Andhadhun – A Tale of Nine Twists


First of all, the spoiler alert! This is not a conventional well-meaning, nice-hearted review. If you have not seen Andhadhun so far, let me declare that I am going to analyse the story below, revealing the “suspense”. Hence, please skip if you are planning to watch the movie. For people who have seen the movie, read on, and count with me the number of Twists in the Tale…and the last one in the bushy tail…

The movie had nine twists, when my wife and I counted them last…twists were normally accompanied with a collective “aaahhh” or “ohhhh” from the theatre crowd (at one point, “Oh shucks” too)…

· Twist One…When you have almost started commiserating with the happy-go-lucky blind musician, Ayushman Khurana, and revelling in his peace, and he reaches home and takes out his grey lenses and “sees normally” …what the…? Why…?

· Twist Two…Dead body No. 1 while playing piano in front of Tabu…will AK be able to control his reaction ? Love his calm stamping in the pool of blood while going to the bathroom.

· Twist Three…Man in vests and with a gun inside the bathroom in Tabu’s home…seriously ? As if the Body outside was not enough…2 twist sin 2 minutes…auricle and ventricle both gone…

· Twist Four…Sitting in police station and starting off with an attempt to complain about a murder…and out walks the Man in vests but now wearing a senior police inspector’s uniform…screwed!

· Twist Five…Murder No. 2 “witnessed” by the blind man…it’s raining bodies!!

· Twist Six…Tabu whips out her gun to shoot AK in his home after realising he is not blind, but AK realises that she has poisoned him with the laddoo – don’t tell me this is one of those films in which the hero kicks the bucket mid-film and then Ms Netflix will take over…

· Twist Seven…AK lives – poison doesn’t seem lethal…but…he is blind now…really…True Hate makes Blind…

· Twist Eight…The Doctor, Murali and Lottery Woman turn out to be scavengers of body parts…aankh bi gaya…kidney bhi jaayega…yeh to art film hai yaar!!

· Twist Nine…Tabu forgives AK because of him being nice at heart as he had asked the Doctor to forgive Tabu…but then changes her mind…and turns the car around to run AK down…the b****h

· Twist Ten…The flying rabbit…however cruel I am, I shall leave this one for you to see for yourself (for those funny people who have not seen the movie but have read this post till here)…

Andhadhund in Hindi BTW means “relentless barrage” or “fast set of movements”…Andadhun is of course a cheeky play on “Blind Man” + a “Tune” symbolising the music he played.

Why does AK keep on pretending to be blind in Europe too ? Well, am guessing that he is a complete whacko, a crack-pot, a loco…pretending to be blind for the sake of enhancing his music skills …after all these enhancements, bugger is still singing in shady clubs and bars there too…

How did he get his eye-sight back is not important…mostly the effect of the poison wore off…or Dani helps him with his eye operation in Europe.

The Vesty Inspector of course is rescued from the elevator in the under-construction building because his wife knows the address to where he is going to kill the ransom-seekers. When they hear about Tabu’s accidental death, they decide to shut up about everything and go on with their lives…taking a chance that AK will not return to Pune…but full life, he will keep an eye out for the blind.

Chhotu should have not got a smartphone at this age, no? He has to take care of Rani, the cat after that…which has nine lives…

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Snapshot of the world in the last 70 years…and last 4-5 years

“Factfulness” by Hans “Rosy”ling (intentional J) is a breath-taking piece of analysis, of how the world is becoming a better place if viewed over the past 70 odd years, roughly, post World War II. He takes great pains to take one indicator after another – affluence, falling mortality rate, child deaths, longevity – and goes on to construct the rosy picture that we are much better off than what we were in the 1950s.

The analysis does not cover the events of the current decade (2010 onwards perhaps) when the above indicators would have further improved. However, the increasing animosity among people, reduced tolerance and increased parochialism are clearly evident to any one even on social media, and one does not have to be a sociologist, historian or an anthropologist to decipher that. In this aspect, the world is increasingly becoming a tough place to live in, especially for some segments of people.

Some of the reasons for this trend could be :

