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Summer Internship Report
ON
“Diversification of “TheBricks” from Real Estate Company to Publications sector”
By
Pardeep Kapil
A0101909235
MBA Class of 2011
Under the Supervision of
Dr. Shalini Trivedi Senior Lecturer
Economics Department
In Partial Fulfillment of Award of Master of BusinessAdministration
AMITY BUSINESS SCHOOLAMITY UNIVERSITY UTTAR PRADESH
SECTOR 125, NOIDA - 201303, UTTAR PRADESH, INDIA2010
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AMITY UNIVERSITY UTTAR PRADESH
AMITY BUSINESS SCHOOL
DECLARATION
I, Pardeep Kapil student of Masters of Business Administration from Amity Business
School, Amity University Uttar Pradesh hereby declare that I have completed Summer
Internship on “Diversification of TheBricks from Real Estate to Publication”
as part of the course requirement.
I further declare that the information presented in this project is true and original to the
best of my knowledge.
Date: Pardeep Kapil
Enrol. No: A0101909235
Place: Noida MBA Class of 2011
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ACKNOWLEDGEMENT
I express my sincerest gratitude and thanks to hon’ble, Mr. Amit Singh, for whose
kindness I had the precious opportunity of attaining training at ‘TheBricks’. Under his
brilliant guidance I could complete the project being undertaken on the “Diversification
of TheBricks from real estate firm to publications” successfully in time. His meticulous
attention and invaluable suggestions have helped me in satisfying the problems involved
in the work. I would also like to thank the overwhelming support of all the people who
gave me the opportunity to learn and gain the knowledge about the various aspects of the
industry.
I would like to thanks Dr. Shalini Trivedi (Faculty Guide) for their constant enthusiastic
encouragement and valuable suggestions without which this project would not been
successfully completed.
Pardeep Kapil
A0101909235
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Table of Contents
CHAPTERS PAGE NO
Executive summary 7
1. Introduction 8-23
1.1 Company Profile
1.2 An overview of real estate industry
1.3 Diversification Strategy
2. Literature Review 24-29
3. Research Methodology 30-36
3.1 Objective of Study
3.2 Research Problems
3.3 Factors and Parameters
3.4 Data Collection
3.5 Research Technique
3.6 Sampling Technique
4. Data Analysis 37-52
5. Conclusion 53
6 Recommendations 54
7. Limitation s 55
8. References 56
9. Annexure-I 57-58
10. Annexure-II 59-60
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Executive Summary
The main objective of the project is to study the diversification of “THE BRICKS”, a real
estate company to publications with respect to the difficulties and the problems faced by
them during the diversification and also to study how they are tackling with all such
situations. The report consists of the brief summary of the company and apart from this it
clearly mentions the objective of the study and the research methodology used i.e. both
the primary as well as the secondary data. The data collection method used is structured
non disguised questionnaire in which the types of questions used are open ended,
multiple choice and close ended.
The report consists of a detailed view of the tasks, which we have been undertaken
to analyze the scenario of the real estate market and the buying behavior of the people
while purchasing the property. For the accomplishment of the task we had prepared
various set of the questionnaire so as to know the consumer buying behavior and also
how a real estate firm is diversifying itself to the publications. Besides this, the report
consists of the finding that Delhi an NCR region is the major attraction for the real estate
investors and has more scope to grow in terms of property market. The project helped me
to know more about the realty sector and also about the current scenario of the property
market in India.
With the help of questionnaire I was able to carry out the detailed analysis of my
project. The details of the methodology used by me for the accomplishment of the project
is stated as below:-
AREAS COVERED: - Delhi, Noida, Greater Noida, Ghaziabad and Gurgaon.
RESEARCH DESIGN: - Descriptive.
SOURCE OF INFORMATION: - Primary and Secondary Data.
DATA COLLECTION METHOD: - Structured and non disguised
questionnaire.
SAMPLING METHOD: - Convenience sampling.
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Chapter 1
Introduction
1.1 Company Profile
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'Bricks' has developed more than 300 properties within Delhi and the NCR region alone
and as a leader in the real estate development and consultation domain has set standards
in the industry with its Services Since 1983. It is widely recognized as an authority in this
niche segment and is seen as a first choice partner in success by most clients.
With a presence in Delhi, the NCR, across India and abroad, Bricks leverages its wide
network and resource to maximize client benefit.
As a company Bricks urges Active Participation, it is a place that nurtures and
encourages innovation and maintains an environment of easy approachability. This is a
way of ensuring the best practices that have made Bricks what it is today, percolate down
to every level right from the top management to staff at the site.
Our Phenomenal Success is often attributed to the absolutely transparent way in which
we do our business and the stress we lay on clear and open deals with our clients.
Every property developed by Bricks is marked by its Distinct Sense of Design
Superiority and Maximum Utility-They stand apart from the rest.
The drive to excel that underlines every Bricks effort today continues to propel the
company towards new and unexplored areas creating greater value for our clients.
The company is into
Constructions
As a builder Bricks in its long engineering history has undertaken some of the biggest
constructions projects in India and abroad. With ample acquired skills and hands on
experience in construction of hotels, residential and commercial complexes, hospitality
environments and work spaces, it is ideally equipped to rise up to any challenge in this
domain.
Renovations
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Renovating an existing property can be a tricky task because it is not merely complex but
also involves a certain human element. Understanding the client’s final picture of the
property and the significance from the existing property both from the engineering stance
and the aesthetic stance is where the sky lies. And people at Bricks know just how to rule
earth.
We carefully understand the client’s renovation need and then suggest realistic
options before setting about executing it. Supported by seasoned engineers and
technicians, most renovations we do end up exactly the way the client had dreamed of.
Architectural
As market leaders, Bricks is home to some of the most creative architectural brains in the
industry who have proved there mettle in projects that stand out for there architectural
excellence and safety. The evolved design sense, advanced architectural soft wares we
use and the passion of the people behind it all come together to make the distinct Bricks
difference.
