Ambience IPO: Attractive in Short Term or Only Long Term?

The upcoming IPO from NCR-Delhi based Ambience Limited has many trappings of a winner, but unfortunately, some strange downsides too.

The realty major’s principal claims to fame are their projects themselves. The Group runs India’s largest currently operational shopping mall. Gurgaon’s Ambience Mall with over 1 km of shopping space on each floor is something more than a mall; for the past couple of years it has been a popular modern tourist destination in the country. The ambition to build this kind of a project is critical when investors decide to subscribe to an IPO or not.

Ambience Island, a mix-use township which includes this mall, apart from a Leela Kempinski and several apartment complexes stands testimony to the Group’s planning, designing, and construction competencies. In fact, Ambience is one of the bigger developers with their own construction infrastructure.

Secondly, Ambience is active in all facets of real estate development from residential to commercial to office space to SEZ. Next should come the company’s sharp focus on the largest real estate market in India – the National Capital Region. It is a reasonable achievement that Ambience has been able to stitch together a prime land bank of over 800 acres in NCR cities, out of which nearly 75% is licensed land, which means it is readily developable, unlike the usual agricultural land.

The credentials of the main promoter is also good. Chairman Raj Singh Gehlot is a Chartered Accountant by training, and he has been noted from the very beginning for a unique philosophy in development – that Ambience will develop only projects that are either of these three – large, premium, or innovative.

The main downside for this IPO is the debt the company has accumulated over the years. At 2500 crore, this debt is a bit troubling for the analysts. Of the Rs. 1300 crore IPO proceeds, Rs. 475 crore will go straight to service this debt. That is not a grave problem as such, but the debt that will remain still on the books can be troubling.

Secondly, the company is focussed on luxury, a realty paradigm that even when it refuses to die, is going through a deep crisis. Ambience is more comfortable creating townships with golf courses, rather than suburban condominiums with no garden. The company is yet to have a sound strategy to address the affordable segment comprising of middle-income homebuyers. However, this is not something unthinkable for the firm as it has its roots in constructing more down-to-earth apartments in New Delhi suburbs in the 80s and 90s.

The main hurdle for this IPO would however come not from within the company but from without. Despite Nifty & Sensex racing ahead, realty indices are still down. Ambience had filed its Red Herring on the last day of September last year, the same day as Lodha and Reliance Infratel, and one day before Emaar MGF and Sahara Prime City. All of them are yet to open their offers. To stand out among this crowd, Ambience is scouting for a an anchor investor and also working out the offer price.

Oberoi IPO: Will Style Meet Substance?

When Vikas Oberoi finally takes his realty firm public in the coming days, it will be in style, much like whatever he does. Like how he is acquiring the ‘The Beach’ in Goa now, how he cruised into Forbes’ 15 Youngest Asian Billionaires in 2008, and of course his Las Vegas engagement and dream wedding to former model and actress Gayatri Joshi.

However, the public offer climate for realty is not much positive with realty indices failing to look up, lackluster performance of recent real estate IPOs like DB Realty & Godrej, and bigger public issues like Sahara Prime City, Lodha, & Ambience waiting in the sidelines.

The IPO gets its style and substance from a 4/5 rating from CRISIL that indicates above average fundamentals. These days it is not sure whether even such a rating is enough to save a realty IPO, but one thing is sure, this rating is not common.

Some of the reasons cited by CRISIL sound true. Oberoi Constructions had always steered clear of the developer’s practice of amassing huge land banks, which when the market goes southwards, can create life-or-death issues as now witnessed by DLF, Unitech, Parsvnath, and many more. At the same time Vikas has sometimes shown guts to outbid developers multi times his size, when he knows he is into something big. The best example is how he bagged GlaxoSmithKline’s corporate headquarters in Mumbai for $24 million.

Secondly, Oberoi Constructions had made a name for itself in quality through their earlier projects. While those projects are nowhere in scale to what the firm is trying to do nowadays, that premium quality tag has enabled the firm to maintain better margins in the industry.

The name Oberoi has also been a major factor. Mumbai headquartered Oberoi Hotels & Resorts has had a name in Mumbai for many decades. Though Oberoi Constructions has nothing much to do with EIH that runs the luxury hotel chain that includes Nariman Point’s Oberoi and Trident, the name must have surely helped.

Anyway, that is a non-issue as the surname Oberoi has become even more popular with the emergence of Bollywood actor Vivek Oberoi who is incidentally a close friend of Vikas ‘Vikki’ Oberoi, like another close friend Akshay Kumar.

Vikas Oberoi’s family was traditionally in the highly profitable saffron trading business, and it was from that his father diversified into the construction scene by starting Oberoi Constructions in 1985. The now 39-year old Vikas took the helm of Oberoi Constructions only in 1997, but ever since that it has been a round of good growth. One of the highlights of his stewardship has been attracting $152 million investment from Morgan Stanley.

Oberoi Constructions is active in all the three segments of branded real estate – residential, retail, & commercial. Though the company going for IPO has only six completed projects, and that too in just four locations – Juhu, Andheri, Khar, & Goregaon, the promoter and promoter group have developed nearly 4 million sq ft across 30 projects. Which, of course, brings to the table the question of future competition among group entities. To allay such fears, Vikas Oberoi has signed non-compete agreements prior to the IPO that he won’t construct any project under the Oberoi brand, outside of this company, except in already identified projects.

Vikas, who has been mulling this IPO for some years, is now also more realistic. The IPO size has come down from the earlier Rs. 4000 crore, and the Group is now limiting its focus only to Mumbai & Pune. But the main upside of this Issue will remain this young promoter’s track-record. Vikas ranked 717 in Forbes’ 1000 Worldwide Billionaires with an estimated networth of $1.4 billion in 2007.

Musli Power X-tra Doesn’t Contain Viagra, Cialis, Synthetic Steroids: Test Result

Kunnath Pharmaceuticals, manufacturer of Musli Power X-Tra, a herbal formulation for impotence and infertility has disclosed that it has received communication from the Office of the Drugs Inspector, Idukki, Kerala State that the drug’s samples that were confiscated for testing has yielded negative results for the presence of Sildenafil Citrate (active ingredient of Viagra), Tadalafil (active ingredient of Cialis), and synthetic steroids.

