Sobha cuts staff cost by Rs 6 crore
Pay cut of 10-15% across the board
Omaxe cuts staff expense by Rs 1.5 crore
April 2008: The realty sector was going great guns and thought the party would continue. Announcements of mega projects and great interest among investors were the order of the day. Developers couldn’t stop smiling but would make some noises time and again about the lack of skilled labour in the realty sector. They would blame project delays on non-availability of contractors and site engineers.
Six months later, things sure have changed.
Sobha Developers Ltd (SDL), the Bangalore-based realty major that mainly focuses on the high-end residential segment, has reported a dramatic decline in staff expenses in its September quarter results. From Rs 25 crore in the same quarter in 2007, staff costs fell to Rs 19 crore this year, a huge fall of Rs 6 crore. Rumours are that the company has shown many employees the door.
Asked if this was true, Sumit Keshan, chief financial officer (CFO), Sobha Developers, denied sacking any employee. “But we have decided to scale down the variable pay budget,” he said.
Variable pay is a component in the salary which depends on the employee’s performance and also the company’s and usually includes bonuses. If Keshan’s to be believed, Sobha Developers’ employees haven’t been given annual bonus this year as they were in 2007 when the sales were good.
However, an almost 25% drop in labour costs only through variable pay cuts is hard to believe. A site engineer working with Sobha who has resigned from the company says that Sobha had already cut pay-checks by minimum 10-15% across the board and since last week it has started sacking its employees. The pink slips are also being handed to its international division, Gulf International Construction & interiors Company (GICI) in Qatar.
DNA Money also checked various job portals where Sobha had advertised for hiring staff and all the advertisement that flashed were dated two months back which includes position like project manager, site engineer and others. Thus, it is clear that new hirings have also been freezed.
When Sobha launched its Initial Public Offering (IPO), a report by Motilal Oswal Brokerage dated September 30, 2006 says that the company has 3222 employees on board which is inclusive of skilled and unskilled labourers.
The other developer which has seen a fall in its staff cost expenditure is India’s largest developer according to market capitalisation, DLF. Its expenditure dropped by Rs 3 crore from Rs 61 crore, DLF had attributed that 300 people have left the company for better shores.
Even Omaxe, the Delhi based developer has shown the door to its employees. Its staff cost expenditure has fallen by Rs 1.5 crore from Rs 7.5 crore to Rs 6 crore this year. Repeated attempts to get in touch with the company remained unfruitful.
Analyst from an international brokerage says, “The provision for variable pay (bonus) has been reduced because numbers look bad for FY09. While that could explain some of the difference, the reality is that most developers are letting people go as execution has fallen substantially. Sobha has one of the most leveraged balance sheets and they are still developing premium segment projects they need to change their business strategy to liquidate themselves.”
According to the latest realty report released by the Kotak Institutional Equities Research stable says that Sobha has the second most leveraged balance sheet after Unitech, the Delhi based India’s second largest realtor according to market capitalisation.
Monday, November 17, 2008
Friday, November 7, 2008
Interview with Architect Karan Grover
“Putting up glass buildings does not make us modern”
“Designers are arrogant”
says Karan Grover, the Platinum Award winner in 2003 under Version 2 of Leadership in Energy and Environmental Design (LEED) from the US Green Building Council,the first architects in the world to get this highest possible award for Sustainable Architecture-2003.
The man who never fails to impress his audience with his colourful presentation on a 70mm screen, speaks to Pooja Sarkar and G Seetharaman on the sidelines of a Green Building conference held in Mumbai. Excerpts from the interview:
P&S: What is happening with the Tata’s D.E.S.I.G.N lectures?
KG: Under the Tata Tiscon brand, we are doing a design knowledge series where we talk to architects and students. It is basically a lecture series where we are spreading awereness where the architect has something to share on design where myself and another architect come around for a session. We started the series in Kolkata last year and we have covered about 15 cities. For the tier-II and tier-III cities, I and 15 other architects would make a film. It would be a capsule and it would travel to these places where we can’t go. We are planning to complete 100 cities by the end of next year. We also feel it is becoming a brand. People are interested in speaking at the seminar. Every time we choose a different architect who has something to share. In Pune we had Gurmeet Rai who spoke about conservation. We have different people talking about different things.
P&S: There is a lot of talk about green buildings, but are developers interested in constructing such buildings and will these buildings sell?
KG: The green movement is a very new movement .At the summit in the morning developers spoke about developing a billion sq. ft. by 2010 which is not small. Green buildings save money, use less energy and less water. People feel better living in these buildings. Of course, it is a new movement and in the next 3 years it is going to become the biggest thing in the world. It is going to become mandatory to build green buildings. We have got Energy Conservation Building Code (ECBC), in next two years they are projecting it as a self imposed norm for developing buildings. We are not talking about zero-carbon buildings, they are very high-end. No building is zero-carbon. We are talking about buildings which save 50% energy, 40% water and use 100% day-lighting. Increase the productivity of the people by 30%.
P&S: What about the cost of green buildings?
KG: It is very very nominal. When I did my first green building it cost 16% more than normal buildings, now the differential is only three-fourth. It has got to do with attitude and nothing to do with money.
When you design a green building right from the conception there are some parameters which you should keep in mind, you must not have anything on east and west, so it’s in the attitude. The cost of running the building was never included, the budget for developing the building was done but not about the maintenance. The point is that we are not taught these things in colleges. Today the lifecycle cost of the building is being taken care of which is the actual cost of running the building.
