter of a billion unique consumers over the last decade,” says Allahabadborn Neeraj Roy, emphasising his

Siddhartha roy, cEO of hungama.com

22 | forbes india May 13, 2016

Hungama aims to Hit an annuaL revenue run-rate of $100 miLLion in tHis fiscaL company’s made-in-India credentials.

Hungama is therefore building a range of services all centred around digital content and based on experience gleaned from selling to “Middle India” over the last decade. That includes some 350 partnerships with various types of content providers, cumulatively generating about $1.5 billion (around Rs 10,000 crore) in endconsumer-based revenue for telecom utilities and others over a decade, says Roy, who is now managing director and CEO of Hungama Digital Media Entertainment.

“We are hard-nosed about delivering value to the consumer and getting value back into the broader content ecosystem,” he says. “If one rupee is the price at which a

consumer will buy something, I’ll deliver a service at that price point, if it’s Rs 99, I’ll deliver at that.”

Complexities in pricing apart, broadband access is the other important inhibitor to streaming services, says Jehil Thakkar, a partner at KPMG India, who heads the consultancy’s media and entertainment practice.

“Remove those inhibitors, and the market will explode.”

Today, with about one in four people paying for some Hungama service—including over-the-top (OTT) content streaming via cellphone networks, tie-ups with satellite TV providers and broadband internet service providers—the company has an overall monthly ARPU (average revenue per user) of Rs 16-18, says Roy. Sometime in the current fiscal year, he expects Hungama to hit an annual revenue run-rate of $100 million (around Rs 660 crore).

As the company launches new offerings—such as the movie service launched in July last year—Roy expects the needle to move on earnings as well. Hungama’s movie streaming service is priced at Rs 249 a month and provides unlimited

When Hungama showed bessemer the money The company’s strong revenues convinced investors that streaming services can be monetised in India

Vishal Gupta

b

essemer Venture Partners led a $40 million investment in Hungama Digital in mid2014, and returned to invest more this year. Hungama didn’t have a video platform in 2014 but there was a plan to move in that direction.

“When I first met him [Neeraj Roy], I was worried about how low the monetisation is [in India], but then he showed me the numbers and I was taken aback,” recalls Vishal Gupta, the India managing director of Bessemer.

The numbers Gupta had seen till then were for other streaming services that were projecting annual revenues of Rs 2-5 crore. “He [Neeraj Roy] showed me Rs 60 crore and it was stunning.” This was the revenue run-rate Hungama had projected to hit during the 2014-15 fiscal year.

“The biggest surprise was that this Rs 60 crore was net to Hungama,” says Gupta. Hungama users were cumulatively shelling out nearly Rs 120 crore annually on the service, about 10-15 percent of that was going as taxes and about 40 percent was what Hungama’s telecom partners were taking away. “I hadn’t heard of

this kind of monetisation,” says Gupta.

Bessemer’s experience with two unrelated prior investments also helped. The firm had been an early and lead investor in Twitch, which live broadcasts online games. When Twitch first pitched for an investment to Bessemer, Gupta recalls he had a similar is-this-for-real feeling.

A few months after Bessemer invested in Hungama, Amazon. com bought Twitch for $1 billion in August 2014. “At Twitch, we saw how sticky an engagement can be once the engagement patterns set in. And as the engagement goes up, monetisation happens,” says Gupta.

In early 2014, Bessemer had also made a small investment in Periscope—a service that allows users to broadcast live video streams— which got acquired by Twitter in 2015. “It got prematurely acquired, but the fact that video is such a big piece for people was obvious to us three or four years ago, and that’s why we thought Hungama would do well,” explains Gupta.

Their foresight is paying off.

- HA May 13, 2016

forbes india | 23

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subscription to 6,000 titles. Another 1,500 titles are available for a one-time fee per title. So, while Prem Ratan Dhan Payo is available as part of the subscription, a Hollywood movie like Black Mass will be charged Rs 120.

Hungama, which is already offering movies from Disney and Marvel, will soon add movies from Sony Pictures too, says Siddhartha Roy. To its list of movie titles, Hungama will soon add exclusive content too.

The company is using the money it has raised—about $40 million in mid-2014 and another $25 million in a round led by Chinese smartphone maker Xiaomi Corp on April 4 this year—to produce its original shows. Bessemer Venture Partners, which led the 2014 investment round, returned to invest more alongside Xiaomi, as did Intel Capital, another existing investor.

“The manner in which the amalgamation of content and devices has happened in China, I think there is a lot to learn from there,” says Neeraj Roy of the Xiaomi partnership.

Xiaomi smartphones—which have gained a strong following among India’s youth—could become more attractive with a host of Hungamabranded content bundled in by default in India. The two companies were hammering out the details, Roy said. And this is not the only such partnership for Hungama. The company has offered some of its content for free over a limited period to buyers of the OnePlus smartphone.

“At Xiaomi, we think of smartphones as a platform to deliver internet services, and this includes [audio and video] content. We are investing in Hungama not only to start integrating content into our smartphones, but also to grow together with them and deepen our understanding of the content sector in India,” explains Hugo Barra, Xiaomi’s vice president for international operations. “We have chosen Hungama because of what they are doing in terms of aggregating large

enterprise

hungama

amounts of content and delivering an amazing user experience.”

“At Hungama, we have already commissioned our first original [content] and it’s going to be available in episodes. It will be a Hindi-English mix,” explains Roy, adding that the first episode will roll out in the JulySeptember quarter of this fiscal.

Over the next three to four years, the task is to move towards a monthly ARPU of Rs 90-100 at which time Roy expects Hungama to have customers north of 150 million and “a certain percentage of that community will be transacting with us as daily-, weekly- or monthly subscribers”.

But Hungama has competition, especially from Saavn on the music front. Its off-shoot has raised $100 million recently and is working on audio beyond mainstream music (which includes genres like comedy and sports radio). Likewise, Airtel Wynk, the music streaming and downloading app of the country’s largest telecom operator Bharti Airtel, has been downloaded 12 million times within a year of its launch, the company said in December 2015. Bharti has since added games and movies as well.

Apple music is available in India and Netflix too has made an entry though these two are targeting a fairly niche, and relatively wealthy, segment of the Indian market.

Companies less-known in India, such as Rdio—which acquired the music streaming service Dhingana to boost its Indian library of music—and Guvera are also offering their music streaming services in the market.

KPMG’s Thakkar declines to comment on individual companies, but says the industry in India is so nascent that it’s too early to call out winners and losers. “I think we are at the first floor of a 30-storey building at this point,” he says, and adds that many things will change over the next two to three years, including broadband penetration and speeds.

In that time frame, India will see its 24 | forbes india May 13, 2016

internet user base increase by another 350 million smartphone owners, and Roy anticipates that a majority of them will use their smartphones for some form of entertainment.

And Hungama is prepared. Be it with its use of AWS or its modern content delivery network from Akamai Technologies, it is already leveraging the networks of telecom providers and internet service providers, to become relevant to a range of regional users from Bhojpuri to Malayalam, says Roy. Hungama Drive, the company’s partnership with luxury carmaker Jaguar Land Rover earlier this year, will soon find its way into another major auto brand, says Siddhartha Roy without elaborating further. “The technology was built by Robert Bosch and we are working directly with

over tHe next 3-4 years, Hungama expects to Have customers nortH of 150 miLLion their R&D teams,” he adds. “Stuff like this takes time to get right. These are going to be placed in 5-10 million cars and they will have to work flawlessly.”

‘Gamification’ is another big draw at Hungama. Add a song to your playlist and you get points, download something and you get more points. The accumulated points can be redeemed against other digital goods across a gradually widening ecosystem of partners, which Neeraj Roy envisages will eventually include every business that can benefit from using Hungama as a means to reaching large numbers of potential and existing customers.

Last year, Hindustan Unilever Limited (HUL) teamed up with

Hungama to promote its Kwality Walls Cornetto cone ice creams.

Buy a Cornetto, scratch the wrapper for a code and use it to download 200 songs for free on Hungama’s Android app. The winners also had to enter valid details, including their email IDs and cellphone numbers—a treasure trove of data for marketers at HUL and Hungama.

The whole country and all its businesses are rife with potential, from Roy’s perspective: “How can a two-wheeler maker look at its 20-million customer base and use entertainment services from a partner like us to engage with that customer base?”

Today’s Hungama is an evolution of something that started around 16 years ago. Along the way, businesses were tried, discarded, built and successfully sold as well (as in the case of the digital marketing services unit that was bought by WPP, one of the world’s largest ad companies). Acquisitions were made too, as in the case of IndiaFM. com, now Bollywood Hungama, which is “still run by its founders even though we own 100 percent,” Roy takes pride in pointing out.

Looking ahead, “If 2015 was a year of this,” Roy says holding out his open palm, fingers splayed, “2016 will be a year of this,” he adds making a fist—pointing to the consolidation that’s coming.

And Roy is open to more acquisitions. “If there are real meaningful communities out there, I wouldn’t hesitate to look at ways of consolidation.” Over the next three years, “we would like to retain and consolidate our leadership [and] become an integrated business with music, movies and TV all under one roof,” he says. “Where we would like to innovate is, how people access us, and how they pay for those services.”

Given Roy’s long years in delivering digital entertainment, one can expect Hungama to lead the charge as videostreaming strikes root in India.

enterprise Ott videO industry

everyone’s riding the streaming Wave

With a multiplicity of services on offer, video streaming players in India are set to face a problem of plenty, apart from the limitations of the country’s digital infrastructure

n

etflix entered India only on January 6 this year, when in a keynote address at the Consumer Electronics Show (CES) in Las Vegas, Reed Hastings Jr, co-founder and CEO of the company, announced the expansion of its on-demand video streaming service to 130 countries.

That was in addition to the 60 nations where it already operated.

But despite Netflix’s late entry into the country—almost a decade after it started streaming services in the US—the Indian consumer has long been familiar with Over-the-Top (OTT) services: The delivery of audio and video over the internet.

Frenzied entrepreneurial activity in the OTT video streaming space preceded Netflix with Times Internetowned BoxTV, Zee Entertainment Enterprises Limited’s Ditto, Eros Now, Sony LIV and Star India’s Hotstar having tested the waters before. And it continues. Within just four months of Hastings’s announcement, the Indian OTT video space witnessed the launch of Viacom18’s (which is part of Network 18, the publisher of Forbes India) Voot, Zee Digital Convergence Ltd’s OZEE and Vuclip’s Viu. Netflix’s India launch received its fair share of attention at a time when the video streaming ecosystem is taking shape in the country. “Competition is welcome,” says Rajiv Vaidya, CEO of Spuul, a

26 | forbes india May 13, 2016

By AngAd Singh ThAkur

video streaming service delivering Indian content. Vaidya insists that given the nascence of video streaming services in India, Netflix’s arrival will only add grease to the wheels of market expansion.

While that may be a given, video streaming services will have to navigate many hurdles in the road ahead, which includes the lack of adequate digital infrastructure. “India has not really defined what broadband is. The current definition is throttled and determined by telecom service providers,” explains Anand Agarwal, CEO of Sterlite Technologies, one of the country’s largest manufacturers of optic fibre cables. “While in most parts of the world broadband is defined to be in the order of 15-20 Mbps, in India broadband speeds are usually just a fraction of that at 0.5 Mbps,” he says.

India may be at the cusp of a transformation in this regard. The roll-out of 4G data services in the country is already under way. A recent report by brokerage firm Credit Lyonnais Securities Asia (CLSA) suggests that India’s 3G and 4G subscriber count will hit 300 million by 2018. While the likes of Bharti Airtel, Aircel and Vodafone have already completed certain phases of their roll-out, the forthcoming launch of Reliance Jio (Reliance Industries is the owner of Network 18, which publishes Forbes India) is expected to further improve the quality of internet

connectivity. The drop in the prices of 4G-enabled handsets is viewed as another factor that may supplement the change that is ongoing. At the same time, given video content’s high propensity for data consumption, slow internet speeds are a reality OTT companies must contend with.

“We work really hard on optimising the quality of streaming. Adaptive streaming allows Netflix to read a customer’s broadband connection speed and adjust the stream accordingly,” says Jonathan Friedland, Netflix’s chief communications officer.

Netflix is used to employing adaptive streaming. “It [broadband speed] is not any worse [in India] than in Brazil, Bolivia or El Salvador where we already provide services,” says Friedland. The company is also working on data compression, he adds. “We are doing a lot of work on complexitybased encoding.” This is essentially aimed at enabling streaming with lower data consumption, which is ideal for slow internet speeds.

In November 2015, the Internet And Mobile Association of India (IAMAI) estimated that India’s internet user base would hit 402 million by the end of that year. Of this, 117.34 million are broadband users, according to a report released by the Telecom Regulatory Authority of India (Trai) in October 2015.

These numbers are, however,

Sudhanshu Vats, group CEO, Viacom18

not representative of the number of video streaming consumers in India. According to research firm Media Partners Asia, there were 12 million video streaming subscribers in India in 2014, which was projected to reach 15 million in 2015. It also estimated the number to jump to 105 million by 2020.

Inadequate infrastructure development apart, an equally formidable challenge for companies in the OTT video space is the problem of plenty. “There is a multiplicity of OTT platforms today, each with different content, which creates a problem of discovery for them,” says Ashish Pherwani, head, advisory, media and entertainment, Ernst & Young.

How then do these services differentiate themselves? “It’s a matter of user experience, the consumer interface, and how we interact with the customer,” says Spuul’s Vaidya. “Content, at the end of it, is a function of capital.”

Content is central in the drive for differentiation. Services like Voot, Hotstar, OZEE, Sony LIV and Eros Now all have their unique content libraries thanks to the television and film content that they already own.

These libraries give them a significant edge over their peers. While some players like Spuul currently do not have their own content, Vaidya points out that in future, large media conglomerates may be better inclined to sell their rights to an outside OTT player than to direct competitors.

“Over time, content from the studios of media conglomerates will be made available to aggregation services,” believes Nickhil Jakatdar, founder and CEO, Vuclip. “Even if you look at a market like the United States, Disney, Sony, everybody had their app, and yet the most popular ones are the aggregators Hulu and Netflix.”

In its journey from a mail-order DVD subscription service to the world’s largest internet TV network, May 13, 2016

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enterprise

Ott videO industry

JOshua navalkar

Jonathan Friedland, chief communications officer, netflix

Netflix has taken a number of seemingly risky bets. But perhaps its most important gamble in the recent past has been its push for original content. On the back of successful shows like Orange is the New Black and House of Cards, the company has now announced that it will be spending over $6 billion (around Rs 40,000 crore) on original content in 2016.

Many in India are following suit.

Voot, besides the content from parent company Viacom18’s television and film divisions, also features original content. “Original content is an additional differentiator that we have brought in,” says Sudhanshu Vats, group CEO, Viacom18, referring to shows like Soadies, a show about a family obsessed with MTV India’s popular reality show Roadies.

Hotstar has already incorporated a substantial amount of original programming on its platform.

Almost every major streaming service already has original content or is in the process of creating it.

The revenue models that these services employ (subscription-based, advertising-based or a combination of free and premium content) also have a bearing on the content. Many video streaming services in India are currently based on the freemium model, which allows users free access 28 | forbes india May 13, 2016

to a limited section of the content and subscription to the rest. Subscriptiononly models, like Zee’s Ditto, are few.

The arrival of the world’s largest subscription-based video streaming service offers another opportunity to see how the price-sensitive Indian market adopts the model.

“It [the subscription-based model] works on the principle that people will pay for content they can’t get elsewhere,” says Sameer Nair, group CEO, Balaji Telefilms.

Nair’s company is preparing the launch of the production house’s digital offering, ALT Digital Media Entertainment Limited (ALT Digital).

ALT Digital will offer content only through subscriptions and will feature only original content created by it. “Exclusive content created for an affluent market has scope, provided it is not available elsewhere, is compelling, and marketed well,” says Pherwani.

The subscription model also allows companies to look at content differently. “Our business model is not based on you watching a show at one point in time,” says Friedland. Netflix simply looks at the aggregate viewership of a show and how much they pay for it is decided by calculations done around that.

Without the pressures that come with having to sell advertisements

for particular slots, the company is free to bet on content that may ordinarily not have been broadcast.

“It gives us enormous flexibility,” says Friedland. “In a simple sense, linear TV is broadcasting. We’re narrowcasting, to someone who would like a particular kind of show.”

Not all are convinced of the viability of the subscription-based model, though. “I feel India is some time away from that,” says Viacom18’s Vats, adding, “I don’t think viewership has reached the critical mass to drive a subscription-only model.” However, says Vats, the transition is around the corner. “I’ve been saying it is about 12-24 months away and we’ll continuously keep evaluating this.”

Viacom18’s Voot is, for now, run on an advertisement-based model, but it may transition to a freemium model in the time to come, according to Vats.

Besides creating original content, on-demand video streaming services also face the challenge of tailoring movie and TV show recommendations to each user’s taste. Given the huge arsenal of shows and movies on its website, recommending the right content to every user is no mean feat.

“If you ask most OTT providers how many hours of content they have on their platform, the answer will vary from 5,000 to 20,000 hours,” Vuclip’s Jakatdar points out. “When you have so much content, the good news is that you have a lot of content. The bad news is that you have a lot of content.”

The key to succeeding in India lies at the intersection of these challenges.

While Netflix may not necessarily provide the best way forward in India, its global experiences help put India’s constantly evolving OTT video industry in perspective. As for its own expansion, the India launch is yet another gamble for the company. “We’ve learnt a lot by doing something that nobody’s done before,” says Friedland. And the same must apply to OTT players in India—till then, no one’s pulling the plug off their cable TV.

real e s tate special

The Builder’s Blocks Tough situations call for out-of-the-box solutions.

And few sectors have faced a lull like the real estate industry. But there are a few enterprising developers who are determinedly fighting the market’s real woes. Either by sticking to the right verticals or by devising innovative solutions or, often, on the dint of simple goodwill. These are the stories that you will find in the pages that follow

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‘The New Real Estate Regulations Will Push Prices Up by 30-50%’ Vikas Oberoi, boss of Mumbai-based Oberoi Realty, says the new real estate legislation will increase direct and indirect costs for developers, who will then pass them on to buyers

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he slew of reforms that the government plans to bring into the country’s real estate sector will lead to an escalation in costs for developers, and in turn, real estate prices, says Vikas Oberoi, chairman and managing director of listed real estate firm, Oberoi Realty.

In an interview with Forbes India, Oberoi, 46, says real estate prices may become costlier by 30 to 50 percent as a result of the direct and indirect costs (such as cost of capital) that developers will need to incur in the process of adhering to the new rules.

But the new regulations are a step in the right direction as they protect the interests of home buyers, who wouldn’t mind paying a premium for the transparency that the new rules will bring in, says Oberoi. Edited excerpts:

Q How will the new regulations governing the real estate sector impact the industry?

The Real Estate Act and the constitution of the real estate regulator is a step in the right direction. I personally welcome it.

The new regulations are skewed towards the buyer and rightly so. But everything comes at a cost. And when new regulations are applied to an industry, there is bound to be a cost

30 | forbes india May 13, 2016

By Aveek DAttA

escalation on account of adhering to these norms. Someone has to bear this cost and in the real estate sector’s case, the consumers will have to bear it.

Q How will costs for real estate developers increase?

The new norms state that a new project can only come into the market once it has all the necessary approvals in place. While we as a company have always followed this practice, there are many other firms, especially smaller ones, who market projects without all the permissions in place and their trade-off against us is price. They sell houses cheaper than us, and not much could be done about that because that is the way the market worked.

With the new norms and the real estate regulator in place, projects that don’t have all permissions simply won’t be able to enter the market; that is a great thing because it will create a level playing field for companies. Now consumers can only buy something legitimate with all approvals in place; and of course, they will have to pay a premium for that.

This will reduce the flow of new projects into the market and the resultant supply, as not only will new projects need approvals from the government, they will also need approvals from the new

regulator. It will take some time for the new regulatory framework and infrastructure to be set up and, consequently, there will be a huge drop on the supply side.

Even the remaining supply will be at a higher cost because companies have to service the cost of debt while they wait for permissions to come in and start selling a project. A company like ours typically borrows money at an interest rate of below 10 percent. But the average cost of borrowing for listed real estate developers is 16 percent and for unlisted companies, it can be as high as 25 to 30 percent. If these companies have to wait for two to three years till they get approvals and start seeing the colour of their money, their costs would have literally doubled; this will be passed on to buyers.

Finally, even when developers sell an under-construction project, 70 percent of the money received from customers has to be held in an escrow account and can only be used for the development of that project. This means that even after you sell units in a project, you haven’t immediately recouped the capital you have invested for your land and you cannot use that money to repay debt. So the interest cost is going to keep ticking and make the project more expensive.

These regulations wouldn’t

make much of a difference to us specifically because we follow a lot of these processes as best practices within our company in any case.

Q What is going to be the resultant impact on real estate prices for home buyers?

Real estate is going to end up becoming more expensive. These regulations exist in developed markets like the UK and Singapore. But the cost of money in these markets is cheap when compared to India where cost of capital is very high. So clearly, a lot of real estate supply is going to be sucked out and the remaining supply is also going to come at a higher cost.

In effect, prices could go up anywhere between 30 and 50 percent, especially with the cost of capital during the construction phase compounding.

Q do you see increased

It is important to understand why sales aren’t happening in India. India is in a unique position, compared to the rest of the world. In Western markets, people are leveraged and companies have all the cash. In India, companies are leveraged and people have all the cash. Customers come to us with approvals to borrow up to 90 percent of the price of the house, but they never borrow more than 50 to 60 percent. They have the capacity to repay this debt over the next 15 years, but they cut other expenses and try to repay in four to five years since cost of debt in India is high.

So the current market isn’t under stress because people don’t have money. It is under stress because the general economic environment is such. There is a lot of latent demand getting built up, which will unleash itself soon. Even at present, readyto-move-in dwelling units are selling at a premium. So there are buyers.

Q When do you expect the May 13, 2016 forbes india | 31

Joshua Navalkar

prices of real estate creating pressure on home sales, which are subdued already?

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general economic environment to improve, which in turn, will boost real estate sales?

That is difficult to say. But as there are clear indications that supply of residential units will dry up due to the factors I mentioned, it may lead to a spurt in demand. This is what happened in the office space as well. A lot of developers converted their upcoming office projects into residential units as they didn’t have the money to finish these office projects. As a result, there is no new supply of office space in Mumbai coming in and once the existing office spaces are all taken up, those wanting to buy or lease new office spaces will have to pay a premium. This, in turn, will encourage developers to build more office spaces going forward.

Q When can we expect the high existing inventory in the residential real estate segment to clear out?

Who says there is inventory? This entire concept of inventory came into being when real estate firms got listed.

And as per accounting norms, the day a company buys land, the apartments that are meant to come up on that land are treated as inventory. The equity analysts pick up the number ascribed to such ‘inventory’ and the international property consultants compile the industry data.