  • Post the Great Economic Crisis of 2008, while too-big-to-fail banks were bailed out and economies & markets were revived, they proved to be nothing more than steroid-induced revivals. The growth was not all-encompassing and many developed countries for the first time saw huge segments of people becoming poorer over the past 10 years. In democracies where everyone has a voice, these segments gravitated towards right-wing parties which pointed out to a convenient enemy, which had kept these people poor – migrants! Migrants were taking their jobs and hence people were getting poorer. Hatred is the most infectious sentiment, and can be easily bred like mosquitoes on stagnant water. The Nazi movement in Germany in the 1930s and 1940s, or recently the Brexit or most infamously Trump’s victory in the United States are testimony to the ease of spread of hatred by identifying a specific physical community.
  • The Islamic terror movements of Al Qaeeda and later on the ISIS did not help the cause of migrants across the globe. Islamic migrants started getting viewed with suspicion in asylum-granting countries, and were easy to target again by the hate-mongers. In some countries, this may have spread to their own Islamic citizens too, leave alone migrants, and perhaps the precariously balanced multi-religious social order of the past 500 years may have got disturbed.
  • Out of the 70,000 years after the Cognitive Revolution (thanks Noal Yuva Harari), it’s only in the past 100-150 years that man has stopped chopping heads with swords riding on a horse, 0.2% of their entire history. Thus, the veneer of civilisation of human beings is still pretty thin. Social media has brought out the internal bottled-up vitriol out in the open, and catalysed the recently growing hatred across the globe. People had ostensibly got restrained in the past 100 years with face-to-face conversations, debates and other such civilised outcomes of a democratic society. But now, the acid and bile has come out gushing in torrents once you can hide behind the anonymity of a Twitter handle, and wonder of wonders, when you are allowed to curse and abuse celebrities and political leaders in 121 replies. It’s like the walls of dams long restrained have been opened and people are breathing sighs of relief while cursing and muttering under the breath and into the mobile.

 In a Blog site named Rational Exuberance, I cannot end this piece on a pessimistic note J. I think that people will get bored of all this hatred and venom over the next couple of decades. Jaundice and cancer of the mind are bad diseases to harbour for a long period of time, and larger swathes of people will realise the negative impact from these sentiments on our own health. People may gravitate towards inane films, sports, books once again and hopefully, that will be the next revolution of mankind!

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Have RERA, Will Prosper…

This article of mine first appeared in Financial Express, Aug 2018

Close watchers of the Real Estate Industry in India have been prophesying for some time that the Real Estate (Regulation and Development) Act (RERA) implemented in May 2017 will be a game-changer in an Industry, which has been plagued with a deep sense of mistrust for the past four-five years. A mistrust which precipitated the fall in sales of homes from a high of half a million per year in 2013 to half that number in 2017. This mistrust emanated from a significant section of the Developer community building huge supplies, not keeping their promises, delaying project construction and in many cases taking the consumers for a ride. When an entire consumer community votes with their feet, it takes an Industry 5-10 years to recuperate.

And help to resolve that problem had come from unexpected quarters. Thanks to the Government’s twin intervention of Demonetisation and RERA, the Industry got the jolt it deserved. Cash transactions vanished after Demonetisation. RERA brought in clauses to protect consumer interests, to prevent developers from using monies fungibly, to ensure consumers got what they had been promised. The Supreme Court played in tandem, turning out to become the protector of the masses, and dealt severe judgments against some errant developers.

Some Industry specialists had forecast such a positive scenario, based on their collective knowledge from the impact regulatory bodies had brought about in other sectors – TRAI (Telecom Regulatory Authority of India) in Mobile Telecoms, IRDA (Insurance Regulation and Development Authority) in Insurance and to some extent, the tough SEBI (Securities & Exchange Board of India) in stock markets and mutual funds. In each case, the new regulation took three-four years to stabilise, had to go through two-three versions to finally find its feet and its teeth, but ultimately ended up in exploding the sector with a decade long growth of 15-20% CAGR. Also, in each of these sectors, larger professional corporates entered after regulation, foreign players – waiting and watching for decades – entered the country, existing players failing to smell the coffee vanished, and the Industry consolidated for the better.

So let’s see what has happened in the Indian residential real estate since May 2017. The bad news first – only few states have seriously started implementing the clauses and spirit of RERA. Maharashtra is head and shoulders above all other states in the discipline and diligence of implementation of RERA. The next three-four states have tried to take a leaf out of Maharashtra’s book, and are now trying to catch up. Leaving these five, it is sad to note that other states are still trying to get their acts together, and if this continues for longer, people will start suspecting the intent rather than commiserating with the complexity of implementation.

Let’s double-click further to see how the market is evolving. Referring to the latest Realty Decoded Report from (Apr-June 2018), there are two cities of India, which together are now contributing to 51% of all sales of new homes across India. No points for guessing which are these two cities – Mumbai and Pune! This number was around 39-40% till a year back! And go ahead and please guess as to when did these two cities start breaking away from the pack? Right again – mid of 2017, after RERA got implemented.

If this won’t convince the nay-sayers, then I am not sure what will? The simple cycle is that RERA gets implemented under a strong and strict RERA authority, Developers start playing by the rule and spirit and start falling in line, consumers start believing the promises made on the Product, start feeling genuinely protected, and start coming back to the market. The beauty of the residential real estate product is that there indeed is a genuine demand for homes to live in, and especially in a developing and fast-growing country like India where each year, tens of millions of people are moving from lower class to middle class. We just need to do enough not to scare off this real demand into sitting on the fence or starting to rent rather than buy.

The Investor community, which follows the base User demand, will return once end-users start returning. So just turning poetic for a moment, “actual RERA will get actual Residents, and actual Residents in turn will get actual Returns”. To add to the impending Goldilocks situation, stocks have already done their bit in the past 2 years, and should take their cyclical break, possibly giving real estate a chance to enter the asset allocation of Investors.

