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Investment Opportunities
Nov
28
Indian Real Estate - Time for bigger Investments & Change
Filed Under Emerging Sectors, India Business, India Investment Opportunities, India Real Estate, Indian Companies, Indian Government, Metros, Tier-2 Cities, Tier-3 Cities | Leave a Comment
The Times of India reports of a conference in Chennai hosted by Dun & Bradstreet about ‘Dynamics of the Real Estate Market: The Investment Perspective’. As per the conference, the Indian Real Estate Market is pegged at around $14 billion. Although the article presents a summary on the major discussions, 2 major points of discussion emerge.
1. Foreign Investment into Real Estate
This aspect has been well explained in previous posts on this website. The article on FDI in India puts Real Estate as one of the top 3 attractions for Investment.
And the article on Indian Commercial Real Estate also discusses the potential there is in Real Estate. But just to add an interesting fact here – Financial Institutions are among the biggest investors in Real Estate Projects in India.
Merrill Lynch is paying about $377m for a 49 per cent share in a portfolio of residential projects managed by DLF- Indian’s largest listed developer, in one of the biggest deals of its type in India. The transaction, Merrill Lynch’s sixth in Indian real estate, brings its investment in the sector to about $550m.
Late last year, JPMorgan announced its first investment on its own balance sheet in Indian property, paying $60m for a stake in a residential project being developed by Mumbai group, Lodha Builders.
2. Innovative products by Financial Institutions
The Times of India article quotes S. Sridhar, Chairperson and Managing Director, National Housing Bank:
“the real estate community needs to think out of the box and offer wide range of products, which suits the pockets of even people in the low-income group.”
Perhaps new financial products are needed various rate increases by the Reserve Bank of India (RBI) had serious impact for the retail loan segment.
Borrowers have declined in number and default has increased as the interest rates became unbearable and the burden of a rising EMI became too much for the average borrower. The resulting slump has made it difficult for the banks to match previous year’s record breaking credit growth.
Banks have tried to counter the retail loan growth decline by offering discounts on home loan and other retail loan interest rates and associated processing fees during this festival season. This led to a small increase in retail loan off-take, but the results didn’t match the expectations. Home loans have been worst hit - with the segment not taking off as expected, even after festival-season discounts.
About the Author: Ishan Sethi is a Sales & Marketing professional with keen interest in emerging sectors and India business opportunities. He is an alumnus of Indraprastha University and IIM Lucknow. He can be reached via the Contact page.
Nov
28
Mobile Carriers in India- What next? part2
Filed Under Emerging Sectors, India Business, India Investment Opportunities, Indian Companies, Internet in India, Metros, Mobile Telecom, New Media, Tier-2 Cities, Tier-3 Cities | Leave a Comment
Let’s continue the discussion from the previous post. The continued rapid growth of the mobile subscriber base in India presents a variety of management challenges, and as an observer, it is sometimes visible which company’s management is performing better.
So far, Airtel and Vodafone have been engaged in a battle of Call Rates, Lifetime validity schemes, Recharge Coupons, everything to do with a financial benefit to the consumer. Here are a few interesting facts, from the International Data Corp(IDC) survey conducted on the ‘Mobile Service Usage and Satisfaction’:
- The average waiting time to speak to a customer support agent is a little below three minutes.
- When probed on billing, nearly one in every six (18 per cent) mobile users was dissatisfied with the billing system of his/her service provider. This is way off the TRAI guideline that billing errors should be less than 0.1 per cent.
- More than half the users with a billing related problem perceive ‘wrong amount being charged by the operator’ as the prime reason for dissatisfaction.
All these refer to Customer Service problems.
Let’s draw an analogy here: Mobil Oil was in a price war for long at its US Refueling Stations. Mobil’s management always considered price as the single most important criterion for a customer to walk into a station. In a market survey conducted in the 90’s they realized that 80% of its customers had customer service as top priority, and only 20% wanted price to be a factor. Mobil then went into a major program to reorganize a Refueling Station into a more customer-friendly place.
They contacted a Formula 1 team for speed in refueling, and to understand how the team in a Pit Stop worked so well together. They visited Ritz Carlton Hotels to get more know how on how to treat a customer better, and lastly visited Home Depot- a specialty US retailer, to understand how to build long term relations with customers.
On the face of it, an oil company has nothing to do with any of the 3 companies just mentioned, but within a year of making changes, customer satisfaction rating went above 95%. Just imagine!
Now even the Indian mobile carriers want the same high levels of customer loyalty – but don’t seem to be taking specific steps to make it happen. If some action is already being taken, then it’s weak and not visible. After all, given the pending number portability policy that will be implemented it seems logical for the companies to make every effort to hold on to existing customers.
And for these reasons, the biggest opportunity for any Mobile Wireless Carrier in India today is in building a better Customer Service Infrastructure. As surveys worldwide have shown, it’s 5 to 10 times more expensive to get a new customer than to keep an existing one - Business Management 101!
About the Author: Ishan Sethi is a Sales & Marketing professional with keen interest in emerging sectors and India business opportunities. He is an alumnus of Indraprastha University and IIM Lucknow. He can be reached via the Contact page.