Kochi based Kunnath Pharma’s premises were raided and a case registered against them some weeks back by the authorities on suspicions and allegations that Musli Power X-tra’s popularity is due to adulteration using these proven allopathic molecules. However, in tests carried out subsequently on the samples by Government Analyst, Drugs Testing Laboratory, Thiruvananthapuram have failed to detect the presence of these synthetic chemicals.

Speaking to Seasonal Magazine on the development, Kunnath Pharma’s Founder and Managing Director KC Abraham put it this way, “How can they find something that is not there? We are 100% sure that we never add any synthetic hormones or additives to our medicines. We have a highly capable lab of our own, and we regularly test each batch of our medicines.”

This is not the first time Musli Power X-tra has been viewed suspiciously for its ingredients. Even now, it is learnt that its samples are under similar tests in states like Maharashtra. Commenting on it, KC Abraham told, “The fact that they are suspicious of our brand is our greatest testimony. Our medicine is so effective, that too in the short-term, that they fear we are relying on allopathic molecules or synthetic hormones. But multiple tests carried out in premium labs in Delhi, Hyderabad, Thiruvanathapuram, and a few other cities too have cleared us.”

Seasonal Magazine April Issue Contents & Issue in PDF

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Contents:

West Braces for Electric Car Shock
Not too long back, electric cars were sci-fi. Today, they are real, and tomorrow they are going to come out in hundreds of thousands in US & Europe. Nissan Leaf rolls out of production lines in October, Chevrolet Volt in November, and BMW Mini E soon after. The problem is many of them demand as much electric power as an average Western household. Experts say the electric car launches has the potential to trip the grids of America & Europe. But on the flipside, their advent is going to put the thrust on green energies like wind power.

VOLKSWAGEN’S NEXT GAME PLAN FOR INDIA:
Polo for Volume
First Europe’s #1 car maker tested India with group brand Skoda. Then came the higher test with Audi. Then came the turn of VW’s ‘own’ makes – Passat, Beetle, & Jetta. So far so good. But nothing ground shaking. ‘Coz this is India, where volumes call the shots. Volkswagen is not new to volumes, and was expected to bring up Polo sooner rather than later. The only surprise is the price and what you get for the price. In one master-stroke, VW has taken on the fastest growing segment in the country with Polo – the high-end sub-compact. Not an easy or painless decision, considering that the premium Polo is priced even below its internationally cheaper cousin Skoda Fabia. With prices starting at Rs. 4.34 lakhs for the entry-level petrol variant, and with Polo’s Chakan plant having 1,10,000 annual capacity, the greater ambition is clear. The timing wouldn’t have been more perfect. Auto granddaddy Toyota’s image has been dented for the first time, and sub-compact sector leader Maruti Suzuki just registered its highest ever historical monthly sales. Incidentally, this new volume play coincides with what happened internationally just three months back – VW which had long back upstaged GM, zipped past Toyota too in production numbers. Polo is in no doubt Volkswagen’s India volume strategy, but it promises the Indian car buyer more for less.

Indian Cities, Neighbourhoods & Residential Projects

You knew what you were looking for, all along. That is how you zeroed in here. You wanted the environs to lift your mood, groom your kids. A place where you can get the world’s best stuff next door, and a place from where you and your family can raid each nook and corner of the city, at will, without delay. Some days you prefer rail, some days the highway, and some days you would rather be away, long away. The investor in you also approved of the place. It would be a legacy for your kids. But you were not so sure about the developers, the projects to choose from. Will your selection rob you of your peace, you were worried. A compilation of neighbourhoods in Mumbai, Pune, Bangalore, Chennai, & NCR, including Andheri, Saki Naka, Mahalaxmi, Powai, Chandivali, Jacob Circle, Borivali, Oshiwara, Palm Beach Road, Chembur, Virar, Kalyan etc in Mumbai; Kondwa, Kharadi etc in Pune; Jayanagar, Airport Road etc in Bangalore; Sriperumbudur, Maraimalai Nagar, Padur etc in Chennai; Sonepat in NCR, and many more, as well as project details of Orbit Residency Park, Sobha Carnation, India Bulls Sky Suites, DB Orchid Heights, Nahar Amrity Shakti, Kanakia Samarpan Royale, Wadhwa Imperial Heights, Palm Beach Residency, Ajmera Pristine, Unitech Residences, Prestige White Meadows, & Hiranandani Palace Gardens.

Don't Kill Mumbai, India's Only Global Bet
The British had first bet on Kolkata as India's global city. Even after Independence, that bet's power lingered on, and till the mid 60s, Kolkata was the country's economic powerhouse. But then came the narrowmindedness, the over-confidence, the complacency. It was the same fate that befell the once almighty Tokyo. While Singapore surged using Tokyo's fall, in India it was the turn of Mumbai to make good of Kolkata's decline. But all along this history, the city of London has held its forte as this globe's No. 1 financial destination, even while the British Empire withered. London and Singapore are examples of global cities that are more powerful than even whole nations. Unfortunately, India's best global bet as of now, Mumbai, is also showing those same symptoms as Tokyo and Kolkata, argues noted writer Sanjeev Sanyal.

Till the Next Increment Do Us Part
Can love survive when a woman earns more than a man? A fabulous story from UK, but for which India is already bracing
for.

Prevention Not Better Than Cure?
Experts say US doctors overtesting, overtreating. Even Obama can't say no to them.

Cars Our Cricketers Drive
What do they - Sachin, Dhoni, Ganguly, Sehwag, Harbhajan, Gambhir, Pathan, Yuvaraj, Dravid, Sharma, & Sreesanth - drive around?

Google from Your Mobile for Metro Routes, Updates.
After Chennai, Kolkata, & Hyderabad Metros, Delhi Metro routes too are now on Google Maps.