By this definition, the new real estate sector regulations will only add to the level of inventory in the market in the future as developers will have to wait for approvals and it will be a good five-year cycle for even a reputed developer to build and sell a project.

But I want to say that buying land is not the same as creating inventory, in the real sense of the term, and the inventory levels that are spoken of in the market don’t exist.

Q What is the future outlook as far as oberoi realty is concerned?

This [2015-16] has been the best year for us. We launched our projects in Borivali and Mulund and we haven’t

32 | forbes india May 13, 2016

seen such sales numbers just after a project launch before. These are all fresh sales. On the other hand, we are also recognising revenues from some of our existing projects where construction is ongoing.

We are just sticking to the basics of business and that is working well.

We pick land parcels that are welllocated and ensure that the designs of our projects are economically viable for the areas in which they are situated. Commerz II is a commercial building [in Goregaon], which was completed just as there was a slowdown in offtake for office space. But growth in demand for office space is now coming back with the overall focus on promoting India as an investment destination; and with a lot of developers having converted their office projects into residential ones, supply of new office space is limited. So Commerz

ground. So we will be marketing Three Sixty West beginning this month.

We have another project in Worli [a plot of land that Oberoi Realty acquired from GlaxoSmithKline] where we intend to do a mixeduse [residential, commercial and office space] development.

So our strategy has been to fill the bucket faster through multiple taps. We have projects that are ready, semi-complete and at the pre-launch or launch phase; and there are buyers at every level.

Q oberoi realty’s return on equity has declined between 2010-11 and 2014-2015. is this a cause of concern and when do you see the trend reversing?

Not really. It depends on the business cycle we are in. Our operating profit margins remain very high. We have sold a lot of units in Mulund and

“TheRe will be a cOMpleTe change in MindseT Of develOpeRs whO will need TO be MORe upfROnT and TRanspaRenT.” II stands to gain from that.

In Goregaon, we have two residential offerings—Exquisite, where some apartments are ready, and Esquire [under construction]. Of a total saleable area of 3 million square feet across these two projects, we have already sold 2.2 million square feet.

In Worli, we are building Three Sixty West [a luxury branded residential and hospitality project to be managed

by Ritz Carlton]. The internal thinking was that we should first build this project [65 of the proposed 89 floors have been completed] and then bring it to the market by showcasing the superiority of our quality of construction and amenities on offer.

These are expensive offerings and buyers feel more comfortable when there is progress to show on the

Borivali, but we can’t recognise that on our books yet [revenues from real estate projects are typically recognised in the profit and loss account after crossing a certain threshold of sales].

The best way to look at the company is to see its net asset value, and we are doing very well by that parameter.

Q What is your outlook for the real estate sector in 2016-17?

There is bound to be consolidation in the sector and the new real estate regulations will act as a catalyst.

There will be a complete change in mindset on the part of developers who will need to be more upfront and transparent. Regulation is always good for companies that are well-managed as they get rewarded in the long-run.

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Chennai Gets the Chills

As the city’s real estate sector reels under a prolonged slowdown in sales, developers like Akshaya are changing strategies to cope

Sri Manikandan for forbeS india

By Anshul DhAmijA

34 | forbes india May 13, 2016

F

or the longest time, drawing room conversations in Chennai have been about how the city’s weather could best be described in three words: Hot, hotter, hottest. But Chennai does enjoy some fine weather in January, a time when morning walkers, who feel the chill,

T Chitty Babu, chairman and CEO of Akshaya

wear light sweaters and mufflers.

There’s another chill, however, that is being felt in Chennai; one that has lasted for much longer than its usual number of months.

And comforters of different kinds are being pulled out to combat it.

A December 2015 report by property consultancy firm Knight Frank shows that the number of new residential unit launches in Chennai has dipped by 58 percent over a three-year period: 37,079 in 2012 to 15,541 by the end of 2015.

During the same period, there was a 34 percent dip in absorption (purchase) of residential units.

On both metrics—new launches (supply) and absorption (demand)— Chennai is worse off than other southern cities such as Bengaluru and Hyderabad. The Knight Frank report says that by the end of 2015, Bengaluru saw a 25 percent decline in new launches and a 1.1 percent dip in absorption (the number of units absorbed is 50,130), while in Hyderabad there was a 55 percent drop in new launches, and a 22.51 percent drop in absorption, (14,760 units were absorbed). Hyderabad, of course, has been weighed down by political instability due to the splitting up of Andhra Pradesh.

T Chitty Babu, chairman and CEO of Akshaya Pvt Ltd, which has built 11.5 million sq ft of real estate space since 1998, mostly in Chennai, concurs with Knight Frank’s data: “The overall health of the state economy has contributed to a sluggish real estate market. Job creation in the city and state has actually dipped over the last five to six years.”

Babu’s back-of-the-envelope calculations say the annual job creation figures in Chennai have slid from over 1 lakh to around 60,000 to 65,000 over the last five years.

He adds: “This is reflected in the absorption numbers of residential units.” A senior executive in a private sector bank agrees: “On the development front, no new great

announcements were made post 2012. Hence, no new big company was setting up shop.” According to a Business Standard report, data from the department of industrial policy and promotion show that Tamil Nadu and Puducherry “together attracted $4.27 billion in FDI” between April and December 2015, compared to $3.82 billion during the 12 months from April 2014 to March 2015. This, however, is yet to translate into action on ground.

One of the manifestations of a slowing job market is the dipping demand for office space in the city. Data from global property consultancy firm JLL India show that Chennai had the highest absorption of office space in 2007, at about 7 million sq ft. However, following the 2008 global financial crisis, office space absorption fell to 2.9 million sq ft.

In the last five years, the average yearly absorption of office space has been between 3.5 million sq ft and 4.2 million sq ft. At the end of 2015, however, Chennai did see an uptake in demand with a little more than 5 million sq ft of office space getting absorbed, corresponding with a national increase in demand.

In comparison, Bengaluru saw a record 12.7 million sq ft of office space getting absorbed in 2015.

In 1995, Babu (48), who has a civil engineering degree from Sri Siddhartha Institute of Technology, in Tumkur, Karnataka, started Akshaya Structurals, and undertook contract-based construction work for developers. In 1998, Babu decided to turn developer, and started Akshaya Homes (rechristened Akshaya Pvt Ltd in 2001). “The brand [Akshaya] was not evolving while doing contract-based work,” he says. With its headquarters in Chennai, close to 85 percent of Akshaya’s overall real estate development is in the residential space, with the remaining 15 percent comprising offices and commercial spaces. Although initially focussed in Chennai, Akshaya has May 13, 2016 forbes india | 35

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since moved to Coimbatore and Trichy, and is now looking to enter the Salem market. But, its home turf is where all the action is, both in terms of developments and challenges.

Chennai’s sluggish residential real estate market is clearly putting stress on the profit and loss accounts of developers and Babu is no exception, with his company reporting a 20 to 25 percent dip in sales over the past couple of years. To counter the slowdown, Babu is doing things differently: “Initially, we never sold our commercial properties; we only rented or leased them. But now we have started selling these assets.” While he did not reveal a timeframe, he aims to sell around 1 million sq ft of commercial space, largely to private corporations, and shore up around Rs 400 crore.

Babu is also utilising some of the company’s large land assets to build

current market sentiments in Chennai are nothing but a passing cyclical trough, he says, albeit an “unusually long trough”, as one banker sums it up. “Typically, every four to five years, the market goes through a down period for about a year or so. This time around, the down period has lasted for more than two years,” says the banker.

A

part from an economic slowdown, there is a plethora of other related factors that have contributed to the sector’s dwindling fortunes. JLL India’s data show that the Chennai market has about 50,000 completed and unsold residential units. Market analysts say it will take between 18 and 20 months for this inventory to sell.

“After the global financial crisis, developers started moving away from building commercial assets

ChennAi hAs About 50,000 unsold residentiAl units. it’ll tAke between 18 And 20 months for these to sell gated communities where buyers can build their own homes, instead of building apartment complexes.

Typically, the developer constructs all the infrastructure and amenities in the project, and buyers can either build their own home or get the developer to build it for them.

“The turnaround time for these projects is much faster [about 90 days] than apartments, and it also ensures steady cash flows,” says Babu. Indians, by and large, have always had a preference to buy land as an investment option and hence demand has been buoyant.

Babu plans to sell 1.3 million sq ft of plotted developments, of which he has already sold 0.4 million sq ft.

But the slowdown is in no way giving Babu sleepless nights. The 36 | forbes india May 13, 2016

to residential assets. Then, from building typical apartment dwellings of 30 units, they started expanding to 500 unit dwellings, and even started going into larger township developments of 2,000 units,” says Sarita Hunt, managing director, Chennai & Coimbatore, at JLL India.

Chennai buyers traditionally prefer smaller apartment buildings, of about four storeys. Also, till 2007, state regulations didn’t allow developers to build more than nine floors. Most of the large township developments have taken place in the last five to seven years, and have predominantly been by developers from the NCR, Mumbai and Bengaluru, where highrises and developments of several hundred units are more the norm.

But while there was a steady

supply, demand did not keep up.

Initially, there was some appetite for the new projects, which made developers increase their prices. For a while, buyers accepted it, but after a point they refused to go along. “Prices kept going up, and buyers were not able to keep pace with that,” says Ram Chandnani, MD, transaction services, at property consultancy firm CBRE South Asia Pvt Ltd. A phrase used frequently to describe Chennai home buyers is ‘conservative’. This means buyers do not stretch themselves beyond their planned budget. For example, in Bengaluru, if a developer offers a residential property for Rs 60 lakh, buyers are likely to buy it even if it exceeds their budget by 10 to 20 percent. This does not happen in Chennai. “In Chennai, they don’t go beyond their affordability,” says Babu, adding that the sweet spot in home prices in the city is between Rs 30 lakh and Rs 60 lakh. However, there are emerging suburban pockets where the per sq ft rate of apartments has outstripped the purchasing power of the buyer.

For instance, Chennai’s IT corridor of Old Mahabalipuram Road (OMR), where rates have risen to more than Rs 6,000 per sq ft, following land prices that have shot up from Rs 1 crore per acre to almost Rs 25 crore per acre in the past 10 years. At these rates, a 1,500 sq ft apartment would cost Rs 90 lakh (excluding taxes), and is almost 50 percent higher than what an average home buyer would prefer.

“These prices are too steep for even the IT population. Unlike Bengaluru, Chennai doesn’t have a large research and development ecosystem that offers high-paying jobs,” says Chandnani of CBRE. Also, a significant percentage of Chennai’s real estate market caters to blue collar workers from the manufacturing sector.

Babu, though, claims that rates in OMR have appreciated by only 10 to 15 percent, at best 20 percent,

over the last five years. Akshaya has developed 15 projects (a mix of residential and commercial, totalling 4 million sq ft) along OMR, and is developing another 3.8 million sq ft in the region.

Of this, one project is a 38-storey luxury residence, touted to be the state’s tallest building. Each apartment is around 7,000 sq ft, and costs Rs 6.5 crore to Rs 7 crore. Despite the prevailing market sentiments, Babu claims to have sold 40 percent of the project, which consists of 31 units, in the last 24 months.

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onsumer sentiments were also rumoured to have taken a beating when Chennai got flooded last December. However, Juggy Marwaha, MD, South India, JLL India, dismisses the rumours, saying the floods would become a “fading memory” among buyers, similar to what had happened after

the 2004 tsunami, which caused largescale destruction to life and property along India’s eastern coast. “Land prices in the tony beach house suburb of Neelankarai had dropped by about 50 percent,” recalls M Murali, managing director, Shriram Properties. But it lasted only for six to nine months.

“From that drop, land prices have gone up by six times,” he adds.

So, will last year’s floods affect real estate prices? “There is a momentary slowdown in business, not only for the real estate sector but for every other sector. Yes, people are more careful in choosing the location and are looking at more established developers,” says Babu.

Velachery was one among the worst-hit areas last December.

Four months on, there are no signs of an impact on real estate.

“We are negotiating a few land deals and prices have just not come down. Either it’s the same

or it’s 5 percent higher,” Murali says. The story is the same in the neighbouring suburb of Pallikaranai.

“There was a glut in inventory, and that situation got further aggravated by the floods. In my view, the sales personnel of developers may be painting a picture that people are not buying because of the floods,” says Marwaha of JLL India.

While Chennai’s real estate market has faced challenging times, there seems to be an emerging silver lining.

“The markets have improved in the last few months. There is a sizeable increase in developer sales. The demand, however, is skewed towards projects nearing completion,” says Mathew Joseph, member of the executive management of HDFC. He says buyers are getting good deals “as residential real estate prices have stabilised” in most locations. Results of the forthcoming state elections are expected to have a positive impact on the market as well.

May 13, 2016 forbes india | 37

getty iMageS

Chennai’s real estate market has faced challenging times but, of late, there has been a sizeable increase in developer sales

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Building on Trust Despite the realty slowdown, Noida-based real estate developer ATS Infrastructure is expanding its business and credibility

By Shutapa paul

amit verma

Getamber Anand, CMD, ATS Infrastructure

38 | forbes india May 13, 2016

F

or Getamber Anand, an aeronautical engineer by training and a firstgeneration real estate developer, building storm drains and culverts in Sector 59 for Noida Authority—the government body authorised to develop infrastructure in the region—was a formative

experience in more ways than one. Apart from learning the trade, Anand also grasped the significance of seemingly simple approaches: Staying proactive, building goodwill and transparency with his staff, customers and suppliers all the time.

This was in 1989 and Anand, a 27-year-old at the time, is still grateful for those lessons. They, after all, helped him build his real estate company, ATS Infrastructure Ltd in the National Capital Region (NCR).

More importantly, he is among the few players to have been able to withstand the pressures of dampened spirits and over-supply in the market.

In fact, ATS is launching and selling new projects, even while maintaining its profitability: The company claims to have a total turnover of Rs 1,700 crore for 2015-16, with a projected turnover of Rs 2,500 crore for the current fiscal, and says its gross profit is at 20 percent of its turnover. The group has 22 projects—13 ongoing and nine completed—apart from more coming up in Mohali, Chandigarh, Dehradun and Ahmedabad.

What has worked for Anand is keeping the costs low and sticking to in-house construction. “A few companies have managed to buck the trend because of strong reputation, premium location for their projects, the negotiable price factor, and timely completion of projects,” says Anshuman Magazine, chairman and managing director, CBRE South Asia Pvt Ltd, a property consultant. And ATS has been ticking all these boxes.

But Anand, chairman and managing director of ATS Infrastructure and president of the Confederation of Real Estate Developers’ Associations of India (Credai), reiterates that it isn’t mere strategy that has allowed ATS to stay afloat and even prosper during turbulent times. “We are nothing if not for our goodwill and credibility,” says Anand, who looks more like an engineer than the CMD of a real estate company.

The foundation for the goodwill

he speaks of is the consistent on-time delivery of houses—for the most part— and this has been meticulously built over the years. When project delays do take place, they aren’t glossed over but handled with sense and sensitivity.

Often, Anand points out, support comes from customers themselves.

He cites the example of two projects, Heavenly Foothills in Dehradun and Golf Meadows near Chandigarh, which were delayed by over a year and a half. Another project in Noida called Paradiso was also stuck for eight to nine months.

Consumer angst inevitably followed.

“I remember one home buyer, who had already bought a property in one of my completed projects in Noida, offering to speak to irate consumers and explaining that if there was a delay, it probably was a genuine one. I’ll never forget that day,” says Anand, who ensured that penalties were duly paid and consumers were compensated. He also bought back the apartments of the more jittery buyers, and paid them a higher rate than what they had paid. “I spent over Rs 50 crore through personal funds as well as through equity and debt. I sold off some equity in the Chandigarh project and raised funds for it,” says Anand.

This effort to maintain credibility has helped ATS build a loyal home buyer base of around 20,000. When an opportunity to invest in a new property comes up, these customers are the first to be alerted through emails. Some of them upgrade an existing ATS property while others spread the news among their social and familial networks.

It helps that Anand works very closely with his team and tries to visit as many sites as possible in a day. This personal inspection and supervision has ensured that the company always runs a tight ship. “He [Anand] is a very hands-on leader and the best part of our organisation is that ownership has been created down the line. Every individual takes responsibility,” says Vipul Maheshwari, chief financial May 13, 2016 forbes india | 39

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adnan abidi / reuters

According to a recent report, it will take four years for the existing inventory of flats in the NCR to get sold

officer, ATS. This was reaffirmed by on-site employees who Forbes India met while surveying one of ATS’s upcoming projects, ATS Pristine in Sector 150 on the Noida Expressway. “Every real estate project is a separate special purpose vehicle (SPV),” adds Anand. “It’s not like the materials from one project can go to another. We do things very professionally here.”

ATS also has its own in-house construction and post-delivery maintenance staff that handles everything from architectural drawings, plumbing and electrical work to the actual construction.

By not outsourcing to external companies, ATS is able to maintain a competitive per-square-feet cost of between Rs 1,800 and Rs 2,250, which other developers overshoot by at least Rs 500, claims Anand.

The focus at ATS is, quite simply, construction. Every employee has to visit the construction site irrespective of job profile. “The biggest mistake that construction companies make is that they do construction out of Excel sheets,” says Anand. With 40 | forbes india May 13, 2016

backward integration, the profit margin of the contractor is also reduced and the money is ploughed back into the project. His philosophy is reflected in the composition of ATS’s 4,000-plus staff strength: 1,500 are qualified engineers and technical staff, over 1,200 on-site supervisors and about 300 senior staff.

These employees, much like their customers, have proved loyal through tough times. In 2008-09, employees across the board opted to take a 30 percent cut in salaries. In 2014-15, those earning monthly salaries of over Rs 1 lakh gave up their increments so that the lower grade staff could benefit. During a particularly difficult phase, one senior staff member was ready to hand over his savings to him, another supervisor his land, Anand recalls. “This makes me want to do better for the entire ATS family,” he says. “So whenever there is a downturn I tell the employees that we are not in the business of selling; we are in the business of making homes.”

His words may sound odd in the context of the business he is in. The real estate market is murky in NCR,

and different from other parts of India. It is a market that is dependent on brokers; rarely do developers deal directly with the end buyer of the property. But ATS was one of the first companies to take a direct route to its customers. Initially, because of limited stock, ATS had to rely on direct selling and continues to do so in Noida, which is responsible for almost 70 percent of ATS’s inventory in the NCR market.

When ATS entered the Gurgaon market in 2011, they had started selling through brokers. The results were muted. It now wants to completely exit the third-party arrangement and sell directly in Gurgaon. ATS, which claims to have projects that are worth a total of about Rs 20,000 crore, has already reduced its dependence on brokers there to 40 percent of sales.

ATS’s aversion to brokers not only helps efficiency, it also adds to its credibility, especially since it creates a distance between the company and Delhi-NCR’s peculiar propensity for trading flats like company stocks.

Helped with low transaction costs and pushed by brokers, many flats are resold at least three or four times

before reaching the end user. “In NCR, a property is registered only upon completion of the construction or after 100 percent payment of its price. Hence properties can be bought and sold at any stage prior to complete payment,” says Magazine.

Real estate fund managers often jest (only in part) that while people trade equity stocks on weekdays, rich Delhi residents trade properties on weekends.

Brokers play intermediaries, taking money from one client with the promise of re-selling the property and providing an attractive exit.

The broker will then offer the same apartment to another buyer, making a commission at each resell. Real estate companies encourage this as it creates an illusion of demand, thus allowing them to increase prices.

“Any builder who did not fall into this trap was well placed despite testing times,” says Piyush Pushpak, chief operating officer, Shubhkamna Advert (SBPL), a developer operating in Noida. “If you have your basics right and look at end users, construction and delivery even during this time, you can be sure of good results and sales.

Consumer habits have changed. They will invest their hard-earned money only if they are confident that they will get their dream home.” And ATS did just that. “We targeted the end user,” says Anand. With the help of Credai, Anand urged real estate developers to circumvent the broker network and sell directly to home buyers.

Anand, in fact, believes that the trend of trading flats like stocks is flagging. And the reason for this is linked to the overall lull in the real estate market in India.

According to a December 2015 Knight Frank report, NCR is the “worst” market in India—it will take over four years for the existing unsold inventory of 2,06,000 units (as of December 2015) to get sold.

This is a longer time frame than the average three years other cities will take to sell their inventories.

This has affected the launch of new projects, with the average number of units coming down from 86,000 in 2010 to 31,700 in 2015. It also led to a price correction, especially in the premium market in NCR, of 5 percent from Rs 17,123 per sq ft to Rs 16,372 between June and December 2015.

Those who are stuck with three or four flats with the intention of reselling them have not been able to find buyers, nor do they have the money to pay further installments to the developers. This has led to problems for the developers, who have had to start borrowing from private equity (PE) funds that were ready to lend at high interest rates.

ATS too turned to PE funds while acquiring land. “You require money

The ASK real estate fund has been recommending the handson model followed by Anand to its investee companies. “There is a lot of learning that other real estate companies can take from ATS,” says Amit Bhagat, managing director and CEO, ASK Property Investment Advisors. He is particularly referring to ATS’s relationshipmanagement with employees, customers and even suppliers.

But it may not be possible to learn much of ATS’s approach, drawn as it is from its founder’s early experiences. It all goes back to his time working with Noida Authority in the 1980s. Today, sitting in his office in Noida’s Sector 132, Anand talks about one incident that defined

HelpeD wITH low TrANSAcTIoN coSTS, mANy Ncr flATS Are reSolD mulTIple TImeS before reAcHINg THe eND uSer while acquiring land and it is at an SPV level,” says Maheshwari. In 2007, IL&FS became the first PE to invest in the company’s Chandigarh project, pumping in Rs 145 crore.

But ATS has been careful to not become over-leveraged, he says.

“It’s mostly structured debt. We give [housing] stocks to our investors and profits are shared during exit,” says Maheshwari. ATS’s debt to banks is approximately Rs 1,000 crore and PE debt is of around Rs 700 crore.

ATS has raised money most recently from ASK Group and Piramal Fund. Having borrowed from other companies like HDFC PMS, ICICI Prudential, Motilal Oswal and Milestone, the real estate developer has been able to provide them attractive returns.

“ASK invested Rs 127 crore and we are going to give them an exit with 1.85x,” says Maheshwari.

how he was going to do business.

With limited funds at his disposal, Anand used to work on credit. One day, Anand, who was recovering from a broken leg, missed paying a supplier. That supplier confiscated his brother-in-law’s blue Maruti 800, the car that Anand had been driving.

At that point, Anand knew that he had two options: Go home and break the news to his sister and brother-in-law, or man up and convince the supplier to trust him, return the car keys and wait for a slightly delayed payment.

“I told the supplier that one day I will become big and I won’t give him a single contract if he keeps the car with him,” says Anand. The supplier, half-shocked and halfamused, handed over the keys to the young man standing in front of him with his leg in a cast. The harder option had proven more fruitful to Anand then, as it does now.