Predicting from the other States following in the footsteps of Maharashtra RERA, Bengaluru and Ahmedabad should see revival of business soon. Hyderabad is seeing a resurgence of demand post resolution of the Telangana issue, and hopefully, the RERA their keeps on strengthening; Else they may end up committing the cardinal sin – running fast, but in the wrong direction!

Like the Gayatri Mantra says, “May thou guide our intellect in the right direction”, let’s hope market participants notice the direction in which the winds are blowing, implement RERA sincerely, align with customers, and see the best years of Real Estate come back!


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The Most Valuable Companies in the world

This is an in-your-face rudimentary piece, analysing the companies with highest market capitalization in the world. The “analysis” is limited to tracking of the market cap Top 10 over the last 3-4 years as well as some juxtaposition with Fortune 100 List (by revenues).

Super 7 : OK…so as many of you would be aware of, there has been a change in the world order of most valuable companies in the past 2-3 years. The Super 7 “Consumer Internet/Tech companies” (FAGAM – Facebook, Amazon, Google, Apple, Microsoft and the Chinese entrants – Alibaba and Tencent) have been in the Top 10 for the past 2 completed quarters – CY2017 Q1 and Q2!! We loosely club Apple and Microsoft also in this group, given their stratospheric growths following the explosion of Internet penetration through smartphones and browsers. Barring Microsoft and Apple, all 5 companies would not have been around 25 years back!

Top 3 : Of the 7, the old two – Apple and Microsoft have been in the Top 10 for the past 27 quarters at least (I have data since 2011). Google (name changed to Alphabet in Q42015) joined them in Q2,2013 and hence has been in the List for the past 18 quarters flat. For the last 9 quarters, these 3 companies have been in Top 3 of the List, and in the order of Apple, Alphabet and Microsoft!! Google overtook Microsoft in Q3, 2015 and has stayed at No. 2 ever since!

The latest completed quarter – Q3, 2017 had the following rankings :

  1. Apple
  2. Alphabet
  3. Microsoft
  4. Amazon
  5. Berkshire Hathaway
  6. Alibaba
  7. Tencent
  8. Facebook
  9. Exxon Mobile
  10. Johnson & Johnson

Old world companies : Berkshire, Exxon and J&J form the minority in the Top 10 from “old world” companies. Let’s see how the top order looked like in the past few years…going back to the 4th  quarters of the past few years…in Q4,2016, the other old world companies in Top 10 besides these 3 were JP Morgan Chase, GE (remember?), Wells Fargo (Amazon was the 4th Internet company in the List). This Top 10 List was identical a year back in Q4,2015. In Q4,2014, Petro-China and ICBC figured instead of GE and JP Morgan Chase in 2015. Walmart was there instead of Amazon (poetic justice J).

Hope the above gives a flavor of the biggies of the old world, which had ruled this List for a few decades, and how swiftly the order has changed in the past 2-3 years!!

Market cap vs Revenue : Just as an academic exercise, we juxtaposed the above List with the Fortune 100 List based on revenues. Walmart is the biggest company in revenue, followed by three Chinese Govt companies, followed by Toyota, Volkswagen, Royal Dutch Shell.

In the Top 10 of this List, we find three of our old “valuable” friends – Berkshire at No. 8, Apple at No. 9 and Exxon at No. 10. None of our other 7 in Top Market Cap companies figure even in the Top 20 of Fortune List. Amazon is the next one to come 26th!!

So, obviously, there’s a current disconnect between revenues and market capitalization. People are betting the currently higher-valued companies are going to grow much faster than the currently higher-revenue companies, for a long, long time. At some point of time of course, profits or profitability of these valuable companies need to start shooting past the current Goliaths of revenue!

Amazon has done to Walmart what Walmart did to other retail stores 30-40 years back. Microsoft has out-paced Intel and IBM and Dell. History of Top 10 has been very colourful. Super 7 cannot take their seats for granted. Having said that, the avg market cap of top 6 Internet companies is 625bn USD vs 350bn for the top 4 old world companies. Some feel that the gap is too big to be bridged easily and soon. But then history has been a cruel teacher…

(As we publish this blog based on Sep 30 rankings, I see that Oct 31st ranking has seen Alibaba overtake Berkshire!!).

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Re-building Indian Realty…step-by-step

This article of mine first appeared in Mint, Nov 2017

The Minister of State for Housing and Urban Affairs, Mr Hardeep Singh Puri tore into the real estate sector this week citing that the “biggest fall-outs affecting the long-term growth of the real estate sector came from project delays, diversion of funds by builders, one-sided builder-buyer agreements, unfulfilled promises and lack of finances”. The intermediate step between the above factors and the Industry not doing well was the current state of crisis of confidence on the part of consumers stemming from possibly, the same factors that the Minister alluded to. Members of the Real Estate Industry can no longer sweep these reasons under the rug, since these have become big enough to threaten the viability of the sector itself, or at least a part of the sector.

