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Iu
Oob
Nob
Db
2010
Quarterly in house magazine of CREDAI National
HOw DO westrategIze tO
prOvIDe HOmesfOr all
Improving Urban HousingCover Story
- Mukta Naik
- Anil Parameswaran Nair
BetweeNa rOck
a sOft place&
- Akash Deep Jyoti
creatINgsymBIOtIc
relatIONsHIps
Office real estate -
creatINgsymBIOtIc
relatIONsHIps
Office real estate -
- Akash Deep Jyoti
Bugod- Vivek MenonBugod- Vivek Menon
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D mb,
Ou onn ndo h bn o dd n nd
ub onn o h min on oninuou
basis for the benet of our members. Hope you
have appreciated the articles on Management and
Spiritual aspects starting from the last issue. This
issue has an article from one of the most respected
brand consultants of the country Mr Harish Bijoor
discussing marketing strategies. You will also have
another piece from Mr. Anil Parameshwaran Nair
ho hi i n xui dio o h UBmIndia Magazine Property World. This issue also
has a bonus - as against one article by a Banker
every issue, we have contributions from 2 leading
Bn on on b nd noh on uu
opportunities of Real Estate.
Research Organizations and Newspapers have once again started predicting correction in Real Estate prices.
Such predictions can bring about sluggishness. I am not sure how far these reports are correct. On one hand
IT sector is booming again, millions and millions of sq ft of commercial space has been absorbed by IT and
other sectors during this year, IPP and Core sectors have shown better results during the 2nd quarter, RBI has
suggested that the banks should increase deposit rates to encourage savings and to reduce lending rates to
encourage investments, campus selections are back again, hiring by all the sectors is in full swing, income
levels have gone up, consumption seems to have picked up rapidly, the malls are brimming with activity again.
Sum and substance is that the overall atmosphere is vibrant. When the country is showing all round growth
and prosperity, I do not know how Real Estate can move in the opposite direction.
Union Government is targeting an aspirational GDP growth. Support to Real Estate can ensure that the country
kisses this magic gure of 9% growth. If you want to sell a pin you need Real Estate, if you want to sell an
elephant you need Real Estate, if you want to create jobs you need Real Estate, if you want to create infrastructure
you need Real Estate, you need Real Estate for every activity small or big. Therefore the basic raw material
for the growth of the GDP is Real Estate. As such the Real Estate deserves support at the supply side. It is hoped
that RBI and the Government of India take urgent and adequate steps in this regard.
rd,
a Bihn Hd,
edio
th edio i h mnin Dio o chd Houin, Bno nd p pidn o
CREDAI - Karnataka.
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D ind,
a h i o iin hi, ou nion i in
h id o nub o : 2g, cwg,
the Adarsh building plus a number of other
nd d iu ooin on h hoion,
threatening to join the list.
Politicians are, by the common people, presumedto be guilty unless proven innocent.
All this is very disheartening and is a matter
of great concern.
We, who are in the business of Real Estate development are vulnerable to many of the ills
that plague players in a License Raj namely corruption and coercion.
It is in our long term interest to push for a Regulatory Act that make Developers plus the
authorities accountable for their actions (or inactions). It is also in our interest to adopt and
implement our code of conduct - in letter and spirit. Not doing these things will be a clear
declaration of being short sighted.
Through CREDAI, we need to make many positive changes in our industry and also force
changes in others Should we act? Will we act? What is the way forward?
rd,
ku g
chin
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D find,
The Indian Real Estate Sector is witnessing a metamorphosis. The
sector, which was grossly neglected, is now taking giant strides
and is all set to dominate the growth curve of the country. And
as our economy grows, the aspirations of the new age nation
grows even faster.
Providing Housing for All has become the mandate not only
o h gonn, bu o o u ho nd in h
development of this core sector. The moot question that needs
o b nd i ho do hi hi nd? creDaI
is of the rm view that all stake-holders need to work together
to achieve and fulll this dream. With this end in view, we, at
creDaI, h onid h 10h NatcON N Dhi, in
which all the stake-holders, namely the Ministries of Housing,
Urban Development and Finance, will deliberate on what needs to be done. The convention has been aptly
titled as Housing for All Working Together.
Radical policy initiatives are required to be taken. Be it providing nance for creating infrastructure, motivating
the State Governments to frame effective policies for the development of housing, redevelopment of slums or
setting into motion policies by which new townships can be created with the greatest speed. The task, we all
realize, is not easy. We have to be very rm in our resolve, we need to be bold in our approach, we need notbe afraid to think out of the box.
A report published by McKinsey has assessed that the migration to our cities is growing exponentially. Indias
urban population is expected to soar from 340 million in 2008 to 590 million in 2030 and this urban
expansion will happen at a speed quite unlike anything India has seen before. MGI estimates that India needs
to invest $1.2 trillion just in capital expenditure in its cities over the next 20 years. These gures are startling.
It is important for us all to wake up and face the challenge with grit and determination. We shall endeavor to
draw and focus the attention of the Government to play a decisive role in bringing the various wings of the
government together in a single platform to build a strong sustainable and vital infrastructure to support the
growth of satellite townships.
We, friends, have a very substantive role to play, and in the process of expanding our businesses we will be
able to build the very foundation of our great nation. I call upon my fellow developers to stand united in our
resolve to build an India in which we would all be proud to live, with social harmony and respect for our fellow
brethren.
w d,
snoh k run
pidn, creDaI
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Let us together make India Truly Green!
- Syed Mohamed Beary 12
Recognition 20
NSDC- BANGALORE INITIATIVE
- Suresh Hari 36
Are you Future-Ready?
5 Steps to Building an Information-Edge In Real Estate
- Prashant Das, Divyanshu Sharma 38
Service tax -
Realty players caught between Writs and the Department
- S Sivakumar 46
Letters to Editor 55
17Neat INDIa- Umar Teekay
HOw DO westrategIze tOprOvIDe HOmes
fOr all
ImprovingUrban
Housing
Cover Story
- Mukta Naik
3028- Akash Deep Jyoti
creatINgsymBIOtIc
relatIONsHIps
Office real estate -
n e!th chin&
19n e!
th chin&- Harish Bijoor
New Base Rate SystemO Bn- Rathnakar Hegde24
a lonHumilityin
poion Quo- Subroto Bagchi
1515
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edo
A. Balakrishna Hegde
edo Bod
Irfan Razack
Ranjit Naiknavare
Pradeep Jain
Niranjan Hiranandani
Dharmesh Jain
Harsh Patodia
Uzma Irfan
G P Savlani
Dgn & lou
GAAP Communications Pvt. Ltd.
Email: [email protected]
Pnng
Jwalamukhi Mudranalaya Pvt. Ltd.
Please send in your feedback,
contributions and advertising queries to :
GP Savlani,
Resident Director,
Confederation of Real Estate Developers
Associations of India
CREDAI - National Secretariat
703, Ansal Bhawan,
16, K.G. Marg,New Delhi - 110001
Ph: 011- 43126262, 43126200
Fax - 011- 43126211
Email: [email protected]
Website : www.credai.org
Inhouse Magazine for Private Circulation.
Not for sale
- Rathnakar Hegde
fUtUreOppOrtUNItIes &
BaNk fUNDINg
real estate
swamI sUkHaBODHaNaNDa
Of prasaNNa trUst
- Swami Sukhabodhananda
Bu
god- Vivek Menon
21
- Anil Parameswaran Nair
BetweeN
a rOck
a sOft place&41
44
tHe aNtaND Its
pHIlOsOpHy50
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l u oh
India Truly Green!
ndias population is projected to be 1.26
billion by the year 2016 and it is expected
to overtake China to be the most populous
country by 2050. Furthermore around 40
crore people are estimated to migrate from rural areas to
urban centres. It is therefore imperative that India plans for
high economic growth in all sectors. Such growth will leave
behind large carbon footprint and green house gases. Another
alarming factor to note is that human consumption of Natural
Resources has doubled in last less than 50 years and presently
we outstrip what the Earth can provide by more than half. Even
If we continue to consume at the present rates, we would need
two Earths by 2030. Vast majority of world population does
not enjoy a fair standard of living while European & Americanouni onu o hn hi du h o od
natural resources. If the developing world were to maintain
a living standard of European countries, we would need two
I
Editors BoxAmazing effort by Indian Green Building Council that should
inspire all of us to do our bit and at the end of the day its
a win-win both for Developers and for Mother Earth.