May 13, 2016 forbes india | 41

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The Workspace Meister

In the last two decades, Jitu Virwani has emerged as India’s largest premier office space landlord. The Bengaluru-based billionaire now plans to expand his presence in the residential space, and enter industrial parks and warehouses too

Rolls-Royce. The complex comes equipped with food plazas, ample parking slots and, most important to clients, power back-up. Last year, it added a Hilton hotel that allows visiting managers to stay close to their offices. There are even plans to open a crèche for working mothers.

Running such a large office park can be a bit of a logistical nightmare.

Getting it right is both an art and a science. Over the last decade and a half, it is this art and science that

Virwani, 50, chairman and managing director of the Embassy Group, has worked hard at perfecting. The result: “Most of our tenants have done multiple deals with us and we’ve emerged as one of their preferred partners,” says Mike Holland, CEO of Embassy Office Parks.

Having started as a small developer in Bengaluru in the 1980s, Virwani has, in the last two decades, built the largest stock of premier (Grade A, representing the highest quality

PhotograPhs By Mallikarjun katakol for forBes india

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n Bengaluru’s eastern flank, not far from the old Hindustan Aeronautics Limited airport, stands Jitu Virwani’s finest creation. Spread across 60 acres, Embassy GolfLinks business park provides 4.5 million square feet of office space for over 45,000 employees. Its tenants include the who’s who of Indian and global corporations—the likes of Tata Consultancy Services, Cognizant, Target, Cisco, Goldman Sachs,

By Samar SrivaStava

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of buildings) office space in the country—24 million square feet.

(DLF, with 37 million square feet, has the most office space overall.

With 3-4 million sq ft projected to be constructed by Embassy annually, it is expected to narrow down the lead substantially.) Other parts of the group include a residential portfolio that caters to premium customers, a services company that provides housekeeping and maintenance services, a fledgling hotel arm as well as plans to enter industrial parks and warehousing.

Virwani’s journey is a textbook case study in how to systematically build a business step by step. He eschews leverage. “Unless leverage is backed by an identifiable cash flow, I am not comfortable with it,” he says. In an email interview, Tuhin Parikh, a senior managing director at Blackstone, who looks after the firm’s real estate operations in India, lauds Virwani’s understanding of risk. “He understands risk well and knows how much risk he should be taking,” says Parikh.

As the business has grown, Virwani, who is a regular on the Forbes India Rich List and was ranked 68 in 2015 with $1.6 billion in wealth, has delegated effortlessly while still remaining accessible to his customers. In the last three years, he has hired heads for each of the key verticals (offices, residential, services, industrial parks) and given them complete freedom in day-to-day operations. By his own admission, much of his own time is spent on focusing on larger trends and maintaining relationships with all his stakeholders—tenants, land partners and financiers. It’s been his formula for winning repeat business.

Most significantly, Virwani’s is also the story of a smart entrepreneur who, spurred by the increase in offshoring and outsourcing by western corporations, spotted an opportunity in office parks and has methodically worked to cash in on 44 | forbes india May 13, 2016

it. “I’m so bullish about the demand for office space in the next ten years that I see us adding another 3-4 million sq ft a year,” he says.

“Virwani is a prolific dealmaker and is able to see inherent patterns in businesses, which enables him to see value where others can’t, thereby giving him the first mover advantage,” says Parikh.

While the residential market in India has had to contend with oversupply and declining prices, office developers are seeing buoyant demand. The stagnating rentals of the post-Lehman era are a thing of the past and the last six months have seen rentals edge up even as supply remains restrained. With an average of 34 million sq ft leased every year, the market is on track to soak in at least another 300-odd million sq ft in the next 10 years. In addition, office space is a rental yielding asset—yields are at

his partner, who ran a real estate business together, called Embassy, in Bengaluru. As a fallout, his father had decided to stop developing more properties. A distressed Virwani, who had intended to join the family business, recalls telling his father that his partner had other businesses to fall back on. “We had only real estate as our bread and butter.” To his surprise, his father bought his argument: He agreed to let Virwani continue developing using the Embassy brand name but without any financial backing from the family.

The re-energised Virwani set out and bought his first land parcel from Anandbhai, a Gujarati landowner, on Infantry Road—now a bustling street but then a place where auto rickshaws would refuse to go—and started developing his first office block, Embassy Point. As luck would have it, he sold one floor to Kirloskar

“I am so BullIsh aBouT The demand for offIce space ThaT I see us addIng anoTher 3-4 mIllIon square feeT a year.”

8-9 percent compared to residential yields of 2 percent—which makes holding such properties for the rental returns alone a viable proposition.

This has resulted in developers like Embassy building large office parks and reaping the benefits of steady income while peers in the pure residential play struggle for survival.

In addition to Embassy’s dominance in the office space market, it is also making moves in the residential and warehousing space, which will prop it as among the country’s largest real estate companies.

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he year 1993 is not one that Virwani can forget in a hurry.

The then 28-year-old was a bystander to a dispute between his father, Mohan Virwani, and

Oil Engines, then run by Vikram Kirloskar. At Rs 825 per square feet, Vikram liked the price but needed approval from his grandfather Vijay Kirloskar, who sat in Pune. After a meeting in Pune, Virwani sold another two floors to Kirloskar Pneumatic.

Even before he had completed the project, Virwani had made money and also started an association with Vikram Kirloskar, one that would traverse the next two decades.

It was what Virwani did next that distinguished him from his peers and showed that he was not about to operate his real estate business the way it was traditionally done in the country. After having received money from Kirloskar for the office space, he could have easily paid Anandbhai.

Instead, Virwani chose to take him

along and renegotiated the deal to share half the built-up area with him. A sceptical Anandbhai initially refused, thinking that Virwani would be unable to sell the office space.

“At that moment, I told him I had already sold two floors and we became partners,” he says. This freed up Rs 2 crore for Virwani to invest in his next venture. This move was unlike the norm at the time, when the association between the developer and landowner was more transactional—buy-sell.

And that was to become Virwani’s operating style over the next two decades. His modus operandi was simple. Take capital from investors, develop property, share the proceeds and move to the next thing. The 1990s saw him develop several office buildings in Bengaluru and nurture his initial relationships with clients.

By the end of the decade, two trends spurred Virwani on to take his big bet on office parks. First,

he noticed companies were taking tentative steps towards expanding the scope of their operations by significantly increasing their staff strength. For instance, Microsoft went from 1,000 to 5,000 employees in a year. This dramatically increased the amount of office space they would need. At 100 square feet per employee, it amounted to 500,000 sq ft of office space. Until then, few companies had gone higher than 100,000 sq ft at one go.

Second, Virwani realised that once the ‘floorplate’, or the area of the floor, increased from say 10,000 sq ft to 100,000 sq ft, it dramatically increased the efficiency of seating employees. Both these factors resulted in companies upping their office requirements.

In the early 2000s, a key confirmation of Virwani’s belief came from large Indian IT companies that were setting up their own office parks

for work outsourced initially from the US and later western Europe.

Insulated from the hustle and bustle of Bengaluru, they offered landscaped surroundings for their employees to work in. They came equipped with round-the-clock power supply and employees had the option of eating in food plazas and going to the campus gymnasium or yoga classes.

The last mix in the cocktail was the emergence of western companies using India as an offshoring base.

Among the most prominent examples of this is Accenture, which employs 150,000 people in India and has a global headcount of 373,000. Other examples include Microsoft, Fidelity Investments and Swiss Re. But global policies prevented them from purchasing office space in India. They had no option but to lease. If Embassy had to cater to this, they’d have to add an office park to their offering.

Mike Holland, CEO of Embassy Office Parks

May 13, 2016 forbes india | 45

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46 | forbes india May 13, 2016

Office Records 45 Million square feet

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he growth in demand from global companies also led to the emergence of what is referred to in the industry as Grade A office space. These are buildings that are leased out, have one owner and one property manager—which can be the same, like in the case of Embassy that uses a group company for managing the parks. Tenants have all their maintenance needs taken care of. They simply move in and start work. This clearly is not a business where the developer can sell and disappear. It owns the asset and is responsible for its upkeep. It is also not a play many developers have proved themselves adept at.

They’d rather construct and sell.

This game has, over the last decade and a half, separated the men from the boys. It has led to the emergence of half-a-dozen companies—Embassy, DLF, GIC, Brookfield, RMZ, Prestige, DivyaSree—that have large portfolios and are keen on growing them.

Together, they would make up 60 percent of the 200 million sq ft of Grade A office space in India.

The last two years have seen a veritable boom in this market. Indian annual leasing averages about 34 million sq ft, according to Colliers International. Foreign clients, who make up 70 percent of the demand for Grade A office space in the country, have been expanding their physical presence; meanwhile, Indian clients who prefer a mix of leasing and owning office space have been slowing down on increasing their staffing numbers. “The demand for the office market that we play in is directly related to the health of the US economy,” says a leading office parks developer on condition of anonymity.

It was this trend that Virwani caught on to early and capitalised on. In 2002, he set up Embassy GolfLinks in partnership with KJ George, who is currently the minister for all subjects pertaining to Bengaluru city. The site started as a 5-acre project, with ANZ Infotech

40

94%

leased area

total office space

% leased area

35 30

91% 73%

94%

25 20

91%

15

95%

10

95%

5 0

dlf*

embassy group

k raheja unitech rMZ Corp Corporation (Brookfield)

Panchshil hiranandani realty

develoPer

Source: Knight Frank

signing on for 41,187 sq ft at a monthly rental of Rs 25 per sq ft. It was at the bhoomi pujan (ground-breaking ceremony), when IBM signed on for 700,000 sq ft, that Virwani got further validation of his analysis that the office market would explode.

He quickly bought more land and gradually Embassy GolfLinks became a 60-acre, 4.5 million sq ft facility.

He also found a willing backer in HDFC. Virwani was stunned by the speed with which chairman Deepak Parekh approved a Rs 40 crore loan.

Parekh had been briefed by his Bengaluru head RVS Rao that Virwani was an upcoming developer who must be supported. A quick meeting in Mumbai was all it took for the loan to get approved. Parekh also told his team that the project must not suffer for lack of funds. His relationship with HDFC has continued till this day. Virwani says that whenever he’s gone to other banks, HDFC has stepped in and upped his credit limits.

Virwani’s skill in forming partnerships was to also help him in managing tenants. He goes the extra mile to accommodate their requests. He’s even set up a separate company, unlike other developers who usually outsource them. Embassy Services, headed by Pradeep Lala, takes care of all their needs inside Embassy’s parks—from

*Figures include Grade A as well as other property types

housekeeping to maintenance to organising buses to running crèches.

It is now an independent Rs 500-crore company that provides these services to other developers as well.

A significant problem that clients faced was accommodation for their visiting employees. Virwani set up Embassy Hospitality to take care of this. “We plan to set up a hotel in each of our properties that will be open to both park tenants as well as the public,” says Sartaj S Singh, president, Embassy Hospitality.

Over the last five years, Virwani has moved to cement his position in the Bengaluru market. Through Embassy GolfLinks, Manyata Tech Park and Embassy TechVillage, they offer 20 million sq ft in the city alone, apart from Tech Zone in Pune. “We have clients coming to us directly for their needs without going through property consultants,” says Holland.

As a result, the company, after many years, has been able to push its rentals up. Average rentals have moved up by a third from Rs 54 to Rs 67 per sq ft per month in the last year, according to Holland, who is confident that supply will not exceed demand significantly over the next couple of years. Reason: Experts say the existing rentals do not justify the construction of significant amount of office stock in the foreseeable future. Office space is

also taking longer to construct. Earlier, it was possible to have a building up in 12 months, says Virwani, but since the implementation of the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA, which guarantees hundred days of wage employment in a year to rural households), labour is harder to get and so buildings can take up to 24 months to construct and fit out.

Therefore, with developers staying restrained on construction, there is little danger of a glut, unlike in the residential space, which, interestingly, is a direction where Embassy is also now headed.

W

ith his leadership position in the Bengaluru office market unchallenged, Virwani, in 2012, decided to get back to the residential space. In the late 1990s and early 2000s, Embassy had

Bengaluru. This is land Virwani had acquired for Rs 200 crore in the late 1990s. He then spent 10 years between 2005 and 2015 acquiring parcels in the area, where the landowners had initially held out, to finally reach 300 acres.

“Sometimes I wish I could get five years of my youth back. Acquiring these large land parcels is just not possible anymore,” rues Virwani.

He’s confident of selling both these plots and the apartments on this land even in a sluggish market. And when he is done with this, he still nurses a desire to launch apartments in the Rs 50-60 lakh price bracket.

“The buyer [in this price range] is getting shortchanged. I think we can give a much better product in this price bracket,” he says.

You would think Virwani has his plate full, but then you would have to think again. The self-confessed

“JusT as wITh offIce parks 10 years ago, There Is a shorTage of grade a warehousIng and IndusTrIal parks.” constructed a few residential buildings in Bengaluru. When they restarted work, “we took a conscious decision to stick to the premium housing space”, says Reeza Sebastian Karimpanal, vice-president, residential sales and marketing at Embassy. Embassy’s new foray, spread across six projects in Bengaluru and Chennai, retails at an average ticket size of Rs 2 crore.

Most of these apartments will be delivered in 2016. Among the projects in progress is Embassy One, an ambitious mixed-use development, which will feature a Four Seasons Hotel as well as apartments serviced by the hotel chain, apart from office and commercial space.

In May, Virwani will make another big bet by launching Embassy Springs, a 300-acre township in north

workaholic’s appetite is never satiated.

Next up, Virwani is confident of a REIT (Real Estate Investment Trust) listing that will allow a broader set of investors to come into the company.

The context for this venture lies in his association with Blackstone. Virwani believes the recent clarifications on issues such as withholding tax are sufficient to make investors list REITs. In 2012, Virwani stitched up a 50-50 joint venture with Blackstone to form Embassy Office Parks. He had been talking with Parikh for many years without any deal materialising.

In 2010, they did put together a residential project but it was in 2012 that the big Embassy office parks deal took place that took care of a lot of the company’s financing needs. At present, the existing Rs 1,000 crore received

from their four parks as rentals (shared by Embassy and Blackstone) is more than enough to take care of interest costs. Virwani is confident of the privately held Embassy being able to fulfill its funding requirements to expand office space.

A sneak peak into the next stage of Embassy’s growth can be found in a new industrial park venture that the company recently incubated in partnership with Warburg Pincus.

“Just as with office parks ten years ago, there is a shortage of Grade A warehousing and industrial parks in India. We plan to change that,” says Anshul Singhal, chief executive of Embassy Industrial Parks.

Embassy has acquired 52 acres in Pune and 198 acres at Sriperumbudur near Chennai for two industrial parks that will come equipped with basic infrastructure and links to ports and airports.

Companies will set up factories for their manufacturing needs.

About 60 percent of the space will be reserved for warehouses. Plans are afoot to acquire more land parcels near Delhi at the start of the Delhi Mumbai Industrial Corridor.

Expect this to be a billion-dollar business a decade from now.

Still a young 50, Virwani is already looking to the next generation to take over. Son Karan (24) is his executive assistant who shadows his father, while second son Aditya (21) is expected to join the business soon.

Virwani has taken on an active role to mentor them. “I didn’t have my father to mentor me but I make sure I do that with Karan,” he says. Though it is hard to imagine Virwani taking a backseat, he does insist that he could step back in the next 4-5 years.

In that event, ever focussed on relationships, he’s concerned about what he’ll do with his team that has been there for the last 20 years with him. “Maybe I’ll take them with me and start something new,” he says. That could well be an adventure to watch out for.

May 13, 2016 forbes india | 47

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All I Want is a Bed Somewhere

Single professionals have never had it easy with house-hunting. For them, the rent-a-bed model— an upgrade on the PG accommodation—is an ideal option, as developers are fast realising

By DeBojyoti Ghosh

House owner: You are from Odisha, so you must be eating fish?

Prospective tenant: Yes. House owner: Sorry, I can’t give my house on rent to people who eat fish.

T

his conversation took place in 2004, but Amarendra Sahu—a prospective tenant then—still recalls it with a mix of bemusement and indignation.

Sahu had moved to Bengaluru on work and wasn’t prepared for the hostility that accompanied house-hunting in the city. “Nobody would give me a house! Thoroughly frustrated after a tedious three-month house-hunting mission, five of us got together and rented an entire independent house.

It was the only way to get a roof over our heads,” says Sahu, then a fresh engineering graduate from the National Institute of Technology, Karnataka (NITK) in Surathkal.

It has been 12 years since Sahu, now co-founder and CEO of NestAway Technologies, was denied a house because he liked his hilsa, but not much has changed. House hunting in the city is still akin to looking for the proverbial needle in the haystack for single men and women. Take the case of 25-year-old Neetu Sophia Thomas. “Landlords seem to have a list of expectations for their tenants. No cooking of nonvegetarian food, no male friends, no

48 | forbes india May 13, 2016

partying, no music after 10 pm are part of the usual checklist. Recently a house owner even expressed her fear of men hanging around in the area more if she gives her house on rent to single women,” says Thomas, a sales executive with a Bengalurubased media company. Currently looking for single accommodation, Thomas continues to live in shared paying guest (PG) digs where, among other things, her landlord thinks nothing of walking in post 10 pm without prior notice. “There is simply no privacy,” she says.

Taking note of these pain points of the single urban working population, Sahu, 33, started NestAway last year, a managed home rental services provider, along with Smruti Parida, 32, Deepak Dhar, 33, and Jitendra Jagadev, 33. The Bengaluru-based startup connects tenants with house owners and provides assistance throughout the rental process. It also manages rentals for its customers by providing fully furnished accommodations.

One of the opportunities it has tapped into is the ‘rent-abed’ business. With an increasing number of working professionals in the 20-25 age group in large cities looking for better accommodation in housing societies, beyond PGs, and a hassle-free rental process, the organised real estate market in the country has developed an

appetite for the ‘rent-a-bed’ model.

Typically in a rent-a-bed accommodation, the tenant shares a flat along with others. While the concept has always existed (as PGs), experts point out that the differentiation is in the participation of real estate developers converting their apartments into shared accommodation facilities. This gives tenants access to all the amenities that are available in gated communities and housing societies, and not included in regular PG accommodations.

Currently, NestAway works with a network of 3,000 house owners and 10,000 tenants across

Bengaluru, Hyderabad, Pune, Delhi and the national capital region (NCR).

However, close to 60 percent of its new business comes from Bengaluru.

Over the last year, the Ratan Tatabacked startup has garnered investor interest as well. So far, it has raised $44 million from investors such as Tiger Global Management, IDG Ventures India, Flipkart, Russian billionaire Yuri Milner and angel investor Naveen Tiwari, co-founder, InMobi.

“There is a migration of a large number of technology graduates to cities such as Bengaluru, Pune and Hyderabad and, consequently, a demand for economical and

good quality accommodation. Of late, several startups, real estate developers and managed property operators have ventured into the rent-a-bed accommodation space,” says Bhushan Sawant, managing partner, Sawant Partners, a Mumbaibased real estate consulting firm.

Indeed, in the last one year, many home rental operators have started offering rent-a-bed accommodation seeing its immense market potential.

Bengaluru-based real estate developer Shanders is set to launch its first rent-a-bed scheme in April with its new project in the Electronic City area, home to a large number of IT

professionals. In its initial stage, the property would have about 110 apartments (6 beds per apartment) adding up to 660 beds. Shanders aims to operate about 3,000 beds in the next year largely focusing on Bengaluru’s tech population.

“In the shared accommodation facility, a maximum of six people can share a three-bedroom flat of about 1,800 square feet. Along with the host of common amenities within the apartment, we would also provide access to the club house, swimming pool and gym, concierge service, food delivery, on-call doctor and parent/ guest accommodation. The tenants May 13, 2016 forbes india | 49

Bmaximage

Amarendra Sahu, co-founder and CEO of NestAway Technologies

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in the rent-a-bed accommodation can use all the facilities,” says Sriram Chitturi, CEO, Shanders. The rent per bed varies anywhere between Rs 6,000 and Rs 13,000 a month, depending on the space of the flat, area of the property, facilities and services.

“Most of the house owners don’t want to rent out to bachelors and single women, preferring families instead. But by providing the renta-bed format in a housing society, we are trying to institutionalise the space and bring in facility managers and third-party vendors to provide allied services,” says Chitturi.

Analysts believe that for developers, formats such as rent-a-bed are an effective channel to monetise unsold inventory. According to a report released earlier this year by industry body, Confederation of Real Estate Developers’ Associations of India (Credai) in association with

estate developers and institutional investors don’t look at buying and renting out apartments is because of low rental yield. However, rental yield from a commercial property in India is between 8 and 9 percent. By working on a per bed concept, the rental yield can go up generously.

It easily gives developers about 5-6 percent yield on their property,” says Ajay Kumar, founder and CEO, Cozee Homes, a Bengaluru-based home rental services startup.

By early May, Cozee Homes is geared to enter the per bed accommodation business. “We have taken up some inventory (about 100 properties, primarily apartments) in areas such as Electronic City, Whitefield and Kalyan Nagar in Bengaluru,” says Kumar.

For Bengaluru-based online rental platform Grabhouse, shared accommodation is a key vertical

SeeinG itS immenSe market Potential, many home rental oPeratorS are now oFFerinG rent-a-bed accommodation international property consultant JLL, Bengaluru had 82,357 units of total unsold inventory as of December 2015.

The inventory included both underconstruction and completed projects.

“Clearly the rent-a-bed format can monetise inventory. However, it is important that the other parameters, such as location, are also maintained as also adding valuebased services vis-a-vis luxuries.

This remains, in the end, a price sensitive market,” says Sawant.

Typically in the Indian real estate market, the rental yield from residential properties is very low— on an average, between 2.5 and 3 percent—while the global average for countries similar to India in terms of economic development is about 4.5-5 percent. “One of the reasons why real 50 | forbes india May 13, 2016

with 55 percent of its total listings in the shared accommodation space. With a presence in 11 cities, including Bengaluru, Delhi, Noida, Ghaziabad, Gurgaon, Pune and Hyderabad, 70 percent of its customer base is currently living in shared accommodation.

Not just tech populations, but students away from home are also a big potential market—and companies like WudStay, an online marketplace for budget accommodation, are entering this segment. Launched in April 2015, WudStay raised funding of $3 million from Mangrove Capital Partners and Vikas Saxena, CEO of Nimbuzz, a messaging application maker. In December last year, the startup, founded by 33-year-old Prafulla Mathur, said it would enter

the branded PG space in cities like Kota, Delhi and Bengaluru, with large student populations.

Average monthly rentals for PGs in metros range between Rs 4,000 and Rs 6,000, offering a huge potential for organised players to grow. Compare that to the services provided, and the tenant’s preference seems obvious.

