Thank God for the courts in India. The Supreme Court confirmed the penalty imposed by the Competition Commission of India (CCI) on DLF and ordered it to pay Rs 630 crore in three months, dismissing arguments that the levy was excessive and sending the stock of the debt-laden developer in a tizzy. CCI had imposed the penalty on DLF (carrying a debt of over Rs 19,000 crore) in August 2011 for using its dominant position in the market to engage in unfair trade practices such as making consumers sign inequitable agreements. It had faulted 16 clauses in the agreements as unfair. The penalty was calculated at 7 per cent of the average turnover of the company.
Indeed, the high-handed attitude of some developers has kindled consumer activism, which, backed by recent judgements in favour of consumers, is on a high. Developers, therefore, have been now modifying buyers agreements to protect themselves. Deals now talk about longer delivery deadlines of up to five years from the earlier three to four years. Supertech has started giving live feeds to buyers on construction updates. Raheja Developers, on the other hand, has added a clause in its buyers agreement barring customers from posting derogatory comments about the company online. It is time the industry understood that there is value in improving the ethical quotient of the industry-or there will be more to lose. Parag Parikh, an astute stock investor, summarises this sentiment, saying, "I would never buy a real-estate stock. In this country, cash changes hands in real-estate deals and it doesnt enter the books. The land banks reported in balance sheets dont reflect the truth. Stock prices fluctuate for no reason."
While this issue celebrates "Indias Top Innovative Builders", our thought leadership has helped the industry move from an era where they would not share any business information to citing turnovers and profits. In the recently held 9th Construction World Architect & Builder Awards, while receiving his trophy Mofatraj Munot, Chairman, Kalpataru, seconded an opinion by architect Rahul Malik that the building fraternity has abused the rules set by the municipal administration so much that the new rules it has laid constrict innovation now. He further urged the industry to come together to assure the authorities that, going forward, there will be a higher level of adherence to governance so that innovation in construction should not be punished.
Indias first Smart Cities Summit held on August 22-23 drew a record response. The deliberations underscored the need for strong urban planning and administration. Municipalities that have achieved breakthroughs in providing and implementing urban infrastructure services earned respect and envy.
According to a poll conducted by a financial daily of 50 leading industrialists and CEOs, investment bankers and managers of large PE funds on the impact of new Prime Minister Narendra Modi on business and economy, 74 per cent of CEOs are already seeing demand pick up; 80 per cent have made new investment decisions or are likely to do so; and two-thirds are now stepping up hiring.
The next three to four months will be, in a sense, the most painful as while sentiment seems to have improved, it will not be reflected in demonstrably higher sales and profits. So businesses will have to put on a happy face and yet have to suffer the last leg of the financial squeeze as the economy gains ground. Development and governance are the two wheels of the current Government and the road is rocky but we have strong drivers: aspirations of the youngest population in the world and an unleveraged, unlimited potential.