- Syed Mohamed Beary
nd h h, hi
oud nd ix nd
h h o inin
h iin ndd o
U.S.A. To negate this
nd in od o ii
growth without impairing
h hbi h
o on ou,
recycle and leave the least
ecological footprint.
th indn Gn Budng coun
(iGBc), a part of cii h n in
strides and is successfully leading the
Green building movement in India.
iGBc is consciously striving to teach &
inu Gn p nd bi h i u i
in hnin nd nd ind o Gn P
- a w o . Its vision is to sensitize key stakeholders to
embrace green and pave way for India to become a Global
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leader in Green buildings. To achieve this, it aims to champion
oo on nd bin Gn unb o
the Indian mainstream by enlisting members from every walk of
life to participate in various green initiatives and simultaneously
marshal widespread dissemination and awareness campaigns
through local chapters spread across India. IGBC has come a
long way in its endeavour with creditable achievements (some
of which are enlisted below) to place India as a world leader
of Green Building.
IGBCs achievements & leadership in India is commendable.
From just 1 green building in 2001 measuring a mere 20000
sft, its efforts have helped to remarkably raise the gure to
765 green buildings of over 465 milllion sft. In addition to
the same in the last 9 yrs it has also introduced around 150
varied green building products and equipment and enrolled
over 1046 members (including 90 founding members). Not
only this, it has also successfully made an inroad in Govt.
circles with 33 green buildings of 6.38 million sft.
Furthermore IGBC has launched following rating systems to
ui din :
IGBC Green Homes IGBC Green Factory Buildings
IGBC Green SEZs (Jointly with Ministry of Commerce &
Industry)
LEED Indi Nc (N conuion)
LEED India CS (Core & Shell)
A host of other programmes are on its anvil and IGBC
is working on initiating the following shortly:
n IgBc gn cii
n IgBc gn shoo
n IGBC Existing Buildings (Retrot)
n IGBC Landscape
to bo o ou nd i h ouni
needs Government & Industry collaboration and
People Participation. This could be achieved through
augmenting membership and impelling Govt.
partnership through legislation and by introducing
various incentive schemes and simultaneously
galvanizing Stakeholders i.e. Developers, Architects,Product manufacturers, Corporates, Government
ani, adi o b n
initiatives.
Going Green as a community means that we need to
be more responsible and proactive in protecting the earths
ecological balance. This environmental consciousness should
be present, whether we are dealing with government policies,
or industrial and economic activities, or in our daily living. On
a larger scale ultimate transformation can only come through
education; therefore we must also encourage and provide
our students with the knowledge, tools, and inspiration to
envision and aspire for a sustainable and peaceful world.
In this way, we would have built the foundations for a more
environmentally-conscious generation. The old adage
W no Wn no advocates sustainability in simple
terms. rdu, ru, r houd b h n o
our daily life.
In n nihnd o ob nin o h nd o
proliferating greenery and adopting green practices, IGBC is
a trendsetter and sets the pathway for a Green future. IGBC
beckons one and all to adopt Green practices and be its
ambassador for Green. Come join hands and partner with
IgBc o Indi h ounn o h gn Buidin
Movement. To know more about IGBC and become a member
kindly log on to www.igbc.in
SYED MOHAMED BEARY is the rebrand chairman of IGBC,
Bangalore Chapter and also the C & MD, Bearys Group,
CREDAIMember.
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ere is a lovely piece from a professional I have never
met but like many of you, keeps in touch over the
Internet. Dr. Ramana is a neuro-surgeon from Vizag
and he has this absolutely humbling story to share.
The ghat-road passing through deep jungles on the way
from Koraput to Visakhapatnam (Vizag) is dotted with
hamlets inhabited by tribal people living in harmony with
nature. Medical facilities are not easily available unless they
travel to the nearest town - sometimes to a primary health
centers through forest paths carrying the sick on a make
shift stretcher. Usually the literate among them or patients
o on ho h i vi o h o
specialized treatment. This is how a family of four landed up
at our hospital one night.
The father and mother were holding a thin boy of nineteen
years in their rough, weather beaten arms. The younger sister
was hiding behind the mothers sari awed by the hospitals
bright lights. The troubled little group radiated innocence, pain
and poverty. The boy was shifted to Neuro ICU immediately. He
was unconscious for fteen days and also malnourished due to
vomiting and dehydration. Prior to becoming unconscious he was
having headache and fever. The boy was diagnosed as having
raised intra-cranial pressure. I called aside the boys father and
spoke to him in Oriya. I told him that his son needed a CT Scanrst and later he may require surgery.
The father asked me to go ahead with the treatment and not to worry
about expenses, as he had brought ve thousand rupees with him.
The answer grounded me. The expenses could run up to more
than ten times the amount! I explained this to the father of
the boy. We gave him the other option - of shifting him to the
government general hospital for continuing treatment. The
family members became annoyed at the suggestion and wept.
They did not agree and I had to give up persuading them.
Giving up the persuasion trail, I requested the scan center to do
free a CT scan of the brain. The scan conrmed hydrocephalus;
ondition that required surgery. He needed a shunt tube to
H
Editors Box
One becomes a professional more through the quality of
work he does than due to his qualication, is the essence
of this beautiful real life anectodote.
- Subroto Bagchi
a lonHumilityin
poion Quo
be put from the brain to the
abdomen.
The hospital administration
obliged to treat the patient in
the general ward free of cost.
Doo dond du hboy needed; other patients
ndn nd i
helped them by giving them
food and moral support in
spite of language barrier.
The boy was operated upon and he made remarkable fast
recovery. Even before a week passed, he was eating by himself
and walking around the ward. He started gaining weight.
All these happenings gave me a real feel good within andappreciation from others.
But the patients father was stone-faced with no expression of
happiness nor did he offer thanks. This attitude troubled me
throughout their stay in the hospital. On the day of discharge
I oudn i in hi i h houd b hnu o u
for putting his son back on his feet again and almost free of
cost in a modern corporate hospital. He was surprised and
asked why should he? The purpose of bringing him here
was to have him cured - so why the thanks? If that was not
the case, Why would I have taken all the pains to shift himhere?, he asked me.
Then he told me that he had sold all the land he had for ve
thousand rupees, and for rst time entered an unknown place.
Other than his hamlet the only place he had ever visited is the
weekly haat (open air market) near his village to sell the forest
products he collected for the whole week. He wanted to save his
child and that alone made him venture into a big city.
The halo around me crumbled.
My contribution did not seem too much compared to what he
was doing for his son.
a hi I o o h ion in , bu I i
felt like laughing.
suboo Bhi i b non o o-oundin mindt in
1999, Indias most admired companies across industries.
In 2008, Bagchi took on the role of Gardener at MindTree
where he spends one-on-one time with the Top-100 leaders
at MindTree to expand leadership capacity. Bagchi is on the
Bod o gono o h Indin Iniu o mnn,
Bangalore. Bagchi has authored three business best-sellers:
The High Performance Entrepreneur, Go Kiss the World and
The Professional as Penguin Portfolio books. Currently, he writes
a column titled Zen Garden in Forbes India.
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couple of months back I was in Delhi to attend
one of those ostentatious weddings. There
ou union, h in Dhi
swanky hotels & one in the brides sprawling
mansion in Rohtak, Haryana. For the Rohtak do, we were
ferried from our Delhi Hotel in a eet of Mercs & I had the
opportunity to travel with an American gentleman called Joe.
This was Joes rst time in India & in the previous two days he
had only seen the better part of Delhi. Until we hit the road to
Haryana he seemed to have a wonderful image of India from
what he had seen up till then easily complimenting the Indian
IT juggernaut stories that he was fed with back home.
The three hour trip between Delhi & Rohtak was like a rude
shock to him. The lth & the squalor, the dust & the slush, the
i od & h ndin , h dnd bu &
unkempt shop frontsthe overall ugliness that kept hitting our
view with unfailing regularity was evidently too appalling for
his senses. He wanted to know if it was the same with rest of
Indi !!
If any of you have traveled on that road and also across
India, you probably would have replied that it is much worse;
except that we are so used to the mess that our senses have
become numb to it. It takes an occasional foreigner to wake
us up & bring it to focus. No denying the fact that India is a
huge mess.
Joe had another disturbing question- I know you guys are
taking huge strides in technology & your economy is booming;
I have no doubt that you will be a developed country pretty
soon; but how are you going to clean up this mess?
