When ‘real’ growth is what you desire, you need to face ‘reality’!
The realty sector in India is quickly coming up to global standards, but a lot still needs to be done...

(column by Sharvan Gupta, EVC & MD Emaar MGF Land Pvt. Ltd)

In India’s fast-growing economy, real estate has emerged as one of the most attractive investment areas for domestic as well as foreign investors. Research estimates that Indian Real Estate market is expected to grow from the current $14 billion to $102 billion in the next 10 years. As per ASSOCHAM, the booming real estate market will gain momentum and is likely to attract foreign investment worth Rs.80 billion in 2007.

The main growth thrust is primarily due to favourable demographics, increasing purchasing power, existence of customer friendly banks & housing finance companies, professionalism in real estate and favourable reforms initiated by the government to attract global investors.

The country has had three good fiscals of growth and currently is clocking a 9% growth rate. Add to this a pre-disposed government focused on strengthening India’s socio-economic fabric through continuous reforms and liberalization charter. Additionally there is a huge focus on developing the social and physical infrastructure of the country including roads, airports, bridges, SEZs, cities and integrated townships.

The sector which was largely unorganised fragmented and unregulated in the 1990’s has seen tremendous transformation. Relaxation in government regulations and liberalisation of the market has resulted in foreign funds investing in the sector. A large number of global private equity firms like Goldman Sachs, DSP Merrill Lynch, Morgan Stanley and JP Morgan have started investing in the Indian real estate market. It is estimated that over $4- 5 billion of FDI was pumped into the sector during 2006, while during 2005-06, the bank credit to the sector touched Rs.2.60 trillion against Rs.1.45 trillion during the previous year. Streamlining of the regulatory framework has gone a long way in making the sector more transparent, thus making the environment more investor-friendly. Today, the Indian real estate sector has moved into the large corporate space by getting listed, forming credible JVs with large foreign partners. This capital infusion from legitimate sources has further led to the sector being organised and transparent.

Increasing exposure to international capital has also encouraged local firms to match international standards, thereby raising the bar for domestic players. The immediate beneficiary has of course been the Indian customer who gets the benefit of high quality products across a wide range. Also, this has helped in ‘corporatising’ the Indian real estate sector resulting in higher standard in accountability, performance, quality and on time project management. One can see significant improvements in market transparency, with better standards of reporting and legal processes.

Having said that, I feel there is a lot more that can be done to ensure more accountability, transparency and discipline in the real estate industry. In order to help this sector gain more respect, a more focused and liberal approach & the right kind of impetus has to be given by the government. The government has to join hands with the private sector, as it can further catalyse growth. A more supportive attitude, sustained focus and relaxed fee structure would give the sector the much needed thrust.

(End of Sharvan Gupta column)

The King of Clean Times

(column by R. Prasad)

Ever wondered how much of a regulation it is for a mother to run with a bottle of Dettol around her beloved child, who has come back home after a game of cricket – his hands scratched and bleeding. Though she is chiding him for his misadventures, at least she can be assured that her child will be well taken care of. That’s the kind of assurance and credibility associated with Dettol; and many other brands from the stable of Reckitt Benckiser (India) that have become an integral part of our daily lives.

At a time when FMCG players like Hindustan Lever Limited (HLL) and Procter & Gamble (P&G) were dominating the consumer-care segment, Reckitt Benckiser (with household names like Harpic, Cherry Blossom, Lysol, Colin, Veet, Clearsil, Strepsils, Vanish, Easy Off Bang, Mortein and many more in its kitty) has managed to create a niche for itself in this already crowded segment. For more than half a decade, Reckitt Benckiser has been ably led by its mild mannered & stoic Managing Director, Chander Mohan Sethi, who has displayed relentless resolve to take challenges head on – akin to the challenges of dirt and lesion that the company’s products fight everyday.

After completing his Management degree from the Motilal Institute of Business Management, Allahabad, Sethi started his corporate journey with Reckitt & Colman of India in 1984 as a Branch Manager for the eastern region. His outstanding performance at the company soon saw him being promoted to the post of National Sales Manager in 1987. He was later transferred overseas and worked in West Africa and Nigeria. In his two decade stint, he has seen the company both through the good and bad times – when the company became a subsidiary of the global FMCG giant Benckiser in 1999 and was renamed Reckitt Benckiser (India) Limited and also when the company’s four-year-old JV with Nicholas Piramal ended in 2001.