Size Zero to Plus Size,
Anorexia to Comfort Eating
All about eating disorders - anorexia, bulimia, comfort eating, and how fashionable is fashion induced eating habits?

Sexy Dressing, Sharing a Drink, & Small Talk are Rape Invitations
And wonder of onders, this is not men saying. In a survey it is women who feel that rape is often the fault of the victims. Interestingly, men are not agreeing.

Have You Run Into These Mistakes?
Avoid these five common mistakes while jogging.

Even Superstars Want to be Supermoms
Aishwarya Rai keen on motherhood.

Mirror, mirror, Who is the fairest Bahu?
Is it Kajol or Aishwarya Rai?

Social Net Hotter Than TV, Mobile, Even Porn
Young men are hooked on the web - even in bed.

Sachin Special
Not Almighty, Just Sachin
Even Dreams Come True for Him
Studies Serious in Cricket's First Family
Karma is Cricket, Karma Phala, Can be Bharat Ratna

How a HERB Created a Billionaire
The Story of KC Abraham & Musli Power Extra

25 Weeks, 250 Grams, But Too Strong to Die
World's smallest ever baby boy weighs only 250 grams.

Ready for Video Everywhere?
LTE breakthrough for mobile television.

Do Boys Buy in Dubai?
Yep. Boy, 11, buys property worth $44m in Dubai.

Vidya Balan Sure that she Deserves a House

Keypads, Touchscreen, and now No Touch

Slims Not too Lazy, Not too Active

Ageing Still Shocks Amitabh

Hold Your Breath at this Diver's Feat

Beware, Mind Reading Machines Arrive

How Senior Friendly, Disabled Friendly is UK?

BMW Eyes E-Class Volumes with 5 Series

Changes to Expect in 2010-11

Electric cars, green energy, smarter smart phones, hotter social networking, the emergence of Sports Inc. – the changes awaiting us in this financial year are diverse and deep. Are we really ready?

Change is finally changing.

The original theory was that change is constant or continuous. The new theory is that there are periods of not much change and there are periods of rapid changes.

Are we entering another such rapid change zone, after months or even years of lull?

Otherwise, who would have thought that the blade length could be reduced by 33% and still be considered a legal bat, after 200 years of no major change? Who would have thought RBI would tighten money supply just weeks after the budget, weeks before the year expires, and a month before the new monetary policy kicks in?

Otherwise, who would have thought Shashi Tharoor would get so proactive to bless an unlikely mix of crickpreneurs to bring an IPL team to his state? Mind you, the money committed for winning the Kochi bid is four times want Mukesh Ambani paid for Mumbai Indians. But this unlikely mix called Rendezvous Sports World Ltd, continues to surprise many as its lead promoters Shailendra Gaikwad and Vivek Venugopal, though of respectable business families, are highly unlikely to do it on their own or with a couple of similar-profile investors.

Gossips doing the rounds are 1) Gaikwad is ‘supported’ by a high profile Mumbai cricketer who is a close friend of his, and 2) a UAE prince who now owns Manchester United is the real source of the money. The fact that Tharoor was Chairman of a UAE based company for a while, and the hints that Lalit Modi had dropped about the UAE Sheikh lend some credence to the gossip. Anyway, it goes to Tharoor’s credit that he changed from a long-term cricket enthusiast on paper, to a cricket enthusiast on pitch.

Anyone can be taken by surprise. Dinesh Karthik was surprised at how the Mongoose launched 7 sixes and 9 fours from Hayden to demolish them. The US Markets were caught on the wrong-foot by Duvvuri Subbarao’s surprise squeeze. Anyway, the RBI Governor is expected to protect only the Indian markets – which he did – and not the US one. The fact that he wields power to upset US markets, however, is another change.

Many consider it as the height of irony – or change – that Marylebone Cricket Club could agree to the suggestion from IPL and Mongoose to approve the rowing-pad-like bat as legal. Lalit Modi’s moneymaking machine is considered the antithesis of the much venerated MCC, still the rule maker in international cricket. Times are changing; even they can come together.

The new problem with change is that it is more unpredictable than ever. Following stock market pundits, many were waiting for the 9th month from March 2009 to re-enter positions. But this time market rebounded within three to six months.

Even while our parliament passed the Women’s Reservation Bill after much antics, an even bigger problem with women’s changing roles is lurking in our households. The problem – of wives earning much more than husbands - has already escalated to a significant size in Western countries and our guess is that Indian metros are no different.

When it comes to gadgets and technology, the pace of change can really burn hands. By the time you come into grips with touchscreen phones, they will change to touch-less screens. Even tech giants like Google are stunned by tech growth these days – this was the week when Facebook finally overtook Google in page views for a brief period in US, according to some metrics. Active social networking is even hotter than passive pleasures like TV or mobile chat for today’s youth.

But companies like Google are trying their bet elsewhere. They are pushing products like Google Maps in countries like India. Not to be outdone, Nokia is offering their maps software for Indians free of cost, with a lifetime guarantee that it will remain free. Other tech changes that we highlight in this issue include the coming of pervasive mobile video and the advent of mind reading computers.

Design, branding, and innovation are also coming together like never before to create a marketing edge. The latest example is the Porsche Design Mobile Phone, which even while costing around Rs. 85,000, is only available for Porsche car owners.

2010’s biggest change, however, would be something that will happen on Western roads. At least three electric cars will roll out of production lines in huge numbers. Electricity authorities there are running for cover as these cars would take up roughly the same electricity as a standard household with basic appliances. Experts are already predicting windfall years for wind-energy makers, as the electric cars’ night-time recharging is ideally suited for wind energy’s biggest curse – severe under utilization while we all sleep.

Petroleum maker Mukesh Ambani is also running for cover. While his retail forays made him look vulnerable, his newfound interest in the sports management business can again make him the darling of investors. After a lacklustre bonus issue and failed attempts to take over international companies rattled his share prices, the partnership with IMG is showing signs of taking the scrip northwards.

Some analysts are already predicting that Sports Inc is all set to follow Telecom Inc and IT Inc, in this country. Reliance is not alone in this, as many corporates like Mahindras are already there and niche players like Shirke Infrastructure is trying to carve their own space here.

