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Jul 17, 2012, 08.28 PM IST
In a free-wheeling chat with Moneycontrol.com's Kingshuk Mukherjee, Mr. Mayur Shah, MD of Mumbai-based realty developer Marathon Builders describes his way of doing business, tackling various archaic rules and regulatory issues hurting the real estate industry in the metropolitan region.
He also emphasised on the need for faster approvals to reduce costs as well as the diverse facts a CEO needs to keep in mind when dealing with Mumbai's dynamic, complex and cyclical realty market. Below is an edited transcript of Mukherjee's exclusive interview. Q: Could you tell us your strategy on the speed of decision making in your business? A: Reforms have happened all over but the real estate has been an overregulated sector, the most important part of the sector is land. Land is becoming such a big issue that the rules and regulations related to the development have still not stabilised. A lot of regulation related issues are plaguing the MMDRA region for the many years and these needs to be sorted out. These myriad regulations along with some new additional rules like new "DC" rules for Mumbai have created hurdles in the way of speedy decisions. These rules can create serious problems in the functioning of the real estate industry. The real estate industry is extremely complex and all these things like new regulations make the situation even more complicated. In order to make speedy decisions the CEO needs to have very strong knowledge in legal rules, land development and approval process is a must. He will not only needs to be agile but also knowledgeable about the entire holistic process from land related issue to planning design related issue, MHADA regulations, construction rules, legal formalities and finally the delivery part. Every step requires a domain expertise and the CEO is supposed to be the master of all these steps. Since I am developing a barren land to a complete finished structure the final delivery part is my ultimate responsibility. I consider the MMRDA to be a region of 19 cities with a population of one million each. We are present in all the 19 locations that's the equivalent of 19 cities. Also every micro-market in the MMRDA has its own unique demographic profile. You need to keep this mind and create the residential apartments to cater to their unique tastes. Q: What data-points do you have access to needed to make crucial decisions? A: In order to make those crucial decisions you will need to be very well networked with all the stakeholders. As one of leading members of MCHI (Maharashtra Chamber of Housing Industry) I have done a lot of work in the approvals process. We have requested to the Maharashtra government as well as union government that in order to bring down the costs the approval time needs to brought down to three months. If you see the interest cost of the land plus the inflation and the delay in approvals this in increasing the cost by 40%. So the actual price can be drastically brought down if the time limit of the approvals is really shrunk to three months. So the key data points that one needs is networking, personal knowledge enhancing, bringing in the latest technologies and time tested techniques, a constant interaction with the world view and since I am member of the tall building council I have all the required data points with me to make the most important and crucial decisions. Besides you also need to have the blend of the best available talent whether it is landscaping, structural engineering, glass facading or even the lighting aspects of the building. I am a patron member of member PEATA India (Practicing Engineers, Architects and Town planners). You have to get the best of talent available across the world and apply it to the local conditions here. Q: The real estate industry particularly in Mumbai has seen a huge supply of luxurious residential developments project all targeted at the same HNI niche group but there are questions about oversupply (and less demand) how are you dealing with this? A: The data that all these "Research Reports" and surveys have come out with are all without any substance. In fact in our Marathon group we have sold out almost all of our projects and have a waiting list. So this perception that there is an oversupply is all rubbish and there is in-fact a long waiting list and the price in reality has gone up from what it was a few months ago. It is not a businesses proposition to sell a ready flat, that developer will be making a loss if he is doing that. It is the wrong information. You cannot generalize OVERSUPPLY because the entire MMRDA region is like 19 cities. There may be odd aberration where the location may be bad or no proper supply of water or utilities so the flats may not sell and you cannot take this and make a sweeping generalisation that there is an oversupply. Any reputed developer in Mumbai has actually got a wait list of flats. We do not have residential project in the parel area so we are not really affected but I do not believe in this oversupply thesis there could be one of two exceptions but I think a generalisation is oversimplification and I believe that there is huge demand for good quality luxurious flats. Q: Over the years what would be the key change that has transformed the real estate business today? A: The basic thing is the customer’s aspiration had undergone a sea change. Till a few years back simple one bedroom or two bedroom hall kitchen with a garden were being built. Not too many fancy flats were being built. The amenities like balcony, terraces, several podium parking lots, Garden with Club House and Swimming pools etc are these are the norm today. In fact today there are towers which can go up to 60 / 70 / 80 or even 100 floors for residential flats. All these have ultra modern facilities and amneties. We at Marathon have always introduced the latest in construction technologies like aluminum MIVAN shuttering technology plus RCC construction. In all our project right from Badlapur to Lower Parel we have 99% guarantee on external leakages. So with all these amenities the final product quality has really changed. It has improved to world class quality and the customer benefits the most from this. We are now planning - designing a 62 storey tower. Q: Human resources remain the key to success of any business transformation exercise. What measures have you taken to retain talent? A: We have a vey strong training programme and also improving the skill set of all our employees. Every employee who joins us sees an improvement in their knowledge, skills and ability to work. Work environment is something that we focus a lot. We give a lot of freedom to our employees to do their work. We make sure that the work environment we give is the best so for example every Marathon office is designed in such a way that ambience, space, lighting, ventilation and the aesthetics bring out the best in an employee. We have also provided fresh air oxygen in all our air-conditioned offices in fact we have done research that shows that providing fresh air and oxygen betters the work efficiency and productivity of all the employees.
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