New supplies, resellers to bring down home prices

 If you have been waiting to buy a home, this could be your chance for some bargain hunting as nearly five lakh apartments are expected to be delivered this year, shaking up an already oversupplied home market and forcing investors to sell them in a hurry.

"The widening demand supply gap will help prices fall further," says Pankaj Kapoor, managing director of Liases Foras, a property research firm, which supplies market data to banks and industry.

ET reported on Monday that property prices have begun to soften around the country and builders have started to offer discounts as high as 10% in some cases. According to the National Housing Bank's (NHB) residential housing index Residex, 22 of the 26 cities it tracks have seen a decline in home prices between 1% and 5% in the April to June quarter.

While builders under pressure have started offering discounts, an even better opportunity is emerging in the secondary-resale market where over-leveraged investors who had picked up properties over the last few years are willing to offload their inventory at discounts as high as 30%.

How to grow from within :: Business Line

 

While entrepreneurship is the act of starting up an enterprise from scratch, intrapreneurship is that of doing so within an existing larger organisation. There’s been a lot of focus on the rewards of entrepreneurship and the asymmetric and exponential returnsone can make if the idea succeeds. This potential for phenomenal returns has led to an expansion in venture capitalism (VC).

Since it takes only two out of ten investments to succeed and lead to an Internal Rate of Return (IRR) as high as 20 per cent, entrepreneurs are a lucrative proposition for VCs.

While the challenge in entrepreneurship lies in its entry barriers, the fruits of success — its returns — make it worth the trouble.

AB OVO

Starting with a clean slate can be extremely risky, especially when building a new enterprise.

In its formative stages the enterprise is sensitive not only to vagaries of macro-economics , but also the absence of deep pockets needed to take on larger competitors pose challenges. Thus at infancy most VCs and start-ups fail.

In the end the returns are worth the risk, you may say, but what if similar returns can be generated without the same levels of risk?

When established companies venture into new products/services or new businesseventures under the umbrella of the larger organisation they become entrepreneurs, as an entity now termed ‘intrapreneurs’.

WHAT-PRENEURSHIP?

Intrapreneurship can generate the returns equivalent to a new venture but with limited downside risk.

The reduced risk comes from the existing organisation’s established goodwill, network, people, processes, learning and so on which can be tapped by the new experiment — thus improving its odds for success.

In addition to reduced risk, intrapreneurship has the benefit of lower costs since support systems and vital processes such as finance, IT and so on can be tapped from existing cost centres .

To that extent intrapreneurship ventures can also get off the ground faster in comparison to first-time start-ups.

Many large organisations have successfully diversified with this. Titan, for example, entered the jewellery (through Tanishq) and accessories (through Fastrack) markets, Horlicks ventured into biscuits and nutri-bars from beverages; similarly Indian banks went into insurance and asset management.

There have also been cases of new business spawning into entities larger than the parent, such as Apple.

The good news for investors here is that word about most of these intrapreneurships go public early in the day; if the investors think the idea is hot, they can participate as well by investing in the listed parent company.

TRADE-OFFS

A lot of times established companies feel limited by the stage of the life cycle that they find themselves in and are resigned to the average returns generated by mature companies. But they can change this and accrue the high returns generated in their early stages through new entrepreneurial ventures; through intrapreneurship ideas.

On the one hand, some CEOs believe such experimentation could threaten the existing reputation of the company or brand if the new idea were to fail. Likewise, a few others believe these experimentations to be an anathema to the idea of core competence.

On the other, it can be argued that in today’s world of disruptive change, the risk of falling prey to an upstart is far higher than the risk of small failures in trying to stay relevant to customers.

Plus, there are various ways to hedge the risks of intrapreneurship for instance by way of sub-brands, entering into related areas, and testing through pilot launches.

In fact core competence itself, if defined in the right manner, can aid creative growth while reducing the risk of failure.

Apart from issues on consensus of it being a good ‘way forward’ or not, there are other systemic issues which plague intrapreneurship activities in comparison with entrepreneurship. Bureaucracy, lack of nimbleness and passion, pulling the plug too early, or allowing problems to fester until it’s too late are some.

All in all, given the risks and rewards enumerated, the onus to decide falls on you — entrepreneur or intrapreneur?

UTI Equity: Invest :: Business Line

Rupee fall has overshot limits: Montek at G20

The rupee's fall this year has clearly overshot limits that can be justified by economic fundamentals, and India has adequate reserves to defend its currency amid global volatility with foreseeable need for any foreign aid whatsoever, deputy chairman of the Planning Commission Montek Singh Ahluwalia said on Friday.

"With 280 billion dollars in reserves, I don't think we will be drawing on currency swap arrangements unless something drastic happens," Ahluwalia said.
Ahluwalia, as the chief "sherpa" for Prime Minister Manmohan Singh at the G20 summit of the leaders of the world's leading economies told reporters that  economists, working on varying assumptions, had estimated the Indian currency's value at anything between 59 and 65 rupees to the US dollar.
"Some depreciation was justifiable," Ahluwalia said. "But when it was 69 there was clear overshooting that was not desirable." The government says currency markets had overreacted in the backdrop of a global volatility in the currencies of emerging economies after the US Fed mulled an early pullout of the $85-billion-a-month injection of easy cash every month  to prop up the US economy, a part of which flooded markets including India. As insitutional investors pulled out that money out of India, the rupee sank.
The prime minister told the G20 summit that a coordinated policy was needed in ending unconventionarl monetary measures to curb undesirable currency swings.
Leaders of the BRICS group comprising Brazil, Russia, India, China and South Africa met at the summit's margins on Thursday to affirm a plan to built a joint contingency reserve arrangement (CRA) that will help members draw funds from a common $100  billion facility, to which India has pledged $18 billion.
"What is not yet clear is what are the terms on which you can draw," Ahluwalia said, adding that it will involve some interest payments and also be linked to the percentage share of the contribution of each member to the fund. However, the fund does not involve any upfront contribution and only constitutes a pledge, he said.
The BRICS fund is only a long-term measure to help India, and has no immediate relevance or need in the context of the rupee's current problems. India already has a $15 billion bilateral arrangement for a currency swap loan from Japan,  and that also is not needed now, Ahluwalia said.
India also has the intermediate option of increasing  its contribution to the International Monetary Fund from its reserves and boost its currency cushion.
"Markets would take note of that," Ahluwalia said.