Monday, September 10, 2012

One last time: a realty review!

B&E’s argues why real estate developers in India can go the full hog with their price hikes, at least for now; and we add a cheesy realty review to go along with it one last time this year...

Cheesy, because it’s been done a hundred times before. Interesting, because for once, we’re advising the realty players to actually increase their offer prices. Today’s scenario is a far cry from that of 2009, when the demand for real estate in India clearly reflected the weak global sentiments – absorption rate of both commercial and residential properties had then stood at a miniscule 9% (Q1 2009). In contrast, at this point of 2010, India’s realty sector already shows an absorption rate that’s as high as 21%; and if the trend continues, as per collated B&E estimates through market reports and expert sentiments, India will need another 240 million sq. ft. of commercial space and about 4.25 million units of residential real estate to meet the growing demand between 2010 & 2014.

At the same time, the supply largely remains constrained due to the slow pace of construction activity that happened during FY2009-10. As a result, the demand for real estate across major metros (which includes Delhi, Mumbai, Bangalore, Chennai, Pune, Kolkata and Hyderabad) in the country is estimated to become three times the supply during 2010–14 (as per US based real estate services firm Cushman & Wakefield). But in a scenario where demand is growing, supply unfortunately is still not growing. It seems that the top builders in India too want to test the elasticity of demand and as such an enormous rise in prices of real estate, especially residential units, can be clearly seen all across India.

As per a recent research conducted, among 2,863 localities across major metros in India, residential property prices have witnessed a sharp rise over the last one year. Mumbai of course is the vanguard of such rise. While property prices in areas like Mahalaxmi in Mumbai have climbed a whopping 63.5% (from Rs.25,117 per sq. ft. in 2009 to Rs.41,056 per sq. ft. in 2010), they have gone up by 57% in Colaba. Other localities too in Mumbai have witnessed a sharp price appreciation in the range of 36%-55%. Similar has been the rise in other metros. While property prices have appreciated by about 35% in Delhi and Bangalore over the last one year, they have gone up by 25-30% in Chennai, Gurgaon and Pune. Kolkata, Noida and Hyderabad too have seen real estate prices rising in the range of 5-20% in 2010. The name’s quite cheesy, but as per Makaan.com Property Index (MPI) – which, unbelievably, is India’s first property index – property prices at a national level have increased significantly by 7.2% in the last one month. The index in August 2010 stood at 1,187 as against 1,107 in June 2010. Compared to August 2009, MPI in August 2010 has moved up by 13.9%.


Source : IIPM Editorial, 2012.
For More IIPM Info, Visit below mentioned IIPM articles.
 
IIPM : The B-School with a Human Face
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Saturday, September 08, 2012

DR. WILFRIED AULBUR, MD & CEO, MERCEDEZ-BENZ INDIA

He’s the man who has been steering the Indian arm of Mercedes-Benz for the past five years. In an Exclusive with B&E, Dr. Wilfried Aulbur, CEO & MD, Mercedes-Benz shares where the company is heading
 They entered India in 1994. After some restructuring globally and getting accustomed to the Indian landscape, we today know them as Mercedes-Benz India. It wasn’t a smooth ride, but today the luxury automobile giant rules the roost. 

B&E: With a gamut of luxury car makers like BMW, Audi, et al, having set foot in India, what has been your focus & strategy to fight competition?
WA: Our core focus has been value for money. This is the reason we haven’t decontented our offerings. Further, we have not gone into overly aggressive discounting because at the end of the day we believe that the luxury car buyer is looking for an experience and is willing to pay the money for that. In fact, the strategy has paid off well and we have a very good bottomline. Going forward, we plan to continue along these lines.

B&E: Audi and BMW entered the Indian market 4-5 years ago and they have successfully been able to eat a considerable portion of the luxury car pie. How has this affected Mercedes-Benz?
WA: Competition has increased but then that’s market dynamics. In a market brimming with opportunities, redistribution of market share is actually healthy. If you look at markets such as Brazil, China or Russia you’ll observe similar scenarios where luxury car brands have divided the market among themselves. We are growing very significantly in China and have sold more than 1,00,000 vehicles within the first nine months of this year. This means that over 10% of our overall global sales is coming from China. While 22% comes from US, about 45% of the total global sales comes from Europe and other western countries.

B&E: How important is the Indian market for Daimler AG?
WA: As of now India is just 1%. However, 10 years down the line we will achieve the same size as that in the United Kingdom. But, at the end of day the market share that we are talking about is very small in terms of volume.

B&E: To what extent does Mercedes-Benz rely on local manufacturing?
WA: As compared to other luxury automobile manufacturers, we derive the highest degree of local value addition. For the C-class and E-class we have local body shops which takes care of the paint job. We also have assembly lines for the E-class. In fact, this flexible manufacturing setup with limited investment gives us the advantage to produce more variants and churn out larger volumes.

B&E: The road ahead for Daimler AG in India...
WA: Daimler has already made huge investments in India. We have recently announced an investment of over Rs.3 billion. In fact, with growth opportunities, investments are gradually moving up. Human resources at Bangalore have also been ramped up from 200 to about 600 employees. There are no specific plans as far as investments are concerned, but considering the overall landscape, we are definitely at par with competition in the industry.