So, what should the different players – Real Estate Developers, Government, Intermediaries (Brokers), Online portals and You, the Consumer – do differently, for this Sector to do well in the long term? “Doing well” does not only mean that people start buying more homes than today and prices start rising. Doing well would encompass a deep correction of practices and building up of a long-term confidence in consumers.

Government : This is the only entity in the entire eco-system which seems to have taken the bull by its horns and done the most progress in the past one year. Starting from DeMonetization to establishing the RERA to launching a slew of measures enabling affordable homes, the Central Government has indeed walked the talk in its contribution to repair the malaise. However, the Govt should have introspected that cash has come into this sector not because the Developers want it or because the consumers want it, but this has come largely  from a historical demand of cash from the local authorities giving approvals for Projects. The maze of up to 50 approvals needed for every Project encourages this rent-seeking behavior, in turn encouraging mediocre Industry participants, and finally discouraging clean business houses from entering this Sector. State-wise variations in construction norms, occupancy certificates, joint development rules again discourage from large national players emerging in India. Since relationship with local authorities is sadly a critical success factor, we see most of the Developer companies expanding to 2-3 cities at the maximum. A true stream-lining and standardization of these on-the-ground processes and policies at state level and local municipal level will take this sector ahead by 10-20 years! Automating and making online all these processes is the only way forward. This will get a huge pushback from the ground in various states and various local bodies. But no Central Government has been as strong and as determined as the current one to make this happen and thereby, create the roadmap for a 25-year bull-run in real estate!

Real Estate Developers : The main protagonists in this Sector need to heed the lessons from other sectors which got regulation forced down their throats because of the excesses being committed in the sector (remember, Life Insurance?). No self-respecting entrepreneur wants to hear what the Minister of Housing has said last week about the Sector and in effect, about the players in this sector. In all other industries, Consumer is the king; what is good for the consumer is good for the business. Real estate sector is not being run on Mars! The same rules of business and long-term prudence should apply here too.

We need to fight on the basis of superior construction, smooth deliveries, after-sales service, great brands, and finally, superior & predictable returns to the Investors. In the process, we would have to engage with the Central Government on ways to solve our predicament of local approval policies. The great news is that there are quite a few real estate companies in India which are trying to run their businesses on sound business principles. It is the longer tail of companies which is trying to win through short-cuts, and these should be reined in urgently. RERA has fired the first salvo; if the local approval processes are cleaned up, many of these smaller companies would lose their dubious competitive advantage on their own and fall by the wayside. Till then, the prudent companies need to continue to walk the talk, supported by RERA, and grab share through robust business strategy and excellence in execution.

Brokers and Online portals : Brokers have a duty to be on the side of the consumer and to explain pros & cons of the deal. Most of the brokers in India are local brokers and continue to live in the same locality as the consumers do, after the deal is done. So no broker wants to lie to the consumer or pull a fast one, since he is going to meet the consumer daily in real life, after that. Still, the broker community has a bad name in the market, and should take pains to work on that. Possibly, it is the proverbial rotten apples who are spoiling the perception of the lot in the market. In any case, now that all Brokers have got registered under RERA, they should understand the implications of the same, and try to play by the rules.

We need to win business through hard work, more options shown, understanding clearly the needs of the consumers, and acting on behalf of the consumers. There is of course revenue pressure and the kitchen fire to be kept warm, but abiding by the above principles will also bring in more wealth in the long run.

Online portals have done a good job so far in de-mystifying the Real Estate market and making the “discovery” process for the consumers much easier. They need to continue to work to improve the quality of listings by verifying the listings more, and thereby giving the consumers a what-you-see-is-what-you-get experience.

Mr & Ms. Consumer : You have got the Central Government, the big daddy, looking out after you now, protecting you with the RERA clauses. Your money will be used in the Project you have bought into, you will get what you saw in the marketing brochures, no changes will be made in the Project Plan till 50% of your Building mates agree to that, you will get a penal interest if your Project is delayed.  You need to start walking with a swagger, be more confident and assertive of your rights. You need to be more aware of what you are buying, the agreement you are signing, the long-term investment prospects, the best loans available. You need to help the Industry by selecting the right developer by looking at track records in construction, delays, quality and very importantly, in delivering-what-they-promised. The good Developers need your support in out-shining the rest, and in building a great Industry. This may be the largest investment decision you make – you owe a responsibility to your family that you have really thought through this.

Finally, you should stop thinking that your real estate investment is going to give you 50% p.a. returns. As our country’s economy matures and sectors develop, equity and real estate should continue to give you Fixed Deposit + 7-10% returns p.a.. There is no reason why any investment will give you super-normal returns, going forward. In fact, you should run away from anyone promising you >20% returns in any asset class.

Whew! That’s a long list of to-dos for all the constituents of the Real Estate market, for the sector to start doing great. However, the die has been cast and many of the above moves have  begun already. The India Real Estate juggernaut is all set to roll. The next two decades might well be remembered as the golden era of Indian Real Estate! But we all have work to do before that!