Interior Designing
As value additions to the already sterling services that we provide, Bricks offers interior
design solutions that convert empty spaces into functional, stylish and dynamic living or
working environment. The spaces are designed in keeping with your taste and the
functionality.
Safe, sturdy, stylish and maximized utility is how what we want our interiors to be
and we work diligently towards it. We provide comprehensive design solutions so that
you don’t have to look elsewhere from your plumbing to color co-ordination to
electrification-we take care of every aspect of your dream design.
1.2 An Overview on Real Estate Industry
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Introduction
All immovable properties including land, structures on it and other natural resources can
be classified as real estate. It is also referred as realty. All types of residential,
commercial and industrial properties fall under this domain. Real estate involves the
purchase, sale and development of land, residential and non-residential buildings. The
major players in this sector are the realtors, builders, brokers, buyers and sellers. The
activities of the real estate sector encompass the housing and construction sectors also.
With its huge growth potential in the market, real estate sector has emerged as a
major field of business in recent time. The real estate sector in India has assumed
growing importance with the liberalization of the economy. The consequent increase in
the business growth opportunities and migration of the labor force has, in turn, increased
the demand for commercial and housing space, especially rental housing. The
development and expansion in the real estate sector is influenced by the developments in
the retail, hospitality and entertainment (e.g., hotels, resorts, cinema theaters ) industries,
economic services (e.g. hospitals, schools ) and information technology (IT) enabled
services (like call centers ) etc. and vice versa.
The real estate sector is a major employment driver. It is the second largest
employer next only to agriculture. All this is due to the chain of backward and forward
linkages that the sector has with the other sectors of the economy, especially with the
housing and construction sector. About 250 ancillary industries such as cement, steel,
brick, timber, building materials, etc. are totally dependent upon the real estate industry.
The real estate sector in India is flourishing rapidly and widely with a growth rate of
about 30 percent each year. The division is like - about 80 percent of the real estate
development in India has been in the field of residential housing and the remaining 20
percent includes office, shopping malls, entertainment centers, hotels, multiplexes and
hospitals. India’s booming outsourcing business industry and consumption-led growth are
contributing significantly to its real estate growth. The outsourcing business houses
including call centers, technical consultancy services, and medical transcription units and
programming houses constituted around 10 million square feet of real estate growth in
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India till 2003. In last couple of years the share of commercial sector in the overall real
estate growth has been more prominent.
Considering the advantages of significantly lower cost of operations in India, several
multinational companies across the globe are expressing their willingness and desire to
shift their operations to India. According to a 2003 estimated records, the demand for
office space by the over expanding IT and IT- enabled service sectors in India would be
around 66 million square feet, in the next five years. These multinational companies have
realized the fact that in order to expand and flourish their business, the skilled Indian
work force can be of great use to them. So they need to provide the Indian professionals
with all the facilities of modern life starting from housing to entertainment, so that they
can give their best in the work place and at the same time be happy with their standard of
living. This trend has set off the development of world class entertainment centers and
business centers, across the country, thereby bringing a radical change in the lives of
urban population in India. The growing demand of sky scrapers in all the metropolitan
cities across the country has changed the image Indian skyline. There is an estimated
requirement of 80 million housing units over the next 15 years and 2000 sq. ft. of office
space over the next five years. For the purpose of increasing the investment required to
plug the aforementioned supply deficits, the government, has allowed the Foreign Direct
Investment (FDI) up to 100% in the specified real estate projects including townships,
built-up infrastructure and construction development projects. In December 2007, The
Security and Exchange Board of India (SEBI), which is the domestic stock market
regulator has issued the draft regulations clearing the way for introduction of Real Estate
Investment Trusts in India. This beneficiary step taken by the government is expected to
favorably serve the booming real estate market, by functioning as an alternative source
for satisfying the capital needs of the sector.
The relatively crucial development potential of real estate industry, coupled by the
encouraging and favorable FDI regulations and increasing focus from the private equity
sector has created substantial investment and significant growth opportunities for the real
estate companies.
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As this springing up realty sector is getting on into a stable and sustainable economic
sector, three key trends, which are likely to shape its future, are emerging:
a) Increased focus on execution risks
b) Increased investments in mixed-use development projects with a view to extract the
maximum synergic benefit
c) Syndication among real estate developers on execution of “big- ticket” development
projects, i.e., shift from competition to partnership.
The sustainability of growth in the real estate sector is due to its strong and intensive
demand by various other sectors like:
i) Rapid expansion of IT and IT-enabled services and also the business outsourcing
industry including both the knowledge process outsourcing and the clinical testing
outsourcing.
ii) Extensive development and acceptance of shopping malls as “one stop destination”
for the consumers.
iii) Growing popularity of the special economic zones as preferred destinations for both
the manufacturing as well as service industries.
Government Initiatives
The introduction of many progressive reform measures by the government to unlock the
potential of the sector and also to meet increasing demand level has provided a better
exposure and also helped this sector to emerge as a full fledged grown up player among
all the other sectors in the market. The government has announced a stimulus package
coupled with the Reserve Bank of India’s move has allowed banks to provide special
treatment to the real estate sector, which is likely to impact the real estate in a more
positive way. RBI has decided to extend exceptional concessional treatment to the
commercial real estate which was restructured on 30th June 2009.
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100% FDI is allowed in the realty projects through automatic routes.
In case of integrated townships, the minimum area which could be developed has
brought down to 25 acres from 100 acres.
Urban land (Ceiling and Regulation) Act, 1976 (ULCRA) repealed by
increasingly large number of states.
For the wholly- owned subsidiaries and joint ventures, the minimum capital
investment stands at US $10 million and US $5 million, respectively.
Minimum lock-in period of three year is there for the full repatriation of the
original investment.
For the single brand retail outlets and for the cash-and-carry through the
automatic route, 51% and 100% of the FDI is allowed respectively.
For the better development of the realty sector, government has provided sops to
the real estate sector as stated in the 2009-10 budgets. The developers of housing
projects (units of 1000-1500 sq. ft.) have been granted a tax holiday on profits
from projects initiated in the financial year 2007-08. Such project must be
completed before March 1, 2012.