Source : IIPM Editorial, 2012.
For More IIPM Info, Visit below mentioned IIPM articles.
 
IIPM : The B-School with a Human Face


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Thursday, September 06, 2012

It’s time to act, Mr. President

All the Bush-Era tax cuts are set to expire at the end of this year, meaning Obama needs to act, and act fast if he wants to avoid raising taxes across the board. Or is there something else in his mind? B&E catches up with the US Congressional Budget Office, Moody’s and others for an intensive analysis.
 
It was spring of 2001. The first Harry Potter film had yet to arrive in theatres and September 11 was just another day in the calender. Even the United States Federal Budget was running a surplus as usual. In fact, earlier in the year the US Congressional Budget Office (CBO) had estimated the nation’s budget surplus to be around $281 billion in FY2001, largely the result of several years of rapid economic growth. Though CBO observed some weakening in the economy, it was sure that by 2011 the budget surplus would reach $889 billion.

It was in this context that the Congress had passed, and the then President George W. Bush had signed into law (in June 2001) broad tax cuts that would cost US economy a whopping $1.35 trillion over the next 10 years. Two years later, Bush again enacted a new set of tax cuts, this time costing an additional $350 billion. Not only both tax cuts were massive and helped Bush win a second term in White House, but were also considered to be good moves by policymakers. However, it’s once again decision time for policymakers in US as both laws are set to expire on December 31, 2010. And if Congress does nothing (as it appears as of now), taxes will rise for every American starting January 1, 2011, aggregating $300 billion per year, or about 2% of GDP (as per CBO). Interestingly, this decision has to be taken in a fiscal environment that is exactly opposite from the one in which the tax cuts were enacted. Instead of a surplus the federal budget has a $1.4 trillion deficit (at the end of FY2009).

No doubt, there is wide agreement that allowing all the tax cuts to expire on December 31, 2010 makes little sense given the economy’s fragility. Doing so would almost certainly trigger a renewed recession. But then making the tax cuts permanent for all taxpayers, regardless of income, will not only widen the federal deficit but will also inflate the national debt phenomenally. There are certainly several options on the table, but each one seems to come with a big price tag. One option is to extend the tax cuts indefinitely, making them permanent for all taxpayers, regardless of income (as Republicans want). But exercising this option, would cost US economy a whopping $3.1 trillion over the next 10 years and inflate the national debt to 82% of GDP. This would be the highest level since 1948, and well above the average debt-to-GDP ratio of the last 50 years of 37%. 
 

Source : IIPM Editorial, 2012.
For More IIPM Info, Visit below mentioned IIPM articles.
 
IIPM : The B-School with a Human Face
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Wednesday, September 05, 2012

SWISS BANK: INDIA’S WEALTH

If US can, Why cannot India Force the Swiss Government to Disclose Names of Indians with Swiss Bank Accounts?

In a much publicised case last year, US authorities had compelled UBS (the biggest bank in Switzerland) to reveal the names and details of 300 odd American citizens who were holding bank accounts in the said bank. The US government had even slapped a penalty on the bank to the tune of $780 million for helping the individuals evade tax

And the Indian government? Well, apart from sending cursory emails and diplomatic communiqués, the Indian government itself doesn’t seem to want the details. If they really had wished, the Indian government could have taken up a Swiss government offer last year to rework the India-Switzerland treaty. Guess what, India didn’t!


Source : IIPM Editorial, 2012.
For More IIPM Info, Visit below mentioned IIPM articles.
 
IIPM : The B-School with a Human Face
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Tuesday, September 04, 2012

US: Pranab is still the External Affairs minister

Secretary of State Hillary Clinton’s State Department considers Pranab Mukherjee to be India’s foreign minister! More similar gaffes inside...

Truth is stranger than fiction, but fiction does appear to have an irresistible appeal for two of the world’s largest administrative agencies, the US State Department and CIA. The official web portals and communiqués of the US State Department and CIA are splattered with notable misinformation and errors that would be necessarily considered highly affronting at a diplomatic level.

Last week, we showed how both the State Department and CIA confidently misrepresented India’s map (and showed Kashmir as part of Pakistan) on their websites. We had no idea there was more to come – perhaps even ‘the’ reason for why the Americans seem to be making no headway with India on foreign affairs. The US State Department’s official website mentions that the Minister of External Affairs of India is (still) Pranab Mukherjee! S. M. Krishna, the current Foreign Minister of India since May 2009, has been notably left out of the State Department’s official communiqués. Incidentally, Krishna has also met Barack Obama in various forums, including at New York in September 2009. Not all listed information is wrong, though. Some US government letters are thankfully still reaching the right addresses in India. The Home Minister of India is correctly named as P. Chidambaram; and so are some other Indian politicians.

Mistakes on the CIA and State Department’s websites are not only India-centric but can be found in the case of other countries too. What’s interesting is that, in spite of the official websites of these respective countries portraying genuine information, the US has failed to recognise the same in its own records.


