Venue—Hotel Kohinoor Continental, Mumbai
Moderator—Pranay Vakil—Chairman Praron Consultancy
Atul Modak—Head-Kohinoor City
Gaurav Gupta—Director, Omkar Realtors & Developers
Jhumur Ghosh— National Feature Editor, Times of India
Ravi Sinha—CEO & Managing Editor, Track2Realty
Jhumur Ghosh: I am a little curious. In 2008, all the funds of the world were lining up for real estate and signing and today we are having this discussion, in just four years. How does that happen?
Pranay Vakil: I will tell you, how did this happen. I will not take names obviously, but I know a retail player who is into malls, he makes estimates of what he will do in the mall, how much he will sell in the mall. Let’s assume he expected to make Rs. 1 crore a month. He took five years receipt, discounted it and took it upfront from the financer. Rs. 50 crore against 60 crore, but all those estimates which were made went hey wire, blame it on foot falls, blame it on government policies, be it recession and all of that. Now he is sitting on Rs. 50 crore which he puts into a second and then he has gone into third project. Now those estimates are not even 50 per cent.
So what does that mean? He goes back to the financer, says: “I have to repay that in five years but now I will take six years.” Financer has no choice but then the footfall again goes down 40 per cent. He again goes to the financer, takes seven years time, the financier very grudgingly kind of agrees. Again further fall down in footfalls. Now what he will do? Invoke the security, not that he has much option. But today think of the developer who spent the money even before the sales took place; it is actually factoring your future.
There is no sales and business has been run only on the basis of projections and expectations in excel sheet with assumptions. Assumptions didn’t go accordingly and then with proposed FDI in retail everyone thought in two years things will happen, but again it did not happen.
Ravi Sinha: It is easier to blame that funding is not coming because of this and that irregularities. Fine, we all know and we understand that there is a problem of poor perception & projection for the business. The point is has the sector done its home work to come out clean? How many of CREDAI members have signed the moral code of conduct? Not even 20 per cent.
Jhumur Ghosh: See, ambiguity you can sort out but there is a bottle neck. Ambiguity is something that you can seek clarity to sort it out. Bottle neck can not be sorted out by seeking mere clarity.
…to be continued