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Making sense of recent trends in Indian Real Estate

This article of mine first appeared in Moneycontrol Nov 2017

This is a factual article, with no forecasts or outlook of the market, but helping in understanding more the actual trends in Indian Real Estate sector in the past two quarters (Apr-June 2017 and Jul-Sep 2017).

New homes launched

As per the PropTiger-Housing Data Labs report of Q2FY18 (Jul-Sep 2017), Developers had launched Projects with an average of 46,000 homes (units) in each of the four quarters of FY17 (Apr 2016-March 2017). Thus, about 180,000 homes were launched that year. Launch means announcing the commencement of sale of a Project, with proper Plan of the building etc..  60% of these Units were launched in Pune, Bangalore and Mumbai, almost equally between these three cities.


Number of new units launched fell from the above average of 46,000 to 29,000 in Apr-Jun quarter of 2017, and further to 22,000 in Jul-Sep 2017! Of this 22,000, 14k came from Mumbai + Pune – a whopping 63%! This matches with the fact that of all the states in India, Maharashtra has been the first one to get its act together on RERA. They stuck to the May 1-Jul 31 “settling down” period, and have taken actions accordingly. That 63% of new launches in India have come in Mumbai and Pune clearly shows that RERA having stabilized in Maharashtra, Developers have got back to work there.

Other states still seem to not have got their complete act together on RERA. The reasons for dragging their feet could be different. The most uncharitable explanation being given is the strong nexus between local government and builders. At best, we could blame the delay on execution sluggishness. There is a significant risk that this unstable environment will continue in such States for a few more quarters, and we can see number of launches subdued in these states.

It remains to be seen that after RERA stabilizes, will number of launches go back to the 46,000 units quarterly level again ? Or will the RERA clause of setting aside 70% of the Project funds in an ESCROW account be a slight deterrent and Launches may not go back to the original level immediately ?

Homes purchased

Let’s look at Sales now. How many units were actually bought by people in the above time periods ? Again, going to the Data Labs data, we had seen that people purchased an average of 51,000 units per quarter in each of the four quarters of FY17 (Apr 2016-March 2017). Thus, about 200,000 units were sold in that entire Year. Again, not surprisingly, 60% of these units were sold equally between the three cities of Bangalore, Pune and Mumbai. This fact has to be seen in the perspective that just 3-4 years back, in FY13 and FY14, 40-50% of homes sold were in Delhi NCR! So, the Indian real estate sector has seen a composition mix change in the past 3-4 years, something which some Analysts have glossed over. Further, Bangalore and Pune had no business being equal to Mumbai in sales, since Mumbai is about 3 times Bangalore and 5 times Pune in commercial size and strength. This hence showed the relatively poor performance of Mumbai, an over-priced market. Bangalore and Pune continued to gain from the inward migration of graduates following the employment generation in IT sector. Bangalore also stole a march by cornering most of the Internet start-up jobs. New homes clearly follow jobs. Mumbai managed to salvage some pride with some growth of late in the BFSI sector.

Let’s see now as to what happened in the past two quarters in sales. Apr-Jun 2017 saw 53,000 units being sold, just above the average of FY17, despite a crunching fall of new units launched from 46,000 to 29,000 as described above. This is because the proportion of new launches in sales has been falling progressively over the past two years, from a high of 40% 2 years back to 20% now. Hence, the impact on sales was not immediate. Sales however fell in Q2 (Jul-Sep 2017) to 45,000. The double impact of low launches in Q1 and Q2 should be felt on sales in coming quarters.

Sales have fallen to 45k, again 43% coming from Mumbai+Pune. But this is not too different from past, when top 3 cities used to give 60% of sales – it’s 59% even now. Hence, looks like consumer psyche has not changed too much because of RERA (which makes sense – if anything, sales should increase because of RERA protection). However, the 18% across-the-board fall in sales has possibly come because of confusion in GST on property prices, and that’s a national phenomenon.

Three Key segments

Let’s now take a quick look at data on everyone’s favourite – the affordable segment! While there is much brouhaha of late about Affordable houses selling more, houses priced below Rs 50 lakh were selling 56% of total throughout FY15 (Apr 14-Mar 15), fell to 52% in FY16 and remained at that level in FY17 (except Q4FY17 when it shot to 58%), and has been in 52-54% range in FY18 also. So this segment has been fairly constant in the past few years!

A further bigger insight from the above is that majority of this segment sale is in the Rs 25-50 lakh segment and not in the <Rs 25 lakh segment. In fact, the <Rs 25 lakh REAL AFFORDABLE HOUSES have been in the 17-19% range of total sales for the past 3 years, having inched to 18-20% now. The Rs 25-50 lakh segment saw 35% of all sales happening in that segment. So, it is some time before the Government’s dream of true affordable houses really takes off well.

Let’s round this piece up with a look at sales in the Under-construction vs Ready-to-move in (RTMI) Units. 16-17% of the total sales done were in the RTMI segment, rest being under-construction sales. While RTMI units sold in the Market have increased from 10k per HY to 20k over last 2.5 years, in absolute terms, they are still 16-17% of the total primary units sold.