Another change driving Sports Inc is the sponsorship industry’s growth rate. At 12.6% annual worldwide growth, sponsorship is the fastest growing marketing tool, ahead of 3.9% for advertising and 4% for sales promotion.

IPL, of course, provides the best example. This year, sponsorship revenues for each franchisee is expected to double from Rs. 24 crore to Rs. 40 crore, with IPL’s current brand value estimated at Rs. 19,000 crore.

No wonder, at least a couple of IPL franchisees are expected to announce IPO plans shortly. In some ways the high-risk but high-yield Mongoose bat symbolizes the mood of IPL as well as the country’s Sports Inc.

How a Herb Created a Billionaire - The Story of KC Abraham and Musli Power X-Tra

That nothing sells like sex drugs needn’t be repeated. The enormous success of Viagra and its later day cousins Levitra & Cialis stands as ample testimonies. But Kunnath C Abraham, a young farmer based in Muvattupuzha, a satellite town of Kochi, had a little more foresight. He figured that allopathic drugs like Viagra would soon run into a wall, as far as sales is concerned, due to their associated health risks. And that is what happened to Viagra and its cousins during the next couple of years, especially in countries like India. This was the same time during which Abraham was interested in a herb called safed musli, and a huge surplus yield in Kerala with no takers. Since the herb had an emerging reputation for curing male impotence, KC Abraham decided to take his big chance in pharma business. He and his small team created Musli Power Extra, a concoction of nine Ayurvedic drugs including safed musli. And followed it up with one of the loudest ad campaigns that the ayurvedic OTC segment has seen in recent years. The lure of a safe sex drug clicked. Just within a few years, Kunnath Pharmaceuticals was selling more than 2 crore capsules a month. Priced at par or more with Viagra clones, each of these capsules bring in Rs. 25 in revenue to Kunnath. But unlike Viagra clones that can be bought even one-piece, Musli Power Extra’s smallest pack is of 30s, costing a neat Rs.750. But then, Kunnath doesn’t promise instant on-demand cure. Though notable improvement is possible within 3-4 days, one minimum course is 90 capsules, over 45 days, available on discount at Rs. 2000 when brought as a pack of 90s. No wonder, KC Abraham became an overnight billionaire, at least in rupee terms. But it was not without tough fights. The entrepreneur in him has always rose to the occasion with nifty strategies like using the name musli instead of safed musli which is not in the country’s official Ayurvedic pharmacoepia, and settling out-of-court with Viagra owner Pfizer over using their trade name. Abraham has also won in the last round where it was tested whether his campaign of selling a cure with advertisements is permissible under Indian Law, by quickly dropping the impotence-cure tag and adopting a vitality-booster tag. Kunnath was also raided and a case registered against it in recent past. But KC Abraham will show you the thankful testimonies that he receives every day from his customers. He is gearing up to fight the latest round against the wonder drug by People’s Union for Civil Liberties (PUCL) which has filed a writ petition in Kerala High Court on 8th February 2010 against marketing Musli Power Extra. KC Abraham wants Kunnath to be the big-pharma of Ayurveda, much like Pfizer, GSK, or Merck. His business ambition is self-admittedly bigger than Dhirubhai S Ambani, and if it were possible he would have worked for a Nobel. And much like Bill Gates, he would love to spend much of his fortune on charity, a direction in which he has already started.

Seasonal Magazine in conversation with KC Abraham, founder of Musli Power Extra.

Your story is often said as an overnight success story. One day a farmer, a few days later a billionaire. Is this true?

If overnight means a few years of hard work and hundreds of impossible hurdles, yes, I am an overnight success story. It is media who calls me a billionaire and such things. I don’t work for such tags, but yes, Kunnath has been a tremendous commercial success.

Musli Power Extra has been a rapid success in the OTC segment. To what do you attribute this success?

Firstly, we could create the right formulation that worked. The fact that Safed Musli was beneficial for sexual debility was well-known, but we could arrive at the right formula for mixing Musli and other proven herbs. This was largely done by me through months of experiments.

But copying even the right formula is not tough these days. Why then is competition unable to catch up with you?

They are trying but it is not easy. There are no shortcuts. Because, it is not only a matter of the right formula of the herbs, but how the extracts are handled. We go for high-quality, high-concentration extracts of active ingredients in these herbs, while others mostly go for bulk raw herbs. It raises our costs as we have to use more raw materials, but we want our medicines to be 100% effective.

Even this technology can be copied over time, isn’t it?

Not really, as this requires one’s own R&D setup. No one wants to do that kind of investment. You will be surprised to know that our analytical lab has been set up with an investment of around Rs. 2 crore. We did this even before we could afford such things. And even before that, we were relying on strong setups like the lab in Amala Medical College and other similar clinical labs.

The history of heavily marketed OTC ayurvedic drugs is that, authorities and the medical intelligentsia continue to be sceptical of their real effectiveness. How do you plan to survive this hurdle?

Yes, I understand the situation, but we have already surmounted this hurdle to a great extent. But, yes, not everybody is going to agree. The question is whether the patients who have taken this medicine agree. And in that aspect we are tremendously satisfied.

You mean you get testimonials etc?

A lot of them, and regularly too, reassuring us that we have created something really effective and helpful.

Your flagship brand, Musli Power Extra, has been targeted many times by the central as well as state drug regulators. What were they looking for, and what is the current situation?

The fact that they are suspicious of our brand is our greatest testimony. Our medicine is so effective, that too in the short-term, that they fear we are relying on synthetic hormones. But multiple tests carried out in premium labs in Delhi, Hyderabad, Thiruvanathapuram, and a few other cities too have cleared us.

But isn’t this a constant hassle? One positive finding and your brand can disappear…

No, we don’t consider it as a hassle or risk. How can they find something that is not there? We are 100% sure that we never add any synthetic hormones or additives to our medicines. So, why should we fear? We have a highly capable lab of our own, and we regularly test each batch of our medicines.