Indeed how are we going to clean up this mess? The uncleared
garbage piles, the irresponsibly left behind construction debris,
the carelessly thrown trash, the ever increasing mounds of
a
Editors Box
Swanky India & Dirty India. Two distinctly different sides
of our country, are beautifully picturised in this article. The
author suggests the solution to bridge the two party is in the
hands of the Developer. So true.
Neat INDIa - Umar Teekayplastic waste, the bowel
churning sight of spit
& hun in hidd o ou ii, ou
badly maintained public
transport & indisciplined
trafc, the haphazardly organized buildings & shabbily
inind d, h qui o b h i
cluttering our sky-line, the garishly displayed publicity
materials, the unclean roads, the ugly public infrastructure, the
ever mushrooming slums, the smell, the stench, the pollution
h do on bin? and ho i h iniii o
hi ih?
I dont think there is an easy answer to this. But there is no
harm in discussing some basics.
A very basic requirement of any cleanup drive is to arrest the
spread of lth. Primarily we must nd ways & means to prevent
its continued generation. No doubt this is the responsibility of
every single Indian. But in a country where most citizens have
more pressing basic needs, it would be impossible to make
neat & tidy India their priority; not now, not for a couple ofdd! moo, hi i in h doin o hbi nd od
habits die hard. So obviously, one needs to think of some
doable initiatives that can be the responsibility of a chosen
few and in turn can shape a new Indian habit.
I am reminded of a simple grannys rule Neatness begets
Neatness. In other words, neatness in the surrounding quite
often induces neat habits. While it may be an Indian habit to
be irresponsible or indifferent in dealing with public spaces,
there is no denying the fact that the human brain is conditionedto appreciate things that are neat & orderly.
An example that I can think of is- if you travel with our desi
cousins on a Southeast Asia tour, the very same people who
would spit paan & throw trash casually in India would suddenly
behave disciplined in Singapore & become the same
desi guys again the moment they reach Thailand
or Vietnam. I dont think all of this has
to do with the legendary stringent
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punitive measures that Singapore once had. I feel it has more
to do with the general neatness of the country that the mind
quickly appreciates and prevents one from disturbing.
Closer home, I have another encouraging example. Take
a look at Bangalore buildings of the pre nineties. Those
buildings, like anywhere in India, had less emphasis on the
common areas like staircases, lobbies etc. During the nineties,thanks to the pioneering efforts of some architects and builders,
we started seeing jazzed up common areas with high-end
materials & nishes. And, it is now a recognized fact that with
h hn, h o h bn d hn in h
very same Bangaloreans age old habit of spitting in staircase
corners & dirtying the common areas of these buildings.
Keep it neat, and generally people will keep it that way is a
time tested truth. On the contrary, if a place is a mess, even
the most civic among us misbehave. If you travel extensively inChina, you will see the super-duper elevated 8-lane freeways
and most exits from them will lead you to the old economy-small
town-cluttered-roads. The same driver who was an embodiment
of super civic sense on the 8 lane will suddenly behave so
irresponsibly the moment he hits the small town roads. How
else would you explain this?
I am not sure my theory is absolutely right but I would like to
believe that it is, because in which case, there is some hope;
bu bn h onn nd o buid lot of this can be taken care of. Saying No to Ugliness can
be a national campaign, like Italy did some years back with
a fair degree of success. If governments continue to build
yovers like the ones that we encounter on our way to the
Bangalore Airport, continue to erect road dividers that are a
visual affront, continue to make public buildings that are a
public shame, continue to ignore the post construction mess,
continue to overlook the need for clean wash rooms in public
places, continue towell, do an endless list of things the way
they are doing now, it is meaningless to have any hopes.
And as for the builder community, haphazardly organized
buildings, irresponsibly disposed debris...here too, the list
is quite long. Umar Teekay heads Teekays group, which is into corporate
interior t out across India. Besides designing and tting out
work places for IT companies and corporates, Teekays is also
known for some of its projects for Govt institutions like NIC,
STPI, IIIT-B etc. which stand out for their non-sarkari, corporate-
class look and feel.
If the government agencies and the builder community can
join hands to spearhead a campaign that can result in visibly
distinct public spaces, we can probably hope for people to
follow suit and maybe, we will be able see a neat India faster
than we imagine. Added to this, if we can train and enroll
the teaching community to inculcate neat habits in our future
generation, it can be far reaching.
Incidentally neatness is a close companion of cleanliness.
Cleanliness invariably follows neatness. While cleanliness
is slightly abstract and difcult to enforce, neatness can
be ensured because it has a perceivable and appreciable
presence. Thats why, probably, its always neat and clean
and not the other way around. Like Green India, Neat India
should be an equally important campaign.
Incidentally, our American friend Joe was greatly impressed
with the opulence of the wedding in Delhi & Haryana. Hewas particularly envious of the way an average rich man
gets pampered in India. Our host in Rohtak had a palatial
estate, a battery of uniformed drivers, a large contingent of
well groomed personal attendants and the likes. As long as
we were inside the venue, witnessing the gala rituals, Joe kept
appreciating the comfort that a rich man can afford in India,
which many of the rich in the United States cant afford, what
with 42 dollars per hour wage bills! But when we came out
and hit the road back to Delhi, Joes envy vanished. This is
what he said, before he preferred to take a bumpy snooze
than get disturbed by the mess out side- Irrespective of the
comfort that you can afford in private, you have to go through
this mess for most part of your waking life. Back home, I may
have to drive my own car, tend to my own gardens, cook my
own food, repair the leaking faucets myself, but when I go
out, I dont have to meander my way through the mess and
negotiate through the chaos
How true! The nation that has already arrived continues to
live in lth! How disgraceful!
Time we did some thing towards Neat India.
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n e!
n h in u I h id,
ouh, d nd hid, h i on
insight that has held me in good stead. This
is the insight of Integrity branding.
Integrity branding is all about saying the simple truths in your
brand communication process. Stick to the tone and tenor of
integrity and you cant do no wrong!
Let me look at it in a manner of detailing the concept at hand.
The point is simple. All consumers are essentially truth seeking
animals. Yes, all of us lie in some small manner or the other.
These are really the small lies that make the fabric of our
modern day lives. Small lies that ward off the inconvenienceof a lie-less society.
Despite all these small lies, we are essentially truth seeking as
consumers. When you buy a toothpaste, you expect honesty
out of the entire exercise. The consumer-brand interaction
process is a relationship. A relationship quite like the many
relationships we go through in our social lives.
When you get into a relationship with a member of the
opposite sex, or let me be politically correct and say memberof the same sex even, you expect just one primary thing out
of the relationship. The truth. There is no relationship you get
into expecting dishonesty and the lack of integrity.
Very simply put, consumers get into brand relationships based
on the expectation of the truth. But does she get it? And how
much of it? And how frequently so?
My belief is that the brand that offers the most of the truth
most of the time in this continuous relationship is the one that
succeeds. The brand that fails on this count is an utter failure
right away, or on the path of a self-fullling prophesy of doom
round the corner.
I
Editors Box
One short ar ticle shows us the marketing tool that all of us
have been looking for ever since we started selling.
th chin&
- Harish Bijoor
l iu hi ih
an example. Let me choose
my favorite gourmet table
bird for this example, the
hin! l h
of them.
There are really three
hin in ou in
lives. And remember, all of us are marketing people, since
there are only two kinds of people in the world. The marketing
person, who markets to others. And the marketed-to person
h oh nd!
Imagine three chickens out there. Each of the chickens is a
manufacturer and a marketer. Each of the chickens has done
something they are very good at. Each has laid an egg. And
each of the eggs looks alike.
Each of the marketer chickens takes a different path to market
their respective eggs.
There is the rst chicken, which I call the Shy chicken. This
chicken looks at the egg it has laid and nds the productquality to be all of 100. It then stands up, looks at the target
audience of potential consumers and whispers with a decibel
of shout that is at best 2 on a scale of 100.
This chickens whisper is heard by very few of those in the
target audience. Even those who hear of it, hear it as a faint
whisper. The promise offered by the whisper is just 2 on a
scale of 100. Those few who hear the whisper actually come
to see the egg, lured often by the under-shout that creates quite
a bit of mystery in the consumer at hand.
When the few consumers actually arrive to see the product,
there is great joy. The consumer expectation of 2 is rewarded
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with a delivery of 100. The positive strokes offered in this
purchase is +98. The negative of this approach of course is the
fact that it scores very low on consumer awareness scores.
