Don’t walk out of your home
As there’s no place left in hotels...

(column by Siddharth Nahata)

Hospitality industry is on a rock-and-roll to the beat of the booming economy and to the spiralling number of business and leisure travelers from the international and national space. And whether it is the Taj Mahal in Agra, or the backwaters of Kerala, the one sure area where foreign travellers would spend on, is booking hotel rooms. In FY06, approximately 4 million foreign tourists arrived into India (a growth of 11%) and shelled out $6 billion. Low-cost airlines have further provided an impetus to the sector. The boom is being witnessed across hotels of every segment. Recent developments have even led to capacity crunch situations in hotels, and this, despite many of the top hotels investing in capacity additions over the past five years. The occupancy levels of hotel rooms across major cities have either scaled up or remained firm. Average Rental Revenues (ARRs) have also gone up in the range of 15-35%.

The maximum growth in ARRs was witnessed in Bangalore, backed by the demand from the ever growing IT industry (and its much frequent expat-driven seminars). The average rent per day in five star hotels in the city towered to as much as Rs.11,000, a swell of 25% as compared to year earlier. The soaring numbers have once again brought back the hotel industry into the limelight. More than 120 luxury hotel projects have already been announced. In order to cash in, Taj Group has announced its plans to build (or acquire) 23 additional hotels, adding more than 2,000 rooms to its war chest. Even realty players like DLF are entering the new battleground, which has already seen international hotel brands like Amanda, Satinwoods, Banana and many others announce their India plans. So the next time you have a fight with your wife and are thinking of trudging up to the nearest hotel, better call up before leaving your home!

(End of Siddharth Nahata column)

Festival of splurging

(column by Vareen Gadhoke)

It’s festival time once again and India Inc. – especially the biggies in the real estate sector – are making the most of it for sure. With a stupendous growth rate of 30% in 2005 in terms of value, the real estate sector currently stands at a humongous $12 billion turnover, with a fantastic CAGR of 15% during the last decade. The sector is expected to touch the $50 billion mark in 2010, and $180 billion by 2020. Real estate behemoths like DLF, Ansal, Hiranandani, Omaxe et al are looking forward to the upcoming festival season to give further impetus to the sector. States Arvind Khanna, COO, Beekman Helix India Consultants, “The whole action will remain concentrated on the residential segment. Action will be at its peak during Navrataras, since it is considered to be more auspicious to buy homes during Navratras than in Diwali.”

Diwali is one time of the year when buying and investing reaches new heights. To tap into the festivities, a lot of real estate players are pushing ahead their projects for the gala season. Explains Vikram Bhatia, Chairman and MD, Splendor Landbase Ltd., “Indians are still bound by deep rooted traditions and cultures and they try to make important landmarks of their lives on auspicious and religious days.” And if you seriously thought that even prices might rise, given the increased demand, relax! Historically speaking, the best of bargains, and employee bonuses, have come around only during this season. Go ahead, light that festive lamp and call up your stodgy bankers. You might need to make quite a lumpsum withdrawal!

(End of Vareen Gadhoke column)

Composite? Come of it...
A revolutionary technology, but costly

(column by Karan Mehrishi)

So what is more important in today’s car – affordability or contemporary design? If present trends are to be believed, then surprisingly both are! But amidst all this hoopla, there appears to be a grey patch. Manufacturers are in a dilemma about how to make cars lighter & hence, more fuel efficient. The answer is really not simple as it comes in a complex and expensive package called ‘composite material’, which is defined as a combination between two or more materials with non similar properties, thereby inheriting the inherent strengths of a variety of materials used. Such materials are extremely robust and are still unbelievably light. It is estimated that these heavily engineered combinations are about 80% lighter then commonly used steel and can still manage to maintain a structural integrity even at extreme operating temperatures of 2000 degree fahrenheit. Since composites are high tech materials, they are generally used in areas where high performance in stressful situations is paramount, such as in auto racing & aircraft fuselages. As Dr. Richard Butler, senior lecturer at Bath University mentions, “(Such material) gives an overall 30% weight saving to aircraft.” Composites also don’t compromise on the design quotient. Gordon Smith of Warwick Manufacturing Group states, “You can do extremely complicated shapes...” As such materials require high capital intensive capabilities, they are certainly not currently in economy spectrum. Sports cars like Ferrari F430 and Lamborghini Gallardo already use composites in their structural frame for an efficient power to weight management. Even saloons like the BMW M3-5 and Audi RS4 have become “composite.” Clearly, unless this new technology becomes affordable, composites will continue to remain as much a part of auto folklore, as are Ferraris!

(End of Karan Mehrishi column)

Are Indians finally rich?