From the initial positioning as a drug for male impotency, you have successively repositioned it as something for sexual debility in women too, then as a cure for male and female infertility, and now as a health tonic for general vitality. Isn’t this only a marketing strategy to attract a wider audience?

No not at all. You see, all these just happened in the course. In the beginning we were only hopeful on this as a cure for sexual debility. But then the patients started coming to us, thanking us for helping them have a child. Then we started researching on this facet and that is how all these happened. It was not planned as such.

But aren’t all these, too many diverse applications for a single medicine?

No, not really, if you know how ayurveda works. Sexual health, fertility, and general health are inseparable aspects in ayurveda. We believe that is why this formulation is effective for all these conditions.

If that is the case, why didn’t anybody – especially trained ayurvedic physicians – did not stumble on such a cure?

I would say we were fortunate and hardworking. Yes, what you told is true, even some of the ayurvedic doctors we have employed are surprised at the effectiveness of our remedies. Patients continue to give them positive feedback on infertility.

You have even resorted to strategies like a money-back guarantee on infertility. How genuine are such strategies?

We are genuine on that promise, but we have almost never been asked for a refund, because our patients more or less convey that they are happy with our medicine and would like to give it more time.

Kunnath has resorted to one of the heaviest advertising campaigns in the OTC segment. How do you value the role advertisements have played?

Advertisements do play a critical role, but at the end of the day, advertisements are only advertisements. Something that we would like to say. What matters more is word-of-mouth publicity among patients. In these private problems like impotency and infertility patient-to-patient advice plays the most critical role. Good news about an effective cure really goes places.

You have been alleged to find loopholes and turnarounds to dodge regulations in creating such medicines and marketing them. How will you counter?

Well, look at it from another angle. I have this medicine that I find to be really powerful and safe. Should I keep it to myself just because our laws are archaic and their interpretation or implementation is corrupt? No, I shouldn’t, and that is what we did. Yes, we were creative and persistent to jump past the obstacles. In the final observation, the only relevant question is whether it was good for our patients. It was.

You even had a tiff with Pfizer over using the Viagra trademark…

That is done and over with. Again, it was a case of correctly and powerfully communicating with our patients. But when they objected, we understood and pulled back.

PUCL has filed a writ against you recently in Kerala HC about the legality of marketing cures like Musli Power Extra…

We are aware of that, and our legal team will defend us properly. We had even bigger cases thrown against us. We are confident of surviving.

What are your objectives in starting Kunnath Pharmaceuticals, apart from commercial success?

Yes, we are past that stage – aiming only for commercial success. My real aim is to be the brand that redefines what modern Ayurveda is before a sceptical world community. They are sceptical because many of our conventional ayurvedic drugs don’t pass stringent Western tests like those for heavy metals. I want to change that. We will make our ayurvedic drugs synonymous with the safest drugs in the world. We are investing heavily for this – pursuing drug approvals in over 70 countries, and developing a pipeline of over 60 ayurvedic formulations. We have even initiated the process of getting FDA approval.

Apart from Musli Power Extra and Breathe Power Extra, what are your upcoming formulations?

Well, our testing pipeline is now led by a formulation for diabetes, and many others are set to follow. We get calls from the non-organized traditional ayurvedic physicians (vaidyas) of Kerala who want us to market their best remedies which are generally closely guarded secrets in their families. They want their formulations to live on even after them, and as an organization that can make success out of the correct formulation, they approach us. We are currently testing some new-age medicines based on these formulations.

Apart from formulations, what are the near-term objectives for the organization?

We want to start a chain of neighbourhood clinics all over Kerala, and possibly across the nation later. Qualified and Kunnath accredited ayurvedic physicians will provide consultations to patients. We want to reach out to the patients, not wait for them to discover our remedies at a too later stage.

Personally, what are your desires and ambitions?

All through my life I have set impossible targets and achieved them. So sky should be the limit. Last year the Nobel for Medicine went for scientists who created breakthroughs in geriatric medicine. And here I am, with a formulation that delivers youthful vigour to even old age couples. So, if I were a scientist, I should have desired for the Nobel. (Laughs). Anyway, that is the kind of targets or desires I nurse. As the saying goes, you have to shoot for the stars to get the moon.

And your personal and business ambitions?

If you really press me, I would say I will try to surpass Dhirubhai Ambani. The scope for Ayurveda is that much, even ahead of refining. I am predicting that the world will turn back from harmful allopathic medicines in an unprecedented way. This has started already. In the coming years and decades this change to Ayurveda will gather unbelievable momentum. We will be ready for that age with the widest portfolio of authentic but modern ayurvedic medicines for all common diseases. Kunnath will be the big pharma of Ayurveda, much like you today speak about Merck, GSK or Pfizer. But personally I don’t plan to repeat Dhirubhai’s follies. (Smiles). I won’t leave back a fortune only for my family. They will be given a decent fortune of course, but nothing to quarrel over through an entire lifetime. My personal ambition is a mega charity initiative, which we have already started in a significant way. As our profits rise, we plan to contribute more and more to our charitable initiatives, which are now geared to serve economically challenged students and senior citizens.

Will Large Mumbai Real Estate IPOs Like Lodha Shine?

Thirty years back, the Lodhas were just another business family trying their luck in Mumbai real estate. But they played the game differently, maybe due to their education and exposure to international business. Unlike most Mumbai developers, Lodha Group decided to be a corporate first and a developer only next. They focused their energies on branding, team-building, and professional management, concepts not considered practical in real estate then. Founded by Mangal Prabhat Lodha and developed by Abhisheck Lodha and Abhinandan Lodha, the Group is today at dizzying heights. For the past year and the past quarter, Lodha has been the single largest developer in Mumbai with almost 12% market share, which is more than double of the second-largest player. The rapid growth hasn’t been without its downside, with some segments of the homebuyers and media complaining about aggressiveness, unrealistic promises, and missed deadlines. Anyway, the strategy that Managing Director Abhisheck Lodha put together with his top management team for this market-beating performance even during the downturn was quite intelligent – they pushed the limits of luxury in their core segment thereby attracting the most affluent customers, even while they launched deep into the middle-income affordable segment. Today, the Lodha brand addresses the luxury and middle-income aspirational segments, while the Casa by Lodha brand serves the middle-income affordable segment. The strategy has also set the stage for a mega IPO of around Rs. 2790 crore, for which the Group has received SEBI approval. The Group is mulling over when to go for the IPO, as the markets haven’t been very kind to realty IPOs recently. Bullish on branding, the Group has also been successful in branding commercial spaces, something where many developers haven’t been successful. Currently the Group is developing over 29 million sq ft of prime real estate across 38 projects.