Look at the second chicken then. This is what I call the honest
chicken. This chicken looks at the target audience and shouts
out the product offer with a shout level of decibel 100. The
shout quality is equal to that of product quality.
The pros of this approach is apparent. Awareness scores are
good. Everyone has heard that the chicken has an egg to offer.
But there is a problem here. Consumers do not necessarily
respect honest chickens. When the consumer has heard the full
story, he does not want to see the egg at all. There is just no
mystery. Only a few arrive to see the egg, and these are the
only ones who actually need an egg. And when they arrive,
they expect 100 and get 100. No positive strokes and no
negative. The potential of a buy is low as well.
The third chicken is waiting. This chicken finds the
competition hot. This chicken gets onto the rooftop and
shouts with a decibel value 400. The darned chicken
h id n bu hou i i h id n oid!
The awareness scores are terrific. The enti re town lands
up to look at the phenomena. The expectation is 400.
The delivery is 100. There is a negative stroke quotient
of -300. And nobody buys!
All these three chickens and their respective approaches are
out there for the marketer to choose from. Each of us makes
this choice every living day.There are variations available in
the gamut of 0-400 in terms of shout levels. Different marketers
choose differently.
But guess what, the chicken that shouts with a decibel of 80
is the one that succeeds the most. Also, after 400 what? Back
to a decibel of 2. In a market where everyone is shouting at
400, the one chicken which whispers the least is the one that
is heard and trusted the most.
Think about it. Which chicken are you as a marketer? And
which chicken are you as a working person? And whichchicken are you as a person living in a family of your own?
The author is a brand-domain specialist and CEO, Harish
Bijoor Consults Inc., a consulting practice with presence in
the markets of Hong Kong, Dubai, UK and India.
Email:[email protected]
u b o creDaI kn,
Mr. M.R.Jaishankar of Brigade Group
was honored by Builders Association
o Indi, kn cn duin hi
Annual Celebrations.
Mr. P.C.Mohan, Honorable Member of Parliament
did the honors in a glittering function. BAI Karnataka
Center deemed it t to honor Mr. Jaishankar for his
dedicated service in improving the Construction
Industry and for creating Worldc uu in Bno
and elsewhere. Mr. Balaveera
Reddy- former Vice Chancellor-
VTU, Mr. Chamaraja Reddy- Past
President & Trustee of BAI , Mr. Appi
Reddy- Vice President- BAI and Mr.
K.Sridhar- Chairman, BAI Karnataka
center were present. The speakers
appreciated the effort of Mr.
Jaishankar in creating exemplary
structures and wished many more
members of the fraternity join his
O
re
cO
gN
ItION
dedication. While thanking the Association for the honor
bestowed on him, Mr. Jaishankar requested fellow builders to
oo od o o hn nd o ih ind
dedication to complete structures that will stand the test of time
and with superior quality. He compared the efciency and
quality of work turned out elsewhere in the world. His specic
n o chin, h o unou nd h innn
of infrastructure, was a noteworthy point.
S.Suresh Hari
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ith twenty percent of the worlds population
and six percent of the worlds fresh water
ou, Indi un nn
policy seems ill equipped to address this
fundamental problem. In a country like ours which is blessed
with signicant sources of water both in terms of the melted
ice from snow capped peaks and adequate precipitation,
h ouion o hin o on nn
than in addressing the statistic. A search in Google
reveals innumerable theses that have been written by various
onn nd non onn ni on
management. Pundits and professors alike have suggested
various doomsday scenarios to wake up both the polity and
bureaucracy to this impending problem. While the ink has
dried on many a report, little seems to have been done to
address this issue. Every year, drought stricken areas across
the country cry for as much help as ood inicted areas. For
once rural and urban India seems to wake up to the same
dilemma.
While Dr. K.L. Raos proposal back in 1972 to link the Ganga
to the Cauvery and Captain Dasturs proposal in 1977 may
have had certain inherent aws in them, the intent to interlink
h i houh nd n h ound o on
many a scholar including President APJ Abdul Kalam. While
one might argue that hyperopia has never been a virtue of our
polity and expecting them to invest so much and see such a
gigantic project through to completion may be wishful thinking,
the solution should be driven by the fundamental right to life
guaranteed under our constitution. The project, if properlyplanned and executed could kill two birds with one stone.
Coming to the urban scenario, paying fourteen to forty rupees
for a sip of aqua addresses more of a fashion statement than a
fundamental necessity. Mineral water or regular from a white
gloved steward says it all about our urban water supply system.
While we have looked to the River Cauvery to grant us the
elixir of life in Bangalore, we have ignored the huge potential
in our own backyards. The garden city (Bangalore) of lakes
has been reduced to a city of cesspools, so is the story of most
w
Editors Box
Much has been written about solution to water problems buthas it even served as a wake-up call asks the author.
Bugod- Vivek Menon
of our cities in the country.
th obiou no d,
where can we nd solace?
An interceptor sewerage
system, for starters, would
nu h h
generated nds its wayino n
plan (STP). An effective
oid nn
system through a global
nd, h h udd
h ubn d hn o h nin ihin h o
municipality, would ensure an eco friendly approach
and minimize contaminated landlls. Both of the above,
implemented effectively, would keep our storm drains and
hence lakes clear of contaminated efuent. As an example,
the slaughter house at Tannery Road in Bangalore currently
spews blood and fecal matter that nds its way into Ulsoor
Lake. Sustained efforts from many local groups to shut down
the abattoir and/or install an efuent treatment plant at the
site have been met with litigation and false promises. Similar
situations may be true to other cities also. In the United States,
all waterways like our very own Rajakaluves, come under the
jurisdiction of the US Army Corps of Engineers. This guarantees
that no one ever encroaches or contaminates these lifelines.
Most of our country is blessed with adequate rainfall barring
the western deserts. While the urban sprawl has depleted
ou ound ou, i i i o u o bih
aquifer recharge zones, or protected green cover, where all
development is prohibited, to ensure adequate inltration. A
storm water pollution prevention and ood mitigation plan for
every project that disturbs virgin land, would ensure that urban
areas stay free of ooding while construction does not clog
or contaminate our storm systems. In the absence of a strong
policy to regulate and protect our water systems and the will
to act, we may end up contaminating this precious resource
that we as a country have been blessed with.
Vivek Menon, P.E., has been an advisor to various governments
on public policy related to infrastructure and water management
and is currently an infrastructure subcommittee member at the
Center for infrastructure, Sustainable Transportation and Urban
Planning (CiSTUP) at the Indian Institute of Science.
We had printed the following article by the above author
Sri. Vivek Menon in the last issue but a portion went missing
while designing. We are reprinting the same with my sincereapologies to the author for the printing error.
edio
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did no h o h o o n innon i
life for the engineering world to wake up to the crude
reality of mediocrity in the practice of engineering. The
compound wall built by a local contractor in Bengaluru
for a government agency, came crashing down during a heavy
downpour, claiming an 18 year old victim. While the judicial
process plays out in delivering justice to the victims of the family,
the engineering community is at a loss for answers, not as to
what caused the collapse but how to prevent such mishaps in
the future. While private players in the real estate space have
chosen the best and brightest to plan, design and build their
edices for them, what has suffered the wrath of incompetence
are works in the public domain. Most of us who have traveled
abroad have come back starry eyed and bewildered by the
progress in the construction of civil infrastructure. Whether it is thechunnel connecting England to the rest of Europe or the Big Dig
in Boston, where all the ugly interchanges in downtown Boston
were taken underground to make way for green lung spaces,
weve all been amazed at the quality of workmanship and the
adherence to the best practices in construction.
Now zoom back to our very own Bengaluru. Other than the
International airport that was built through a public private
partnership, most of our modern public infrastructure is not even
worth a mention. The magic boxes, fondly referred to by the
engineering community as tragic boxes or match boxes,
ih bui in obon i o ii nin hn
their heads in shame. Signal free corridors that are an unknown
concept for most urban arterials, collectors or distributors, in the
o h od, hid h h nx b id o id
bread. The Richmond road yover, which for the longest time had
the dubious distinction of being the only yover in the world with
an intersection until recently, threatened to nd its way into the
Guinness book of world records. Facts stated, so whats new,
one might ask.