Along with this, the Finance minister allocated US $ 207 million to grant a
1% interest subsidy on home loans up to US $ 20,691, provided, the cost of the
home should not be more than US $ 41,382. This subsidy is expected to provide a
better and a further boost and hike to the housing sector.
With the boom in the property market spreading in all directions, the real
estate sector is touching new heights of success. However, this growth in the
realty sector is also due to the various policies adopted by the government to
facilitate investments mainly in the economic and industrial sectors. Also the new
stand adopted by the Indian government regarding the foreign direct investment
(FDI) policies has been encouraged and appreciated by increasingly large amount
of countries to invest in Indian Real Estate and in Indian Properties.
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India preempted USA as the second-most favored destination for FDI in the
world. With the changing trends in the current Indian investment scenario, India is
able to attract more than three times foreign investment at US $ 7.96 billion
during the first half of 2005-06 fiscal, as against US $ 2.38 billion during the
corresponding 2004-05, making India one of the most prominent player among
the dominant host countries for the FDI in Asia and the Pacific (APAC).
FDI in Real Estate on The High Growth Path
Foreign direct investments (FDI) in Indian real estate market are currently on the
high growth path. Study on future of real estate investments in India is brought
out by The Associated Chambers Of Commerce and Industry of India
(ASSOCHAM) says real estate market is growing at the rate of 30 %p.a.
According to the industry expert’s view, FDI’s share in domestic real estate
market is up to 10% by March 2007 and has touched about 26% level from 16%
of fiscal 2005-06. This is of great importance for the global real estate players in
the Indian real estate market and increasing demand of the office space
particularly in the IT and BPO sectors.
The forecast of ASSOCHAM’s Study on the Future of the Real Estate Investment
in India was estimated to be about US $ 60 billion future market size of real estate
business in India, the share of foreign investments will be within the range of US
$25-28 billion for the year 2010 .The overseas investment is also having larger
space in Indian SEZs and the widely increasing numbers of the shopping malls is
naturally fatting their share in the real estate market.
In 2003-04, India received a total amount of about US $ 2.70 billion FDI
inflow, out of this about 4.5% was committed to the real estate sector. In 2004-05,
this data had increased up to US $ 3.75 billion FDI inflow, of which the real estate
share was about US $ 10.6%. However, for the year 2005-06, the estimated FDI
inflow was found to be US $ 5.46 billion, out of which around 16% was
contributed to the real estate sector. The study further projects that in 2006-07, the
FDI inflow had touched US $ 8 billion in which the real estate contribution was
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about 26.5%. And for the upcoming years the prediction for the FDI inflow is
estimated to be increasing and the real estate market share will also fatten by this.
Why Invest in Indian Real Estate
Flying high on the wings of booming real estate, property in India has become a dream
for every potential investor looking forward to dig profits. Everybody is eyeing on the
Indian property market for a wide variety of reasons:
Real estate sector in India is witnessing tremendous boom. It’s ever growing
economy is on a continuous rise with 8.1% increase witnessed in the last financial
year. The smashing growth in the economy has increased the purchasing power of
the people and creates demand for the real estate sector.
Every year approximately 2 million or more new graduates are produced from the
various Indian Universities, thereby creating demand for about 100 million sq. ft.
of the office and industrial space.
Presence of large number of reputed companies will attract more companies to
initiate their operational bases in India thus creating more demand for corporate
space.
Huge amount of dividend is yielded by the real estate investments in India.
Around 70% of the foreign investors are making profits and other 12% are
breaking even.
Apart from IT, ITES and Business Process Outsourcing (BPO), India has shown
its expertise in other sectors also, like, auto-components, chemicals, apparels,
pharmaceuticals and jewellery where it can match the best in the world. This kind
of positive attitude of India is surely going to attract more and more foreign
investors in the nearby future.
The concession provided by the Indian government in the FDI rules has invited more
foreign investors and real estate in India seems to be one of the most lucrative grounds at
present. The revised investor’s friendly policies have proved to be quite economic and
productive for the investors, apart from this have allowed foreigners to own properties,
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and dropped the minimum size for housing estates built with foreign capital to 25 acres
(10 hectares) from 100 acres (40 hectares). With these relaxing and changed policies of
the investment, the overseas firms can now put up the commercial buildings as long as
the projects surpass 50, 000 sq. mt. (538,200 sq. ft.) of floor space.
Opportunities for Investors in Indian Real Estate
In the recent time, India has become a potential goldmine for investors all over the world.
With the flourishing and expanding economy and liberalized government policies,
investors from all over the globe are choosing India as their business destination. As
Indian real estate rules the economic vibes of the country, the most important beneficiary
of the recent boom in this sector is the investors. Driven by the positive growth in the real
estate scenario and the Government of India’s decision to allow 100% foreign direct
investment (FDI) under the ‘automatic rule’ in the construction and development there
has been a significant rise in the number of Indian as well as foreign investors in the
realty sector.
Developers like DLF, Ansal, Omaxe, Ambuja, Unitech, Vatika and Sahara Infrastructure
are among a few that have initiated large scale real estate developments in the residential
sector catering to all segments of the society.
Real estate sector is much more professionally managed with a number of big players
including both developers and corporate, entering into the business. The real estate
market is not the monopolistic market, as there are more and more players entering into
this development game.
In the residential sector, with the increase of disposable incomes and easy availability of
home loans, most builders tries to woo the investors with the lucrative features and the
latest inclusions of premium luxury apartments and condominiums fitted with the most
modern accessories in home luxury.
Apart from the residential segment, the commercial venture includes office spaces,
sprawling malls, multiplexes and retail outlets. As per the past reports, around 200 or
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more new malls with a combined retail space of about Rs.2.5crore/ sq. ft. and an
estimated investment of around Rs. 12.5 crore are expected for the upcoming year.