Seasonal Magazine in conversation with R Karthik, Senior Vice President, Marketing, at Lodha Developers Limited.

Last year Lodha had won an award from United Nations for one of your projects. What was it all about?

Yes, the 2009 UN award was for Casa Bella’s integrated planning. The project, as you might know, is the largest single phase township development in Mumbai. The award was for Good Practices that have made outstanding contribution to improving the quality of life in cities and communities, with an emphasis on environment-friendliness and sustainability.

Lodha has pioneered concepts like by-invitation-only residential projects in Mumbai. How can such projects be justified, and how much of a success they have been?

Though we have pioneered it in Lodha Bellissimo in Mumbai, it is an established residential norm in advanced markets. The concept is that the residents of a premium project would like to know whom they are going to have as neighbours and as part of their close-knit community. The problem is, people with cash need not necessarily be people with class. Since a group of buyers cannot practically do this choosing, we do this selection for them. This concept is definitely a successful model, and we are implementing it in a Hyderabad project too. But definitely, it is not our mainstream strategy.

You have also ventured into hobby-themed projects, like golf and water-themes. What kind of a response do you anticipate for these projects?

Well, our first water-themed project, Aqua, is already an exceptional success. The golf project you mentioned is coming up in Pune, as it requires a massive spread of land. Apart from its sports theme, we are positioning it as a second-home concept, which we believe is sure to catch up in Mumbai. People sometimes want to escape all this hustle and bustle for some quiet greenery they can call their own. We also expect the elite crowd of Pune to warm up to this project.

You have recently won relief from Delhi HC against NTC for a mill land. But do you think that in the present circumstances paying 710 crore for a 10 acre land is justified? What do you plan to construct in this land in Parel?

Yes, our position has got the court’s backing now. Lower Parel and Parel are highly sought-after locations in Mumbai and that is why we are paying a premium. Though the price is high, we are confident of making a successful project out there. The fact that other developers too were willing to pay almost similar prices shows that our confidence is not ill-founded. Anyway, we have still not finalized as to what should come up there eventually. It will definitely have a large proportion of residential component.

Your Aqua project has been a reason for much controversy as its expansive water-theme runs contrary to Mumbai’s water shortage. The project’s completion has also been delayed. Do you think you underestimated the water scarcity angle at the planning stage?

First of all, the so-called controversy is not our creation. It is not possible to design a water-themed project without looking at the water sources. Forget us, no developer in Mumbai is going to get away after failing such promises. Aqua is not our first project or our last one. We have a track-record in keeping all our commitments, and we have a future that also depends on keeping our word on Aqua. The water-theme at Aqua requires only a little topping-up, and the same is being planned through rainwater harvesting and superior water management technologies.

Despite having core competency in the high-end luxury segment, Lodha chose to diversify into the affordable segment in a massive way through the Casa brand. Is it a signal that your high-end luxury segment is grinding to a halt?

No, not at all. You see, in a city like Mumbai, it is mission-critical to discover and address demand-supply mismatches. We were smart enough to detect one such opportunity in the middle-income segment and that was how the brand Casa by Lodha was born. Its massive success shows that our research and timing were accurate. But that doesn’t mean the luxury segment is dying or that we are not looking at that. We are still bullish on luxury which brings us 45 to 50% revenues, another 25 to 30% being made up by our middle-income aspirational products that also come under the Lodha brand, and only the remaining 25% is from Casa. We are at the cutting-edge of luxury homes, offering features like 4-BHK super-sized apartments, themed projects, and serviced villas.

Your upcoming IPO has obtained only a Grade 3 approval from CARE, citing only average fundamentals. Your declining profit margin, too narrow geographical spread, and ongoing litigations were said to be the risk factors. How do you plan to improve on each of these fronts?

That rating need not be the correct assessment. We believe that we have above average fundamentals as a market leader. The decline in profit margin has been due to two factors – the downturn that affected the industry as a whole, and our diversification into middle-income products. With the industry looking up again, and more of the high end and luxury projects being launched by us, we are confident of bettering the margins.

What about your narrow geographical spread?

Our geographical spread is not narrow at all. Mumbai is the country’s largest and most lucrative real estate market. The city was the least affected during this downturn, and the first to rebound. But agreed, we are not a national player, but look at what happened to the NCR based developers who went national during the last boom. Most of them faltered in these new markets, making their whole operation risky. Geographical diversification in real estate business is a bit tricky. No two markets are the same. That is why we continue to bet on Mumbai, our home turf. In Hyderabad we are carefully testing the waters.

Lodha is often regarded as a new-generation developer in Mumbai compared with traditional players like the Hiranandanis or the Rahejas. How does your brand differentiate itself from the others?

Yes, compared with some of them, we are young, but having started in the 80s we are pretty well experienced. Our core differentiation is that we are the only professionally managed developer in Mumbai. Almost all developers, even the listed companies, are more or less family affairs, while we, even while promoted by a family, is 100% professionally managed. The difference comes from the family itself, with scions like Abhisheck Lodha having experience in international blue-chips like McKinsey.

Lodha is known to undertake most of the construction works in-house. Why is it so in an environment where outsourcing is the norm?

Lodha is a corporate first and a developer only secondly. That means we try to excel on fronts like quality control and corporate governance. For that we need to be the best, largest, and the most capable organization in our industry. All through the years, we have been precisely building up this team. Today, we have the largest and the finest workforce in Mumbai, including the largest engineering practice in the industry. It is a huge competitive advantage.