(column by Siddharth Nahata)

In FY ‘06, the automobile industry grew by 12% in terms of numbers and 10% in value terms. Furthermore, exports crossed the $2 billion mark. At the moment, the auto industry accounts for 5% of the GDP, and these figures are expected to keep on flying high in future. Both national and global players seem to be bullish on India as never before. Minister of Heavy Industries and Public Enterprises, Santosh Mohan Dev, on September 7, 2006, at the Annual Convention of the Society of Indian Automobile Manufacturers (SIAM), confirmed, “Manufacturers have announced plans to invest Rs.11,000 crore in the past 9 months.” On the same day, Japanese automobile giant Suzuki announced a fresh investment of Rs.30 billion in Maruti. The investment will be added on to Rs.60 billion investments earmarked by the company for new models and new plants. Even Honda is gearing up with an investment size of $200 million. M. Takedagawa, CEO & President, Honda Siel, divulged, “The plant will be primarily used for small cars production. However... we will be in a position to launch a small car only in 2010.” Tata Motors (with Rs.120 billion planned investments over the next four years), TVS (with Rs 4.5 billion currently earmarked) are leading the Indian brigade with gumption. The way these companies seem to be intent on selling more and more cars to Indians, it seems Indians are finally getting richer... or are they really?

(End of Siddharth Nahata column)

If only I had the money, sigh
BBC TopGear winner, Apache 150!

(column by Karan Meherishi)

The funky youth of today, who wish to make no compromise on either style or quality, are lusting for their dream machines. And the brand that has satisfied this lust quite admirably, is the one and only Apache 150. In the fourth month of its launch, this brand has already become the number two brand in the premium motorcycle segment and is expected to garner a sizeable share in this segment during the current financial year. The parent company TVS’ motorcycle sales went up by 28% in July, and a big chunk of this is due to Apache. Truly, TVS’ erstwhile conservative outlook has seen a paradigm shift since the entry of the Apache. As now, finally, the company has turned a new leaf and has been exploring international expertise in enhancing the style factor. K. N. Radhakrishnan, President, TVS Motor Company, upholds: “India has the youngest population in the world with 70% under 35 years. However, the motorcycle density in India is just 40 motorcycles per one thousand persons. Favourable demographics, rising disposable incomes, high growth in services sector, low cost retail finance and rising personal aspirations are all leading to a healthy growth in motorcycle market.” Advice from leading European design studios, especially in Milan, and visiting top design schools for recruitment, have been part of a corporate move by TVS towards more elegant and efficient products. The company, through the Apache, has designed a motorcycle that is currently unmistakably perceived as the most gorgeous bike on the streets today. In a segment which is characterized by the likes of Bajaj Pulsar and Honda Unicorn, TVS finally has a product positioned right on, especially after their not so creditable attempts with the Fiero, and the past era’s Shogun. In such a short time, Apache has obtained several ‘Bike of the Year’ awards from all leading auto magazines. But more creditably, it won the best design award from BBC TopGear & even from the Overdrive magazine. Well, if we had the money, we’d buy the Apache right now! Well, if we “really” had the money, we’d perhaps buy a Bentley, eh?!

(End of Karan Meherishi column)

The SUV mania

(column by Siddharth Nahata)

From monstrous Hummers to sturdy Pajeros to the suave Mercedes M-class, we love them all. But the SUV rage has been hit globally as the tension continues to mount over fuel prices. The sales of SUVs in the US declined by a big margin, which had made a huge dent on companies like GM, Ford etc, whose major part of the sales come from the SUVs (or tough trucks) segment. However, in India, it’s like a chalk and cheese story. Mahindra & Mahindra is the clear leader in the SUV segment. Scorpio, in fact, outperformed Tata’s Sumo and Safari combined. Sales figure for Scorpio for the month of August stood at 3794 units, an increase of 20% as compared to the previous year. Tata’s Safari and Sumo accounted for sales of 3451 units, a growth of 29.7%. For M&M, the utility vehicle segment grew at a healthy rate of 11.7%. Given comparable prices, what seems to be the reason? Urmil Negandhi, auto analyst, Parag Parikh Financial Advisory Services Limited remarks, “Mahindra Scorpio, due to its European styling, completely hammers its peers.” In view of the topical trends and booming economy, the SUV segment seems to be continuing to remain hot amongst Indian consumers and auto manufacturers. Industry analysts have still not been able to decipher away the significance of increasing fuel prices over SUV sales. And now, with even mini-vans (like Innova etc) being attempted to be sold under the SUV tag name by dealers, perhaps the bigger competition for true blue manufacturers is from these Johny-come-lately substitutes.

(End of Siddharth Nahata column)