So all in all, the Indian residential real estate market is poised at an interesting juncture. Even as we speak, the festive season has been largely disappointing. Industry insiders would be well-advised to look at the trends within trends and shape their plans accordingly not to get disappointed in the medium run.

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Online home buying in India – where have we reached ?

This article of mine first appeared in MoneyControl Sep 2017

The commercial Internet has been around for more than 20 years in India now, and the smartphone for about 10 years. This potent combination has resulted in this century being what I call the Internet-Smartphone Century. This combination has driven many of our daily purchases “online” or mostly “on-mobile”. It started with books, flowers, then mobile phones, other electronics, apparel, and of late, furniture and grocery! This piece explores the status of buying homes online, and if we have achieved any sort of scale on this front.

The short answer to the above question is “yes, indeed there has been good amount of progress”. Most of the online real estate companies in India (and for that matter in the world) so far are classifieds platforms, where the buyer looks for apartment choices and in most cases connects with the broker who’s advertising that apartment. Then the process moves off-line with that broker showing that apartment and in most cases, a bunch of more apartments. Hence, many online sites in India today are more a “broker-finding” site rather than “apartment-finding” site. And which is perfectly fine – as long as the consumer problem of finding an apartment is getting solved.

However, out of the two problems of real estate buying, viz Adequate choice and genuine apartments, both are partly being addressed, with the process moving to the age-old broker-led process very soon. Only select portals have been able to hold on to the quality of listings (apartments) by verifying as many as possible. And the choice of apartments swiftly moves to getting relegated to the choice that your selected broker has.

In any case, one would not have imagined a huge number of apartments being purchased completely online like e-commerce goods on flipkart and amazon. Many of the customers (whether in India or in other countries) would like to make a visit to the apartment or the land on which the building is going to come up – to get a first-hand view of the location, locality and approach.

However, the positive progress that has happened on this front is that the real estate portals have increasingly started giving as much information as possible online, and have thus, increased the percentage of decision-making online, thereby reducing the offline part of the decision-making. This has resulted in narrowing the short-list online, not making unnecessary site visits.

Who is online buying more suited for? Online buying is more suited for NRIs, Cross-city domestic Investors and time-strapped white-collar executives – essentially, consumers who do not have the time to do a site visit (or multiple visits, as is the normal case), and most probably who are buying as an investment rather than for end-use. I myself bought a 2-BHK apartment as an investment from a reputed developer largely by looking at their plans on paper, and seeing the location on Google maps. The site was a piece of land, whose shape would anyways, be completely changed by the Developer who is building 10 towers there.

Another factoid that we have observed is that many online buyers from the categories above prefer well-established Developer brands to buy their apartments from – a brand which they can trust on delivery, on quality of Projects and on not taking the consumers for a ride.

What should online real estate sites provide ?

From the home-seekers’ perspective, one would like to have the following information, as a dream buyer’s list, for one to be able to take the decision of buying online :

  • Location of the site on Google Maps; distances and path from 2-3 key places in the city
  • Actual videos or walk-throughs put up of the site on which my building is to be developed – multiple videos, comprehensively, showing :
    • neighbouring plots of land and buildings on them
    • possible buildings which may come up on neighbouring plots of land
    • approach to the proposed tower
    • walk-through tour of sample flat if available
    • proposed security arrangements
  • 3D walk-through views of the Project, towers, amenities; walk-throughs of the proposed apartment
  • Price trends in the locality, for the past 4-5 years; estimated price appreciation possible and why; need to see potential IT parks, office hubs, growth hubs on a map or an animated video
  • Prices of neighbouring projects
  • Short 4-5 line note on why is the price of the selected project a good deal
  • Map of site, along with schools, colleges, restaurants, malls, places of worship (based on religion of the customer) plotted in 10-min, 20-min, 30-min walking radius
  • 8-10 lines on why this Builder is a good Builder : completed number of buildings, apartments
  • Approval of Banks to the Project for Home Loans and a description of the Due Diligence they have done
  • Names of Lenders / PE Investors in the Developer HoldCo or in the Project SPV and their background, and their Investment thesis behind making their investment.

If I get the above information online, I am definitely going to be more inclined to hit the “pay now” button for the apartment. Will you ?

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M&As in Indian Businesses – Looking at the Key Imperatives…

This article first appeared in the print edition of the magazine “People Matters” – Oct 2017

The Indian economy and businesses have seen a high-growth phase almost ever since this new millennium began, more so after 2003. This phase has even survived the 2008-9 Global Economic Crisis without too many scars to show for it. This piece will focus on the Imperatives behind M&As in Indian businesses and post-merger impact in different cases.