Serious complaints have also been raised by some of your customers and by companies like LIC Housing Finance that you are demanding EMIs for which the required work has not been completed. Why are such problems occurring and how do you plan to address them?

These allegations are totally one-sided. The very nature of residential real estate and its mortgage business is that disagreements are possible. But one thing we can assure you – we have the industry’s very best customer service and conflict-resolution mechanism. Almost all other developers are less accommodative than us. It is one of the core reasons we grew so quickly in this highly competitive market.

Pre-budget, the capital markets were sluggish with some key real estate IPOs like EmaarMGF being put off, and some like DB Realty listing at discounts. With the post-budget scenario slightly looking up, is your IPO finally going to hit the markets now? How would you asses the risk, your IPO being large-sized at around Rs. 2790 crore?

Each company and each IPO are different. Some may have decided that the public offer climate is not currently favourable, and some may have listed at a slight discount, which I will say is fair enough. Not bad at all when you consider the current scenario. As far as we are concerned, we have got the SEBI approval, and we will go for it at the right time.

What is the edge Lodha enjoys?

We are the market-leader, the single largest developer in Mumbai with around 12% market share. Our nearest competitor is not even half our size. This has been the case during the last year as well as this last quarter.

Will India International Sports Summit Deliver?

You have heard about all kinds of summits, even summits for sports development. But here is the first one on stadiums. Not really, it is for the greater cause of sports development itself, but the route chosen is through stadium development. As the saying goes, build it first and then they will come. A visit to any of the public stadiums in our metros would confirm this. Stadiums cramped with joggers, walkers, shared between half a dozen sports, and not to speak about the dozens of cricketing nets by at least two different academies. Doesn’t a nation of billion needs at least 1000 stadiums, one for each 10 lakh people? But in a nation with pressing problems from poverty to drinking water, sports and stadiums often get relegated as the last priority by the Governments, except during occasions like Asiad or Commonwealth Games. But sports has a greater role to play in nation building, even in poverty alleviation, as sports defines a nation’s culture, its passion. Close your eyes and imagine an India without cricket. The only solution to the vexing challenge of sports infrastructure is public-private-participation. Now, here is a prophet and a summit for this cause – SE TransStadia and India International Sports Summit 2010. Their first stadium, the brainchild of MD & CEO Udit Sheth, is a PPP project with Gujarat Government at Ahmedabad. A first-of-its-kind stadium, not only in India, but the world, this Rs. 300 crore multi-purpose stadium can host ten different sports. But the real stunner in the stadium will be its convertible design, that can convert this outdoor stadium into an air-conditioned indoor one, at the switch of a button, in less than six minutes. For this technology, TransStadia is partnering with UK’s StadiArena, which has the patented technology invented by former English Premier League footballer Paul Fletcher. The inaugural India International Sports Summit 2010 scheduled for 24th & 25th March at Trident, Nariman Point, would bring together Indian and international personalities from government, sports, sports management, sports journalism, and other related fields, and is backed by almost all the national level sporting bodies. TransStadia is promoted by Mumbai based Setco Group with international operations in the automotive component sector.

Seasonal Magazine in conversation with Udit Sheth, MD & CEO, SE TransStadia, on the Summit and the company’s upcoming stadiums:

For our readers’ benefit can you explain what TransStadia and this Summit are all about?

Well, I would say let us not mix up the two. TransStadia and the India International Sports Summit are two different concepts. We at TransStadia are into sports infrastructure management. This inaugural summit that we are promoting and sponsoring is towards the greater goal of sports being acknowledged as an industry, for the greater good of sports itself.

Can you detail this sports-as-an-industry concept?

Sure. For sports to be considered as an industry, we should be able to monetize sports. For this, we at TransStadia have identified a three-pronged strategy. Firstly, there should be education in sports. The currently available sports education is a marginal or a fringe affair. That should change, and major sports items should be made available as subjects from the school level onwards. Secondly, sports infrastructure development through public-private-participation should be pursued as it is perhaps the only viable, sustainable model for this. Thirdly, we should have sporting packages or events much like IPL, where all the above factors come together to be monetized. Lastly, all this should be for the greater good of sports. I think that should explain the concept behind this Summit.

But won’t this sports-as-an-industry concept corrupt pure sports, and make it more like any other industry?

Not at all. That is a misconception many among us carry. If you look at the international scene, you can easily see that all the thriving sports items are the best monetized ones - be it football, basketball, cricket, or tennis. International sporting bodies like FIFA, NBA, & ICC have all woken up to this fact long ago and have modelled their activities as an industry. On the other extreme, take the case of our athletic team members. They have to find a separate career to survive, which will remain a constant headache. If sports is a healthy, thriving industry, this industry will take care of all the participants. This is the message we are trying to put across through the Summit, and we hope that through extensive discussions, clear roadmaps for this would evolve out of this.

What will be the Governments’ role in the Summit?

As you would appreciate, as the apex decision making bodies, our governments should play the most critical role in choosing this sports as an industry concept. That is why we have invited legislators, especially those who are young and much in tune with sports to this Summit.

TransStadia’s chosen sector, Sports Infrastructure Management is a relatively new area as far as India is concerned. But with the recent announcement of Reliance Industries, the country’s largest industrial group setting shop in this sector with world leader IMG, do you think the sector is going to be in limelight?

Definitely. I think that this news, of Reliance partnering with IMG, is great for the whole sector of sports infrastructure. For a pioneer like TransStadia, it further vindicates our stand that sports can be considered and treated as an industry for the greater good of sports. That the country’s biggest industrial group considers this as a growth area is encouraging. But they are not alone in this. The Mahindras, and many others have already become active in this sector.

For your flagship Ahmedabad stadium, we understand that you will be using StadiArena’s convertible technology. What about your subsequent stadiums?

For all our stadiums, we will be implementing this outdoor-to-indoor convertible technology. That is the decision as of now. Because what we are proposing is not just another way to build stadiums, but another way for stadiums to be sustainable. This technology is about viability, sustainability.