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Monday, September 03, 2012

Enter the gates of Shahjahanabad

Amidst the bustle of Old Delhi, Shahjahanabad’s soul stays alive in the buildings and ways of the people...

The dusty, ancient and perpetually crowded streets of today’s Old Delhi are a glaring contrast to the infrastructure surrounding their New Delhi counterparts. The streets of ‘Shahjahanabad’, once rich, vibrant and fit enough to entertain royalty, today lie bruised and battered owing to their constant mutilation by locals and tourists, and the apathy of the government and civic bodies. But walking along these streets is nothing short of a history lesson as a crescendo of culture stares back at you through the Mughal architecture and the bustling markets.

Shahjahanabad, founded in 1639 by Emperor Shah Jahan, was a city built on 1600 acres of land. One could enter this walled city through its many gates – the Kashmiri Gate, Ajmeri Gate, Lahori Gate, Delhi Gate etc. that allowed entry from the North, South East, West and South respectively. The city was planned lavishly with the main street boasting lines of pulchritudinous fountains and exquisite flowers at its borders whilst a stream of sparkling water ran right through the heart of it. The same street, now over-flowing with flower-vendors, sweet shops and textile merchants, is ironically known as ‘chandni’ chowk.

The walled city, the symbolic capital of Mughals until their fall, has hosted some episodes of disgraced conflict and shambolic display of power. The ninth Sikh Guru, Guru Tegh Bahadur, for instance, was mercilessly decapitated on the orders of the ruling Emperor Aurangzeb on 11th November, 1675 AD for refusing to convert to Islam.

Gurudwara Sis Ganj stands at that site today. Another obnoxious episode of brutality was when Persian invader Nadir Shah commanded and watched as his troops massacred 3,000 citizens of Shahjahanbad in 1739. Up until the time of India’s struggle for independence, Old Delhi was witness to much bloodshed. 9th September, 1947 was one such abysmal day when violence gripped the sensitive area in the form of Hindu-Muslim riots. So much so that the police and military were forced to use hand grenades to curb the chaos. Of late, violence has become rare and such communal tensions have become equally uncommon as the same place once considered insensitive towards contrasting cultures and religions, is now home to mosques, temples, a gurudwara and a church, and all are at very close proximity to one another too.

Purani Dilli is a wonderland for aficionados of Mughal history. The dedicated travel guides may be blazing with vivid descriptions of Jama Masjid, Red Fort and other such monuments, but a keen traveller might also fancy the Gauri Shankar Temple, Feroz Shah Kotla and the relatively lesser known mosques within the vicinity. Consecrated in 1836, St. James Church, built by Scotsman Col. James Skinner, is one more such destination. The oldest Church in Delhi, the elegantly poised pale-white structure, surrounded by the lush-green of grass, looks almost otherworldly in the harmonic-pandemonium of Old Delhi. But its significance cannot be undermined.


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Saturday, September 01, 2012

BUSINESS BEYOND PROFITS!

As the world emerges from global recession, businesses should focus on restoring their profitability. But only short-sighted businesses do so at the expense of the pursuit of a broader purpose, writes Amit Bhatia, scion of the l. N. Mittal group, founder of Mittal Champions Trust and Swordfish Investments

The past few years have seen growth rates drop everywhere – even in emerging economies like India and China. That process has not only affected nations and businesses but also lives of ordinary people. As the focus of governments, businesses and the ordinary man turned to survival, many personal aspirations were put on hold and major infrastructure projects, such as the construction of new roads and hospitals were shelved or not built as quickly as they might otherwise have been.

As the world starts to readjust to the new normal of a period of prolonged economic austerity, it might be tempting for companies to reign in programmes that make no discernable contribution to the bottom line as they come under pressure from investors to increase profitability. But now is exactly the time when companies must stay true to the ambitions they laid out in more prosperous times and remember that, over the long term, companies with a purpose beyond profitability will enjoy the greatest success.

There are many who would argue that by simply producing its product, being profitable and providing jobs, a business is already making a substantial contribution to an economy. But over the years the accepted view has become more sophisticated. Business, it is often argued, is in a unique position to help make a broader contribution. As part of its license to operate, it should act responsibly at all times and seek to actively engage with the communities in which it is present. This, advocates of corporate responsibility claim, will generate long-term and sustainable advantages for the business in terms of growth and profitability.

I agree. Of course profitability is crucial. A business has no future if it cannot be profitable, something that will have severe consequences for all stakeholders. But equally businesses must look beyond profit, and also pay attention to the quality of life, in the broadest sense, of the communities in which they work.

I have actually always been very impressed by the emphasis leading Indian companies place on Corporate Social Responsibility. The winner of the Corporate Responsibility Award at the Financial Times/ArcelorMittal inaugural Boldness in Business Awards in 2008 was Selco, an Indian social enterprise that provides sustainable energy solutions and services to under-served households and businesses.

There are many examples of leading Indian companies who make a healthy profit, but utilise a proportion of this profit to make a meaningful contribution where they believe they can have a positive impact such as education and health.


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