Two key imperatives for NEW businesses in fast-moving economies are completing their business models and acquiring scale, i.e., grabbing market share – both to be done as little time as possible. This is necessitated so that such companies can either build a sustainable competitive advantage, often referred to as a Strategic Moat in new start-up parlance, or become the 800-pound gorilla in a winner-keeps-all market. Helping them in this quest are venture capitalists and strategic investors, by funding them for the above pursuits. And the quickest way to do all the above three imperatives is to go on the inorganic route, i.e., to acquire or merge with other companies.

Let’s look at each of these two imperatives, with sub-components and with some examples if possible.

Completing the Business Model : Many of the M&As (mergers or acquisitions) have been done to acquire some line of business, which would complete the portfolio of sub-businesses that a strong company should have in that space. This may not necessarily be a diversification as the case used to be in older times, but could rather be acquiring a new product vertical or geography or even a customer segment.

New product lines or customer segments – Flipkart’s acquisition of Myntra, Amazon’s of Whole Foods or merger of PropTiger and Housing are all examples of this objective for the M&A.

Flipkart made a quick entry into the apparel product market, Amazon did a business model augmentation with an online-offline combination, and PropTiger also completed their stable-state business model with the merger, becoming the only integrated online-to-offline real estate company in India.

Other examples are Facebook’s acquisition of Whatsapp, Axis Bank acquiring Freecharge, Microsoft acquiring Skype.

New geographies – To enter new countries, Zomato acquired (and later on shut down some of them) food tech companies in Europe and the USA. Long back, Airtel had acquired the businesses of Hexacom in Rajasthan and earlier those of Jasmin-Telia in Karnataka and AP to enter into these geographies. Of course, sometimes there is a nuance of regulation forcing companies to do such types of acquisitions (like in Airtel’s case, licences were given state-wise and these M&As were more to get those licences).

Acquiring scale : Some M&As are done not to enter into a new product or new customer segment or new geography. But these are done to quickly acquire scale in their mainstream business, and thus acquire leadership position and deter newer players from entering or become a favoured destination of funding. With the Consumer Internet paradigm of one or two players finally surviving in each sub-sector, VC funds also take up bets quickly in each market and each sub-sector on which 2-3 players to double up their funding on. If you are a late entrant into a sector, you need to quickly acquire some businesses and build scale to become one of these favoured companies. Ola’s acquisition of Taxi-for-sure, or Quikr Homes’ acquisition of CommonFloor are examples of this type of imperative.

Examples from “old-economy” sectors are Vodafone-Idea merger to fight challenges thrown by Jio (and Airtel), HDFC Bank’s acquisition of Times Bank, Centurion Bank, and Birla Cement business growing through acquiring multiple smaller cement companies.

Let’s look a bit at the post-merger situation in the two types of imperatives above. In most of the cases where the Business Model gets completed, the mergers hardly produce too many ripples since most of the components are symbiotic and non-overlapping. Some top management layers may leave in some time as they become Vertical Heads in a bigger company from the business heads earlier. Some overlaps may happen in some central functions like Human Resources, Finance, Marketing. However, in cases where the M&A has happened to acquire scale, especially in the same geographical regions, then there are instances when there is overlap in the Line functions also like sales and local marketing. These are the times when there could be some higher redundancies, especially in team manager and area head levels in sales teams. Redundancies in staff functions also will be higher since these M&As are not to acquire a skill-set or capability, bit more for scale which is more relevant at frontline levels.

The Indian economy is poised at an interesting juncture. If we are able to grow at 8-10% for the next 20 years, there will be too many businesses having to move faster, funded by foreign funds. And too many cases of having to acquire or merge with another company to move faster than the economy and grab a place under the sun. As long as we remember the main objective behind the M&A, and execute with that in mind, there are chances we will have a successful M&A.

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Things you must check before buying a house

 This article of mine first appeared in MoneyControl in Aug 2017

Since there are multiple check-lists floating around the Internet on buying an apartment in India, this piece will cover some of the essential points out of those, and dwell on the more practicable and real ones among those.

First thing first, hire a Lawyer, paying him Rs 5,000 to Rs 10,000 to go through all documents on the land and the property – mostly, you won’t be able to understand those completely by yourself – Title Deed, Land Use, Approvals from Municipal Corporation, Occupational Certificate, 7-12 paper (Maharashtra). In case of resale, this will cover receipts of Property Tax paid and Loan Release document from Bank in case of fully paid up loans on the property.

Estimate the Total Cost of Ownership, adding Parking charges, Stamp Duty, Registration charges, new furniture / furnishings that you may have to purchase. These all could contribute themselves to 5-20% of the bare cost of the apartment.

What is the final usable area of the apartment, especially in case of apartments under construction? Most of the times, the sale would be on super-built up area. You need to be comfortable with the liveable area you will finally get to use.

Estimate total cost of running the home? This will include Maintenance charges, Property Tax, increased commuting charges as compared to your present place. Please ensure that this fits in your monthly Budget.

Check whether most of the other occupants in the building are like-minded and in the similar age group. If the residents are not like-minded, conflicts emerge eventually over how to maintain the building, adjusting on parking spaces, whether pet animals are allowed in the elevator. I would avoid staying in buildings with a mix of 1BHK, 2BHK, 3BHK apartments – different budgets and income levels of occupants – will cause grief in the long run.