Future of Real Estate Market in India
One question that arises in everybody’s mind is that whether the property prices in India
will fall or not in the nearby future? The answer to such question will eventually decide
whether to invest in the real estate of India now or rather wait for the property prices to
fall.
According to the real estate experts and the investment Gurus, “the Indian real estate
sector will definitely going to have a smashing rise in the nearby future.” Thus people are
more interested in investing in the real estate of India. According to the market experts,
the Indian real estate sector has a tremendous potential and have a bright future in the
upcoming years.
With the relaxed FDI norms for the Indian real estate market and a tremendous boom in
this sector, has made the property investment in India to be at a safer side. This is also
supported by the fact that the Indian Government has liberalized its foreign direct policies
to attract higher foreign investment.
It’s not at all true that there is a sudden rise in the property prices. It could be witnessed
for the last couple of years that the prices of the property in India whether it is residential
or commercial has continued to rise. For example, some of the better developed cities like
Noida and Gurgaon, property prices have increased up to five times within a few years.
It’s not the case that only these cities are experiencing an appreciation in the real estate
prices, property prices have been continuously raising across all parts and sectors of the
country. It may be the case that the appreciation in the price hikes in other parts of the
country would not be that much.
According to a recent survey, India stands fourth among the top four Asian
destinations for the foreign direct investment. India being the largest democracy with
excellent democratic governance and transparent property laws attracts more and more
people to invest in the Indian realty market.
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Looking to the above facts, it can be concluded that as far as the Indian realty sector is
concerned, it is going only in one direction, that is, upward. And this current scenario will
lead more and more investors to invest in the Indian real estate market.
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1.3 Diversification Strategy
Diversification may be defined as the process in which a company or a firm tries to get
into different lines of business from its current business operation. Basically
diversification strategies are opted for expanding firm’s operations by adding markets,
products, services, or stages of production to the existing business. The main purpose of
diversification is to allow a company or a firm to get into a new line of business which is
totally different from the current or existing business operation.
Basically diversification may be defined as a form of growth strategy. The main aim
of these growth strategies are to have a significant increase in the performance objectives
usually sales or market shares, which are compared beyond the past levels of
performance. Different organizations follow different kinds of growth strategies to attain
their goals. Many organizations go for more than one type of growth strategy. One of the
primary reasons for such is that many of the investors and executives are of the view that,
“bigger is better”. Growth in the sales is often used as a primary measure to calculate the
performance level. Even the profit level increases or decreases but if the growth curves of
sales is going upward, this satisfies many people. This assumption has often led to
believe that if sales increases, profit will eventually follow it.
If a firm is following a well planned and well designed strategy according to their
goals and aims, it is beneficial for everyone associated with it. Rewards are there if the
firm is pursuing the growth strategy. Based on the sales, managers are provided with
commission. Higher the growth level of sales, higher the amount of commission received.
Basically there are two types of diversification. These are:-
i) Concentric Diversification
ii) Conglomerate Diversification
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i) Concentric Diversification: - This type of diversification occurs when the new
venture of the firm is strategically related to the existing business operations. In such type
of diversification the firm adds somehow related products or markets to the current line
of business. The main aim of such type of diversification is to achieve a strategic fit.
Through the strategic fit, an organization is able to achieve synergy. In essence, synergy
is defined as the ability of two or more parts of the organization to achieve greater total
effectiveness together than that achieved by the effort of the independent parts. Synergy
can be attained by combining the firms with complementary marketing, financial,
operating and management efforts. For e.g., Financial synergy can be achieved by
combining the firm having the stronger financial resources but limited growth
opportunity with that of the firm having lesser financial resources but maximum growth
opportunity.
ii) Conglomerate Diversification: - In such kind of diversification, there is no
linkage between the old and the new businesses, i.e., both are unrelated to each other.
When a firm tries to get into a new venture which is completely different from the current
one, it is defined as a conglomerate diversification. In this type of diversification, synergy
can be achieved through the application of management expertise or financial resources,
but the main function of this diversification is the improved profitability of the acquiring
firm.
One of the foremost reasons for pursuing the conglomerate diversification is that
opportunities in a firm’s current line of business are limited. So as to find an attractive
investment opportunity, the firm is required to consider the other types of business
alternatives.
The other reason for following a conglomerate diversification is to increase firm’s
growth rate. Growth in sales attracts more and more people to invest in the company.
Apart from this growth may also increase the power and prestige of the firm’s executive.
This type of diversification is effective if the new area has growth opportunities greater
than those available in the existing business line.
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The biggest disadvantage of the conglomerate diversification is the increase in the
administrative problems associated with operating unrelated business. Managers having
different background face many problems in operating the task and unable to work
together effectively and efficiently. Competition between the strategic business units for
resources may entail shifting resources from one division to another. Such a move may
create rivalry and administrative problems between the units.
On the basis of direction, diversification may be classified as:-
i) Vertical Integration
ii) Horizontal Integration
i) Vertical Integration: - Vertical integration occurs when firms undertake
operations at different stages of production. This type of diversification can be divided
as-
a) Backward Diversification
b) Forward Diversification
The steps that the product goes through in being transformed from raw material to
the finished good in the possession of the customer constitute various stages of
production. Suppose the firm decides to diversify at the steps closer to the sources of raw
materials in the process of production, and then such a diversification can be called as
backward vertical diversification.
E.g. AVON ‘S primary line of business has been the selling of cosmetics from door-to-
door. AVON followed the backward form of vertical diversification by entering into the
production of some of its products.
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Similarly, if the firm decided to diversify when the product is about to manufacture or
when the firm moves closer to its customers in terms of the production stage, then the
diversification is known as forward vertical diversification.
E.g. LEVI STRAUSS & CO., traditionally deals in the manufacturing of clothes, has
diversified forward by opening up new retail stores to market its own products rather than
producing them and then selling to the other firms to retail.
ii) Horizontal Integration: - It occurs when the firm enters into the new business
either related or unrelated. It may be at the same stage of production as its current
operations.