“In Bengaluru alone, there would be at least 600,000 beds across paying guest accommodations. Bengaluru has the highest density of PGs in India followed by Gurgaon-Noida and Pune. Bengaluru as a city has grown very fast and there wasn’t enough housing available near tech parks where large IT-BPO companies are based, which led to the rapid growth of PG accommodations in the city,” says Nikhil Sikri, founderCEO, Zelo, a branded PG platform with services in Bengaluru and Pune. Currently, Zelo manages about 1,000 beds across the two cities.

Amit Agarwal, co-founder, NoBroker, a Bengaluru-based homerental portal that circumvents the broker, feels that the challenging part about this business is making the right choice on the property. “Get into properties where the demand from tenant is high, typically large IT parks, colleges and corporate centres.

The price point and location of the property should match so that the occupancy level is always high. To make money, you have to aim for 100 percent occupancy in this business,” says Agarwal, who is also exploring the rent-a-bed space to expand his portfolio. On the face of it, the concept seems a win-win proposition for the house owner, tenant, developer and the service provider.

Migrating students and professionals continue to struggle to find desirable accommodation, making them a large market ripe for the picking.

It is still, however, a nascent business. And till such time it gathers momentum, for people like Sahu, the choice continues to remain between hilsa and a house.

The Offbeat Investors

Under Sunil Rohokale and Amit Bhagat, ASK’s realty PE business challenged conventional wisdom. Their funds tested the equity financing route and generated stellar returns by staying true to their investment philosophy

W

hen Sunil Rohokale first visited the ASK Group’s office at Band Box House in Worli, Mumbai, he only had a faint idea about the financial services company and the men behind it. It was April 2008 and he had been invited for a meeting by Asit Koticha, co-founder of the ASK Group and one of the most successful value investors in equity markets.

Rohokale, who was serving as the MD and CEO of ICICI Home Finance at the time, had no prior experience in the capital markets, whereas the ASK Group had earned a name as an institutional broking firm. The company was known for entering into a joint venture with US financial services firm Raymond James Financial in 1993.

The JV ended in 2007 following ASK’s buyout of Raymond James’s stake. After exiting the broking business, ASK diversified into wealth advisory services. At the same time, Koticha harboured ambitions of venturing into real estate private equity—an asset class consisting of equity or debt investments in property.

Koticha had done his research on Rohokale and the banker’s reputation for building a Rs 83,000-crore loan book at ICICI preceded the meeting. Koticha made him an offer to come on board and lead ASK’s forays into real estate PE. “Changing jobs was a big thing.

It was not easy for a conservative Maharashtrian like me, working with a big mortgage bank, to quit and join ASK. But I joined and created an investment philosophy

By Pravin Palande

which worked,” recalls Rohokale.

ASK’s entry into the real estate PE business to finance equity projects in the sector came at a time when no fund was interested in equity financing; most preferred debt financing. But ASK Property Investment Advisors swam against the tide and, has, over the last seven years, raised Rs 3,800 crore through four funds, all dedicated to equity financing. The first fund—ASK Real Estate Special Opportunities Portfolio I—launched in December 2009, has returned 24 percent annually to investors, the highest in the industry (see table).

banking division that advised real estate funds. He knew the thought process of real estate fund managers. He understood why most of the funds failed to deliver returns: Most investors invested in illiquid markets without taking into account the risks associated with developers and projects. He wanted to steer clear of those pitfalls.

Rohokale and Bhagat spent the initial four months at ASK giving shape to their investment philosophy.

They decided they would do equity financing only for the residential market—as it was less risky compared to office space since money came

rohoKAlE And bhAgAT did EqUiTy finAncing only for ThE rESidEnTiAl mArKET And noT ThE riSKy officE SPAcE This success can be attributed to Rohokale and his colleague from ICICI, Amit Bhagat, both of whom joined the ASK Group in September 2008. Bhagat was 42 years old and Rohokale 38 when they took up the assignment. Rohokale rose to become the managing director and CEO of the holding company (ASK Group), while Bhagat took over as the managing director and CEO of ASK Property Investment Advisors, which focussed on the real estate private equity business.

In his previous stint, Bhagat was heading ICICI Property Services, which included the investment

upfront to developers—and to deal with developers with track records of twenty years or more in the top five cities: Mumbai, Bengaluru, NCR, Pune and Chennai. They also resolved to do business only with developers they knew and had dealt with as lenders.

Since then, the duo has stayed true to every word of this investment mantra.

The first few years of the business were tough. Lehman Brothers had just filed for bankruptcy and collecting money from the market was difficult. They had to tap their contacts at ICICI to get investors.

The first fund in 2009 raised Rs 317 crore. There were around May 13, 2016 forbes india | 51

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Joshua Navalkar

Sunil Rohokale (left) and Amit Bhagat

52 | forbes india May 13, 2016

400 investors and it took around 600 meetings to convince all of them to join the fund.

The second fund was launched in 2012 and raised Rs 965 crore, while the third raised Rs 1,400 crore in 2016. All these funds provide equity financing to developers for their projects through the SPV (special purpose vehicle) route.

And investors in the funds have made high returns despite the challenging market post-2008.

“The investors who participated in the first and second funds clearly saw our disciplined approach to investing and the risk-adjusted returns that were generated gave them confidence,” says Rohokale.

These investors were earlier investing on their own in the real estate market. But when Rohokale and Bhagat gave them a presentation about their investment philosophy, they came on board immediately.

Says an anchor investor, “I was very impressed with their investment proposal and I knew that these were not like other funds. They understood on-the-ground investing in the real estate business. I have been the first investor in their first fund and later on invested in other funds as well.”

Most of the high-profile investors end up being part of the investment committee of the real estate funds.

In ASK’s first fund, there were four investors in the committee and three members from the company. In the second, the number of investors on the committee increased to six, while in the third, there were 10 investors and four ASK members.

“These investors are invited to the committee for better governance.

They have specialised knowledge with skin in the game. This aligns our interest with theirs,” says Bhagat.

Bringing investors on board committees becomes important because ASK’s funds actively invest in equity. Most of the money that has been raised by real estate funds has been for debt financing. PE

money mAchine Funds

IRR

ask real Estate special opportunities Portfolio I

24%

ask real Estate special opportunities Fund

21% **

ask real Estate special opportunities Fund II

25% *

* Targeted iRR ** investments of 2015 are not valued

funds usually focussed on debt because developers were not getting finance and the returns for lenders were high. On an average, debt funds have been able to give a return of around 18 percent every year for the last six years.

ASK was the only fund that went in and raised equity money.

“Equity gives the ability to not only control the investment but also the ability to select a good partner. We consider ourselves to be active investors where we want to be in control of the project. We put in 70 percent of the money in a project and take the entire risk management aspect of the project in our hands,” explains Rohokale.

He wants to give growth capital and not become a lender and sit on the fence, which is the common model for most funds. And this is what ASK Property Investment Advisors has set out to change.

Besides, fund managers never focussed on the risks. Rohokale and Bhagat like to be extra careful and prefer to be known for managing risk than generating returns. This closely resembles the investment philosophy of legendary investor Warren Buffett and his partner Charlie Munger, whose principle of margin of safety is based on looking for opportunities where the market price is way below the intrinsic value of an investment. This allows fund

managers to provide for errors in their judgment if things go wrong.

Being active also means that ASK has to be involved in every aspect of a realty project—from the buying of land to completion. Rohokale feels that he is providing long-term capital to developers, so it makes sense that he works with the developer from very early stages of a project.

“We deal with PE funds all the time but ASK fund managers are different.

They enter early, sometimes even at the land-buying stage. They look at the future of the project and they have the expertise to understand issues developers face on a day-to-day basis. Importantly, they work more on trust than paper work,” says Pratik Patel, director of Rajesh Lifescape that has taken equity funding from ASK twice. Patel is a thirdgeneration real estate entrepreneur with a long and successful track record on delivering projects.

One of the checklists on Bhagat’s and Rohokale’s investment philosophy is whether the developer has taken a loan from ICICI Bank or HDFC in the recent past. This establishes the credibility of the developer. In fact, they were the first lenders to Paranjape Developers and Mantri Developers. The duo have identified 11 developers who meet their strict standards. These developers are known to deliver projects on time, are quality-conscious and have an impeccable track record.

But it is becoming increasingly difficult to generate returns in the real estate market due to oversupply and unaffordable prices. Rohokale and Bhagat feel that this is a good opportunity as there will be quality developers who will be looking for long-term equity finance. “For us, it is like value investing… getting good projects way below their intrinsic value,” says Rohokale.

This is exactly the kind of market they anticipated while sketching their investment philosophy and they are right on course.

May 13, 2016 forbes india | 53

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Ready to Build

Precast technology allows developers to standardise quality and build faster. This could be the answer to India’s mass housing needs

By Samar SrivaStava

I

n the south-west corner of Bengaluru, the outline of a vast new project is taking shape: Provident Housing, a subsidiary of real estate developer Puravankara Projects, is setting up a 6,000-home apartment complex. Its two- and three-bedroom apartments come with fitted kitchens, lawns, a walking track and a club house. Spread across 59 acres, the project—where homes cost Rs 35 lakh a piece—certainly doesn’t look and feel like an average affordable housing development.

“We aimed to deliver each apartment at the same quality level and have succeeded in that,” says Ashish Puravankara, managing director of the Rs 1,677 crore-Puravankara Projects.

While the outskirts of Bengaluru are dotted with such developments, this particular project is noteworthy for reasons that could well set a precedent in the building process of large-scale residential projects in India. A typical project of this size would have, on an average, 2,000 workers. Different groups of workers would be at different stages of construction—mixing concrete, laying brickwork, plastering, painting, and laying plumbing and electrical wiring. Each phase of the project, numbering about 1,000 flats, would take about 36 months to deliver.

Provident Housing, in a bid to work faster and more efficiently, has opted for a technology known as ‘precast’, in which concrete slabs are manufactured with predetermined specifications. The slabs are then lifted by cranes and put in position to construct a structure.

54 | forbes india May 13, 2016

Like Provident’s Sunworth project, across India developers are looking at precast technology as a solution to a range of issues. First, there is a shortage of labour. The Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) has shrunk the pool of available migrant construction labourers. Second, labour laws prevent developers from having a large number of workers on their books; they are usually hired on contract. Third, with different skill levels among workers, getting a standardised quality of work is proving to be increasingly difficult. Precast technology addresses all these issues.

In the case of Provident Sunworth, the company admits its adoption of precast technology was “tentative” to begin with. But so far, they have been more than happy with the outcome.

Provident Housing has roped in Larsen & Toubro (L&T) as project partner, which has set up a plant at the project site at an investment of Rs 26 crore to manufacture precast concrete slabs. Here, steel bars are placed in metal boxes and concrete is poured in them. The site has just 160 workers, with another 80 for the night shift.

Once the concrete sets, the slabs are cured—a process that removes rough edges, smoothens the surface, and makes the slabs capable of supporting heavy loads. At the Sunworth project, each ‘floorplate’ has 244 different elements (different kinds of walls in a room) that are manufactured at the L&T plant and which takes five days to generate. Compared to this process— by which one floor of the building

can be constructed in eight days—the more conventional process in which construction is completed one floor at a time, with concrete being poured to form walls, takes up to 12 days.

Once all the elements in each slab are in place, they are transported to the building under construction, 200 metres away, by truck, lifted by cranes and placed in slots to form the walls of an apartment. Different concrete slabs are earmarked for assigned slots. “We leave space for electrical fittings and windows,” says Radha Krishna N, senior manager, technical, at the Sunworth project.

The project completed a 12-storey tower in 96 days. Without precast technology, it would have taken 175

days, estimates K Somaraju, chief engineering manager at L&T who has been deputed to this project.

Once the slabs are in place, painting begins almost immediately. There’s no need to plaster (since curing smoothens the wall surfaces), cutting the process down by another week.

Since different workers have different skill levels, walls in some affordable housing developments are rarely of the same quality, claims Puravankara; concrete slabs ensure consistency.

In all, Provident Housing delivered 1,440 units in December 2015, which is phase 1 of the Sunworth project.

It took 30 months to complete and the company hopes to bring it down to 24 months for the next three

phases. All the flats were sold out and individual owners have begun work on customising their apartments before moving in. The use of this technology, however, comes with hurdles: First, the slabs of concrete are heavy and cannot be transported over long distances as freight costs may render the project unviable.

Industry experts estimate that the slabs cannot be transported over more than 200 km as expenses will become prohibitive. Second, the slabs are taxed at an excise duty of 14 percent when they are moved out of the manufacturing plant; this is unlike a project like Sunworth where the factory was on-site and, therefore, did not attract excise duty. This is an issue

the industry is hoping the government will eventually address. Developers cite the time when excise duty was levied on ready-mix concrete; however, as the product became popular, the tax was removed. Third, a manufacturing plant for concrete slabs would only make sense if the demand for such large-scale housing projects picks up steam in a specific area.

As of now, Puravankara continues to be bullish about the potential of this business. Plans are on to launch a similar project in Chennai. And as more developers warm up to the idea, “we could explore setting up our own factory and this becoming a separate business vertical,” says Ashish Puravankara.

May 13, 2016 forbes india | 55

Bmaximage

Construction workers assemble a precast wall of an apartment in Puravankara’s Sunworth project on the outskirts of Bengaluru

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‘The Wealthy Have Gone From Chasing Trophies to Yield’

Lord Andrew Hay, global head of Knight Frank Residential, who advises the rich on their real estate purchases, says property is an attractive asset class even today

By Samar SrivaStava

Q What are the top locations globally for the rich to buy property?

London, New York, Dubai and Singapore are on top of the list. In the last year, Singapore has come up as they have tried to cool the market there. The interesting one to watch out for is Sydney where the quality of what is available is getting better.

Q are the rich agnostic to geography?

Increasingly so. Currency plays a huge part now along with the safe haven status and eventual returns. And of course, they look at where they can have a nice lifestyle. We have noticed that people are less location-specific.

Q apart from residential real estate, what other type of property do the rich buy?

John Wright

The hotel sector as an asset class remains attractive. Within the commercial sector, office space and industrial and logistics parks are attractive. The high net worth individuals in a number of different regions of the world represent between 20 and 30 percent of the investor base in these sectors. What is more interesting is that in the last five years, the wealthy have gone from chasing trophies to yield.

Q are the rich more circumspect about real estate investments now?

The rich have been more active, but they have slightly less money 56 | forbes india May 13, 2016

now (due to the volatility in global markets). The real challenge for them is, ‘What do I invest in now and where do I go?’ If you look at all the asset classes—gold has had a seesaw and commodities and equities are also down—it has been crazy. If you are a rich person with a global view, you are thinking of which asset class to invest in and where to invest—which currency or territory?

So far, property has been more stable than most years. It is quite surprising because if you go back 10 years, property was not considered a great asset class since it was fairly illiquid. But in a funny sort of way that makes it quite an attractive asset class at the moment. When you invest $20 million in a house, you are not thinking every morning, ‘What is my house worth today?’

Q isn’t expensive real estate taking longer to sell?

Volumes have definitely slowed.

But in terms of the length of time it takes to sell expensive real estate, I am not sure if anything has changed.

The number of transactions taking place in key markets has reduced.

At the top end of the market, I would say to a client, ‘If you have something that is in today’s money worth $20 million, I would give it three seasons or 18 months to sell.’ At the very top of the market, in any market in the world, the number of buyers who are going to transact in that year is not very high. There would only be around 100 people in New York looking at something over say $30 million and the numbers actually transacting would only be 20 percent.

Some Home Truths

Realty prices have not increased much over the past year but there is no imminent threat to the sector. In fact, there are pockets where money can be made compiled by pramod mathew & pravin palande infographics: pradeep belhe; illustrations: chaitanya dinesh surpur

performance of real estate as an asset class Though the average real estate prices across the top eight cities in India have appreciated as much as the Nifty since 2010, some pockets have far outperformed the index. The NCR region, for instance, has seen a major spike in prices.

Despite the parity in the growth of residential real estate prices across the top eight cities and the Nifty, returns from equities have been volatile while real estate prices have shown steady growth between 2010 and 2015.

citywise price change

nifty Vs price across top 8 cities

NCR

Bengaluru

Chennai

Nifty

Mumbai

Change

200 143%

250

127%

200

150

95%

Nifty

150 52% 100

~52%

National Average

100

15%

50 2010

2011

2012

2013

2014

2015

50 2010

2011

2012

2013

2014

2015

*Prices and Nifty indexed to 100

*Prices indexed to 100

tHe cost of Being metropolitan Residential real estate prices in metro cities.

H1 2010

H1 2011

H1 2012

H1 2013

H1 2014

H1 2015

H2 2015

Bengaluru

3,743

4,802

5,652

7,273

8,182

8,619

8515

cHennai

7,412

8,548

9,618

10,206

11,448

13,495

14474

mumBai

28,869

28,138

32,316

30,012

32,197

33,025

33,100

ncr

6,744

6,785

8,182

15,010

17,124

17,133

16,373 *All figures in Rs per square feet

Source: Knight Frank and Forbes India

Note: Top eight cities refer to Ahmedabad, Bengaluru, Mumbai, NCR, Chennai, Hyderabad, Kolkata and Pune.

May 13, 2016 forbes india | 57

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top resiDential inVestment Destinations

fewer new Homes Developers have applied the brakes on new residential launches owing to a high pile up of unsold inventory.

36%

Mumbai New Launches

120000

YoY fALL iN New LAuNChes iN MuMBAi iN 2015

1,14,710

90000 60000 39,663

30000 120000

Residential market demand in a region depends on two key factors—infrastructure development and employment generation. Based on these, Knight Frank’s Residential Investment advisory Report 2016 has identified 11 residential destinations that have the potential to provide the highest returns on investment.

in a free fall

2011

2012 2013 2014 2015

80000

NCR

1,10,751

Bengaluru

70000

60000

70%

ulwe mumbai

80000 63,458

94%

madh-marve, mumbai

new airport road, viman nagar pune

63,261

63% 61%

panathur-varthur, bengaluru

40000 50000

0

2011

2012

60000

2013

2014

40000

2015

49,684

2011 2012 2013 2014 2015

35000

54,147

59% 56%

vishrantwadi, pune

55%

thanisandra, bengaluru

40000

Pune

majiwada-Kasarvadavali, mumbai

Chennai

47%

new gurgaon (sectors 81-95), ncr

37,041

45%

guindy-alandur cluster chennai

50000

30000

42%

golf course extension ncr

25000

40000

20000

30,897

30000

2011

2012

2013

2014

puppalguda-narsingi, hyderabad

15000

2015

0

15,442 2011 2012 2013 2014 2015

41%

2015 Avg. price (’000 Rs/sq ft) expected appreciation (2015-2020)

5

market correction

Fewer new launches and steady sales in the top eight cities have helped bring unsold inventory to 2013 levels.

800000 700000 600000

YoY fALL iN New LAuNChes ACRoss top eight Cities iN 2015.

At 2,44,945 uNits, LAst YeAR sAw the LeAst New LAuNChes siNCe 2010

500000 400000 300000

sales

2013 unsold inventory

58 | forbes india May 13, 2016

2014

2015

6,91,591

2,63,720

7,14,972

2,74,109

6,91,300

0

3,29,630

200000 100000

22%

10

15

20

expected 2020 Avg. price (’000 Rs/sq ft)

25

30

premium launcHes BY citY

Bengaluru

3500

The premium segment has taken hard hits in sales volume, leading to the developer community taking a cautious stand before launching new projects in this segment.

Cities such as Hyderabad and ahmedabad have shown steady sales growth.

3000

3000

2500

2500

2000

2000

1500

1500

1000

1000

500

500

0

26%

Ahmedabad

2000

2014

NCR

1500 1200 900 600 300

0

2015

Hyderabad

1000

1500

of New LAuNChes iN MuMBAi iN h2 2015 weRe pRiCed oveR Rs 1 CR, MAkiNg it the Most uNAffoRdABLe CitY

2013

Mumbai

3500

2013

2014

Pune

1000

800

800

600

600

0

2015

800

2013

2014

2015

Chennai

700 600 500 400

1000

500

0

2013

2014

400

400

200

200

0

0

2015

2013

2014

2015

300 200 100 2013

2014

2015

0

2013

2014

2015

Launches

Sales

trenDs in office market

Vacancy levels of office spaces were at an eight-year low of 15.8% in 2015. Bengaluru had the least unoccupied offices.

150 2012

2013

2014

2015

vacancy levels

22%

120

20% 20% 23%

10%

22%

14%

23%

17%

60

NCR

Bengaluru

pune

Chennai

65

61

56

58

55

57

55

52

49

123

114

107

99

138

126

118

111

118

112

103

Mumbai

14%

25%

23%

95

0

18%

24%

51

30

17%

19%

16% 21%

15%

16%

11.3%

49

23%

60

stock

90

8%

21%

hyderabad 1 Stock = 1 million sq ft

rents Hold up

Office rents in most cities have increased steadily in the last two years, with Pune and Bengaluru setting the fastest pace. mumbai ncr Bengaluru pune chennai Hyderabad

2012 127 53 46 37 45 37

2013 114 53 48 41 47 37

2014 118 58 49 47 49 39

2015 104 63 52 56 52 42

Weighted average rent in Rs per sq feet per month

56% YoY gRowth iN CoMpLeted offiCe spACes iN NCR iN 2015 the highest iN the CouNtRY

May 13, 2016 forbes india | 59

Corporate aCCouNt marriott-starwood

The road to Twice as Good The Marriott-Starwood merger will create the largest hotel chain in the world— and potentially in India too. Forbes India speaks to both players about the ramifications of the deal and their plans in India

‘fOr every HOTel We HAve, THere’S AnOTHer One COMInG Up’

By AngAd Singh ThAkur

O

n April 8, shareholders of both Marriott International Inc and Starwood Hotels & Resorts Worldwide Inc voted in favour of a merger between the two groups, which will create the largest hotel chain in the world. This was preceded by a dramatic few days that saw the surprise entry of China’s Anbang Insurance Group into the bidding fray for Starwood, and its equally abrupt exit. On the eve of the shareholder meetings in early April, Craig S Smith, president and managing director, Asia Pacific, Marriott International, spoke to Forbes India about the impact the merger is set to have on the Indian hospitality sector. Edited excerpts:

the power of advertising, which I think is a big advantage. Today, we (Starwood and Marriott) share a lot of owners [of the hotel properties]. Their life becomes easier because now they just need to speak to one group. Being the largest company also gives you an advantage in negotiations. Imagine something as simple as chicken.

One hundred hotels negotiating chicken with a vendor are going to

be able to negotiate much better.

For the people of India, it means a much bigger international company creating jobs. It’s going to be exciting.

Q It’s nearly a year since you took over as Asia Pacific head for Marriott International. What have been your areas of focus?

Growth continues to be one of our focus areas. Growth means more

Joshua Navalkar

Q Assuming that the MarriottStarwood merger goes through, what will its impact be on the Indian market?

