Venue—Hotel Kohinoor Continental
Moderator—Pranay Vakil, Chairman, Knight Frank India
Panelists—Kruti Jain, Director, Kumar Urban Developers
Sunil Dahiya, MD, Vigneshwara Developers
Atul Modak, Head, Kohinoor City
Ravi Sinha, CEO & Managing Editor, Track2Realty
Sunil Dahiya: What is happening is that we imported certain professionals from other industries and somewhere the vision and mission of the promoter was fueled by their greed or professionalism. They called it financial engineering. And that was the reason we got blocked from the IPO market. Today, whoever has filed DRHP, is going to face so much scrutiny and the band value itself will be discounted by 30%.
Kruti Jain: My point here is, in spite of all the scrutiny, even today we don’t have the right formula. The issue is not to go public or whether the people who have already gone public are right or wrong. The issue now is if you want to go public, can you have a solution where you are saying that this is the actual value on the basis of how other industries value themselves. And it makes financial sense then to go public. We have seen successful IPOs also. We have seen Godrej, Peninsula and the reason why those guys have not gone below listed price only because they did one smart thing that traditional developers have failed to do. They do not have any assets, they do not have the land bank in their company. They want to buy the land with the money they raise and start the process of development.
What the guinea pigs did, they went to the market with their whole land bank and did not realize that they did not have the financial capability, the technical capability or the management bandwidth to develop those many million sq ft. The point is, whoever went public did not have the holistic view or the vision and foresight or the right guidance and perspective and from their mistakes we are learning.
Sunil Dahiya: See, what we require for real estate is some very stable funding from venture capital and mix of maybe equity and debt and obviously vulture funds have to be kept out. But what we need to seek is pension funds coming into India which have long horizons, which are not hungry to get out early and come with very stable rates and are very strong. You give them comfort and they are there to give you money. But what has happened is that at the national level, we have not been able to do that as a brand compass. We have not been able to give comfort to these funds to come into India and they don’t have fund managers.
….to be continued