India is today growing at a brisk pace of close to ten percent
year on year, with infrastructure spending exceeding over oneLakh crores, by conservative estimates. Currently, the onus of
planning, spending and monitoring the outcomes of this initiative
rests squarely with governmental bodies at the local, state and
central level. The apathy and indifference towards delivering
a product that one can be proud of is palpable even to the
untrained eye. The Jawaharlal Nehru National Urban Renewal
Mission (JNNURM) aimed at closing the disparities in spending
capabilities between various Metros and committed a sizeable
chunk from the national exchequer to the state and local bodies.
For a country that at one time was looked at as a third world
economy with foreign exchange reserves languishing at USDtwo billion, India has come a long way to becoming the fourth
largest economy in terms of purchasing power parity. The dearth
of nancial resources is a thing of the past but the way we are
I
tod B Tomorrow...
ruin h pi o eninin
spending these resources is questionable. And that brings us to
the crux of the challenge; do we have a regulatory mechanism
to ensure that our valuable nancial resources are well spent in
building for our future generations.
As planners, designers, engineers and constructors our mandate
is to be the builders to the Nation. It is hence our responsibility in
ensuring that the best practices come to bear on our infrastructure.
Quality control, which is such an integral part of any effort, is veryoften neglected. The timeliness of the effort, referred to in engineering
parlance as a Schedule is never adhered to. The time value of
money is a forgotten concept and most projects see huge cost
escalations and overruns. The cost of these misadventures is hence
borne by the exchequer or taxpayer ultimately. Without a mechanism
to afx responsibility or accountability, the result is an unplanned
product of poor quality delayed beyond expectations. That brings
me to the next question. How does the rest of the world do it?
To answer that, I would like to cite the example of the system of
engineering practice in America. The Engineering Practice Act, thatcame into being to regulate the practice of engineering and afx
responsibility and accountability has done a stellar job in ensuring
that works done in the public domain are par excellence. Under
the Act, only duly licensed persons may legally perform, or offer
to perform engineering services for the public. Furthermore, public
works must be designed and constructed under the direct supervision
of a licensed professional engineer. The terms P.E. or professional
engineer can only be used by persons who are currently licensed
and anyone who violates these parameters is subject to legal
penalties. To be eligible for a professional engineering license,
engineers must have achieved certain professional milestones. Theymust have earned an engineering education, performed certain levels
of engineering work experience, and passed specic examinations.
To keep their license current, engineers are required to complete a
certain number of continuing education credits annually.
One need not look very far back to see that we, as a people, had
the power to build monuments of uncompromising magnicence.
Whether it is the temples of Hampi, the Krishna Raja Sagar Dam
on the Kaveri or the Vidhana Soudha in Bengaluru, they stand tall
as marvels of our achievements in the eld of civil engineering.
However, the new crop leaves much to be desired. When prideis lost in the quagmire of deceit, corruption and indifference, the
rule of law has to step up. In the absence of self enforcement,
the only way to prevent degeneration of value systems is to raise
the standard in the face of mediocrity. The key however, will be
to regulate the practice without letting the evils of present day
society such as corruption override our noble intentions. For that
will only lead to a greater License Raj.
Lest this initiative fall on deaf ears, the idea has been presented
at one of Indias premier institutions with the hope of getting the
b nd h bih o ou h a nd no i in h
true spirit. Hopefully, this will someday help us restore the glory of
this halcyon nation that boasts some of the greatest engineering
marvels that mankind has ever known.
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acKGrOUND. Wh Bnhmk Pm lndng
r (BPlr o bnhmk Plr) dd no wok?
Before introducing the base rate system, banks used a rate
system called Prime Lending Rate (PLR) to set their lending
rates. The problem with this system was, banks manipulated
hi plr o o o o diound ndin o
the borrowers. It may cause loss for banks if they offer loan
with much cheaper price. The real intention of the RBI is to
make banking system much stronger after the global nancial
crisis.
The PLR was introduced in 2003 to ensure that banks publish
their lending rates based on their true cost of funds. All lending
was expected to be at or above the BPLR. This was a fair
expectation, as you cant expect a bank to lend below its cost
of funds. However, over a period of time, competition forced
many banks to do exactly the opposite.
Banks stopped adjusting the BPLR when the interest rates wentdown therefore, the BPLR lost its relevance as a rate reecting
the cost of funds for banks. And when the RBI allowed lending
bo Bplr , h bn d iin ou o o hi
on bo h plr / Bplr (o non ub-plr o ub-Bplr
loans). In fact, the loans were priced as BPLR minus 200 basis
points! (That is, 2% less than the BPLR)
Base rate system provides more transparency on setting the
rates. Each bank has some criteria to set their base rates. Base
Rate System is for the banks to set a level of minimum interest
rates charged while giving out loans. This Base Rate System
has many advantages over the older method of Prime Lending
Rate (PLR). One advantage is, in the Prime Lending Rate (PLR),
B
Editors Box
All that we all wanted to know about Base Rate System
is explained lucidly in this piece by one of the most
knowledgeable, dynamic and respected Bankers.
New Base ratesystem Of BaNks
on oud nion h
loan for lower price for
the preferred customer or
the corporate bodies and
retail customers may have
to pay more for the same
type of loans. In the base
rate system, there will not
b uh in on h
loans.
Ho, h b
system will not be applicable for the following type of loans:
Agricultural Loans
Loans given to own employees
Loans against deposit
Export Credit
Base rate system is arrived at by taking into account, the cost
of deposits and cost of keeping aside cash to meet CLR and
SLR. It is convenient for banks to adjust the lending rates after
the changes on policy rates by the RBI.
th nw B r m
Due to these limitations, a new base rate system is being
implemented from 1st July 2010. This new framework would
have two major benets:
1. Banks would be required to revise the base rate every
quarter.
2. Banks would not be allowed to lend below the base rate
Wh hppn o h ng on?
th r Bn o Indi (rBI) h in ou uidin hih
say that customers of existing loans (based on BPLR) should
be given an option to switch to the new base rate system
without any fee.
Even for banks, maintaining two systems of PLR and base
rate would be administratively difcult so you can expect
h bn o nou
you to shift to the
base rate system.
Bu h odn
- Rathnakar Hegde
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question is will the rate of interest on your loan change if you
ih?
No, it wont only the method of calculating the rate would
change. And you would get a benet immediately if the base
i id dond (b b nd o b
revised every quarter).
emp:
Lets say you have taken a oating rate home loan which is at
BPLR minus 200 basis points. (2% less than the BPLR). Right
now, the BPLR is 12%, so your loan is at 10%.
As you would have observed, if the interest rates go down,
the bank does not necessarily reduce the BPLR. So, even if
the overall interest rates go down by 0.5%, your loan would
remain at 10%. Yes, it is unfair, but thats the reality today.
When you change to the base rate system, the current rate for
your loan would remain the same. So, if the banks base rate
is say 7.5%, your loan would be marked as base rate plus
250 basis points (or, 2.5% above the base rate). So, there
would be no immediate change for you.
However and this is important what would change is how
a change in interest rate is passed on to you. Since banks
have to revise the base rate every quarter, any change in
the interest rate either downwards or upwards would be
passed on to you in a maximum of 3 months.
This is a big leap forward, considering the fact that till now;
most oating rate loan customers have only seen an upward
movement in their interest rates.
tnpn on B r sm
Another advantage of base rate system is transparency on
calculation method to arrive at the base rates. Every bank has
to declare to the public how they have calculated the base
rates. For example, SBI has calculated the base rate by taking
into account past six month deposits.
Under the new system, banks have been asked by the RBI to
ensure uniformity and transparency in calculating the base
rate, which is the oor rate for all loans.
eh bn i u i on b in ino oun
the cost of funds, possible loss incurred in complying with
the reserve requirements, administrative costs and the prot
element. The actual lending rate to the borrower will be
higher.
To the base rate will be added borrower-specic charges,
product specic operating costs, and premium on account of
credit risks and tenure.
The base rate will set the oor for interest rates on all types
of loans. There would be very few exceptions. Staff loans,
on und h dini in h, dn
against xed deposits and a few other categories will be
charged interest rates that are quite independent of the base
rate mechanism.
It is this near universal coverage coupled with the transparencyin its computation that is supposed to give the base rate system
an edge over the BPLR (Bench mark prime lending rate). Will
it deliver what the old system could not?
Knowledgeable observers have pointed that the base rate is
actually a resurrection of a system that was in vogue in the
early 1990s. The Prime Lending Rate (PLR) system was diluted
over time as many types of borrowers sought to be exempted
from its review. By 2001 it had become just a reference rate.