I think it would be positive for the market. Obviously, you’re going to have a much stronger hotel company in Asia. Think of the results from fusing these two sales groups into one. Not just to sell hotels to Indians in India, but even outside India. Even

60 | fOrbeS IndIA May 13, 2016

Craig Smith, president and Md, Asia Pacific, Marriott international

JW Marriott Mussoorie Walnut grove resort & Spa

incentives, more opportunities for people who work for us. That has also helped us retain talent. We’ve been able to allow people to grow within the organisation. Another focus along the same lines has been talent. We spend a lot more time grooming and building plans for our best foreign talent. Then there’s also a lot of focus on digital. In the case of our company, we have these two big generations that fill up our hotels: Baby boomers and millennials. Millennials are going to be the guests of the future. They’re different in the way they act and how they book. But even the baby boomers are adopting digital. Marriott does

over $10 billion a year in direct sales through marriott.com. A lot of people don’t realise this, but that makes us one of the largest retail sites in the world. And that doesn’t include bookings from Expedia, Booking.com,

MArrIOTT.COM dOeS Over $10 bln In SAleS A yeAr. IT’S One Of THe WOrld’S lArGeST reTAIl SITeS

etc. So the focus is on how we make that more actionable in countries like India, China and Japan. In the old days, the general manager would stand in the lobby and talk to guests to find out what they like or didn’t like about the hotel. These days, guests are telling you what they think of the hotel even before they check out.

Q What does growth entail for the Indian market, and what does your pipeline look like?

Growth in India would be double.

The hot question everybody’s asking is about the Marriott-Starwood merger. In India, we will be 100 hotels May 13, 2016 fOrbeS IndIA | 61

Corporate aCCouNt marriott-starwood strong by the end of the year. This is Marriott and Starwood together.

That alone makes us the biggest hotel company in India. That’s larger than Taj, which is a very respectable competitor. Besides that, we have an equivalent number of hotels in the pipeline under construction. It’s safe to say, for India and China, that for every hotel we have, there’s another one coming up. In India it takes a little longer than most places because of the licensing and other factors.

Q The question in India tends to be whether it is getting any easier to do business here. Is it?

Well, it’s getting easier, but it is not easy. I would say that it is still one of the toughest places to do business.

When you think of the hotel business, there are a couple of impediments for hotels in India. The first is the cost of land. Land is extremely expensive in India, especially in metropolitan areas. The second is cost of capital.

For the hotels we build, the interest rates are somewhere between 12 and 14 percent. Those would be great returns anywhere in the world. I think there’s a little bit of difficulty with that. But now we see more capital come in, including private equity.

Q Within India, larger hotel chains have focussed on the metropolitan areas. Is that changing now?

I think you’ll see that there’s still space to grow. We have four hotels in Mumbai. We could easily do a dozen more. We have about 50 hotels in Atlanta, Georgia. There’s room to grow. But we also see room to grow in secondary or tertiary locations.

You may not see a JW Marriott in the smaller cities, but you might see a Courtyard or a Fairfield. It is also worth noting that as you look across India, it is almost like there are all these independent states. The states that are progressive have grown a lot more. The hotel growth too is going to be faster in the progressive states, because there’s more business there.

62 | fOrbeS IndIA May 13, 2016

‘We dOn’T need An AGGreGATOr TO brInG vAlUe TO OUr GUeSTS’ By deePTi ChAudhAry

W

ell-informed consumers and a competitive market makes India an attractive prospect for US-based hotel and leisure firm Starwood Hotels & Resorts Worldwide Inc. Starwood, which has brands like St Regis, The Luxury Collection, W, Westin, Le Méridien, Sheraton, Tribute Portfolio, Four Points by Sheraton, Aloft and Element globally, plans to add 33 hotels in India over the next three years. At present, it has 47 hotels in the country, of which 11 from The Luxury Collection are in partnership with ITC Ltd, along with one hotel under the Sheraton brand.

The chief executive of Starwood Hotels, Thomas Mangas, talks about the chain’s India plans and threat from aggregators. Edited excerpts:

and we feel it can be the third largest market [for us] in the calendar year 2017. Right now, the US, China and Canada are our top three markets.

At the top of our offerings is the luxury segment with St Regis and The Luxury Collection. We recently opened the first St Regis in India, in Mumbai. We have a significant presence in The Luxury Collection through our partnership with ITC and we are opening our first W brand hotel in India [in Goa] this summer.

In our upper scale segment, we have Westin, Le Méridien and Sheraton.

We have 10 Le Méridien hotels here, which is a tremendous presence.

Q room aggregators are a rising business in India. How do you see this trend and does it worry you?

We are very excited about the growth that we see in India. We had a record year in signings and openings in India last year, and we expect that pace to accelerate, given the economic upturn in the country. We have 47 hotels and an active pipeline of 33 more, which are at various stages of construction and development. We are at pace to double our footprint in India in the next three years.

I expect to have a similar pace of signings as we did last year. We can easily see ourselves having 100 hotels in India in three years.

We want to keep working directly with our consumers; we don’t want anyone getting between us and our guests. We don’t think we need an aggregator to bring value to our consumers and guests to help build our brand recognition. The way we are building our digital platform, the great plans and standards that we have, the way we activate our hotels with great products and showcase our hotels with music for example, or art and fashion in W hotels, helps us keep aggregators irrelevant to our guests. As of today, they are focusing on budget hotels, where we don’t play. But such phenomena where a company tries to pull guests out of your distribution channel are a threat.

Q Where does India stand in the pecking order?

Q What is the biggest shift in consumer behaviour in India?

Q How important is India for Starwood Hotels?

It’s the fourth largest market today

The Indian consumer is a very

Thomas Mangas, CeO, Starwood hotels

Q What gives you the competitive edge? What differentiates you from the others?

Hotels are a product; it is about how you activate the product. W, for example, has a very active bar scene.

Hence, night life, fashion, music are all intertwined in your stay. If you like fashion and music, you are drawn to that. If you see The Luxury

Collection here, we are trying to be very authentic, connecting with local artisans, history of the place. That’s what the brand themes are doing and we are doing that better than the others. Experience from a generic term to a very specific consumer experience is activated at the hotel where it permeates through the food, bar, meeting spaces or rooms… so you walk out totally feeling that experience and we believe that is our competitive advantage.

Q Hotels don’t make profit easily. How feasible is the business in India?

For us, our investment is quite limited at the local level, so when we open a hotel, we invest in marketing it. Most of our investment is in building the global branding and creating the IT system that allows reservations to flow. So, hotels in general break even or become quite profitable in a couple of years. So it’s very attractive for us.

It’s an asset-light business model;

we are not building the hotels on our balance sheet; we are franchising or managing them. Franchising is an extremely profitable model. The heavy capital is from those who are building the hotels, and yes, it’s a much longer pay-off, but with a much greater margin that enables that pay-off. Hotels may take three to four years to build and need big outlay of cash upfront, but with the right management and brands, one can drive occupancy and rates in such a way that they can be earning 40 to 50 percent margins over the years.

It’s a much longer payback business.

Q How will the Marriott merger impact your India plans?

We are committed to India and so are they. We are a leader in this part of the world and the combination provides an accelerator here. They are eager to reap the benefits of our experience here. The joint entity would make for the largest hospitality business in India by number of rooms.

May 13, 2016 fOrbeS IndIA | 63

Naresh sharma

demanding consumer. Their experiences as business travellers are influencing their expectations of leisure experience. The Indian consumer who is under the age of 35 has the same expectations as an American or a Canadian consumer… they are well informed, have tremendous access to information, they research every day with online sites that have advice and reviews, and use these tools in their decisionmaking. There is a competitive battle out there for these consumers and that is one of the reasons why we find India an attractive market.

2 0 1 6

ASIA’S POWER

BUSINESS WOMEN

Somruedee chaimongkol 54 ceo Banpu

tHaIland

When founder Chanin Vongkusolkit stepped down as CEO of Banpu last year, the surprise wasn’t merely that he looked for a successor beyond his family but that he chose a woman.

A rarity in the predominantly male energy industry, Somruedee has spent her entire career at Banpu, one of Southeast Asia’s biggest energy companies with huge stakes in power generation across the region. Many of Banpu’s assets remain in coal, earning Somruedee the nickname ‘Asia’s First Lady of Coal’. But last year, revenue fell by 19 percent to $2.5 billion on depressed coal demand. Banpu plans to spin off and list its power generation division. Speaking of spinning, Somruedee is an avid motorcyclist.

By Mary E Scott

Our rundown of 50 leaders and innovators who have shaken things up in the past year

Nita ambani 52 Director/chairperson Reliance Industries/ Reliance Foundation IndIa

See story, page 90

arundhati Bhattacharya 60 chairman State Bank of India IndIa

Bhattacharya is facing her most challenging test yet with the State Bank of India, the country’s biggest. Mounting bad loans, which stood at $11 billion in December, caused net profit to plunge by more than 60 percent to $190 million in a recent quarter. “The days of promoters gaming the banking system are over,” she warned in February, before urging the arrest of liquor baron Vijay Mallya, whose defunct Kingfisher Airlines owes more than $1.3 billion to staterun banks. SBI was among the first lenders to label the former billionaire a “willful defaulter”.

Mallya has denied the allegations and has left the country but says he has not absconded.

cao thi Ngoc Dung 58 chairman & ceo Phu Nhuan Jewellery (PNJ) VIetnam

Cao founded Phu Nhuan Jewellery in 1998.

Starting with one store, she built PNJ into the biggest jewellery brand in Vietnam, with over 3,000 employees and 200 stores. For 2015, PNJ reported revenue of $350 million and profit of $23 million. Sometimes called the Tiffany of Vietnam, because, like the US jeweller, PNJ designs, makes and sells its own products. Cao owns 17 percent of PNJ, which listed in 2004 and is no longer state controlled.

Sabrina chao 41 chairman Wah Kwong Maritime Transport Holdings Hong Kong

Chao was named chairman of the Hong Kong Shipowners Association in 2015, the first woman in its 59-year history to hold the position. The group’s close to 190 members control and manage a fleet of more than 2,100 ships. In her

new role, Chao recently headed a delegation to Greece to promote Hong Kong as a shipping hub and a gateway to China. Meanwhile, her family business, mainly bulk carriers, is navigating the industry’s worst recession in three decades, but Chao is fighting back by adding nine new and second-hand ships to her fleet of 27 and by diversifying her funding sources. Wah Kwong was founded by Chao’s grandfather; she joined in 2002. new to list

64 | forbes india may 13, 2016

Solina chau 54

chew Gek Khim 54

co-founDer Horizons Ventures

executive chairman Straits Trading

Chau has focussed on tech companies over the past year that “tackle impact dynamics in complex systems”. Her top picks were Voyager Analytics, an Israeli-British social media profiling company; Improbable, a UK firm building multilayer online dimensions—think Hollywood blockbuster movie Inception—to be used in the management of infrastructure, defence and more; Windward of Israel, the world’s first maritime-trade data tracker; and Blockstream, a US fintech company specialising in Bitcoin-related data encryption. Chau ploughed more than $200 million into more than a dozen startups in 2015 and early 2016, adding to $420 million already invested.

Chew reigns as Singapore’s ‘Businessman’ of the Year, the first woman tapped for the honour in a decade. Chew’s investment firm has stakes in real estate, hospitality and resources, and 2015 annual revenue of

Hong Kong

SIngapore

$389.9 million. To unlock capital in 2015, the firm sold an upmarket Singapore condo for $38.8 million. On the buy side, it acquired a Melbourne skyscraper for $90.2 million, launched its SRE Asian Asset Income Fund to scoop up REITs across Asia-Pacific and took stakes in real estate funds in Tokyo and Malaysia. Chew is the only woman on the Forbes Asia Singapore rich list, with $425.8 million.

Eva yi-Hwa chen 57 co-founDer & ceo Trend Micro Japan

Chen has guided Trend Micro, the world’s third-largest anti-virus software firm, for the past 12 years, and despite not being a hardcore engineer has a track record of identifying emerging technologies. Her next frontier is security for the so-called Internet of Things, everyday devices with interconnectivity, in particular those in the financial, medical, health care and manufacturing sectors. Meanwhile, her recent $300 million acquisition of HP’s network security business reinforces Trend Micro as the go-to enterprise security provider. Chen, who is from Taiwan, founded Trend Micro with brother-in-law Steve Chang and elder sister Jenny Chen in 1988. Since she took the helm in late 2004, the Tokyo-listed company has doubled annual yen-denominated sales to $1 billion in 2015. The Changs and the Chens own 25 percent to 30 percent of the $5 billion market cap company.

Sonia cheng 35 ceo/executive Director Rosewood Hotel Group /New World Development Hong Kong

The Harvard grad not only pilots a fastexpanding hotel company but also maintains a busy schedule at leadership summits, all while juggling care for three children under the age of four. She has enhanced Rosewood’s global reputation by adding key industry executives and landmark addresses, including Paris’s iconic Hôtel de Crillon, which reopens next year under the Rosewood marquee. Other additions include a grand hotel for Phnom Penh, Cambodia, this year, and in 2017, a resort in Phuket and her first luxury tented camp, in Luang Prabang, Laos. Growth remains brisk in China, helped

by Rosewood’s mainstay New World Hotels & Resorts brand. Rosewood reported revenue growth of 10 percent for 2015 across all brands, and projects about 8 percent for 2016.

may 13, 2016 forbes india | 65

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yuwadee chirathivat 62

ambiga Dhiraj 40

ceo Central Department Store Group

ceo mu Sigma

tHaIland

IndIa

Defying gloomy economic projections, Thailand’s leading shopping centre company rang up growth in 2015. Yuwadee heads the retail division of this historic family company and continued its Thai expansion with two new Central stores and three more Robinson department stores. The big news was a buy into three German stores from KaDeWe group, in Berlin, Hamburg and Munich, bolstering the company’s European profile (11 stores in Italy and one in Denmark). Central Department Store Group’s sales totalled $2.75 billion in 2015, up nearly 10 percent from 2014.

In February, Dhiraj became the first female boss of an Indian-owned tech unicorn when she took over as CEO of Mu Sigma, a provider of data-analytics services, from husband Dhiraj Rajaram, who founded the firm in 2004. With estimated revenue of $250 million, it’s valued at $1.5 billion, based on its latest funding round. Dhiraj and husband, who has moved to Chicago to oversee big clients, own 47 percent. Dhiraj, a former Motorola engineer, joined Mu Sigma in 2007 and was previously COO. She’s based in Bengaluru, with the bulk of its 3,500 staff. In March, a former investor sued Mu Sigma, saying it misled him into selling his stake for less than it was worth. Mu Sigma rejected the claims and said it would vigorously defend itself.

Dong Mingzhu 61 chairman & presiDent Gree Electric appliances CHIna

Pollyanna chu 57 ceo Kingston Financial Group Hong Kong

Chu is an easy pick for this year’s list, based on the direction of her wealth alone: Way up.

Her fortune on the 2016 Forbes Billionaires List was estimated at $3.1 billion, double last year’s $1.55 billion, on a big rise in Kingston’s locally traded shares amid higher profits in 2015.

Husband Nicholas Chu is company chairman; son Kingston, 30, is an executive director. Her father, Lee Wai Man, is also a shareholder but isn’t involved in the business.

Dong is moving to transform the air-conditioner maker into a versatile manufacturer. Her focus is on smart home appliances that can connect to the internet, as well as smartphones, which she plans to start selling mid-year. In March, Gree agreed to acquire Yinlong Energy, a Zhuhai-based power supplier and maker of batteries and electric vehicles, for an undisclosed amount, in a step that supports its production of solar-powered air conditioners that can also generate energy to power households. Another potential growth area is the manufacture of robotic equipment for logistics, welding and other industrial purposes. Revenue in the first nine months of 2015 slumped by 17 percent to $12.5 billion, a turnaround from double-digit growth over the past five years. Dong’s autobiography was made into a TV series in China.

chadatip chutrakul 54 ceo Siam Piwat tHaIland

The 55-year-old CEO of Siam Piwat is best known as the first lady of Siam Paragon, her signature mall. At $1.57 billion, Chutrakul’s newest venture, Icon Siam, is the largest privately funded project in Thai history.

Colleagues describe her as a human dynamo with boundless energy.

Lorna Jane clarkson 51 founDer & chief creative officer Lorna Jane auStralIa

The activewear entrepreneur is taking her Lorna Jane brand of women’s gym gear, yoga pants and dancewear global. After opening its first US store in 2012, the company now has 42 outlets along the West Coast, adding to its 150 stores across Australia and retailers in 54 countries. Clarkson started sewing her own workout wear in the 1980s and opened her first store in Brisbane in 1990. With her husband, chief executive Bill Clarkson, she has expanded her retail empire into cookbooks, fitness books, healthy cafes and yoga studios, generating annual revenue of about $112 million. Private equity group CHAMP Ventures bought a 40 percent share in 2010 new to list 66 | forbes india may 13, 2016

robina Gokongwei-Pe 54 presiDent & coo Robinsons Retail Holdings tHe pHIlIppIneS

Gokongwei-Pe runs the second-largest multiformat retailer in the Philippines, totalling 900 outlets ranging from supermarkets and department stores to convenience and drugstores. The eldest of six children of John Gokongwei Jr (who is on the Forbes Asia Philippines rich list with $5.5 billion), Gokongwei-Pe was told at the age of five she would be part of the family business. She worked her way up, as a management trainee, then cashier, store manager, buyer and merchandising head, before taking the helm in 2013. Robinsons, with 8,500 employees and annual sales of $1.72 billion, raised $621 million when it listed in 2014, the country’s largest IPO in dollar terms. Gokongwei-Pe says her father’s belief that women can be just as good in business as men opened the door to her success. She also says being kidnapped for ransom for one week while she was a college student in the Philippines “toughened” her (the kidnappers were later arrested).

Dipali Goenka 46 ceo Welspun India IndIa

Five years ago, when Goenka took charge of home textiles maker Welspun India (part of her family’s $3 billion in revenue Welspun Group), the buzz in the male-dominated industry, she recalls, was: “Welspun has lost its mind.” Goenka has doubled down to disprove that. Revenue and earnings are up severalfold, with net profit of $81 million on revenue of $790 million in the year ended March 2015.

Welspun India’s soaring market cap—recently at $1.6 billion—has helped propel the Goenkas back into the ranks of the country’s richest and earned her husband, Balkrishan Goenka, the group’s founder, a debut spot on the Forbes billionaire rankings. Welspun is among the top three home textile (towels and bed sheets) firms in the world, and is the official supplier of towels to the Wimbledon and Australian Open tennis championships.

Vinita Gupta 48 ceo Lupin IndIa

Gupta runs India’s third-largest pharmaceutical company, with $2 billion in revenue. In the past year, she has spearheaded $1.2 billion in acquisitions, the biggest of which was the $880 million purchase of Gavis Pharma, giving Lupin its first manufacturing facility in the US, a market that contributes nearly half of its total revenue. Other acquisitions in the past year include companies in South Africa, Russia, Germany and Brazil. Gupta oversees all global markets, excluding India and the Asia-Pacific region, which are handled by younger brother and managing director, Nilesh. She’s credited with setting up the US business and globalising the 48-year-old company, which was founded by her father and makes everything from antibiotics and cardiovascular products to oral contraceptives. The family owns 47 percent of the company.

may 13, 2016 forbes india | 67

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Ho ching 63 executive Director & ceo Temasek SIngapore

On this list since its inception in 2012, Ho is credited with Temasek’s rise as an influential global player. The state-owned investment firm’s assets stood at $192.3 billion as of March 2015, with a one-year total shareholder return of 19.2 percent. Temasek recently signalled its desire to look for opportunities in Europe. Ho, who holds a master’s degree in electrical engineering from Stanford University, is married to Lee Hsien Loong, the nation’s prime minister. In March 2015, Ho took a six-month sabbatical, but the company says it was not linked to any retirement plans. She is active on Facebook. A favourite sign-off echoes Spock in TV’s Star Trek: “Live long and prosper, my friends!”

tina Ju 51 founDer & managing partner KPCB China, TDF Capital CHIna

A 16-year China venture capital veteran, Ju stands out for the China launch of Silicon Valley’s Kleiner Perkins in 2007 as well as her pioneering TDF (the T stands for Tina) Capital, formed in 2005. Of the 40 deals she’s led with both firms, which have a combined $800 million in assets under management, 12 have reached unicorn status of $1 billion, including Alibaba, Baidu and Focus Media. Of the two firms’ five IPOs and five M&As in 2015, four stemmed from her dealmaking: Educational publisher ChineseAll listed in Shenzhen; peer-to-peer lender Yirendai debuted on the NYSE; social gaming provider Kingnet listed on the A-share ChiNext in a reverse takeover; and mobile marketing platform Madhouse sold a 51 percent stake to branding group BlueFocus. Ju’s free time is for family travels, recently to Kenya and Tanzania.

Shinta Widjaja Kamdani 49 ceo Sintesa Group IndoneSIa

From a long line of entrepreneurs, Shinta was handed control of the family-owned business in 1999 and set about restructuring the group. She changed the name of the company, which was started by her grandfather as a rubber plantation, from Tigaraksa to Sintesa. It now has 17 businesses, ranging from consumer products and property to manufacturing and energy, annual revenue of $1.2 billion and 6,000 employees. A graduate of Barnard College in New York in 1989 with majors in psychology and dance, she serves as the vice chairman of Kadin, or the Indonesian Chamber of Commerce & Industry. In 2011, she co-founded with other business leaders the Angel Investment Network Indonesia to fund startups.

chanda Kochhar 54 managing Director & ceo ICICI Bank IndIa

As boss of the country’s largest private-sector lender, Kochhar has to contend with the current bane of India’s banking system: Bad loans. While the bank reported a double-digit increase in consolidated assets to $135 billion in 2015, net earnings didn’t rise as much, due to huge provisions for bad debts.

In January, it launched its Express Home Loan service offering mortgages online with approval in eight hours. Mobile banking, among Kochhar’s pet projects, accounts for one-fifth of all transactions by retail customers, worth an estimated $12 billion in the year ended March 2016. In a bid to retain female staff, she launched iWork@home, which allows employees to work from home for a year. In addition, executives can take children under the age of three on business trips, with a caregiver, at the bank’s expense. new to list 68 | forbes india may 13, 2016

Lee Boo-jin 45 presiDent & ceo Hotel Shilla SoutH Korea

The eldest daughter of ailing Samsung Chairman Lee Kun-hee has had a difficult personal year. Her much publicised divorce was finalised in late 2015, only to be appealed by her ex-husband three weeks later on child-custody grounds. In January, for reasons unknown, Lee stepped down from her leadership and advisory positions at Samsung C&T, the group’s de facto holding company. She remains at the helm of its Hotel Shilla division and is still seen as a key player in the Samsung empire, as heiress apparent and a stakeholder of C&T with 5.5 percent. Shilla, which gets nearly 90 percent of its $2.6 billion annual revenue from its duty-free shops in Asia, took a hit in the third quarter of 2015 with the MERS virus outbreak and fewer Chinese tourists, but business is picking up on strong sales at its latest outlet in Singapore’s Changi Airport. Also helping: A new downtown duty-free shop in Seoul, a joint venture with Hyundai Development that aims to have revenue of $855 million in the first year.

angela Leong 55 managing Director/chairman SJM Holdings/ L’Avenue International Holdings maCau

Macau’s gaming industry is in the doldrums, but Leong is on a winning streak, thanks to her sprawling private business rooted in real estate in China and Hong Kong. Last year, she created L’Avenue International Holdings to consolidate her assets, anchored by two trophy properties: The Entertainment Building, a commercial tower in Central Hong Kong, and L’Avenue Shanghai, a luxury shopping mall co-developed with French conglomerate LVMH. SJM, meanwhile, posted a 63 percent drop in net profit for 2015 to $318 million as revenue slumped by almost 39 percent to $6.25 billion. It is one of six casino companies authorised to operate in Macau, which has been hit by a slower Chinese economy. Leong is consort of SJM founder, Stanley Ho, with whom she has four children. Her wealth of $1.5 billion earns her a spot on our list of Hong Kong’s 50 richest.