It is like having a luxury car whose maintenance cost is more than its price. What is important is running it.
The other thing is our perception. Everything from the west is not modern. We think steel is modern, we think glass is modern. Putting up glass buildings does not make us modern. We don’t look at our culture, heritage and roots. We just copy the west. So its our perception which leads us to make buildings which is not energy efficient.
P&S: Is it possible to build such buildings in a city like Mumbai which is congested and lacks space?
KG: Of course it is. The design for buildings has to be contextual.
For example, At Nariman Point, you pay Rs700-800 per sq ft for the huge glass window, then you realize that too much heat is coming in you pay another Rs 500 per sq ft for vertical curtains and you keep it closed. Then why did you have it at the first place, because you thought it will look good. A building which is working well is bound to look good. But if you want the building to look good and then see the other aspects then it will never meet your expectation. Today’s designers they don’t look at the context. I question the very validity and basis of designers. They are arrogant and do not consider the context. They have some pre-conceived notion and they decide what they want to do.
P&S: Have you seen attitudinal shifts as far as green buildings are concerned?
KG: Yes. When we first organized a lecture there were just 100 people, but at this summit there were over 1000. That is the shift. The only reason I agreed for the Tata lectures because I had decided when I was invited by former U.S. president Bill Clinton in 2007 for a lecture that I would address 10,000 students and 10,000 professionals every year. I was amazed at the response at this summit.
P&S: What do you want to say to students of architecture?
KG: My message is, never forget your roots. Whatever you are looking for is in your culture. Look within and not outside and you will get your answers.
“Designers are arrogant”
says Karan Grover, the Platinum Award winner in 2003 under Version 2 of Leadership in Energy and Environmental Design (LEED) from the US Green Building Council,the first architects in the world to get this highest possible award for Sustainable Architecture-2003.
The man who never fails to impress his audience with his colourful presentation on a 70mm screen, speaks to Pooja Sarkar and G Seetharaman on the sidelines of a Green Building conference held in Mumbai. Excerpts from the interview:
P&S: What is happening with the Tata’s D.E.S.I.G.N lectures?
KG: Under the Tata Tiscon brand, we are doing a design knowledge series where we talk to architects and students. It is basically a lecture series where we are spreading awereness where the architect has something to share on design where myself and another architect come around for a session. We started the series in Kolkata last year and we have covered about 15 cities. For the tier-II and tier-III cities, I and 15 other architects would make a film. It would be a capsule and it would travel to these places where we can’t go. We are planning to complete 100 cities by the end of next year. We also feel it is becoming a brand. People are interested in speaking at the seminar. Every time we choose a different architect who has something to share. In Pune we had Gurmeet Rai who spoke about conservation. We have different people talking about different things.
P&S: There is a lot of talk about green buildings, but are developers interested in constructing such buildings and will these buildings sell?
KG: The green movement is a very new movement .At the summit in the morning developers spoke about developing a billion sq. ft. by 2010 which is not small. Green buildings save money, use less energy and less water. People feel better living in these buildings. Of course, it is a new movement and in the next 3 years it is going to become the biggest thing in the world. It is going to become mandatory to build green buildings. We have got Energy Conservation Building Code (ECBC), in next two years they are projecting it as a self imposed norm for developing buildings. We are not talking about zero-carbon buildings, they are very high-end. No building is zero-carbon. We are talking about buildings which save 50% energy, 40% water and use 100% day-lighting. Increase the productivity of the people by 30%.
P&S: What about the cost of green buildings?
KG: It is very very nominal. When I did my first green building it cost 16% more than normal buildings, now the differential is only three-fourth. It has got to do with attitude and nothing to do with money.
When you design a green building right from the conception there are some parameters which you should keep in mind, you must not have anything on east and west, so it’s in the attitude. The cost of running the building was never included, the budget for developing the building was done but not about the maintenance. The point is that we are not taught these things in colleges. Today the lifecycle cost of the building is being taken care of which is the actual cost of running the building.
It is like having a luxury car whose maintenance cost is more than its price. What is important is running it.
The other thing is our perception. Everything from the west is not modern. We think steel is modern, we think glass is modern. Putting up glass buildings does not make us modern. We don’t look at our culture, heritage and roots. We just copy the west. So its our perception which leads us to make buildings which is not energy efficient.
P&S: Is it possible to build such buildings in a city like Mumbai which is congested and lacks space?
KG: Of course it is. The design for buildings has to be contextual.
For example, At Nariman Point, you pay Rs700-800 per sq ft for the huge glass window, then you realize that too much heat is coming in you pay another Rs 500 per sq ft for vertical curtains and you keep it closed. Then why did you have it at the first place, because you thought it will look good. A building which is working well is bound to look good. But if you want the building to look good and then see the other aspects then it will never meet your expectation. Today’s designers they don’t look at the context. I question the very validity and basis of designers. They are arrogant and do not consider the context. They have some pre-conceived notion and they decide what they want to do.
P&S: Have you seen attitudinal shifts as far as green buildings are concerned?
KG: Yes. When we first organized a lecture there were just 100 people, but at this summit there were over 1000. That is the shift. The only reason I agreed for the Tata lectures because I had decided when I was invited by former U.S. president Bill Clinton in 2007 for a lecture that I would address 10,000 students and 10,000 professionals every year. I was amazed at the response at this summit.
P&S: What do you want to say to students of architecture?
KG: My message is, never forget your roots. Whatever you are looking for is in your culture. Look within and not outside and you will get your answers.
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