The rate charged by banks had very little nexus with the PLR.In fact, a large proportions of loans have till recently been
made at below PLR rates. Sub-PLR loans in India have very
i onnion ih on o h nonu h
wildly popular in the U.S. Risky lending on a massive scale to
less than credit worthy borrowers was one of the factors that
brought about the collapse of the nancial sector in the U.S.
B r h inud ho n o h ndin
that are common across all categories of borrowers. While
each bank may decide its own Base Rate, some of the criteria
h oud o ino h dinion o h B r :
1. Cost of deposits
2. Adjustment for negative carry in respect of CRR and
SLR.
3. Unallocatable overhead cost for banks such as aggregate
employee compensation relating to administrative functions
in corporate office, directors and auditors fees, legal
and premises expenses, depreciation, cost of printing
and stationery, expenses incurred on communication and
advertising, IT spending, and cost incurred towards deposit
inun
4. Prot margin.
5. Return on Net Worth
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Why do we need a base / benchmark rate as a reference?
Each bank would have a different cost for the funds in simplewords, each bank would pay different rate of interest to its
depositors. For example, State Bank of India (SBI) might pay
6% interest on a 1 year FD, whereas a cooperative bank might
pay 9% for the same tenure.
Therefore, the rate at which the banks lend the money would
also be different for different banks. But how would the public
no h h no ndin o h bn i?
This is the reason why a reference rate is required. It is a
h i did bd on h u o o und o h
bank. This is the rate based on which all loans of a bank are
supposed to be priced.
Bnk Nm B r%
STATE BANK OF INDIA 7.50
HDFC 7.25
ICICI 7.50
PUNJAB NATIONAL BANK 8.00
UNION BANK OF INDIA 8.00
CENTRAL BANK OF INDIA 8.00
AXIS BANK 7.50
ALLAHABAD BANK 8.00
ANDHRA BANK 8.25
BANK OF BARODA 8.00
BANK OF INDIA 8.00
BANK OF MAHARASHTRA 8.25
CANARA BANK 8.00
CORPORATION BANK 7.75
DENA BANK 8.25
INDIAN BANK 8.00
INDIAN OVERSEAS BANK 8.25
ORIENTAL BANK OF COMMERCE 8.00
SYNDICATE BANK 8.25
UcO BaNk 8.00
VIJAYA BANK 8.25
IDBI BaNk 8.00
Base Rates are different for different banks. The following table presents the base rates announced for some of the Leading Banks.
cuion o fin r o In
Every bank calculates their Final Rate of Interest with some
points in it. Amongst all those points Base Rate plays
Vital Role. Base rate is different for Rated & Non-Rated
organizations. The calculation is as under:
Base Rate (As per Bank) 8.00%
Add: Risk Premium 0.15
Tenor Premium 0.25
Product Cost 1.75
Final Rate of Interest 10.15%
ri piu i ud on iou in o h idorganization. It represents opportunity cost of the regulatory
capital allocated against the loan offered and expected
loss due to the risk of default. It considers of Rating of Bank,
External ratings. Incase there is any difference between the
internal and external rating, the risk premium as applicable
to internal rating only will be reckoned for arriving at the nal
rate of interest.
Tenor premium represents cost of outlay of funds for a specied
tenor. Premium is also decided by the concerned banks.
Product cost represents allocable facility handling cost incurred
at branch level.
cONclUsION:
Whether Base Rate is benecial?
Base Rate is decided by Banks. Also Base Rate is subject
to change at quarterly intervals. Also, it goes hand in hand
ih din i ri piu, tno piu nd
Product Costs. Base Rate is certainly benecial to strong
companies and for those who maintain high nancial
and credit discipline who will have the natural strength to
noi h o o booin
nd obin on b o
slightly above base rate.
Mr. Rathnakar Hegde is
the former Executive
Director of Union Bank
of India.
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evelopers, occupiers and investors are three
critical components of the ofce real estate
segment. While developers promote the property
and give it on lease, occupiers use and maintain
it, and investors fund it for maximum returns. It is important
that ofce property provide sustainable returns to occupiers, if
developers are to ensure maximum occupancy, and investors can
maximise returns. In this opinion piece, we seek to understand
what the occupier expects from ofce property.
The occupiers primary expectation from an ofce building isgood quality construction at a reasonable cost, and within the
targeted timeline. Construction quality not only means structural
safety against natural disasters, but also usage of innovative
construction materials and technologies. The building should
b iin o x nvionn ondiion, hquk,
oods and other catastrophes. Construction materials and
hnooi houd nu uu iin in k
and damages. Occupiers will wish to ensure that the building
facilitates smooth business operations at a maximum value for
money. If the building is still under construction, occupiers will
expect it to be completed and handed over on time to ensure
that their overall business plans are not affected.
D
Editors Box
Article deals with the expectations of an occupier and
investor from the Developer of a commercial building. Simple
language without jargons is the highlight of this writing.
- Akash Deep Jyoti
th bu i d i n hou d
hv hih d of
adaptability o nu h
it not only meets occupiers
un quin bu
also future needs. The
buin quin
n hn ov i
du o nn
reorganisation, personnel
hif, hn in buin
models, or the advent of technological innovation. Occupiers
will want to retain exibility to ensure alternative ways of utilising
building space. Adaptability in the building will ensure a long,
useful life for it, and maximise returns on initial investment.
The building should have high efciency in terms of space and
energy. Space efciency implies optimal utilisation of horizontal
and vertical areas. Energy efciency means optimal utilisation
of power, and maximum use of natural light and heat. It can be
achieved through adoption of bioclimatic architectural principles
responsive to the climate of the particular location, use of
construction materials with low embodied energy, incorporation
of efcient structural design and effective utilisation of renewable
energy sources to power the building. The individualised
climate controls should permit users to set their own, localised
temperature, ventilation rate, and air movement preferences.
The occupier expects the building to be intelligent and well-
integrated. It should have a superior building management system
with tightly integrated mechanical as well as electrical systems
to enable control of the buildings security, high-speed networks
creatINgsymBIOtIc
relatIONsHIps
Office real estate -
creatINgsymBIOtIc
relatIONsHIps
Office real estate -
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and power operations. It should deploy energy-saving controls
uh uoi ihin-off of ih nd i-ondiion in
vacant rooms through occupancy sensors. The security of the
building should be ensured through a card-access system and
sensor. The building should have a well-distributed, obu, nd
exible IT infrastructure, which allows technological access in
virtually the entire space.
th din o h buidin houd nu ood ih,
ventilation and natural environment. The building should
either provide a view of nature to occupants or an inner
courtyard with a view to nature. This would definitely
improve the employees concentration, efficiency and
health. The acoustics of the building must be designed
and integrated with the other architectural aspects and
furnishings of the office.
C r e d a i i s s u - O c t o b - N o v m b - d c m b - 2 0 1 065
or the rst time this year there was an
Exclusive Indian Real Estate Pavilion
by CREDAI Bengal in Banga Mela 2010
(MABA) from July 2nd - 4th, 2010 at
Sheraton Music City Hotel, Nashville, Tennessee, USA
and Banga Sammelan 2010 (NABC) from July 9th - 11th,
he Programme, Events and Fellowship
coi o creDaI Bn hd
onid n ini ion on
Implication of Service
Tax on Real Estate Industry by Ernst &
Young on Thursday, 19th August 2010
Bn cub o creDaI Bn
members.
The speakers from Ernst & Young
oo:
Mr. Bhaskar Thakkar: Associate
Dio
Mr. Amit Bhagat: Senior Manager
th diuion bou h iou
issues on Service Tax imposed by
f
t
MABA And nABC 2010(ProPerty exhiBition in U.S.A)
rePort on iMPliCAtion of ServiCe tAx onreAl eStAte indUStry
e
ve
Nt
2010 at Atlantic City, Convention Centre U.S.
CREDAI Bengal pavilion made a mark at MABA and NABC
2010 since this was also the rst time proper stalls weremade for real estate pavilion which was standing out in
h xhibiion o h udioiu
the Central Government in the current years union
budget.
th ion hd ndn nd h inion
between Ernst & Young and the members was highly
enlightening.
CredAi BengAl
C r e d a i i s s u - O c t o b - N o v m b - d c m b - 2 0 1 029
finally, the building should have high sustainability levels in
terms of environmental friendliness and ecological harmony.
Most ongoing ofce building projects in India now target
green building certication in this regard. The main objectives
of sustainable design are to avoid resource depletion of
energy, water, and materials; prevent adverse environmental
impact; and create an environment that facilitates life that is
comfortable, safe, and productive.