Susan Lloyd-Hurwitz 49 ceo anD managing Director Mirvac auStralIa

One of only three female chief executives among Australia’s top 50 listed companies, Lloyd-Hurwitz runs property giant Mirvac. She oversees a $5.84 billion property investment portfolio, as well as a $1.65 billion office development pipeline and residential projects that will deliver more than 16,000 lots over the next five years, mostly in Sydney and Melbourne. She studied urban planning at the University of Sydney after migrating from England with her family at the age of 12. After senior executive roles at several large companies, she was appointed Mirvac CEO in 2012. Since then she has sold off non-core assets and focussed on investor returns, delivering a 40 percent share price increase. Operating profit for the year ended June 30 was $340.8 million. Last year, her $2.8 million salary made her Australia’s highest-paid female chief executive.

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Vandana Luthra 56 founDer & vice chairman VLCC Health Care IndIa

Luthra pioneered the concept of a beauty and wellness chain in India. She opened her centre in New Delhi in 1989, offering weight management as well as hair and skin treatments, and now has 313 centres in 11 countries in Asia, the Middle East and East Africa. Her VLCC Personal Care business sells skin care and hair care products through 72,000 outlets across India. VLCC has 4,000 employees, including nutrition counsellors, cosmetologists and physiotherapists. Its revenue in the year to March 31, 2015, was $131 million. Husband Mukesh is chairman and owns 24 percent of the company. Luthra, who owns 44 percent, is planning a $90 million IPO this year. Luthra set up the VLCC Institute of Beauty & Nutrition, which has 70 campuses in India and Nepal.

Ma Xiuhui 45 co-founDer & ceo Opple Lighting CHIna

Ma and husband Wang Yaohui earned their early money making traditional lightbulbs in China’s Guangdong Province export hub in the 1990s. These days, the couple’s Opple, founded in 1996, is part of China’s lighting industry that in the past two decades has gained ground against once-dominant Western firms GE, Siemens and Philips. Sales last year topped $680 million. Ma, as CEO, mostly handles sales and marketing. The businesswoman and mother starts her days from a Shanghai office that includes a mini Buddhist temple for calm. Wang, the chairman, guides strategy. The company received permission from China’s regulator in March to go public. When not working to shed light for their customers in more than 50 countries, the couple enjoys hiking at Buddhist-inspired natural spots. Their $1.7 billion in wealth earns them a spot on the Forbes China rich list.

Kiran Mazumdar-Shaw 63 founDer, chairman & managing Director Biocon IndIa

Amid a volatile stock market, the founder of Biocon took its thriving research arm, Syngene International, public last August. With a recent market cap of $1.1 billion, Syngene shares are up by more than 52 percent from its IPO. The unit, which has clients such as Bristol-Myers Squibb and Baxter, is investing $200 million in capacity expansion. Biocon is spending a similar amount to ramp up production. It was recently approved to sell the generic version of AstraZeneca’s cholesterol-lowering drug, Crestor, in the EU. The self-made Mazumdar-Shaw has positioned Biocon as a large player in insulin. Biocon is the only Asian firm ranked among the top 20 biotech employers worldwide by Science magazine.

Mou Jinxiang 62 co-founDer & chairman Lianhe Chemical Technology CHIna

Mou co-founded Lianhe with her husband in 1985 as a small flavourings maker and emerged from behind the scenes after he died in 1997.

She has built Lianhe into a leading maker of fine chemicals—those that are high quality but produced in low quantities—specialising in agrochemicals, pharmaceutical chemicals and specialty chemicals. The company has more than 5,000 employees and sells to international giants such as Dow Chemical and BASF. Mou is looking to raise up to $222 million in a private placement this year, with the proceeds to be used for capacity expansion and technology upgrading. Net profit last year is estimated to have jumped by 16 percent to $97 million on stable revenue of $612 million. Holding a 30.5 percent stake, Mou is on the Forbes rich list for China with $960 million. new to list 70 | forbes india may 13, 2016

Kumiko otsuka 48 presiDent Otsuka Kagu Japan

Otsuka, 48, led the company back to an operating profit of nearly $4 million in 2015, after its first operating loss in four years in 2014, when her father, Katsuhisa, 72, temporarily took back the reins from her and reversed some of the changes she had made.

Revenue increased by 4.5 percent to over $513 million and her comeback in January 2015 helped Otsuka Kagu boost its market cap above $235 million.

Nalinee Paiboon 57 founDer & presiDent Skyline Unity tHaIland

tomoko Namba 53 founDer & chairman DeNA Japan

Namba has a 13.1 percent stake in DeNA, one of the largest mobile social network and mobile game companies in Japan, with nearly $1.3 billion in revenue forecast for the year through March 31. She stepped down as CEO in 2011 to look after her ailing husband but returned full-time in 2013 to lead its ecommerce and health care businesses. In March 2015, DeNA and Nintendo said they would tie up to work on new games and apps and take stakes in each other. That news lifted DeNA’s shares by about 17 percent in the past year versus the roughly 15 percent drop in the Japanese stock market. (Some gains were lost after they announced in October a delay of their first release.) The Harvard MBA joined McKinsey in 1986, became a partner in 1996 and started DeNA three years later. Last year she became the first woman to own a professional Japanese baseball team, the Yokohama BayStars.

Her health-and-beauty marketing company is expanding overseas under the brand name Giffarine. The product line runs to 2,000 items, including a wide variety of cosmetics and food supplements. After earning a medical degree from Thailand’s Chulalongkorn University, she began her career as an obstetrician before branching out in 1987, starting with skin-care products. The company develops, tests and makes products that go to 40 countries. Sales reached nearly $150 million in 2015, and revenue growth is running at about 9 percent a year. Giffarine is an amalgamation of her daughters’ names: Gift and Fah.

May Ng 48 ceo Pan-United SIngapore

Ng oversees a multimillion-dollar family conglomerate with a market cap of $237.3 million and 2015 revenue of $602.2 million. Operating in five Asian countries, PanU is one of the region’s largest cement and ready-mixed concrete companies. It also runs Xinghua Port Group in China and has a shipping division. Ng’s father founded the firm 58 years ago after getting his start as a lorry driver and fritter salesman; his daughter took over five years ago. She and the firm keep a low public profile while providing basic building materials for mega public-sector infrastructure projects, including Singapore’s growing subway system. Ng, also known as Bee Bee, has served on several boards for NTUC, the nation’s trade union, which granted her a Meritorious Service Award in 2014. She and her siblings are majority PanU shareholders. Brother Henry is on the Forbes Singapore rich list with $600 million.

Nguyen thi Phuong thao 46 co-founDer & chairman Sovico Holdings Tomoko Namba: geTTy images

VIetnam

Nguyen co-founded and is a major shareholder in Sovico, which owns the commercial HD Bank and international budget airline VietJet Air, both of which she runs. HD Bank merged with Dai A Bank in 2014 and is now among the biggest joint-stock commercial banks in Vietnam, with total assets of nearly $5 billion, 10,000 employees and 225 branches and offices. Last year, it bought Société Générale Viet Finance, a consumer-finance company owned by France’s Société Générale. Since its launch in 2011, VietJet Air, which is planning an IPO, has grown its fleet to 29 aircraft, taken the biggest share in the local air transport market and carried 20 million passengers. Educated in Russia in the 1990s, Nguyen also owns 5-star hotels and resorts in Vietnam. Her interests extend to property development, with a $1 billion mixed-use project called Dragon City on the outskirts of Ho Chi Minh.

may 13, 2016 forbes india | 71

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Sky Park 59

Gina rinehart 62

vice presiDent E-Land

executive chair Hancock Prospecting

Park leads this privately owned company with annual revenue of $9.2 billion and a stake in fashion, food, hotels, resorts and theme parks.

Starting in 1980 with one clothing shop called England (today’s name, E-Land), Park and her brother, Park Sung-soo, who is chairman, built Korea’s first fashion franchising company, pioneering casual wear and fast fashion. Its most popular brands in Asia are Mixxo, Teenie Weenie and SPAO. It also holds the licences in Korea and China for New Balance, Cole Haan, Wrangler and Guess Kids. Park is expanding into China, where she plans to launch 100 department stores by 2020. The first opened in January: The Parkson-Newcore City Mall in Shanghai, a joint venture with Malaysian retail group Parkson. Park, who also goes by the name of Park Sung-kyung, is a flamboyant dresser and is rarely seen without one of her signature hats.

The daughter of a high-profile iron ore explorer, Lang Hancock, Rinehart took her late father’s bankrupted estate and rebuilt it into something much larger. The biggest piece of her $9.7 billion fortune comes from Hope Downs, a joint venture mine she has with Rio Tinto. The other is the massive Roy Hill project, a world class iron ore mine in Australia, which started shipments to Asia in December 2015. She also owns a stake in Ten television network and is now the largest owner of prime wagyu cattle in Australia. A court battle with two of her four children led to her resignation as trustee of a multibillion-dollar trust that owns almost 24 percent of the family company, Hancock Prospecting. In May, a court appointed her eldest daughter, Bianca Rinehart, as trustee.

SoutH Korea

Lucy Peng 43

auStralIa

Kathryn Shih 57 presiDent UBS Asia Pacific Hong Kong

Shih’s January appointment makes her a rare woman heading a major international bank in Asia.

It also places her as the third woman on UBS’s 13-member global executive board. Shih joined the bank in 1997. By 2002, she was heading its wealth unit, the industry leader. Under her tenure, her team quadrupled assets under management to $272 billion, contributing nearly one-third of the bank’s global private banking profit in 2015, up from 14 percent in 2002. In her new role, she aims to be a growth manager, bolstered by the bank’s strong capital base and No 1 position in markets such as Hong Kong, Singapore and Australia. Shih, a British national, grew up in the Philippines and was educated in Singapore and the US.

co-founDer & ceo Ant Financial CHIna

Ant’s latest fundraising, expected to bring in $3.1 billion, gives the Alibaba offshoot a valuation of more than $50 billion, making it one of the most valuable privately owned companies (a hair under Uber’s $51 billion).

It’s the second round of financing for Ant; the first, last year, valued it at $45 billion. Peng, a co-founder of Alibaba, established the online financial services company in 2014 to cater to small businesses and “the little guys”. Now she is taking it global. In September, Ant and Alibaba took a combined 40 percent stake in Paytm, India’s largest mobile commerce platform, for $900 million; a month later, Ant received Korean regulator approval to invest in internet bank K Bank. But Ant’s main money earner is Alipay, China’s version of PayPal and the payments system behind Alibaba, with 400 million registered users.

Wendy Pye 72 founDer & ceo Wendy Pye Publishing Group new Zealand

A self-made entrepreneur, Pye has built an educational publishing powerhouse spanning Asia, Europe and the US. The company’s catalogue includes 2,500 titles published in more than 10 languages, with more than 300 million copies sold in 30 countries worldwide.

But the firm’s real strength is in pioneering digital content for early learning; in addition to its online offerings, it has developed standalone apps of downloaded teaching materials for children without access to the internet. Recent deals include partnerships with HarperCollins UK and Penguin China. The youngest of four girls, Pye grew up on a farm in Australia. new to list 72 | forbes india may 13, 2016

Parwati Surjaudaja 51 presiDent Director & ceo Bank OCBC NISP IndoneSIa

One of only a few women bankers in the country, Parwati has headed Bank OCBC NISP since December 2008, after joining in 1990 as a director. The bank started 75 years ago in Bandung, West Java, and was owned by her grandfather. Her father, Karmaka, turned it into one of Indonesia’s biggest lenders, now ranked No 12 with $9.2 billion in assets. OCBC Bank became a controlling shareholder in 2004 through acquisitions and a tender offer. The Singapore bank now has an 86.1 percent stake but leaves the running of the bank to the Surjaudaja family, which retains less than 5 percent. The rest is publicly traded. Brother Pramukti is chairman.

teresita Sy 65 vice chairman/chairman SM Investments/Banco de Oro Universal Bank pHIlIppIneS

In 2015, net profit at her family conglomerate SM Investments grew by 13 percent to $533.8 million while group revenue rose by 7 percent to $6.37 billion. Last year, BDO strengthened its position in the insurance sector with the acquisitions of Generali Pilipinas Holdings and Generali Pilipinas Life Assurance. It also formed a joint venture with Japan’s Nomura Holdings to provide online trading in local stocks. Despite the milestones, Sy is humble: “I cannot say these are my achievements. They are collective achievements of those in our organisation.”

As for her success, she says: “I did not plan it. I would like to say it is perseverance and determination, but I think it is luck.” She is the daughter of Henry Sy, who with $14.4 billion is the richest man in the Philippines.

chiyono terada 69 co-founDer & presiDent Art Corp Japan

Terada co-founded Art with her husband, Toshio, in 1977 and built it into one of Japan’s largest moving companies, with nearly $810 million in annual revenue and operations in the US and China. The company went public in 2004, but management bought it out in 2011, citing the burden of staying listed and compliance costs. In 2005, Art entered the daycare sector and now has nearly 180 facilities across Japan. Terada, who says the help of her mother in rearing her two children allowed her to build the company, wants to develop it into a core business. Terada started work straight after leaving school at 15, and married at 21; the couple set up the predecessor to Art in 1968.

may 13, 2016 forbes india | 73

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thai Huong 58 chairman TH Group/Bac A Bank VIetnam

Thai is revamping the dairy industry with her focus on liquid rather than powdered milk. In a bold move, she decided last year to invest up to $2.7 billion in agriculture in Russia, starting with a $500 million dairy farm; her goal is a herd of 350,000 cows producing 1.8 million litres of milk a year.

TH Group estimates 2015 revenue was $215 million and profit was $45 million. In 1994, she founded Bac A Bank, a joint-stock commercial bank with total assets of nearly $3 billion; it serves as the investment and financial consultant for TH Group. She is majority shareholder in both enterprises.

Patty Pei-chun tsai 36 ceo Pou Chen Group taIwan

A graduate of Wharton, Tsai started as an apprentice to her father, founder of Pou Chen Group, in 2002. A decade later, he made her CEO of the world’s largest athletic and casual footwear maker, with a 20 percent market share, 420,000 workers and a market cap of $10.6 billion. Although Tsai senior owns a controlling stake (the family is on the Forbes Taiwan rich list with $1.5 billion), it wasn’t smooth sailing. Undaunted, Tsai initiated a reorganisation and management reshuffle, earning the nickname, ‘Iron-Blooded Princess’. Protests by Pou Chen workers in China and Vietnam in 2014 disrupted half its assembly lines, which make shoes for more than 60 brands, including Nike, Adidas and Timberland. The ensuing recovery, helmed by Patty, proved her leadership abilities. Her father has said: “Patty has done a better job than I have.” Under her four-year leadership, sales climbed by 30 percent to $8.6 billion in 2015.

Supaluck Umpujh 60 vice chairwoman/chairman Mall Group/Emporium Group tHaIland

Returning to Bangkok from the US in the early 1980s with a master’s degree in pharmacology, Supaluck went to work for the first Mall department store, founded by her father. Shy and retiring, she seemed an unlikely choice to lead growth, but more than three decades later, she runs—and the family controls—the secondlargest retail chain in Thailand, with a dozen malls and department stores and estimated 2016 revenue of $1.48 billion. Three more malls are due to open this year and next. Supaluck is also on a mission to restyle Bangkok’s Phrom Phong neighbourhood as the Em District: Last year, she launched EmQuartier, a high-end office and shopping space with a 40-metre waterfall.

In 2019, she will debut Emsphere, a retail, entertainment and arts complex.

Jane yan 46 founDer, chairman & general manager Beijing Venustech CHIna

Yan has shaped Venustech into China’s leading internet security firm, with 2,700 employees in over 30 branches at home and a joint venture in Japan. She also plays a role in several government organisations, including its top political advisory body. The Beijing company claims 80 percent of China’s government and military business, and provides services to more than 60 percent of large state-owned enterprises.

Its revenue jumped by 28 percent last year to $237 million, resulting in a 43 percent gain in net profit to $38 million. Yan earned a bachelor’s degree from Fudan University in Shanghai; after getting graduate degrees in the US, she returned to China and founded Venustech in 1996. She owns 31 percent; her husband 6 percent. The family is on the Forbes China rich list with $1.5 billion. new to list 74 | forbes india may 13, 2016

Zhou Xiaoguang 53 co-founDer & chairman Neoglory Holdings Group CHIna

At the head of the world’s largest costume jewellery maker, Zhou returns to this year’s list as she refocuses her company on ecommerce, real estate and finance. The 100,000-employee conglomerate has halved its jewellery outlets over the past three years to 1,200 as it moves the business online.

Neoglory is also developing a 480,000-square-metre mixed-use property in Zhejiang Province for $1.3 billion. Revenue grew by a third in 2015 to $1.4 billion; Zhou and family have tripled their net worth to $1.8 billion since she was last on this list (in 2013). The company is planning a backdoor listing of two property units for up to $1.7 billion on the Shenzhen Stock Exchange. Zhou owns 51 percent of Neoglory; her husband, the co-founder and vice chairman, owns the rest. An admirer of traditional Chinese culture, Zhou studies classical Chinese etiquette and texts, and practices Zen meditation.

Zhu chongyun 51 co-founDer & chairman Shenzhen Marisfrolg Fashion CHIna

Wendy Sui cheng yap 60 co-founDer, presiDent Director & ceo Nippon Indosari

An engineer before she embraced fashion design, Zhu established Marisfrolg in Shenzhen in 1993 with her husband, who is the general manager. They have since created a company with $300 million in revenue, 4,000 employees and five clothing lines, including one for men, sold in 700 outlets in China. Their flagship Marisfrolg label claims a top spot in China’s high-end women’s apparel market.

The couple owns 95 percent of Marisfrolg, which would drop to 84 percent after a planned IPO on the Shenzhen Stock Exchange. In 2014, Zhu snapped up Krizia, one of Italy’s first ready-to-wear brands, for a reported $35 million. She debuted her first collection for the house last year and is expanding its outlets in China. She and her family are on the Forbes rich list for China with $1.1 billion.

IndoneSIa

She is taking Nippon Indosari international. In February, the largest mass-market Japanesestyle bread producer in Indonesia inked a joint venture with Monde Nissin to build a plant in the Philippines, ASEAN’s second-mostpopulated country. Nippon Indosari will invest $6.8 million and is the majority shareholder in the venture. Nippon Indosari listed on the Indonesia Stock Exchange in 2010 and had revenue of $121.9 million in the first nine months of 2015, up by 15 percent on year. Yap is the daughter of former Salim Group executive Piet Yap. She also oversees family assets in natural resources, real estate and food.

Zhou Qunfei 45 founDer, chairman & general manager Lens Technology One of the world’s largest makers of glass screens for mobile phones and tablets, Lens went public in March 2015, making Zhou, who retains 88 percent, the richest self-made woman in tech, with wealth estimated at $5.9 billion.

Zhou left her native Hunan province at the age of 16 to work in a glass-processing factory in Shenzhen and rose to director before quitting in 1993 to form a rival company. She founded Lens in 2003; today it has more than 30 plants in China, nearly 90,000 employees and is a supplier to Apple and Samsung. In 2010, Zhou started developing sapphire-crystal covers, which are harder and more scratch resistant than other materials, and became Apple’s first sapphire-cover supplier. The company’s revenue jumped by 19 percent to $2.6 billion in 2015.

Zhou says work is her hobby, but she still finds time for mountain climbing and ping-pong.

Zhu ChoNgyuN: geTTy images

CHIna

reSearCH and addItIonal reportIng by: Shu-Ching Jean Chen, SuSan Cunningham, RebeCCa Fannin, RuSSell FlanneRy, FORbeS indOneSia, ROn gluCkman, Jane hO, JOyCe huang, Seline Jung, naazneen kaRmali, SunShine liChauCO de leOn, lan anh nguyen, Jane a peteRSOn, anuRadha Raghunathan, luCinda SChmidt, JenniFeR SChultz WellS, JameS SimmS

may 13, 2016 forbes india | 75

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ASIA’S POWER

BUSINESS WOMEN

Having It All Nita Ambani’s role as the first lady of Indian business is just one part of her busy life

By NaazNeeN Karmali

A

head of its wider public rollout of the muchawaited 4G phone service, Reliance Jio Infocomm, the telecom arm of oil and gas giant Reliance Industries, held a December soft launch at a sprawling 500acre corporate campus outside of Mumbai. Soft but big—the company controlled by Mukesh Ambani, India’s richest person, had 37,000 staff on site for the event, and more than 75,000 others from Reliance outposts were present by video link.

The debut took place on the eve of the group’s legendary founder Dhirubhai Ambani’s birth anniversary.

With its attendant Bollywood glamour—superstar Shah Rukh Khan, Jio’s brand ambassador, presided as master of ceremonies—the gala was orchestrated by Nita Ambani, the billionaire’s wife, who has been involved with the telecom’s marketing and branding strategy.

In what is a first for any Ambani venture, the 4G service doesn’t deploy the Reliance name in its branding but is simply called Jio, which translates to ‘live life’ in Hindi.

The well-recognised roundel logo of the parent has also been dispensed with. “This is a brave new world

76 | forbes IndIA May 13, 2016

for us, so we decided, after much debate, to break away from the old,” explains Nita from Reliance’s headquarters in South Mumbai.

She occupies a desk in an open office that houses Reliance’s sports business, which she also oversees. While Ambani still works from his father’s old corner room on a higher floor, Nita says she prefers mingling with the crew.

This new open culture was ushered in at the urging of their US-educated twins, Isha and Akash, who work in an open office on Jio’s campus. Isha, who studied at Yale and worked briefly at McKinsey, is involved in marketing; Akash, an undergrad from Brown, works on the tech side. “I’m enjoying mentoring them,” says Nita.

In a country where billionaire wives tend to remain in the shadow of their husbands, Nita’s rising profile in the Reliance empire is unusual and earns her a debut spot on our Power Businesswomen ranking this year. Reliance is among India’s most valuable companies, with $57 billion in revenues (and now owns Network18, a licensee of Forbes Media that publishes Forbes India).