If you are buying the apartment as an investment, think through the profile of your typical tenant and whether the location of your apartment is good enough for such a  tenant. If it is a commuting couple, is the apartment close to the railway station? Is there a parking space? Will they require two parking slots?

Speak with the building watchman or the watchman of the neighbouring building in case your building is under construction to find out the situation of water supply, electricity supply, availability of domestic help, level of security & safety, neighbourhood grocery stores, deliveries from restaurants, exercise gyms, day care centres, hospitals and schools, depending on your life situation, and your need.

Think through if some neighbouring small building or bungalow has the potential to be converted into a taller building and will it block your view in the coming 2-3 years? Ask around from the security guard of such buildings if there is some discussion going on for redevelopment.

Find out whether the Home Loan you are thinking about is the cheapest loan? Explore rates for woman co-ownership or senior citizen, if applicable. Customer service in private sector banks and public sector banks is not too different in Home Loans since our interaction is minimal on an ongoing basis. Hence, fish for the best rate.

Discuss with the seller upfront on cash component if any. These things spring up at the last moment, and most of us do not have access to large amounts of cash.

If you are buying the apartment as an investment, please ensure that it fits in into your overall asset allocation, and that you have a balanced mix between equities, debt instruments and real estate. I would recommend a 40:20:40 mix between the three for investors below 50 years of age. Also, calculate your annual returns from the real estate as a combination of 2-3% rental income plus expected capital appreciation less maintenance charges.

Find the average range of prices in the neighbourhood by asking around. One should speak to people in 2-3 neighbouring buildings to get an idea. There could be a range of 5-10% difference even within neighbouring buildings, depending on quality of construction, exact configuration of apartment, etc..

If you are buying an under-construction apartment, then visit buildings delivered already by the same Builder to check out on quality of his construction, assuming that that would be the minimum quality he would deliver here. You can ask occupants of that older building whether the Building was developed on time, whether the Developers handed over the building to the Society amiably, etc..

So all in all, buying an apartment is possibly the biggest decision you would take, ranking after your marriage and your having a child. You have a responsibility towards yourself and towards your family for doing all the above due diligence before buying your apartment, so as to ensure that “What you thought is what you got”!

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The role of Purpose and Passion in a start-up

While a fantastic product, a disruptive business model, and adequate funding are the established critical success factors for building a new company, the last 40% of success comes from a majority of the employees working towards a purpose, and having a passion for that. Without this, we may end up with 80% success; with it, it may go to 120% (hence, the last 40% :) ).

Purpose comes from addressing some important need of a large swathe of the population, making their lives better. In the process, one ends up building a high-quality MISSION-DRIVEN & PROFITABLE business. Many a times, the founders of the business, and possibly few of the Unit leaders, and some Product managers are the ones who remember the purpose, and work towards it. The majority of the employees then are left out, just doing a job! And that’s a monumental waste of a purpose!

In one of the mobile telecom companies that I worked for, the founder-entrepreneur used to speak about connecting all Indians, solving daily-life problems using mobility, and adding value to customers through providing relevant information. He got a video made showing him taking an auto-rickshaw from the airport and meeting many people on the road, whose lives had been transformed because of the mobile phone. This video was shown at all employee cafeterias across the country, and seeing this filled the people with pride that we are making a change to the lives of people…we are building the nation.

Similarly, in a wealth management company that I myself led later on, we were passionate about Financial Planning for our clients. We wanted entire India to become “Financially Planned”. People had to be aware of investing / saving for life goals, and we used to preach the virtues ad nauseam. Customers who went through the Financial Planning exercise had tears in their eyes holding a copy of their 40-year family Plan which would lead to their children getting educated in great schools, and they themselves, being well-prepared for retirement.

Many of the businesses have some stated purpose. But many of these fail to communicate this among their employees. I think this should be communicated and over-communicated at all times. This increases engagement of employees by 50% (again from my famous levels of 80% to 120%). While some may find it gimmicky, we need to print the Purpose on small cards to be kept in a wallet by all employees. We need to make videos of customer testimonials about how our purpose has helped them improve their lives. We need to review our regional business heads, in addition to revenues & profits, on execution of this Purpose, through some smartly designed KPIs.

Coming to Passion, this is a bigger component of organizational success. Purpose drives a significant part of passion. Some of the other sub-factors building passion among employees could be :
• Being treated with respect by the senior management – majority of people work for respect, and want to be treated well
• Awareness of the larger goals and ambitions of the company, and awareness of the role (however small) that each employee is playing towards that goal
• Transparent and meritocratic system of evaluation and rewards, as well as of consequence management.

The list for building passion among employees could be longer, but keeping in context of this article on Purpose, shall restrict to the above. Compensation, ESOPs and getting bright people together could take you to 80% success…but only few companies are able to hit the 120% levels…consistently…and on purpose :) . All the best!

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