High-value property demand for now, is in a coma. But does Omaxe have an alternate plan to survive?

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High-value property demand for now, is in a coma. But does Omaxe have an alternate plan to survive? Ratan Lal Bhagat presents an insider tale on the whats, whens and whys...

“The going has got really tough for realty players in the current situation of the global economic downturn,” states Rohtas Goel, CMD, Omaxe Limited, voicing out the predicaments of both his company and that of his peers and competitors in the Indian Realty sector. The American financial crisis, meltdown at Wall Street coupled with the misery at NYSE & Dow Jones and chaos at Dalal Street have marred many a dream of building skyscrapers. And India was no exception. The domestic Realty sector (once considered as the driver to the impeccably zooming economy) has taken the maximum beating from the current slowdown. The cascading southward trend of the Indian realty index, which fell by a tantalising 42.98% during the past quarter, stands testimony to the aforesaid statement. The colossal erosion in stock values of all the major players has only worsened the situation and overburdened the funds desiccated realty ship, which is already reeling under the bad weather of dropping sales, high interest rates and drying up of private equity sources.

In such quagmire, Omaxe Limited, one of the major contributors to the Indian Real estate success story, like others is trying hard to battle out the odds, to survive and to grow if the sun shines for long on the once sunrise sector...

Omaxe had ventured into the Real Estate Development business in 2001 to ride and encash the-then country’s most promising sector. Till date, the bullish Omaxe has completed and delivered 11 projects – inclusive of 8 residential, 1 integrated township and 2 commercial setups – covering approximately 5.59 million sq. ft. The completion story till here sounds good. however, it is the work-in-progress where the situation looks iffy. The company currently has 54 projects – including 23 group housing projects, 16 integrated townships, 14 shopping malls and commercial complexes and 1 hotel – under development in ten states in all four zones of the country. Even Goel minces no words in explaining the danger himself, as he promptly adds, “On one hand, sales in the sector are dropping because of rising home loans, and on the other, the developers are facing a credit crunch, which is halting many promising projects.” “The demand in the real estate sector has already slackened by 30% and even though developers are offering discount up to 30%, sales are not picking up,” adds N. Wadhwa, Director, SKI Capital Limited.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Coexistence is a reality in realty! Mr. Vineet Singh, Business Head, 99acres.com

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Are the big builders and brand names easing out the small and mid-size developers?
I think both big brands and small and mid-size developers will co-exist. In many ways both serve different markets. The small builder is more local and serves a niche market. If small builders own land in the right areas they will definitely do well, as their projects will be in areas where there is a demand by the end users. In many cases small builders cater more to end-users than to investors.

Will small and mid-size developers find it difficult to survive in this credit crunch?
Yes, this may happen, especially, if the land-acquisition cost is high. Lot of small builders have been approaching big-size developers the liquidity has become tight and the cost of construction has increased by 30-35%. With the demand slackening, these small developers and their relatively tiny projects have to approach bigger players for survival. Having said that, all developers who are not heavily leveraged will survive. This offsets many risks and increases the ability of realty players to survive the slump.

Do you think, consolidation in the sector is the next wave of change or will it remain fragmented and scattered for now?
I don’t think any fundamental change will happen to the real estate sector due to this slow down per se. Though (in time) we see some movement towards a more regulated real estate sector - some changes (of course for the better) are required. These include uniform rates (based on carpet area), standardization of hidden/other charges, rating of developers, licensing/regulation of broking, et al.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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“Advertising? Naah!”

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McCann’s Sandip Mahapatra brings his own original spin to the subject. He believes that the once hallowed space reserved for all kids who didn’t fit into the mainstream job-scene has now fragmented into many pieces, each offering juicy, exciting and lucrative bites. “So the whackos don’t only have Advertising Agencies to fall back upon where their creativity is concerned. There are movies, TV channels, music channels, designing shops along with a million niche outfits catering to their creative skills, so why will they make a beeline for Adland? That special Calling Card – which involved charisma and mystique – no longer exists in its exclusive, pristine grandeur anymore,” expresses Mahapatra. He dismisses the popular contention of money being the biggest deterrent in Adbiz with, “If the business was so paranoid about it, you can bet they would damn well do something about it! It’s not about not getting good guys, but about not needing good guys!” He decodes his (shocker?) thinking for easy consumption. “The kind of importance, dependence and significance once invested in a servicing person has totally disappeared,” explains Mahapatra. Why? Because there are today specialised vendors to do jobs – previously assigned to him to oversee – that can be accessed directly with quality, speed at a lesser budget. In short, the new-age client is a different creature and so is the new-age vendor. So, what great value addition can the Ad Agency provide?