In other words, developers of ofce buildings need to be
receptive to occupiers needs, and strive to create buildings
that cater to the occupiers requirements. The extent to which
developers are receptive to occupiers interests, and maximise
returns for investors will be key determinants of demand and
pricing of ofce buildings.
Mr. Akash Deep Jyoti, a realty expert with 15 years
experience, is Head - Ratings, CRISIL Ltd
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indings from two recent government surveys offerglimpses into the overall urban housing scenarioin the nation, with special reference to slums.However, far more detailed city specic data isrequired if private real estate developers are to
prepare strategies to partner with local governments or non-
prot organizations to prepare projects that build homes forlower income groups. Mukta Naik throws up some ideas onif and whether this is an opportunity for developers.
What with the Adarsh Society and the housing nance scam,housing has got more than its share of print column spacethis past fortnight. What that tells us, besides the politics andscandal, is that housing gets precious little media exposureotherwise compared to the huge part housing stocks andprices play in the evaluation of economic conditions in Europeand the United States. In fact, using housing as a barometerto gauge economic growth and predict economic trends is asure sign of a mature economy.
In India, of course, the scenario is vastly different. Politically,we are not a federal system; yet states can choose to adopt,adapt and sometime ignore the policy decisions of the centralgovernment. The housing scenario is therefore very differentfrom state to state, depending on the pressure on urbancentres, the stability of the government and the buying powerof the population.
I h h i n u ho o houin in Indiurban centres (24.7 million, by government estimates) andthat the majority of this shortage lies in the economicallyweaker and low-income group sections. It is also clear that it
is impossible to address the problem of urban housing withoutmore city-specic data and a detailed assessments of needs,not only for the dwelling units per se, but about the conditionsrequired to live a decent lifeamenities like water, power,sanitation, transport, access, health facilities, education andso on and so forth. Two recent government studies shed aconsiderable amount of light in this direction.
NssO ndng
The National Sample Survey Ofce (NSSO) has recentlyreleased Report no. 535 titled Housing Condition and Amenities in India, 2008-2009 based on the householdsurveys conducted across the nation in its 65th round of data
collection. Some of the ndings pertaining to Indias urbanareas are notable in the context of housing. Particularly, theseresults give considerable insight into the quality of life offeredby Indias urban centres to the citizens.
FHOw DO we
strategIze tOprOvIDe HOmes
fOr all
Improving Urban Housing
Cover Story
fnn ndo
63% of urban householdslive on owned premisesand 30% of urbanhouhod i in hiddwellings. In fact, 5% ofubn houhod idin their employerspremises!
92% of urban householdslive in pucca structures,6% live in semi-puccastructures and 2% livein katcha structures.
Average monthly rent of rented dwellings in urban areasis Rs 1149 as opposed to Rs 590 in rural areas.
The percentage of home ownership gives an idea of thetremendous pent-up demand in urban markets. If detaileddata regarding the distribution of this data across specicii ib, i oud nb h ion o did
market studies to facilitate the housing industry.
While the construction of homes appears to be overall goodin the survey, this belies the large populations that live inslums that are largely impermanent structures highly prone tocollapse in disasters like a re, ood or earthquake. The dataseems out of sync with reality.
Hh-d ndo
Urban households have a per capita oor area of 9.45 sq m and Nearly 13% of urban households had a per capita oor
area of over 20 sq m. 6% of urban households have katcha drainage, 15% have
no din! 21% of urban households have no garbage disposal facility. 6% of urban households have no direct opening to a road 75% of urban households do not have access to drinking
water within their premises
- Mukta Naik
C r e d a i i s s u - O c t o b - N o v m b - d c m b - 2 0 1 030
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While the per capita availability of space is generous, thetruth is that the disparity between high income and low-incomehouseholds is increasing year on year. The conditions ofoodin in u nd qu n oninu oimpact the health of the citys poorest residents and its baselevel workforce.
th ondiion o din nd b oion nddrastic investments into the overall physical infrastructure of
Indias urban areas. While these have been facilitated bygovernment schemes like the Jawaharlal Nehru NationalUrban Renewal Mission (JNNURM), these upgrades and thelong-term operations and maintenance (O&M) of the citysinfrastructure require cities to invite private sector investment,participation and consequent benets.
conuon-d ndo
4% of urban households took up some form of homeimprovement/construction during the 365 days precedingthe survey.
Average cost per completed activity was Rs 58,000 inurban areas.
14% of these constructions related to a new building 25% of these were nanced from non-institutional entities,
while 15% were nanced from institutional agencies
Boh h hih o o onuion, onidin o othese were repair or improvement jobs, as well as the highpercentage of dependence on informal sources of credit arealarming. They point to the unorganised situation of creditand construction in urban India.
fndng o h um omm
Recognising that the rst hurdle in truly addressing theCommittee of Slum Statistics/Census has been set up by theMinistry of Housing and Urban Poverty Alleviation.
The report sums up the data collected by the Registrar Generalo Indi (rgI) ihin h 2001 cnu, NssO nd UN ndthen goes on to make its own estimates.
Slum population, as per the RGI, constitutes 5.1 % of thecountrys total population and 18.5% of the urban populationof India. In the 1743 cities studies, 52.4 million people livingin 10.2 million households lived in slums. However, the UNpegs Indias slum population to be about 158.42 millionpeople. NSSO reported yet another gure. The discrepancyin data is due to different denitions of slums used by all three
organisations. Some of the fallouts of the lack of data hasbeen disproportionate allocation of funds in JNNURMs sub-missions. Clearly there was a need for detailed and coherentdata using the same denition across the country and theabove-named committee was set up.
However, there is value in the fact that actual survey-based slumdata was collected in the 2001 Census. Using appropriateii hniqu nd bd on cnu nd NssOdata, the committee has come up with an estimate of slumpopulations and the projections for years ahead.
Unsurprisingly, the states of Maharashtra and Uttar Pradesh
are estimated to have the largest slum populations (18,151,071and 10,878,336 respectively) for the year 2011. Tamil Nadu(8,644,892), West Bengal (8,546,755), Andhra Pradesh(8,188,022) and Madhya Pradesh (6,393,040) follow suit.Large states like Bihar and Rajasthan with lower urbanization
rates show relatively modest slum populations.
Clearly, the factors that determine the growth of slums arevaried and complex. The next step would be to arrive at city-specic estimates that would help the planners as well as privatedevelopers interested in partnering with local governments toplan their strategies.
i h n oppoun o dop h?
At present, private sector real estate developers are focusing onthe affordable housing segment, which largely addressed theneeds of the middle class in Indian cities. The determinants ofthis type of housing is the cost of land, construction technology,materials used, density and house size and design. Withconsumers becoming savvier, developers are continuouslychallenged to be able to provide decent, aesthetically pleasinghomes at affordable prices.
However, developers are yet to en-masse conquer the lastbastion for urban housinghousing for the urban poor. Thismeans that, in an ideal situation, developers should be able topartner with the local government or non-prot organizations
in specic cities to prepare projects that provide homes thatare viable alternatives to slum dwellers.
Is this a possibility? In the current frame of thinking, probablynot. But with the pressure of meeting (or at least appearing tomeet) the Millenium Development Goals (MDGs) set down bythe UN and to which India is also a signatory, the governmentis waking up the fact that addressing the needs of the urbanpoor is a vital necessity if we are to avoid political, economicand diplomatic disaster!
C r e d a i i s s u - O c t o b - N o v m b - d c m b - 2 0 1 031
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reDaI ti Ndu hd csr Iniii
joined hands with Habitat for Humanity an
NGO concentrating on providing decent
and affordable shelter to the needy and
had offered to sponsor 300 such units at 5 lakhs eachby inviting its Members to come forward and sponsor at
least 5 units each.
fooin hi iniii nd hin bd hi
opportunity with a spirit of compassion it only seemed
betting that on the occasion of World Habitat Day on
October 4th ( as recognized as by the United Nations as
a day of reection on the basic right to adequate shelter
for all and of the worlds collective responsibility for the
uu o h od hbi ), hih d h binnin
of a week to advocate and educate the importance andh nd o odb houin ih dqu niion
o h inid, h cdi tN do ohin
noteworthy to promote the cause with the theme being
sh o
Habitat for Humanity called for a unique Partnership with
cdi tN mb in di o dd h coi
Responsibility of key Members/Stakeholders of the
Industry in creating an equitable habitat where simple,
safe and affordable shelter is made possible for approx.