“Nita provides the ‘software’ to Reliance’s hardware culture to create

a capability that works. As Reliance becomes more consumer-facing, her soft touch assumes importance,” says Adil Zainulbhai, a former chairman of McKinsey in India, who is a Reliance independent board director.

As Reliance’s non-executive director, Nita has no formal operational role in the conglomerate that her husband runs as chairman and managing director. But it’s no secret that bhabhi (Hindi for “brother’s wife”)—as she is called by insiders—is a power near the throne.

Writer and publisher Shobhaa De, a family friend, says Nita has transformed herself into the first lady of Indian business. “Her native intelligence and quick grasping power have helped her.”

Nita juggles multiple roles: Apart from Reliance’s sports ventures, which include the Mumbai Indians cricket team and a joint venture with sports management firm IMG, she chairs the Reliance Foundation, the company’s charitable arm, and oversees an elite Mumbai K–12 school named after her late father-in-law that she founded in 2003. She also sits on the board of EIH, the company behind the Oberoi luxury hotel chain, of which Reliance owns 18 percent.

Rajat Ghosh foR foRbes

Getty ImaGes (centeR); ReUteRs / manav manGlanI (bottom)

a s i a’ s p ow e r b u s i n e s s wo m e n — N i ta a m b a N i

Hospital. In 2014, Nita joined “Over the years Nita has the board of visitors of MD broadened her interests and Anderson, whose president, evolved to become Mukesh’s Ronald DePinho, calls her anchor. She goes about things a “force of nature. She’s a quietly and covers a great strategic thinker but is also distance,” observes longtime very down to earth.” Beyond banker to Reliance, KV an exchange of doctors, Nita Kamath, the former boss of would like to introduce mass ICICI Bank, who’s president screening for early detection of the New Development of the disease. “That could Bank sponsored by the save so many lives,” she says.

BRIC nations, in Shanghai. reliance Jio’s soft-launch opening in December As she tours the hospital, While friends maintain that greeting patients with a Nita has worked diligently polite namaste, Nita discloses into her role, she got room to that she has personally grow after Ambani and his interviewed each of the 400 younger brother Anil divvied nursing staff. Similarly, she up the family empire and interviewed all the teachers went their separate ways a who work for the Ambani decade ago. The once-warring school. “I’m paranoid about siblings are now business quality and tend to get into partners: Jio has a towercrazy details, but it pays off.” sharing pact with Anil’s ace hoteliers PrS Oberoi and Vikram Oberoi with Nita ambani These lessons were Reliance Communications. imbibed, she says, from Nita, who has never her late father-in-law and publicly commented on the husband who shared an family conflict, won’t be obsession with global quality drawn into it now. Bollywood and scale. The choosiness actor Aamir Khan, who knew figured rather directly: Nita in college as a friend of The late patriarch spotted his sister, remarks that, “It her at an Indian classical couldn’t have been an easy dance performance—she’s journey, but she’s conducted a trained Bharatanatyam herself with grace.” dancer—and thought she For his part, Mukesh says would be a suitable wife he’s “particularly proud of (From left) mukesh ambani, actor aamir Khan and wife Kiran rao for Mukesh Ambani. her continuing contribution with Nita ambani Daughter of a Birla group to sharpening our focus in executive, Nita grew up in extensive restoration and expansion our consumer businesses, middle-class environs in suburban that included the construction of whether it is retail or Jio. Nita brings Mumbai. With an undergrad degree an adjoining 19-storey wing. The together talented people, weaves in commerce, she had ambitions: “I makeover was supervised by Nita, them into a team and works with a told Mukesh right from the start that as was its gala reopening in 2014 by missionary spirit to achieve her goals.”

I didn’t want to be just an ornament.”

Prime Minister Narendra Modi. She Nita insists that apart from the six After their marriage in 1985, Nita says her aim was to create top-shelf years she spent as a full-time mother enrolled for a diploma in special health care services and not just to her three children, she’s always education and worked as a teacher for the well-off. One-tenth of the been a working spouse. “For me it’s 11 for a few years. “People wondered 345 beds are reserved for the poor, hours a day, 6 days a week,” she says why I was working, but Mukesh and it operates free mobile health during one of her thrice-weekly visits encouraged me.” She took a complete clinics in the neighbourhood. to the Sir HN Reliance Foundation break after the premature birth of The hospital has collaborations Hospital in South Mumbai. her twins in 1991 following a difficult with institutions such as Johns The foundation took the 91-yearIVF pregnancy. “They needed a lot Hopkins, MD Anderson Cancer old hospital into its fold in 1998 and of attention,” says fertility doctor Center and Massachusetts General after securing all approvals, funded an 78 | forbes IndIA May 13, 2016

Firuza Parikh, whose husband was Ambani’s college buddy. “Nita had her priorities in place.”

Six years later, she was back in action. Ambani, with his father’s backing, enlisted her help to build a company township for staff at Jamnagar in Gujarat, where Reliance was constructing a giant refining complex. The offer made her nervous—“I had zero experience”—but she was motivated by the challenge of creating an oasis in an arid zone.

Over the next three years she commuted twice a week to the complex. “It was a punishing schedule.

I was the only woman there and everyone called me ‘sir’,” she recalls.

Setbacks such as a cyclone had to be overcome, because, as she learnt, “Reliance is an execution machine.

There are daily targets, and deadlines are sacrosanct.” Today the Jamnagar complex boasts a well-planned, tree-lined township for its 17,000 residents. An adjoining orchard of more than 100,000 mango trees is now home to a variety of birds.

That success established her cred, and she got the green light plus a $4 million cheque for her dream project: To start a topquality K–12 programme from scratch. The Dhirubhai Ambani International School has more than 1,000 students and 150 teachers— and is ranked as Mumbai’s top school. As for criticism that it’s an elite school, Nita notes it conducts evening classes for street kids.

An accidental entry into sports made her a national figure and the face of Reliance. In 2008, Reliance splashed out $112 million for a cricket team in the Indian Premier League (IPL), snatching icons such as Sachin Tendulkar. When the team floundered in the first two seasons, Ambani got her involved.

“I resisted initially as I didn’t know much about the game,” she admits.

In short order she immersed herself and became a fixture on the cricket circuit. Mumbai Indians went

on to win two IPL championship titles. Former team captain Tendulkar says that Nita’s total involvement made a “huge difference”. He recalls that she got the team to bond by organising an offsite at a suburban hotel where Ambani was also present.

Veteran sports journalist Ayaz Memon observes, “The Ambanis aren’t afraid to spend money for the right talent. For them it’s a matter of prestige not just to own a team but also to win.” In the joint venture with IMG, Reliance has expanded into basketball, tennis and football. Education and sports, avers Nita, “should go hand in hand.” She bemoans a lack of sports infrastructure and that India produces so few Olympic champions.

“I told mukesH from tHe stArt tHAt I dIdn’t wAnt to be just An ornAment.”

Nita maintains that her children are free to follow their career interests.

She cites the example of youngest son, Anant, an undergrad student at Brown University, who has set up an animal shelter in Jamnagar. The Ambanis are wildlife enthusiasts, and their holidays are usually in safari parks such as the Mombo camp in Botswana’s Moremi Game Reserve.

The Ambanis have been criticised for not having personally been givers commensurate with Mukesh Ambani’s $22 billion wealth. The Reliance Foundation, founded by Nita in 2010, is entirely funded by the company, not the family. It is also said that the activities of the foundation are not far-reaching enough. “Education and health care for the elite are no big achievements,” says one banker dismissively.

Nita points to the foundation’s work with small farmers in 531 villages in a dozen states through a programme called Bharat India Jodo, which seeks to bridge the rural-urban divide.

Ambani and Nita also faced criticism when they moved out of their family home four years ago to Antilla, a 27-storey sky palace in South Mumbai, billed as the world’s most expensive home for its $1 billion estimated cost. Nita says the cost is vastly exaggerated but makes no apologies for the tower residence whose construction she supervised.

Her new interest is the conservation of Indian art forms and making them more widely known internationally. To that end, the foundation sponsored an exhibition of traditional pichwai paintings of Shrinathji, the Ambani family deity, at the Art Institute of Chicago last year. She funded the retrospective of Nasreen Mohamedi, an Indian artist, at the new Met Breuer in New York.

Back home she’s planning an exhibition space for travelling art shows to be housed in a massive convention centre that she’s building on a 19-acre plot close to her Mumbai school. To be opened in 2018, it will include exhibition areas, a 2,000-seat theatre, retail spaces, offices and residences.

Though she has lately taken up Buddhist chanting “to attain balance,” she remains hyperactive: Still to come are a school for children with disabilities and a liberal arts university.

Nita admits that a controlling streak can overcome her. In the early days of the Ambani school, she would stand at the gate to check who came to fetch the students from school. But she credits Ambani with steering her to delegate more. “He uses a floodlight,” she says, “while I tend to a spotlight.”

With so much on her plate she realises she must let go. “I’m more motivated than ever before, but I’m still learning.”

May 13, 2016 forbes IndIA | 79

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ASIA’S POWER

BUSINESS WOMEN

Dream Weaver A fifth-generation scion has designs on modernising her family’s traditional Indian sari business

by AnurAdhA rAghunAthAn

L

avanya Nalli is on a quest to make her family’s traditional fine-silks business the No 1 sari destination in the world. “If you think sari, you should think Nalli,” says the 31-year-old vice chairman of Nalli Group of Cos, which sells 1.5 million saris a year. “It should be the most trusted sari advisor.”

To this end, the fifthgeneration scion—and the first woman executive—of the $100 million (annual revenue) group is looking to double store count and sales in the next four years.

With $18 million in cash for capacity expansions and upgrades, she plans to add outlets this year in tier-two cities such as Kochi, Puducherry, Jaipur and Chandigarh.

She also plans to rev up sales with a new ecommerce platform and team. And she’s introducing customer-relationship and businessintelligence systems to track buyers, understand their requirements and build loyalty programs.

For the 88-year-old family company, it’s a fresh approach. “I have run the business on experience and hunches,” says Ramanathan Nalli, 56, Lavanya’s father and vice chairman

80 | forbes inDia May 13, 2016

at the group. “Lavanya has brought in a system, rigour and discipline. She’s super-analytical.” Ramanathan has stepped back since November. “You can’t have heads from two generations running the business,” he says.

Lavanya’s younger brother, Niranth, is a third vice chairman and runs the new jewellery arm.

Her grandfather Nalli Kuppuswami Chetti, 75, is chairman. He runs the 50,000-square-foot flagship store in Chennai, which he owns in partnership with Ramanathan, 75 percent-25 percent; the remaining 30 outlets across eight cities, including Delhi, Mumbai, Bengaluru and Ahmedabad, are jointly owned and run by Ramanathan, Lavanya and her brother.

Nalli, which has a reputation for bridal silks and sells a range of saris, priced from $2.20 to $3,100, also has a store in Singapore and one in Mountain View, California, catering to Indian expats.

Lavanya, based in Bengaluru, has her task cut out for her. While the $6 billion Indian sari market is growing, it is disorganised, fragmented and rife with regional competitors. In addition, “the sari market for every

major city has a local player who is very successful and understands that micromarket really well,” says Arvind Singhal, managing director at management consultancy firm Technopak. “There are hundreds of very competent sari businesses, which will be tough to dislodge.”

Moreover, the sari as a category is facing competition from Western and other ethnic Indian clothes.

But this is offset by a revival of sorts, with women willing to spend more on elaborate saris for festive occasions. Technopak projects a compound value growth rate of 6.5 percent for saris from 2015 to 2020, slightly slower than 7 percent in the previous five years.

Lavanya grew up with Nalli in the background. The company was established in 1928 by her great-greatgrandfather, who hailed from the ‘Shaliyar’, or weaving, community in the southern state of Tamil Nadu.

But her direct involvement with the company began only in 2004, when she was earning an engineering degree in computer science at Anna University in Chennai. She interned at the business, overseeing the rollout of inventory-management

Scaling upward: “I am staring at a huge opportunity,” says Lavanya nalli, vice chairman of nalli group

systems and software applications.

After completing her degree in 2005, she joined the company fulltime, increasing its retail footprint from 14 to 21 stores in four years.

She felt that Nalli was adept at selling to women who wore saris regularly but ignored the bored daughters who accompanied their mothers on shopping trips. “These daughters looked at Nalli as ‘my mum’s store’,” says Lavanya. “Their thinking was that ‘Nalli is oldfashioned. My mum wouldn’t wear a halter neck blouse with Swarovski crystals on it. But that’s what I want, and Nalli can’t offer it to me’.

But we had those kinds of saris.”

To lure young customers, she created Nalli Next, which showcased a wider range of saris—from workwear to designer versions to evening and cocktail styles—and fancier materials, such as crepes and georgettes. She also expanded the ethnic-wear collection, with salwar suits and lehengas, or traditional skirts, although saris still account for 90 percent of Nalli revenue.

In 2009, Lavanya left for Harvard Business School. After obtaining an MBA, she became a senior associate at consulting firm McKinsey in Chicago.

In 2014 she joined Myntra.com, India’s leading fashion portal, where she was vice president for revenue and shopping experience, before returning to the family business in November.

She’s hoping to use those insights to expand Nalli, but she’s also drawing on Nalli’s strengths: It has its own weaving centres, is connected with a network of artisan weavers across India and adds new stock every month, as opposed to every quarter or season as at most apparel retailers.

She believes Nalli is at the start of a whole new phase. “I am staring at a huge opportunity,” she says. “The hard part has been cracked—the quality, the sourcing, the talent and the operations.

Now we are going for scale.”

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Wo m e n t o Wat c h

a Dozen on the rise

T

hese young bankers, entrepreneurs, fashionistas, microfinanciers and ecommerce innovators aren’t on our list yet, but they have the energy, savvy and impressive résumés to be Power Women in the years to come

Ananya birla 21 Founder, Chairman & managing direCtor Svatantra Microfinance IndIa

Eldest of three children of Kumar Birla, one of India’s wealthiest businessmen, founded Svatantra, a microloan firm, in 2013 to help rural women start businesses. Joined with mother, Neerja, this year to form MPower to raise awareness about mental health disorders.

Vivian Chou 23 exeCutive Chairman Bright Fame Fashion Hong Kong

Her Bright Fame Fashion investment vehicle bought a majority stake in the namesake brand of designer Thakoon Panichgul, with plans to remake it into an ecommerce startup. Younger of two daughters of Hong Kong textile and fashion billionaire Silas Chou.

Anna Fang 33 Partner & Ceo ZhenFund CHIna

Head of the largest angel fund in China, with a total of $500 million in assets under management, Fang has invested in some of the country’s hottest startups, including mobile-commerce company Xiahongshu, online translation platform 365Fanyi and Mia.com (see Talia Liu). Father is Fang Fenglei, founder of private equity firm Hopu Investment.

Sabrina ho Chiu yeng 25 ProjeCt manager Palazzo Versace, Karl Lagerfeld Hotels MaCau

Eldest child of Angela Leong and casino magnate Stanley Ho is being groomed as a successor to her mother, who’s the managing director of Macau gaming firm SJM. Overseeing SJM’s Palazzo Versace and Karl Lagerfeld hotels being built in Macau.

82 | forbes inDia May 13, 2016

talia Liu 32 Founder & Ceo Mia.com CHIna

raised $30 million in two rounds from Sequoia Capital, American Express, Cisco and Tree Line Asia. Revenue in the year ended March 2015 was $230 million. She is also a triathlete.

Mia claims to be one of China’s largest online retailers of baby and maternal products, with annual sales of $380 million. Investors include Sequoia Capital, ZhenFund.

Abigail tan 30

Lavanya nalli 31

MalaysIa

head oF uK, euroPe & north ameriCa St Giles Hotel Group

(See page 94)

Member of the Malaysian dynasty that owns property developer IGB, Tan oversees its St Giles Hotel Group in the US, Europe and the Caribbean.

It has 6,000 rooms and nine properties worldwide, which she plans to expand to 20 by 2020.

nang Lang Kham 27

tan hooi Ling 32

exeCutive direCtor KBZ Bank

Co-Founder & Coo Grab

Part of KBZ Group, a conglomerate involved in banking, aviation, insurance, hotels and agriculture, with $410 million in revenue in the year ended March 31, 2015. Oldest of three daughters of the founder, Nang is in line as successor. In spare time, visits subzero locales for sledding and snowmobiling.

Joined with a Harvard Business School pal to create app covering taxis, private-car services, motorcycle taxis and social carpooling, with 12 million downloads across six countries in Southeast Asia so far. They’ve raised $700 million in funds in five rounds from investors, including Japan’s SoftBank and the Singapore government’s Vertex Venture Holdings. Self-confessed introvert, gadget freak.

viCe Chairman Nalli Group of Cos IndIa

MyanMar

devita Saraf 34 Founder & Ceo Vu Televisions IndIa

Started her career at 21 at Zenith Computers, founded by father Raj Saraf; then launched Vu Televisions at 24 to make high-end TVs, building a business with $45 million in annual revenue. In January, she appeared in a print ad for the company’s products.

Anjali Singh 34 Chairman Anand Group, Gabriel India IndIa

Heads auto-parts maker Anand Group ($1.2 billion in annual revenue) and its listed unit, Gabriel India, founded by father Deep Anand. Along with husband she co-founded SUJAN, a luxury boutique hotel group with a focus on wildlife preserves in India and Africa.

upasana taku 36 Co-Founder & direCtor MobiKwik IndIa

Ex-PayPal executive founded mobile-payments company with husband, who is CEO. They’ve

sIngapore

Life

appraisal Volkswagen Beetle: Still a people’s car?

P/94

What the search for a home means to Indians across generations

Mumbai’s Parel is witnessing tectonic shifts in its profile of homes—from middleclass, mill-workers’ chawls to multi-crore high-rise apartments

Joshua Navalkar

recliner

recliNer Dwayne Bravo: Man of the moment P/90

Life recLiner

a Home of Your own

The din of real estate statistics and prices might be overwhelming, but the emotions attached with buying your own house are far from lost

By Jasodhara BanerJee

sam Balsara, chairman and Md, Madison World and Madison Communications, prefers to stay in his ancestral house in Malcolm Baug, Jogeshwari

may 13, 2016 forbes india | 85

Joshua navaLkar

m

y father had grown up in a standalone house in his village.

He has always had very fond memories of that place. But the family fell on hard times, and they had to sell off their property and move to the city. Ever since, my father always had a dream to live in a house like that once again. Buying a plot of land in Neral, and building our own small house there, was a wish fulfilment of sorts.”

Raghupathy Parmeshwaran had grown up in a 500-square feet one-bedroom-kitchen in Dombivli, suburban Mumbai. But the life-long wish of his father’s resulted in a rather impulsive, and happy, decision on Gudi Padwa in 2006-07. “My wife had gone out for the celebratory procession, and I was flipping though the newspaper when I saw an ad for plots on sale at Neral. My father and I just decided to go and take a look, but we ended up booking the plot then and there,” he laughs. “When my wife returned, I said, ‘This is the surprise Gudi Padwa gift!’”

Joshua navaLkar

Life recLiner The Parmeshwarans now have a two-storey bungalow on the Neral plot, which they visit often on weekends. “It is unfortunate that my mother passed away while the house was being built,” he adds.

“But my father gets to stay in it.”

Buying a home has been a significant event in the lives of individuals and families down the ages. Homes are where memories are built or relived, where people let down new roots or nurture old ones; they are the confluence of aspirations and hopes; they are, often, what decide the course of the lives of the people who inhabit them.

“We lived in rented houses after moving to Mumbai,” says Ashoka Holla, 43, of the initial years of struggle in a new, big city. After moving from one rented home to another for 22 years (between 1977 and 1999), Holla bought a house in Thane (Mumbai’s neighbouring district) at the age of 27, with financial help from his father. “It was very exciting for us,” he recalls. There was finally a place to call their own. But, as Holla laughs and admits, he has been in a constant process of “upgrading” the homes in which he has lived.

The first Thane apartment was followed by another, a larger one in the same housing complex, for his family. That was followed by a brief stay in a rented apartment in Dadar, in order to be closer to his place of work in Worli, southern Mumbai. “I had changed jobs and was in a high-stress position, and the commute was very long,” he explains. Once he realised the benefits of a shorter commute, he bought his third apartment, this time in Parel, also in southern Mumbai.

“In Mumbai, the shift is always in the opposite direction,” he says. “In other cities, people move towards the suburbs. In Mumbai, people start from the far suburbs and are constantly trying to move towards the centre of the city.” Towards the coveted ‘town’, as the southern part of the city is called in Mumbai.

Town is where most of the offices 86 | forbes india may 13, 2016

still are. “It’s also where all the infrastructure is,” adds Holla. “In the suburbs there has always been a problem of water and electric supply.

That’s not the case in South Mumbai.

In the suburbs, you have 80 percent water cuts, in town, it’s 20 percent.”

But Holla’s claim that Mumbaiites are always trying to move to the city’s centre does not really hold true for a lot of people. There are those who, instead of moving from the city’s centre to the suburbs, have moved out of the city altogether.

And settled in Pune, for instance.

Nandita Rajasekhar is one such Mumbaiite to have taken flight.

“I have been living in Pune for 10 or 11 years,” says the 37-year-old employee of Tech Mahindra, who bought herself a home last year, and is preparing to move into it this summer. “I would have bought a home a long time ago, but there are taboos attached with single women buying homes. There is always that concern that the guy you are going to marry is probably eyeing your house!”

But, once married, buying a home was not far behind. “I needed to own something of my own,” says Nandita.

buying a home has been a significant event in the lives of individuals and families down the ages. Homes are where memories are built or relived “This was not an investment. My main intent was to find a stable place, and not have the feeling of being unsettled every time I changed houses.” The fact that Nandita’s father had bought a house for the family when she was six years old has been one of the reasons why she, too, seeks a similar kind of stable environment.

“My father worked at Mahindra &

Mahindra, and the company had built apartments, which they offered to their employees at a discounted rate,” she remembers. “That was when we shifted from our rented home in Sion [in central Mumbai] to our own one-bedroom-kitchen in Malad [in suburban Mumbai].”

Now the owner of an apartment in Bavdhan, in suburban Pune, Nandita

Moving into high-rises, like the ones in the mill-dominated area of Parel in Mumbai, comes with its share of appendages

feels she has a better quality of life than in Mumbai. “People are more aware, more environment friendly in Pune,” she says. This sentiment is shared by Parmeshwaran as well, who is temporarily posted in Pune, and is living in the Kothrud area: “Pune is like being on ice.” And Mumbai?

“It’s like being on fire!” he laughs. “In Pune, you have time for yourself. In

Mumbai, you don’t. There, travelling for an hour to work is the norm.”

Nandita, however, adds that moving into a new city has its hiccups.