But that also means that if a state government or a local administration is not keen on having this technology, you will lose out as a stadium developer…

Well, let us put it another way. Our technology is not about new stadiums alone. This can also be used for complete makeovers of existing stadiums. So, we are basically addressing a huge market.

So, what will be TransStadia pushing primarily – this convertible technology or stadium management?

In fact, both. And we believe that both these goals are synergistic. But if a certain administration would rather have the convertible technology and not our management, we might even be willing to licence the technology to them. We will have to look at it at a case-to-case basis. But for us to manage a stadium, this convertible technology would be needed.

Can you explain what this convertible technology is all about in simple terms?

Sure. Conventional stadiums are either outdoor or indoor, depending upon the sporting items for which they are designed. An outdoor stadium may have part of its seats covered from the sun or rain, but almost never will they be fit for indoor sports. TransStadia’s stadiums will basically be outdoor stadiums, which can be converted to indoor ones at the flick of a button. By indoor stadiums we mean climatically fully sealed ones, complete with air-conditioning. They will also be adaptable for ten different sports, including most indoor ones like basketball, badminton, volleyball etc.

This sure sounds like something big. Who developed this, and will you have exclusive rights to this technology in India?

Yes, this is truly big as far as sports infrastructure is concerned. The beauty is that this transformation from outdoor to indoor can happen within six minutes. The technology was developed by former English footballer Paul Fletcher and is commercially developed and marketed by UK’s StadiArena. In India, we would be the exclusive partner promoting the technology.

Your first project, the one in Gujarat is a PPP one. Will this be your exclusive development model?

Yes, as of now, that is our sole intention. Developing a stadium is a resource intensive activity, not only in terms of the money involved, but in aspects like availability of land, the statutory permissions, licences etc. So we need to have a strong public partner for the project to succeed and be useful to the public.

Can you roughly put the break-up of the Ahmedabad project? What will the Government bring in and what will you?

Well, the Government will only supply the land required for the stadium. We will bring in the technology and it will also be up to us to raise the 300 crore needed for the project.

What will be the capacity of this stadium? Will it be fully convertible?

The outdoor stadium will have a seating capacity of 30,000 out of which a select area of around 7500 seats will be the convertible region to an indoor arena.

But at 30,000 seats, this is not a big stadium, right?

It won’t be the biggest of stadiums, yes, but it will be very flexible. We will be able to host ten different sports items there, including indoor and outdoor ones. Both the outdoor and indoor seating capacities are kept reasonable so as to ensure optimum utilization.

Can you explain this utilization concept further?

You see, the biggest problem with stadiums is not building it, but commercially using it regularly so that it can be sustainable. This is why rich nations like US demolish stadiums after events like Olympics, while poorer nations like China and India hold on to them even after events, but only to run into viability problems. Our solution for this is not only to host ten different sports, but to host entertainment events and corporate / family functions. Both the outdoor and indoor capacities are kept optimum keeping in mind these flexible uses.

What will be the annual numbers you are looking at in the stadium business?

Since this is a new concept, we have kept a modest target of one or two stadiums per year. But if we get more makeovers of existing stadiums, the numbers can go up.

Who will be building your stadiums? Are you planning to do it on your own?

No, of course not. Development and construction are not our core strengths. We will be commissioning developers and contractors for the construction. We will focus on the concept, PPP, design, fund raising, and most importantly running the stadiums as a viable commercial model.

Apart from stadiums, is TransStadia planning any other sports infrastructure activities?

We are also interested in creating unique sporting academies, and have already identified some viable models for this.

Apart from Gujarat government, where all have you made progress in negotiations? With the Commonwealth Games happening this year, do you think you missed out an opportunity in Delhi?

No, we started out only in 2008-09, and as such couldn’t target Commonwealth Games at all. But Delhi Government is one administration with which we have made some headway for future projects. Anyway, our technology and management model is not suited for one-event stadiums, but for perpetual projects. We are talking with most state government and city administrations for this model.

Will you be doing your part in pitching for Asiad, Olympics etc?

Definitely. It is, in fact, one of the goals of the Summit. A concerted effort from the public and private players is required for such mega events to come to India.

Nitesh Estates IPO: Ignore or Invest?

The about to be launched IPO of Bangalore based developer Nitesh Estates may not be coming at a very opportune moment for the company or investors. Though the market is on a roll after the budget, with listed realty companies also participating in the rally, the time doesn’t feel much favourable for yet another realty IPO. Mumbai’s No.2 developer DB Realty had listed at a discount just before the budget, after garnering barely 0.35% times retail subscription during the Issue.

But the question is whether the offer of Nitesh Estate has something special, whether it has a silver lining among the clouds. The youthful vigour of the company as well as its promoter Nitesh Shetty, and the high brand recall in the super luxury segment are definite pluses for the company. Nitesh Estates had used these advantages to become one of the fastest growing realty companies in Bangalore within a short span of less than eight years.

The downsides are also significant with the company registering a difficult phase in FY09 as far as operating profit (7.6%) and margins (3.2%) were concerned. Subsequently, in the first half of FY10, operating profit has even gone negative. But these developments have more to do with Nitesh’s diversification into low-margin middle-income housing, which is expected to do extremely well in the coming quarters.

The developer has also been smart enough to restructure intelligently before the IPO, shedding some unnecessary weight in subsidiary companies, thereby bettering half-yearly margins in FY10.

Sensing the ongoing dull mood among retail investors, Nitesh has also roped in two Directors with international background to make the right moves in institutional subscription. Nitesh Estates already has a private equity participation of 14.4% by an Och-Ziff group firm.

Rating agencies haven’t been very kind to Nitesh’s books, with CRISIL giving only a 2/5 rating citing below average fundamentals for the IPO. But there are signals that the company is right on to some of the best emerging trends in the industry like co-development with land owners that will drastically reduce investment requirements in the coming years. Nitesh has switched to this model in the majority of their new projects. This, together with their newfound focus on affordable housing should make the Nitesh IPO a value buy, provided the pricing is right.

Watch this space, as Seasonal Magazine would bring updates on the Issue.