315 million Indians who lack the means to a decenthome. In response to this appeal to MDs and CEOs of
our Member Organizations to participate in this drive of
a day of grass roots house building activity by working
cCredAi tAMil nAdU & hABitAt for hUMAnity
c
s
r
CredAi tAMil nAdU
To this end, the Rajiv Awas Yojana (RAY) is being rolled out andseveral other inititiaves are in the ofng. However, serious though thegovernment may be addressing this monumental task, the truth is thatthe solutions lie in empowering local governments in several ways.
fi, o onn nd o h h und o in in uhprojects. Then, they must be willing to partner with privatesector players by putting on the table the most expensiveresources, the land. Third, they must also be willing to provide
inni i duion o x nd dui nd -approvals to these priority projects. Last, and most difcult,they must be in the frame of mind that the developer is hereto do business and not as a philanthropic gesture. Therefore,the business model must also permit the developer to makeprotsin this context low prots per unit but large-scaleprojects should work.
sg o dop: Pon o pond
There are several areas that a developer organization needs tobe sure about before joining the bandwagon. Here are someindicative questions that could help think through whether thisopportunity is right for your organization.
Is this an opportunity that suits the way your organizationunion?
Can you restructure your organizations DNA to work on o in nd hih ou ?
Do you have access to the right construction and projectnn hnooi?
Are you willing to invest in the R&D required to customizethe technology for Indian conditions and more importantlyproject-specic factors?
Are you willing to invest in planning and design innovationsh uin d?
Does your organization have the human resources requiredto partner and work with government and NGOs?
Are you willing to risk a new business model?
Happy pondering!
Mukta Naik is an architect and urban planner. She heads the
planning research and advisory practice at the Institute for
Competitiveness. Her interests centre on housing, equitable
development and policy.
C r e d a i i s s u - O c t o b - N o v m b - d c m b - 2 0 1 032
alongside poor families and thus giving hope and lending
the sense of solidarity to the cause, our Members did just
that. By moving out of their comfort zone for a worthy cause
TN Members beginning with the President, Secretary and
vi pidn Nion nd oh ec mb din hway, literally donned the hard hats and worked alongside
ii buidin ho ound thiuu iin h uh
needed hope to around 300 families in that region.
The satisfaction and gratitude felt and expressed by the
villagers and inhabitants of Thiruvallur District provided
Credai TN Members with the feeling gratication that
comes out of giving back to society by way of acting
on a tangible social responsibility by demonstrating in
ion nd i i oi oin o h h
requirements of the less priviledged in the State especiallywhen juxtaposed with the booming Real Estate Industry.
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ith a stabilizing economy and upward
on in dnd, h conuion
Industry is seeing rapid and phenomenal
growth across the country. The challenge
today for the Industry is shortage of trained labour with good
skill. The challenge of achieving quality work in specied timeline
has to be addressed by the Industry on a war footing.
NSDC is a rst of its kind Public Private Partnership in India
that facilitates skill development. A large part of its efforts are
directed at skill development programmes in the unorganized
sector. NSDC acts as a catalyst in skill development by
providing viability gap funding to enterprises, companies and
organizations that provide skill training. It will also develop
appropriate models to enhance, support and coordinate
private sector initiatives.
Its the privilege of CREDAI that our Chairman Mr. Kumar
Gera, is one of the board members of NSDC. Ever since its
inception, Sri Kumar Gera has been keen that Bangalore
should play a vital role in taking forward the NSDC initiative.
And as such CREDAI Karnataka has taken the step forward
in dn o h NsDc iniii nd h bd on
the task of undertaking skill development to workers connected
with construction Industry.
The inspiration for the scheme of things is from CREDAIPune spearheaded by Mr. Ranjit Naiknavare and persistent
persuasion by our Chairman Mr. Kumar Gera.
Potentially, the target group for skill development comprises all
ho in h bou o, inudin ho nin h bou
market for the rst time (12.8 million annually), those employed
in the organized sector (26.0 million) and those working in the
unorganized sector (433 million) in 2004-05. The current capacity
of the skill development programs is 3.1 million. India has set a
target of providing skill to 500 million people by 2022.
en bo h oion o NsDc, creDaI kn hd
planned similar activity when Mr.Balakrishna Hegde was
the President and to this end an approach was made to the
gonn o kn o h on o quid nd
to house the Training Centre. Again I should place on record
my appreciation to Mr. Balakrishna Hegde for initiating the
process and also to Mr. Raj Menda and Mr. Sushil Mantri
for taking the effort forward in addressing this very essential
requirement of Construction Industry.
Given the nature of Industry - mostly unorganized with pooraffordability of the workers to pay for the training (foregoing
their daily wages) most of the development needs to be
imparted at convenient time and location. Similar efforts
wNsDc- BaNgalOre INItIatIve
are on by a few training
iniuion o on
period of time (NICMAR,
INSTRUCT etc.,) who have
n o o dn
inin in
room like situation. Since
workers skill development
nd i in, i i
imperative the training
goes to their door steps.
ao o h uu
on in o in
achieving the desired results, the economy of operation is vital.
Hence at the start of the programme, large sites with sizable
workforce involved, will be addressed. Smaller sites and few
workers needing training need to be addressed immediately
on getting the condence of start. Model of small groups will
be worked out once experience input is analyzed
Some of the related elds of training to be imparted to start
ih :
1. Masonry (all related work), Plastering and Tiling.
2. Plumbing and Sanitation.
3. Carpentry
4. Site keeping and supervision/management
5. Hands on experience to fresh graduates / diploma holders
prior to employment
The entire training programme will encompass Safety and
basic communication skills.
Since this training can be of two pronged, the just out
Engineering / Diploma graduates from Civil and connected
discipline will also be trained hands on at work situation
along with unskilled workers to take up next level of activity
which is not in the framework of NSDC but an independent
initiative to be taken up by CREDAI Karnataka. Two goals can
b hid houh hi
1- impong h wokng ondon o ng bo
ong wh nhnd n
2- tnng nd ndng h ngn o podu
mpomn
To get better result and sustainable programme, pilot projects
at few large construction sites are planned. The training needs
to be 100% at site, since the ofce interface of skilled workersis a corollary. To create stimulating situations, mobile models
i b d on h in o mobi do od on
wheels. This vehicle will be taken to different sites depending
- Suresh Hari
C r e d a i i s s u - O c t o b - N o v m b - d c m b - 2 0 1 036
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on need and situation. The training will be date specic and
cannot run for months to start with.
Inin ih oh ii oiion i i o h
successful implementation of the programme. BAI Bangalore
center at present has specic programmes to train fresh
graduates and certicates are issued under the authority of
VTU (Visweswaraya Technological University, the authority
who controls all Engineering colleges in Karnataka). These
graduates, once trained are an asset to any construction rm
who look for effective engineers who not only takes care of
technical aspects, but also the administrative part. Partnership
for the execution of project with these similar Associations will
enable greater success and reach.
We will look at advanced training once the pilot project takes
shape. CREDAI Karnataka needs to procure suitable land for
putting up such a center for class room benet and training
different disciplines of labor force.
Even though NSDC contemplates basic Skill development,
we will embark on advanced programmes once the needed
experience is achieved.
1. Grade III as Trainee Worker :- 3 months course
2. Grade II as Junior skilled worker : 6 months course
3. Grade I as Senior skilled worker: short term advance
course with greater focus for individuals already qualied or
one who has gone through skill development.
Employers of workers will be made to play a vital part in
this programme. They need to relieve workers to enable skill
development and also provide them with the wages lost. Site
support for conducting the course is a must.
Partnership with other organizations like state governments,
especially Cess Board will make the programme very effective.
th oion uiiion i on o h nin iu d
by the Board. An effective interface with them will enable part
funding of the programmes. Karnataka is one of the early States
to have initiated the Labour Cess charges and huge corpus is
available. Though Tackling Government Funding has its own
limitation, a prudent mix of funds and involvement from them
will enable more authenticity to the Programmes.
Initially CREDAI Karnataka will allot budget for the programme
as CSR initiative, but huge outow will be required once the
programme takes shape. Detailed costing will be worked
out once the various parameters are put in place. When
CREDAI Karnataka launches the full edged programmewith established center for training, etc., the rough Budgetary
Estimate of around Rs.15 crores will be tapped through
NSDC.
The programmes will be implemented through identied
agencies who have specialized teams handling similar efforts.