“Pune is slow, and, initially, people were hostile,” she says. Things have improved, though, with more people renting out apartments, and a more cosmopolitan population moving in. But hostility need not be found

only in a new city; you could find it even in a new neighbourhood in an old city. Holla says that moving into an expensive high-rise in the old, middle-class, mill-economydominated neighbourhood of Parel came with its appendages. “The apartment in which I live is in an old mill compound,” he says. “There was resistance from the local people when may 13, 2016 forbes india | 87

amit verma

Life recLiner we moved in, because of the sharp socio-economic divide.” But now, he says, matters are more settled.

Holla’s experience in Parel is a factor that divides buyers on whether to purchase homes in new buildings and neighbourhoods, or in old and established neighbourhoods. Old buildings come with established ecosystems of domestic help, local grocery stores, laundry services and milkmen, which all add up to make life easier for a family, especially one with children. In a new building, that too in a new neighbourhood, it takes time for such an ecosystem to develop, making daily life a little difficult. But new buildings are ones in which new relationships are forged from scratch, whereas in old ones, relationships are often inherited, along with their share of squabbles, curiosities and prejudices.

But these old relationships are the very reason that keeps some families in the same place for decades. “Our neighbourhood has become much more crowded and congested than it was before,” says 40-year-old Saurav Wadhwa, a resident of East of Kailash in South Delhi, who lives in a standalone house built by his father in the early 1970s. “There are huge parking issues. But moving to a new development was not an option. Apartments in places like Gurgaon and Noida are very insular; they have no sense of history.”

Wadhwa adds that relationships that are built in these new housing complexes are largely needbased, since they are between people who live there only for the purpose of their jobs. And although housing societies in the National Capital Region (NCR) are making attempts at recreating the sense of a neighbourhood, Wadhwa feels these attempts are rather synthetic.

Homes, till a couple of decades ago, were meant to be for good, as were jobs. However, with the younger generations having to move, often frequently, with their jobs, buying or building a home in one city often 88 | forbes india may 13, 2016

does not make the same sense as it used to. “The younger generation might feel the need to ‘monetise’ the property and save on maintenance hassles as well, and therefore get a builder to pull down the standalone houses and construct apartments in its place,” says Wadhwa.

Buying a newly built property, however, has one practical advantage: Bank loans. Buying an older apartment in Pune was not an option for Nandita, “as the owners often ask for a significant part of the payment to be in cash. That is not an option for people like us who have salaried jobs”. The 80-20 model, wherein the owner makes a down payment of 20 percent of the

Old buildings come with established ecosystems that make life easier. In a new building, it takes time for the ecosystem to develop property price and pays the remaining 80 percent through a bank loan, is what suits salaried home buyers.

That was how Mahua Gupta, a journalist with The Times of India in Mumbai, bought her apartment in Malad in 2009. The fact that she took a loan to buy her house while she was in her 30s is perhaps the biggest differentiating factor between her purchase and her father buying a house after his retirement in 2000.

“My father had a transferable job, and I have grown up in Bhubaneswar,” says Gupta. “He decided on buying an apartment in Kolkata with the money he got post-retirement. He is old-fashioned, and did not feel the need to take a bank loan; he felt that the money he had saved up was good enough.” And although he owned two plots of land, when the time came to take a call, he opted out of

east of Kailash in delhi has its share of parking problems and narrow roads

the hassle of building a home, and bought a ready-made one instead.

“The hassle of building a home is perhaps more now than it was a few decades ago,” says Wadhwa, of South Delhi, who constructed a first floor to his father’s property three or four years ago. “It was difficult even then, but now the trust factor has gone down a lot.” Wadhwa elaborates on this by saying that construction workers today have a lot more choice, especially since there are lots of developer-led projects available for them to work at. Hence, getting good workmen is a constant concern. “Also, the quality of material they use is suspect.

Earlier, you could trust them more with these factors,” adds Wadhwa.

But building your own home was never quite an easy task. Sam Balsara, chairman and managing director

of Madison World and Madison Communications, recalls a family story that he has heard about the 85-year-old house in which he lives, built by his maternal grandfather in the Malcolm Baug housing colony in Jogeshwari, suburban Mumbai, when the neighbourhood was “a jungle”.

“When my grandfather built this house,” says 65-year-old Balsara, “there was no Jogeshwari station. The closest station was Andheri. The story goes that the garage here was not actually meant to house a car, but a tonga. The tonga would take my grandfather to Andheri station every morning, from where he would take the train to town to work. The tonga would wait there all day, and bring my grandfather back in the evening.”

The world outside Malcom Baug

has changed, but Balsara prefers to stay in his ancestral house because of the space, freedom, privacy and independence it offers, despite the fact that it is quite a distance from most places. “I would not want to have fights with my neighbours over whether the wall should be painted green or white,” he says, when asked if he would prefer to stay in an apartment. Balsara seems to have inherited his love for open spaces from his grandfather, who had quit his earlier home in South Mumbai in search of wider horizons, and had sacrificed his close proximity to work for more space to breathe in.

Building homes in areas that are yet to develop has always remained challenging. Parmeshwaran, who built a house in Neral, says that it took three years to complete construction.

“We did not take a loan, and so

progress was slow,” he says. Even after construction was completed, it took another three years for the local government authority to build water supply lines. “We had electricity right from the beginning, but water had to be brought in by tankers.

There was also a common borewell, which all residents could use.” But since the Parmeshwarans did not live there permanently, these hassles did not affect them in the same way as they would a local resident.

In this sense, some things have not changed at all over the decades.

Meenakshi Mukherjee, 73, talks of the house her father built in the New Alipore area of South Kolkata in the early 1950s. “There were just three of four completed houses in the area at that time. There was a street, but no street lights. We would hang bulbs at the end of long bamboo poles and stick them out in front of the house. Our fathers would take turns each night to patrol the area,” she remembers. While there was a local vegetable market within walking distance, “if we had to get good fish, we would have to go to Jadubabur Bazar [about 5 kilometres away].” And there were foxes that would haunt the driveway at night.

In the current economy, buying (and selling) houses is a preferred form of investment for innumerable people, with little thought for the end-user who perhaps needs a house to live in, and not just park disposable money. While the cost of housing keeps increasing—squeezing the middle-class either into cramped apartments (like in Mumbai), or into the undeveloped swathes (like in the NCR)—the sentiments of buying a home have mostly remained unchanged through the decades. In a way, there are more options—bank loans, more housing projects, better amenities; and in a way, there are fewer—building your own house to live in is almost an impossibility.

But at the end of it all, the quest remains for a home of your own. may 13, 2016 forbes india | 89

Life recLiner

d

wayne John Bravo is a busy man. Days after his team won the ICC World Twenty20 (T20) in the most dramatic fashion, the lithe West Indian still can’t find time to catch his breath. When Forbes India met him at a luxury hotel in Mumbai in April, there were over 100 congratulatory texts lying unanswered in his inbox (and he tries to answer them all, he insists). The Indian Premier League (IPL) was upon him and he needed to wrap his head around the new franchise he’s playing for—Gujarat Lions. But before that, he had to take care of another piece of business: The IPL opening ceremony. At the highvoltage event that evening, Bravo was to share the stage with biggies like actors Ranveer Singh and Katrina Kaif and singer Yo Yo Honey Singh. But there was no doubt about the headline act: A groovy number that features the 32-year-old Trinidadian himself.

Ever since his “good friend and drinking buddy” Chris Gayle introduced the song to the wider cricket audience in the opening match of the World T20—doing the signature jig to celebrate his century against England—Bravo’s single, ‘Champion’, has gone viral. On the field, it invoked the West Indian fight-back spirit, and evoked parallels with Cameroon soccer great Roger Milla’s wiggle in the 1990 football World Cup. Off the field, the song has notched up more than 12 million views on its official YouTube channel in over a month since its release. Clive Lloyd’s done it, so have Brian Lara and Usain ‘958’ Bolt. Not just “every Vincy and every Bajan”, but from months-old babies in their cribs to zumba enthusiasts, everyone’s in on the ‘Champion’ jig.

Mumbai designer Bhavesh Shah, who has worked with Bravo for more than five years now, has roped in the cricketer as the face of his latest campaign that is dedicated to champions around the world.

“I recorded ‘Champion’ last August and kept it hanging for a while. I was waiting for the right moment to

90 | forbes india May 13, 2016

The Caribbean Punch

dwayne bravo may be the man of the moment, but the West Indian cricketer has had a career full of many such highs and his share of lows

By KathaKali Chanda

May 13, 2016 forbes india | 91

photograph: Joshua navaLkar; outfit courtesy: the parabito coLLection by bhavesh shah

Life recLiner release it. I had the gut feeling that I should do it before the World T20.

Thank god I did, because without the team’s success, the song wouldn’t have been this big a hit,” says Bravo.

It didn’t take him much to put the chartbuster together. Last August, when Bravo was in Jamaica and playing around with the lyrics with his friend Colin ‘Raza’ Wedderburn, the word ‘champion’ was on his mind.

By the end of the day, the two came up with the song that has the word playing in loop and is a roll call of sorts for Bravo’s heroes (Grammy-winning reggae and dancehall singer Beenie Man), mentors (Brian Lara) and friends (Gayle and Kieron Pollard).

the island nation since 1998, he would try to meet him. The meeting finally took place in 2006, when a friend passed on a word to Beenie Man and he invited Bravo over to his house.

Over time, the two became friends and when Bravo pulled his leg saying he should do a song with him, Beenie Man took him to his studio. “That was the first time I had gone to a studio.

I had no idea it was so difficult to do music,” says Bravo, who recorded ‘Beenie Man & Bravo’, his first ever song in 2011. “That’s the greatness of the man. You make one joke about a dream and he helps you achieve it.”

Ever since, Bravo has performed a few more singles (‘Chalo, Chalo’ for

dwayne Bravo, who says he’s the best entertainer in his team, does the ‘Champion’ jig

adnan abidi / reuters

They recorded a demo with Gayle and Gage, a dancehall artiste, and the master version was produced in the studio of Trinidadian soca artiste Bunji Garlin. The lyrics are uncomplicated and the foot-tapping beat a child’s play. You don’t have to be Michael Jackson to master it; as long as you are willing to give your biceps a mild workout in tune, you are a #Champion.

b

ravo’s innings in the recording studio took off thanks to a joke he cracked with Beenie Man. As a kid, Bravo hero-worshipped the Jamaican artiste (“Because he wrote a lot of songs about girls,” he says winking) and every time Bravo visited

92 | forbes india May 13, 2016

instance) and appeared in a song-anddance sequence of Tamil song ‘Yenda’ from the movie Ula. Despite his years with Chennai Super Kings in the IPL, Bravo hasn’t picked up any Tamil, but agreed to take the plunge when the “offer to entertain” came along. “In 24 hours, I learnt the language, recorded the song and shot the video,” he says.

Such spunk helps in lifting the spirits in the dressing room too, as Bravo announced that he’s the best entertainer in his playing XI. “There are good singers, like [Sulieman] Benn, [Jason] Holder, [Andre] Russell. But entertainers are a different breed, they make everyone feel a part of the atmosphere. I

think that’s my strength,” says the fan of actor Shah Rukh Khan.

If there’s another thing that he can call his strength, besides his lethal dipping yorkers at the death or his heart-stopping fielding, it’s his ability to never give up. Just like Rocky Balboa’s proverbial champion. The last time he represented his national side on Indian soil, Bravo incurred the collective wrath of the powersto-be by pulling the team out in the middle of a series over a pay dispute.

That was in 2014. The Caribbean players had a running feud with the West Indies Cricket Board for years but, by drawing first blood, Bravo had both his board and the Board of Control for Cricket in India (BCCI) frothing at the mouth. Bravo calls the move a “team decision”. “If you ask any player of that time if he was part of the decision-making, he would say yes. It’s not like he did something because Dwayne Bravo told him to.

We all took the decision,” says Bravo.

But that match in Dharamsala, in 2014, when the team announced its decision to withdraw midway, was to be his last one-dayer for West Indies. Next year, Bravo, who played his last Test match in 2010, retired from the longer format. In one stroke, his role as the skipper of the renegade side turned him into a cricketing pariah, wiping away memories of his decade-long career as one of the most exciting all-rounders for West Indies in recent times.

Now, Bravo is back in India and is the flavour of the season.

T

he story of Dwayne Bravo began about 10 minutes away from Brian Lara’s house in Santa Cruz, a small village in Trinidad.

His father and grandfather played cricket for the local clubs and Bravo, the third of eight siblings, “knew he wanted to play cricket ever since he was five”. Every weekend, his father would bundle the village kids to the Harvard Coaching Clinic, where Bravo’s role model Lara started as well.

But cricket, for him, wasn’t limited

to the weekends or the cricket field.

When he was young, Bravo would play at home all by himself. Back from school in the afternoon, he would draft competing teams in his notebook and stand proxy for all 22 players. “I would have my favourites who would always make runs or take wickets. Among the West Indians, that would be Lara, [Ian] Bishop, [Curtly] Ambrose. Among other teams, my favourites would be Alec Stewart, Nasser Hussain, Darren Gough [England], Mark Waugh, Michael Slater [Australia], Sachin Tendulkar, Sourav Ganguly and Rahul Dravid [India],” says Bravo, who was called the right-handed Lara till his southpaw half-brother Darren Bravo arrived on the scene.

In his debut series against England in 2004, Bravo made a fine impression.

With his career-best bowling figures of 6-55 and an elegant knock of 77 in the third match of the series in Manchester, he was dubbed a genuine all-rounder in the mould of Learie Constantine and Gary Sobers.

But Bravo remembers the series for sharing the dressing room with Lara for the first time. “I had met Lara a few times before, but was too starstruck to talk. During that tour of England, we really got together and he showed me around. I owe most of my early success to him,” he says.

But Bravo’s rise in world cricket has been marred by run-ins. In 2005, during a Test match against South Africa in Antigua, he accused opposition skipper Graeme Smith of racially abusing him. The match referee found Smith not guilty and the South African demanded a public apology from Bravo. That never came, and the bad blood between the two players and, by extension, the teams overshadowed Bravo’s maiden Test century in the series. The 2014 pullout from the series in India only reinforced Bravo’s image of a man who loves to rub the cricketing C-suites the wrong way. Says Ayaz Memon, veteran cricket writer, “His is an unfortunate story where his

career became stunted and three or four of his best years were lost in the battle with the administration.”

Bravo does have a tinge of regret that his Test career didn’t take off the way he expected it to. “I could have achieved a lot more. The first four-five years of my Test career were great and I would have liked that to continue. But things happened on which I had no control,” he says. “But I don’t regret taking up issues. I don’t like to take advantage of others and others of me. So I have moved on. I am in a good place right now and I want to continue enjoying that.”

dwayne bravo has always enjoyed playing in india. but his current high was unthinkable even a few months ago

b

ravo has always performed well in the IPL—where he played for Mumbai Indians and Chennai Super Kings before moving to the Gujarat Lions this year—and enjoyed playing in India, which he calls his home away from home. But his current high, cricketing and otherwise, was unthinkable even a few months ago, when he joined his national T20 team for a preparation camp in the UAE ahead of the World T20. Despite their success in the shortest format of the game, West Indies were always an afterthought when it came to picking favourites.

Besides, the team comprised members who hadn’t turned up in national colours for months. “But that’s OK,” he says. “Even if we don’t play with each other for months, we are all good friends and it didn’t take us much time to gel with each other in the camp.”

Speaking on his team’s worldbeating feat, coach Phil Simmons has told ESPNcricinfo how senior members of the team, including Bravo,

turned West Indies into a cohesive unit and fed innovative ideas into the think-tank. “From early in the camp,” said Simmons, “Bravo was working heavily with Jerome Taylor and Carlos Brathwaite on their bowling.”

The bugbears lay elsewhere, outside the 22 yards. The match-fee dispute was still simmering and when the team landed in Kolkata ahead of their warmup matches, they didn’t even have their jerseys ready. “The state of West Indian cricket makes me emotional.

When you see other teams, you see them in similar clothes. When you see the West Indies team travelling, you don’t know who they are. Each player has a different suitcase, different kitbag. This is unacceptable at this level,” bristles Bravo.

But what hurt him the most is Mark Nicholas’s column where the former English player called them a team that was “short on brains”. “It’s OK to criticise, but you call somebody brainless, it’s insulting. This is one format where people must respect the West Indies team,” says the first cricketer to take 300 wickets in T20 cricket. Bravo reached the milestone after dismissing Kings XI Punjab skipper David Miller in this IPL. When West Indies lifted the World T20 at Eden Gardens in Kolkata—they are the first team to have done it twice, having won it in 2012 as well—they did it without the services of top players like Pollard, Sunil Narine and Darren Bravo. Lendl Simmons, their match-winner against India in the semi-final, joined the team late. “Would India have been able to win the tournament without the likes of MS Dhoni, Virat Kohli, Rohit Sharma and R Ashwin?” asks Bravo.

“If we play 10 T20 matches, chances are we’ll win eight,” he fires away. Who could you lose the other two games to, I ask? “In one game, any team having a better day than us will beat us, and in another we’ll beat ourselves,” he says.

Going by his purple patch, that’s a worry he can put off for the time being.

May 13, 2016 forbes india | 93

Life ApprAisAL

Car: 2016 Volkswagen Beetle

By Rishaad Mody

Courtesy: overdrive

T

he Volkswagen Beetle is one of the most iconic shapes in the automobile world. Almost no other car has stuck to a design philosophy so hard through the decades, with the exception of the Porsche 911.

With the 21st century Beetle, Volkswagen aimed at toughening up the looks a bit. The car sits a bit lower and wider than before.

The face is characterised by the round bi-xenon headlights with daytime running lamps; its roof looks a bit flatter than before.

The wheels are 16-inchers; the high-profile tyres have an added bonus of improving ride quality as well. It’s only when you walk up close do you realise just how flared out the wheel arches are—they make the Beetle 30 mm wider than a Jetta.

The frameless windows add some class, but the chrome mirror caps look out of place and way too shiny.

Although the Beetle is quite long too, about as much as a Hyundai Creta, it looks quite compact and that feeling continues behind the wheel. The cheerful cabin is brightened up by the exterior colour-themed dashboard.

94 | forBes india may 13, 2016

effortlessly, and the car pulls to just This is a staple Volkswagen cabin over 200 kmph on the speedometer. with familiar and high quality feeling The 7-speed DSG gearbox comes buttons, knobs and gear shift lever. with paddle shifters and offers quick There’s a crisp touchscreen display and crisp shifts in Sport which supports USB mode; 0-100 kmph took and aux input, making tech specs 9.6 seconds and would it quite versatile.

Type Inline 4-cylinder have undoubtedly turbo petrol The Beetle gets a large been quicker had the panoramic sunroof but Power 150PS@5,0006,000rpm gearbox allowed a more it only opens halfway, Torque 250Nm@1,500aggressive launch. which should hopefully 3,500rpm The Beetle drives deter passengers from Price Rs 28.73 lakh with a hint of firmness, sticking their heads ex-Mumbai but is very pliant out. The boot is really and absorbent, even spacious, with 310 litres, on poor roads. The damping feels although the sloping tailgate limits plush and the suspension doesn’t capacity for tall luggage at the front. crash through bumps. High speed Finally, Volkswagen brings to stability is rocksolid and you could India the 1.4TSI petrol engine the sit at 180 kmph all day long.

Jetta always deserved. For the Beetle, For Rs 28.73 lakh (ex-Mumbai), power has been boosted to 150PS and the Beetle is anything but what the 250Nm. It’s very smooth on start-up, original set out to be—a people’s car. and idles so quietly you can barely It’s a lot of money, but the Beetle is hear it. The sensation of refinement quite the comprehensive package, one is prevalent at all speeds. The smooth that goes beyond just its brand image. engine and excellent NVH (noise, It also drastically improves upon vibration, harshness) characteristics the earlier version’s anaemic engine do such a good job of masking you and drab interior. The new Beetle is from the outside world that the Beetle reasonably spacious, very comfortable actually feels slow till you glance at and now has a fat features list. the speedometer: 150 kmph comes up

Life nuggets A pick of the best, the latest, the greenest, the quirkiest, the most luxurious... that money can buy

Home

Perfectly rounded

The Pebble coffee table, designed by Matthias Demacker, is made of mattcoloured polyethylene. The openings in the coffee table frame emphasise its roundness and provide a practical storage solution. It is resistant to atmospheric agents and can also be used outdoors. The table is available in a variety of colours. bonaldo.in 96 | forbes india May 13, 2016

Style

Two-face

The LanGe 1 in white gold has been inspired by the five-minute clock in the Semper Opera House in Dresden. Just like its historic role model, this new watch by a.

Lange & Sรถhne is based on two separate display elements and comprises the outsize date display, which was created in 1994. alange-soehne.com

Style

Write time

The Montblanc starWalker World Time features a World Time complication integrated inside the pen. One twist of the cone at the end of the lightweight titanium pen lets you read the local time in different time zones. It will also tell you, for example, that when it is 4 am in New york, it is 10 am in Paris. montblanc.com

Auto

dark knight

The indian Chief dark Horse has a 1811cc V-twin engine, with a distinctly rumbly voice. It produces incredible torque, reaching its peak at just 3,000 rpm. The valanced fenders look cool as does the war bonnet atop the front fender. The seat is super comfortable for all-day riding.

-shubhabrata Marmar

indianmotorcycle.com

Dark knight, courtesy Overdrive; Perfectly rounded, courtesy Better Interiors

May 13, 2016 forbes india | 97

“Home is the place we love best and grumble the most.”

—Billy Sunday

thoughts on homes

It’s easy to underestimate the real cost of home ownership.

—Suze orman

a good home must be made, not bought. —JoyCe maynard

IllustratIon: ChaItanya dInesh surpur; top: lIbrary of Congress

Decorate your home. It gives the illusion that your life is more interesting than it really is. —CharleS m SChulz Home life is no more natural to us than a cage is natural to a cockatoo. —GeorGe Bernard ShaW Home wasn’t built in a day. —Jane SherWood aCe Home is, I suppose just a child’s idea. a house at night, and a lamp in the house. a place to feel safe. —VS naipaul I am grateful for the lawn that needs mowing, windows that need cleaning, and floors that need waxing because it means I have a home. —author unknoWn

“We shape our dwellings, and afterwards, our dwellings shape us.”

— Sir WinSton ChurChill Home is where you can say anything you please, because nobody pays any attention to you anyway. —Joe moore The best time to buy a home is always five years ago.

—ray BroWn

The three most important factors in buying a home are, location, location, location! —anonymouS People are living longer than ever before, a phenomenon undoubtedly made necessary by the 30-year mortgage.

—douG larSon

Home is a place you grow up wanting to leave, and grow old wanting to get back to. —John ed pearCe

The fellow that owns his own home is always just coming out of a hardware store. —Frank mckinney huBBard

Home is the place where, when you have to go there, they have to take you in. —roBert FroSt

Home is any four walls that enclose the right person.

98 | forbes india may 13, 2016

—helen roWland

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