Senior ad professional, Esha Guha is thoughtful. “I wish I could really place my finger on that one critical reason… I guess it has to be a compendium of all suggested. However, a reason could be the disappearance of fun, magic and the brand of excitement which only Advertising offered. Earlier, it didn’t have computers and jargons, but had a galaxy of amazing, magical people who, brought life, colour, zing and chutzpah to a calling that was meant to be nothing more than marketing’s hand-maiden,” explains Guha. She believes that while focus, sophistication & technology have transformed the markets’ cape, with competition adding to it, somewhere “the heart has gone out of the hurrahs! Its cold, calculated and clinical atmosphere in the workplace, where emotional or creative leeway is neither required, understood or entertained. “In our time it was celebrated. No wonder, as someone brilliantly put it, the Merchants have taken over from the Magicians… Ah well, the price of progress I guess,” Guha shares. Darr gaya? C’mon guys , chill……. Darna Mana hai because DARR K AAGE JEET HAI, remember?!

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Complacency Complaints...

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Meenakshi Madhvani,
Managing Partner, Spatial Access

Complacency Complaints...

Meenakshi Madhwani of media auditing firm Spatial Access believes that more often than not if a client’s advertising agency is not delivering, the reason is ‘complacency’ on the part of agencies, who are smug in their creative confidence. She hastens to add that account reviews are sometimes the best bet to deal with this complacent behaviour. “I remember this client who was fed up with his agency taking forever to deliver good ideas and creatives. But the moment he called for an account review and a pitch, the agency pulled all stops, put its best people on the job and delivered perfect ideas,” she says, recounting her experience of a few months ago. Prem Kamath, the marketing honcho of Star India somewhat affirms the notion. Having one worked as an agency guy, with some of the best and brightest names in the business - Kamath knows exactly how the cookie crumbles. “I believe that agencies work better under pressure, knowing that if they don’t deliver, I can always go to the next agency and still get the work within my timeline,” he says. Kamath’s strategy of empaneling three agencies for his media conglomerate, stands testimony to the ‘put agencies under pressure’ strategy, which is being followed by many big advertisers of corporate India today. Advertising honchos disagree. Says Jagdeep Bakshi of JWT, “The client agency relationship is a two way process. It’s give and take. The client should give a fair chance to the agency. If it is not working even then, they should separate,” he claims, adding that the whole deal is like going to a marriage counsellor. “He will ask you why you got married in the first place. And what’s the probability that you (in this case, the client) will be satisfied with another agency?” counters Bakshi.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Ogilvy’s very own dude Sumanto Chattopadhaya, plays it cool n’ easy and prefers to look at the big picture. The Executive Creative Director [South Asia] believes that today there is truly a wide representation of the portrayal of the Indian male in ads, “sometimes a confection of the Bollywood-Hollywood stereotype with a tiny sprinkling of reality, other times how these creatures actually wish to see themselves … overall interesting observations of human behaviour.” He cites the example of a car ad in which the boss perpetually humiliating his young subordinate receives a huge ego blow, when the young man drives off in a fancy car! Then there is the cool college dude – a stereotype that keeps popping up in a plethora of ads from snack food, cold drinks, deo to jeans. The adolescent fancy (sometimes boy gets the girl and sometime goofs it) punctured or reinforced, appears to hold big-time appeal. Then of course there is the family man responsible for the well being of his family, although women are stepping into his turf with great speed and efficiency. Lastly there is the man-child who – when it comes to his health – is dependent on his wife. Remember the Saffola ad?

Everything considered, most intelligent, educated and informed ad-watchers – without baggage or agenda – will agree that today’s male-driven ads definitely enjoy a stronger connect with truth, fact and reality than before. The carefully nurtured myth of the male, perpetually in control, in charge and driving everything that matters [with the women, cooking, knitting or child-rearing in the shadows] is clearly over. In fact, recent surveys have indicated that men detest being stereotyped as “shallow himbos wanting to go solo and jump from one girl to another.” The survey reveals some startling, seminal facts … 77% look for girls who are potential wives. 75% believe in soul-mates and admit crying when dumped by their girl. 69% promise they would never cheat. 57% enjoy cooking at home and [most importantly] 56% believed that being a good father or husband made them feel manly!

Wow! We say Amen to that…

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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IIPM Programme :- SUPERIOR COURSE CONTENTS
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Why Study Abroad When IIPM Gives You 3 global Advantages!
IIPM Ranked No. 1 B-School In Global Exposre - Zee...