However, the dissolution of the JV did not hurt Reckitt Benckiser much, as they got their hands on the prized 65-year-old brand Dettol and Disprin. Keenly understanding the Indian market, Sethi took no time to extend the company’s flagship brand Dettol, which is the leader in the antiseptic market with an 85% market share. The market was soon flooded with Dettol Liquid Hand Wash & Dettol Soap that have managed to find a prominent place in people’s bathrooms. The brand extension strategy was a runaway success as Dettol Liquid Hand Wash created an altogether new segment. It now commands 60% of the market in this new category. In the health soap division too, Dettol Soap accounts for 18% of the market. Explaining the core philosophy that drove his business, “media shy” Chander Mohan Sethi (as he likes to call himself) told B&E, “Challenge in business is continuous and is accompanied by continuous innovation and rejuvenation.”

If perseverance and passion ever remained a yardstick to judge an employee’s mettle, then Sethi would be outclassing the rest of the herd. For, if it were not for him steering the ship called Reckitt Benckiser, then the company would have surely gone under, at least in the Indian seas. Despite cut-throat competition from HLL, P&G and Godrej – all vying for a large portion of the FMCG pie – Reckitt Benckiser showed its mettle to become a prominent consumer goods player in the South Asian markets. However, the company did have its share of troubles. Reckitt Benckiser (India) was de-listed from the bourses in 2003 and it was then that Sethi’s mercurial mettle came to the fore, when the FMCG major underwent a major restructuring exercise and successfully came out of the financial woes. Since then the company has grown at a healthy rate of 10-12%. Ecstatically talking about the restructuring, Sethi says, “The exercise showed clear support of people & the clear support of brands.”

Reckitt Benckiser’s standing as a global enterprise got a boost when it gobbled up Boots Healthcare International in October 2005 for a mind-blowing £1.9 billion. With this acquisition, the company was able to add three more global brands – Sweetex, Strepsils and Clearasil – to its ever expanding kitty. The trio was earlier marketed via a JV between Nicholas Pi-ramal & Boots Healthcare International. Sethi, who is also the group’s Regional Director (South Asia), pointed out that this acquisition further strengthened Reckitt Benckiser’s place in the personal care & healthcare domain. According to a recent report by research firm ACNielsen, Reckitt Benckiser is recording a healthy growth rate of 40% and that too without any major investments. When we quizzed Sethi on Reckitt Benckiser’s entry into the food segment, he was pretty tight-lipped and not at all perturbed that arch rival Godrej Consumer Products Limited (GCPL) had entered into a JV with Hershey earlier this year.

Seems like the company’s strategy is to take its existing brands to a new pedestal in the Indian consumer care mart, before looking at other segments. Divulges Sethi, “Reckitt Benckiser is the number one emerging modern brand in metros”, However, reaching this position was not easy for the company. A number of strategies, media campaigns, advertising et al, has helped the company reach its current position. Time and again, the company has roped in different brand ambassadors to promote its products. A case in point being Harpic, whose communication strategy became immensely popular with the housewives after small screen stars – Roshan Abbas & Aman Verma – were roped in. Bollywood actress Katrina Kaif too brought her youthful exuberance by endorsing the Veet Hair Removal System. Elaborates Sethi, “Through these brand ambassadors, people see and believe in what you stand for, then only they would internalise that.”

Sethi believes in carrying forward the monumental legacy of his company that has been built on trust. In complete contrast to his overtly aggressive attitude as a manager, Sethi as a leader exhibits a calm and composed demeanor. He appears to be a man who walks the talk and when our interaction with the head honcho of Reckitt Benckiser reached the topic of leadership, Sethi strongly propounds that HR experts are the best brains to discuss leadership traits. His leadership mantra seems to have been mirrored on the thoughts & teachings of the Father of the Nation – Mohandas Karamchand Gandhi. He stresses the need for a leader to be more transparent in functioning and empowering the individuals in his/her team. Sethi adds, “A leader should be a simple person. He needs to have a vision which is clear, yet challenging and should be communicated so that it is easily bought by the people. The leader should reflect transparency, fairness, objectivity, honesty and commitment. A leader should create and celebrate success!”

Work apart, Sethi takes time out of his busy schedule to spend time with his family and prefers holidaying at the Swiss Alps. Though our interaction with one of the architects of a leading FMCG giant ended, but the learnings that we garnered from the veteran, will remain with us for a long time, much like the effect that his caring products have on the lives of millions of its users!

(End of R. Prasad column)