E.g. AVON’S move to market jewel through its door-to –door sales force involved
marketing new products through existing channels of distribution. An alternative source
of marketing opted by AVON for its products are selling them through mail order and
through retail shops.
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Chapter 2
Review of literature
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Article 1: ASSOCHAM’s report: reality check on real estates
The forecast of ASSOCHAM’s Study on the Future of the Real Estate Investment in
India was estimated to be about US $ 60 billion future market size of real estate business
in India, the share of foreign investments will be within the range of US $25-28 billion
for the year 2010
Source:, http://www.assocham.org/arb/real_estates_reality_check.php
Article 2: India for Property Investment
It is not without reason that more and more domestic as well as international investors are
considering India for property investment. Real estate studies India shows that India has
the right environment that offers maximum benefits to the investors. India is the largest
democracy with exemplary democratic governance and institutions, has strong and
transparent legal and accounting system and most of all has legal protection for
intellectual property rights. Fundamentals of the Indian economy also have become
strong and sustainable. All these factors together make India the hotspot for investment in
every sector. According to an UNCTAD (United Nations Conference on Trade and
Development) report, India is among the top four Asian destinations for foreign direct
investment.
Invest in a profitable business in any sector - raw materials, power supply, fuel, tourism
or commercial ventures. Property investments in India include everything from lands,
land services, commercial real estate to residential property. Invest in commercial land,
agricultural land, land for schools, hospitals or resorts, land for houses, shopping malls
and more. Select your spot from the large geographical expanse that is India. Settle for
India’s commercial capital Mumbai, or other metros such as Chennai, Kolkata or
Bangalore or smaller cities such as Indore, Jaipur, Ahmedabad or Coimbatore. Make
revenue from tourism by investing in hotels, guesthouses or resorts in Kochi or Goa. The
possibilities are many!
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It makes sense to consider India for property investment, if you want to make your
business or any other venture profitable. No other country offers you all the ingredients in
the right measure to make any venture profitable and successful. With a growing middle
class, India offers the ideal market for making great profits, in any venture. The higher
buying power of the average Indian translates to the success of shopping malls, tourism
and product sales, be it the smaller consumer goods or bigger items such as cars.
As an investor, however, you need to have all the facts straight before investing.
And Realty Plus may be the knowledge powerhouse you may be looking for. Read Realty
Plus to know the best spots in India for property investment. Realty Plus is India's first
real estate monthly magazine packed with hundred pages of in-depth reports, surveys,
analyses and expert views on a variety of real estate issues. Learn everything about
properties in India for sale, buying, selling, renting and leasing out. Find also latest hot
property in India, which you can buy at amazing prices.
Property investments in India attract investors from every corner of the globe. But when
it comes to investing, knowledge is power. And, only Realty Plus gives you the
knowledge and confidence to make the right investment decisions in India.
Source: http://www.realtyplusmag.com/content1.html
Article 3 Real Estate Studies in India
Indian real estate companies have picked up really fast in the last few years. As per
recent Indian Real Estate research, the average growth rate returns is 30%, which tells
the tale of this booming industry. Latest Real estate research India has estimated a
revenue increase to $102 billion from $14 billion in the next decade. As per real estate
studies India, there has been an increase in the mass consumption, the trends are
26
changing the consumption pattern of luxury goods and corporate houses with great
purchasing power are also entering into the retail field of real estate.
The RPG Spencer has the largest presence with Music World, Food World, Health &
Glow in south India. Other major players such as Tatas, Birlas and Reliance are also
following the same line, explaining the rapidly increasing shopping malls and other
retail projects. The need for fun, entertainment and leisure has given rise to
various Indian real estate sites like hotels and multiplexes. As per Real Estate Research
India, the country has not only intellectual workforce, but also cost-effective labour, the
factor which has welcomed hundreds of telecomm, IT and ITES offices to build up in
the country.
According to Real estate studies in India, the country is extremely experienced when it
comes to raising and lending capital as compared to other countries. Foreign investors,
brands and realtors have been attracted to invest in the country, keeping in mind its
liberalization policies, free market and open policies of the FDI. The Bombay Stock
Exchange has recently experienced a rising boom, encouraging global players such as
Morgan Stanley to invest $68 million in Indian real estate market. As a conclusion of
real estate studies in India, we can see that as far as real estate is concerned, the bar of
investment has significantly raised. India has immense scope for building
infrastructure, in addition to increase investment returns by 50%. The commercial real
estate yield in India is larger than any other country, thus making it one of the most
popular destinations for real estate investment.
As per real estate studies in India, the lucrative market of real estate in the country are
also attracting interest of the NRI’s to buy properties for themselves or for their family
members or to just make an investment and reap benefits. The great demand has
convinced builders to come up with apartments and townships especially designed for
NRI’s, endowed with five star luxuries and all the modern amenities. For more
information on real estate studies in India, log on to www.realtyplusmag.com.
Source: http://www.realtyplusmag.com/content6.html
27
International Research Journal of Finance and Economics
ISSN 1450-2887 Issue 24 (2009)
© EuroJournals Publishing, Inc. 2009
http://www.eurojournals.com/finance.htm
Prospects & Problems of Real Estate in India
Vandna Singh
Head-MBA Department
Seth Jai Prakash Mukand Lal Institute of Engineering &Technology (JMIT)
Radaur, Yamunanagar
Komal
Lecturer, Institute of Technology & Management (ITM), Gurgaon
E-mail: [email protected]
Abstract
The present paper entitled as “Prospects and Problems of Real Estate in India” is an
attempt to reveal the issues concerned with the real estate investment sector in India.
This paper is concerned with the real estate investment and the emerging trends in the
real estate market. The paper has been divided into three sections. First section talks
about the real estate sector, its type and the features of the real estate market. Apart
from this it deals with the fundamental factors affecting the real value like demand,
supply, property, restrictions to use and site characteristics. Second part explains the
causes for the present real estate boom. It includes the foreign direct investment in the
realty sector and the exposure of the banks to this sector. It also deals with the price
variations in the realty sector with reference to per capita income and the GDP. Lastly,
third part deals in the constraints in real estate investment which includes various laws
to be considered, inflation rate and the barriers in the GDP growth.
28
ANALYSIS OF THE RECENT TRENDS AND THE EFFECT OF THE FINANCIAL CRUNCH ON CONSTRUCTION INDUSTRYRaveesh AgarwalFaculty, Institute of Management Education, GhaziabadAjay PandeyManagement Trainee, Institute of Management Education, GhaziabadArticle No: 178 ISSN 0974 – 9497Year: August 2009 Volume 3, Issue ¾
Abstract
This paper deals with the challenges faced by the present generation due to the current
crises in the world’s financial system. The current global economic recession is neither
the first nor the last to rear its head in the economy. An economic and the financial crises
provide a golden opportunity to the country and its private sectors to review its policies
and programme that are aimed at improving the productivity and the competitiveness. In
this fast and changing global scenario, each and every company is required to constantly
improve and renew their programmes and policies so as they are well prepared to face
any financial and economic crisis. This paper pays more emphasis towards the recent
trends and effects of financial crunches on the real estate sector. Besides this, it also
indicates how the ongoing financial crisis is affecting the construction industry by
reducing its growth, trade and investment flow, employment, remittances. Apart from all
these, the findings reveals that although the financial crunches has a deep impact on the
real estate sector but still it has a great opportunity to overcome all such kind of issues by
analyzing and reviewing its reforms and issues and by providing its best service to its
customers at a lower price than its competitors. Finally, the paper also suggested various
issues that a private sector can follow in order to cope up with such situations and
conditions and by which they can take advantage in their nearby future.
29
Chapter 3
Research Methodology
30
3.1 Objectives
The broad objective of the project is to study the diversification of a real estate company to the publications.
i) To study how a real estate company is diversifying itself to the publications.
- potential advertisers
ii) To study general buying behavior of people’s while purchasing a property and
perception of peoples about Delhi and cities of NCR.
Research is a growing need in any organization of the present world. It is helpful in
identifying the consumer needs and wants so as to launch a product or to bring about
improvements in the existing products. This is done to gain competitive edge over others.
Success of the research depends upon the methodology adopted. The study was based on
descriptive research.
The research methodology deals with the
1. Research problem
2. Data collection
3. Research technique
4. Sampling methods
5. Analysis and Interpretation of research work.
3.2 Research Problem:
TheBricks is diversifying its business from Real Estate to Publication and the company wants to know about the current status of the business of advertisements in real Estate sector.
The company wants to know about the general buying behavior of people’s while purchasing a property.
31
3.3 Factors and Parameters
The questionnaires as shown in annexure 1 and annexure 2 were prepared in order to get all the information needed by the company to diversify its business as well as to know the general buying behavior of the people and perception of the people about various cities while buying a property
In questionnaire designed to know general buying behavior of people and their perception about Delhi and cities of NCR parameters taken were
1. Location - This parameter includes all the location factors such as proximity to central business district, to schools, to hospitals, existence of huge shopping malls, etc.
2. Business Opportunities – These parameters helps in analyzing the perception that people have about the job opportunities and business prospects available in different cities included in NCR.
3. Quality of Living – This parameter helps in analyzing what people think about the style of living prevalent in the 5 cities included in NCR.
4. Law and Order – This parameter helps in analyzing what people about the safety and security situation prevalent in the 5 cities chosen for the survey.
5. Infrastructural Development – This parameter helps in analyzing how respondents rate 5 different cities chosen for the survey, on the basis of conditions of road and highways, availability of public transport, etc.
External Factors
1. Price Range2. Connectivity to Public transport3. Proximity to workplace4. Availability of loan5. Easy Payment Plans6. Rate of Interest7. Resale Value8. Clear title of property9. Proximity to School10. Proximity to Hospitals11. Proximity to Entertainment Centers
3.4 DATA COLLECTION:
32
Data is collected from two sources:
1. Primary Data
2. Secondary Data
PRIMARY METHOD
1) Face to Face interview2) Questionnaires3) Telephonic Survey
SECONDARY METHOD
1) Magazines on Property2) Internet sites on Property3) Internet websites of popular property developers of India
1. Primary Data :
a. Primary Data is collected by using Depth Interviews with the property
dealers, Builders and peoples living in societies in Delhi and NCR region.
b. This helped in finding out the factors for the Research problem.
c. Structured Questionnaire is used as the major tool for primary data
collection.
2. Secondary Data:
o The Secondary data consists of information that already exists somewhere
having been collected for another purpose and researcher begins the
research work by first going through the secondary data.
o Here Secondary data is collected from various property journals and
property sites like www.makaan.com and www.9acres.com.
3.5 Research Technique
33
Basically techniques for marketing research can be broadly classified into two
parts:
Qualitative techniques – comprise of providing insights & understanding of
problem setting.
Quantitative techniques – seeks to quantify the data & typically applies some
form of statistical analysis.
Also research can be divided as:
1. Exploratory Research
2. Conclusive Research
o Descriptive
o Causal
The research design used here are:
Descriptive research (quantitative research) –
The major objective of this research is to describe various market characteristics &
consumer behaviour. It is conducted for following reasons:
To estimate the percentage of units in a specified population exhibiting a certain
behaviour.
To determine the perception of product category.
The instrument used for descriptive research was questionnaires & technique used was
door to door survey.
3.6 Sampling Technique
34
Population: i) Property dealers and builders in Delhi and NCR region
ii) Peoples living in Delhi and NCR region.
Sample Size
i) 213(For Property Dealers and Builders)
Area Covered Deepali
Peetampura
Rohini
Dwarika
Kohat eclave
ii) 70(For Customers)
Area Covered Kalindi Apartments(Delhi)
Anand Apartments(Ghaziabad)
Sai Apartments(Noida)
The Sampling Technique that is used in the project:
Convenience Sampling
Convenience Sampling:
o Convenience sampling attempts to obtain a sample of convenient
elements.
o It is a non probability sampling technique.
35
Chapter 4
Data Analysis
4.1 Analysis of dealer’s data:-
36
How do you maintain your sales?
Frequency Percent Valid PercentCumulative
Percent
Valid Depends upon walk-in 35 16.4 16.4 16.4
Advertisements 75 35.2 35.2 51.6
Contact Based 103 48.4 48.4 100.0
Total 213 100.0 100.0
Table 1
Fig. 1
37
Inference: Answering the question “How do you maintain you sales?” about 48.36 percent of the respondents answered that they maintain their sales on contact bases whereas about 35.21
percent of the respondents said that they advertise about their company and the properties available with them for sale. Now the company can target these 35.21 percent of the
respondents for advertisement in their magazine.
Which medium will you prefer for advertisement?
Frequency Percent Valid Percent Cumulative Percent
Valid Magazine 58 27.2 27.2 27.2
Newspaper 93 43.7 43.7 70.9
Internet 47 22.1 22.1 93.0
TV/Radio 15 7.0 7.0 100.0
Total 213 100.0 100.0
Table 2
Fig.2
38
Inference: The Company is diversifying itself into magazine publication whereas the advertisements in magazine will also be available on company’s website so in this way a real estate agent or builder can advertise his property through magazine as well as through internet.
The answer to the question “which medium do you prefer for advertisement?” 27.23 percent of the total respondent said that they prefer magazine whereas 22.07 percent of the people said that they prefer internet for advertisement. So about 50 percent of the total respondents said that they will go for magazine or internet for the advertisement of their property.
Now ‘The Bricks’ is going to advertise through magazine as well as through internet so the company can target these 50 percent of the respondents for advertisements.
Table 3
Do you want to expand your business from current state?
Frequency Percent Valid Percent Cumulative Percent
Valid yes 189 88.7 88.7 88.7
no 24 11.3 11.3 100.0
Total 213 100.0 100.0
39
Fig. 3
Inference: On asking the question weather the property dealers and builders wants to expand their business from current level, 88.73 percent of the people responded that they want to expand their business from current level whereas only 11.27 percent of the people said that they are satisfied with their current level of business and they don’t want to further expand their business.
Table 4
40
Do you want to expand your business from current state * which medium will you prefer for expansion of your business?
Cross tabulation
which medium will you prefer for expansion of your business
Total
Relationship
building
Opening new offices
Advertisements
Collaborations
do
you
want
to
expa
nd
your
busi
ness
from
curre
nt
state
Yes Count 16 55 107 11 189
% within do you want to expand your business from current state
8.5% 29.1% 56.6% 5.8% 100.0%
% within which medium will you prefer for expansion of your business
100.0% 100.0% 99.1% 100.0% 99.5%
% of Total 8.4% 28.9% 56.3% 5.8% 99.5%
No Count 0 0 1 0 1
% within do you want to expand your business from current state
.0% .0% 100.0% .0% 100.0%
% within which medium will you prefer for expansion of your business
.0% .0% .9% .0% .5%
% of Total .0% .0% .5% .0% .5%
Total Count 16 55 108 11 190
% within do you want to expand your business from current state
8.4% 28.9% 56.8% 5.8% 100.0%
% within which medium will you prefer for expansion of your business
100.0% 100.0% 100.0% 100.0% 100.0%
% of Total 8.4% 28.9% 56.8% 5.8% 100.0%
Inference: The result for the crosstab between “Do you want to expand you business?”
and “which medium will you prefer for expansion of your business?” shows that out of
88.73 percent people who wants to expand their business from current level 56.3 percent
41
of the respondents wants to go for advertisement for the expansion of their business. It
shows that there is a good number of property dealers and builders who wants to
advertise their business through advertisements.
Table 5
How do you see real estate sector in terms of opportunities?
Frequency Percent Valid Percent Cumulative Percent
Valid very good 115 54.0 54.0 54.0
good 64 30.0 30.0 84.0
average 26 12.2 12.2 96.2
Poor 8 3.8 3.8 100.0
Total 213 100.0 100.0
42
Fig. 4
Inference: Asking the question “How do you see current status of Real Estate Sector in terms of opportunities?” 53.99 percent of the total respondents said that the sector is really good and there are lots of opportunities of growth in this sector. 30.05 percent of the people responded the sector as good, 12.21 percent of the respondents said that its is average whereas only 3.76 percent of the respondents considers it as poor in terms of opportunities, which shows that the sector is on a boom in terms of opportunities
Table 6
On given a chance will you go for collaboration with other firms
Frequency Percent Valid Percent Cumulative Percent
Valid yes 44 20.7 20.7 20.7
no 169 79.3 79.3 100.0
Total 213 100.0 100.0
43
Fig. 5
Inference: The response to the question “on given chance will you go for collaboration with other firms” nearly80 percent of the total respondents answered as NO where as only 19.72 percent of the total respondents answered that YES that can work in collaboration with other firms. The Bar charts above shows the result shows that the Real Estate sector is a highly unorganized sector where different property dealers and builders do not want to work in collaboration with each other.
44
4.2 Analysis of Consumer feedback
Table 7
What was the factor that affects the most on purchasing decision in this complex?
Frequency Percent Valid Percent Cumulative Percent
Valid Brand name of developer 3 4.3 4.3 4.3
Location 27 38.6 38.6 42.9
Affordability 40 57.1 57.1 100.0
Total 70 100.0 100.0
45
Fig. 6
Inference: While purchasing a property the factor that effects buying decision of a customer the most is “Affordability” 56.34 percent of the total respondent said that they look for affordability firs while purchasing a property. After affordability the second most prominent factor is location of the property, about 38.03 percent of total respondents responded in favor of Location.
Table 8
46
Descriptive Statistics
N Mean Std. Deviation
Upto What extent price Range affects your choice of society(Rate on a scale of 1-7)
70 6.1000 .68419
Upto What extent connectivity to public transport affects your choice of society(Rate on a scale of 1-7)
70 2.2000 .80937
Upto What extent proximity to workplace affects your choice of society(Rate on a scale of 1-7)
70 2.9429 .84931
Upto What extent Availability of loan affects your choice of society(Rate on a scale of 1-7)
70 5.1857 .70798
Upto What extent Resale value affects your choice of society(Rate on a scale of 1-7)
70 2.3286 .63065
Upto What extent Clear title of property Affects your choice of society(Rate on a scale of 1-7)
70 4.1429 .85611
Upto What extent infrastructure Affects your choice of society(Rate on a scale of 1-7)
70 5.6714 .92817
Valid N (list wise) 70
Inference: On asking to rate the factors affecting the choice of a society to purchase the property Price Range were the first and foremost factor that effects the decision. On a scale of 1-7 the mean for this factor comes out to be 6.1 which is very high. This shows that how price range effects the decision while purchasing a property in a society. The second factor that affects the most is Infrastructure of the property and the ambience of the society.Very close to Infrastructure factor is Availability of loan for the purchase of that property. This shows that people to a large extent believes in availing loan for the purchase of their property and hence the factor “Availability of loan affects the buying decision of a person to large extent.
Perception of people about Delhi and cities of NCR.
47
Fig. 7
Inference: Here opinion of the people about Delhi and various cities of NCR were taken on various attributes like Location, Business Opportunities, Law and Order, Quality of Living, Infrastructural Development and the following inference can be drawn.
Location: Delhi was considered to be the best place to live as far as location is considered. Whereas giving it a competition next to Delhi is Noida. It is chosen as the best location to live in entire NCR. Noida is located close to the Capital of India and is also very closely located to Indirapuram, another upcoming city.
Business Opportunities: As far as Business opportunities are concern Delhi is again at number but according to the opinion of the respondents all the NCR cities including Ghaziabad is giving it a good competition. So in terms of Business Opportunities both Delhi as well as the cities of NCR has scored well.
Quality of living: Delhi is again the first choice of the people on the parameter of Quality of Living following it is Noida.
Law and Order: considering law and order as the parameter Delhi and all the taken cities in NCR region lies almost at the same level with Delhi leading again and Noda just following the lead.
Infrastructural Development: Delhi is again top in the list as far as Infrastructural development is concerned whereas on second place in the list is greater Noida.
48
Conclusion
There is a good portion of property dealers and builders who wants to advertise
themselves or property available with them either through magazine or through
internet, company can target these property dealers and builders as their potential
advertisers.
The small companies in major don’t want to work in collaboration.
The major external factors which people consider while purchasing the property
are price, availability of loan and proximity to workplace.
In Peoples perception Delhi is considered to be the best place on all the
parameters and Noida is the second choice.
49
Recommendations
Apart from the real estate agents and dealers, the company should approach
architects and interior designers also.
The company has limited its research to the Delhi and NCR region only, it should
go for other regions also.
A follow up should be there for the dealers to whom the contact in first meeting is
not successful.
50
Limitations
Study was restricted to some parts of Delhi and NCR region only.
Study was restricted to property dealers and builders only whereas we could
consider architects and Interior designers also.
Analyzing the perception of people about different cities of NCR was little
difficult as some respondents didn’t have much knowledge about the other cities
in NCR
Denial of many Property Dealers and Builders to provide the information about
the properties they deal in.
51
References
www.makaan.com
www.magicbricks.com
www.ansalspropertiesltd.com
www.eros-group.com
www.eldecogroup.com
www.omaxe.com
www.parsvnath.com
www.ashianahousing.com
www.gurgaonproperties.net
www.realestatencr.com
www.gurgaonrealestate.com
www.estatedeveloper.com
52
Annexure 1
Questionnaire
AMITY BUSINESS SCHOOL
Respondent’s Name______________________________________
Name of Apartment______________________________________________
Self owned property Rental
If rental, have you invested in any other housing complex
Yes No
What is the most important factor that affect your buying decision while purchasing property in this apartment?
Brand name of developer Location
Attractive and frequent ads Affordability
To what extent do the following factors influence your choice of a housing complex(Rate on a scale of 1-7)?
Not at all very large extent
Price range _____/_____/_____/_____/______/_____/______
Connectivity to _____/_____/_____/_____/______/_____/______Public transport
Proximity to _____/_____/_____/_____/______/_____/______Workplace
Availability of _____/_____/_____/_____/______/_____/______loan
53
Resale value _____/_____/_____/_____/______/_____/______
Clear title of _____/_____/_____/_____/______/_____/______Property 1 2 3 4 5 6 7
Give preference among the cities on the bases of given parameters
Gurgaon Noida Greater Noida Ghaziabad Delhi
Location
Business Hub
Quality of Living
Law and Order
Infrastructural Development
54
Annexure 2
Questionnaire
AMITY BUSINESS SCHOOL
Q. 1. Which category you best fit in:
1 Financer 2 Agent / dealer
3 Registered company 4 Builder /constructor Civil contractor
Are you in Construction?
Yes No If Yes, Then site details _______________________________________________________ _______________________________________________________ _______________________________________________________ Q.2 How do you manage your business/projects?
1 Category of personnel employed 2 Contact Based
3 Advertisement 4 Area specific Contacts
Q.3 Do you want to expand your Coverage area of business?
Yes No If yes, how:- 1 Relationship building 2 2 Opening new Offices 3 Advertisements 4 Channel Partners
55
Q.4 How much network is important in this sector?( plz tick)
1 2 3 4 5
No use Most importantQ.5 what do you feel about current status of real-state in terms of opportunities?
1 Very good 2 Average
3 Good 4 Poor
Q.6 Which medium will you prefer for advertisement of your property?
1 Magazine 2 Newspaper
3 TV/Radio 3 Internet
Q.7 Given a chance will you go for collaboration with other firms?
Yes
No
Q. 8 any suggestions:- _________________________________________________________
_________________________________________________________
Personal details:- Name & Organization ……………………………………………………
Address: ……………………………………………………
…...………………………………........................
Contact No:.………………… E- mail: …..…….………………………
Date: ____/____/2010
56
