Builder of Reliable Assets

Kochi: With less than nine hours left for the half-yearly closing of 2016-17 fiscal, we reached the corporate office of Asset Homes at Panampilly Nagar in Kochi on September 30. Did we choose a wrong day for the cover story interview? Of course, we were a little bit worried until we walked in. Much to our relief, a hushed and relaxed ambiance welcomed us, and the off-white interiors of the office added to the serenity. With his usual trademark smile, Sunil Kumar V, Managing Director, greeted us and began the conversation straight away. We got the answer for the tranquility prevailing all around in the course of our interview which lasted about three hours.

At the end of the half-yearly period, Asset Homes has recorded 50 per cent growth (YoY) in terms of number of units sold. “Today (read September 30), we would achieve 50 per cent of our annual target. We would require a few more units to reach that figure. Now it is 4 pm. By 11.30 pm, we would achieve the target. Believe me, no builder in Kerala would have achieved such a figure this year,” the 46-year-old Civil Engineer says, brimming with confidence.

Sunil’s team at his 10 offices – seven in Kerala and one each in the US, Dubai and Qatar, would have been working on closing the deals. Some prospective clients would be negotiating for more discounts, while others might be filling up the application forms. However, during the three hours that we spent in his office, there was hardly any distraction. He has effectively delegated responsibilities to his team, which he claims was a conscious decision. Currently, Asset Homes has 236 employees and close to 1900 workers at various sites.

Asset Homes is celebrating 10th anniversary this year. To date, Asset Homes has undertaken 75 projects of which 46 have been completed while 29 projects are in various stages of completion. Asset Homes is the only builder in Kerala which has secured seven-star CRISIL (Credit Rating Information Services of India Limited) rating for three residential projects. It is also the first builder to get DA2 rating within eight years of its inception. (DA2 rating is accorded by CRISIL based on the developer’s ability to execute real estate projects as per the specified quality standards and within the stipulated time schedule, and the ability to transfer clean title). For the first time in the history of real estate sector in Kerala, Asset Homes has extended a free insurance coverage for 25 years to its apartments,  against damage caused by natural calamities like fire, earthquake etc. in association with the New India Assurance Company. And perhaps, it is the only builder to brand its own customer service division which it calls Asset Delight.

But Sunil Kumar is not satisfied. He has embarked on a dream journey of making the company the Most Reliable Realty Brand in India by the year 2020 with a turnover of Rs. 2000 crore. Christened as Vision 2020, Sunil has set in motion a customer-centric, target-oriented and sustainable strategic growth plan. At the same time, he is ensuring that quality of his products or services and his commitment to customers are never compromised.

A born leader, Sunil was the college union chairman and general secretary while pursuing his Civil Engineering graduation at Government Engineering College, Thrissur. On one of the walls in his office, there hangs a group photo of him along with the other batch mates of the Executive Education Programme in Real Estate Management conducted by Harvard Business School, Boston. He is an Executive Committee Member of CREDAI, Kochi an industry association which he has also served earlier as Joint Secretary and Chairman of Exhibition Committee. Sunil also functions as Consulting Engineer with various organisations, and is an active member of several professional bodies as well as social forums.

Read on about the exciting entrepreneurial journey of the ‘Responsible Builder’ of Kerala.

Please share the growth story – from a salaried professional to an entrepreneur

I completed my Civil Engineering in 1991. The word entrepreneurship was something unheard of then, let alone startup. It was difficult to find a job even for an engineering graduate. The only aspiration of majority of youngsters was to find a job with decent salary.  Or else, you had the option to become a Pravasi. Doing business was not considered a fair practice. Profit-making was akin to committing a sin. You could see how businessmen were portrayed in Malayalam films those days. There was no entrepreneur in my family, too.

I was badly in need of a job and hence, did not pursue higher education. My first job was at the construction site of IHRD Engineering College at Thrikkakkara. It was one among the first engineering colleges sanctioned by the government under the self-financing mode. Ironically, I was part of several protests against the government’s decision to start self-financing colleges while in college! After a year, I got selected to Cochin Refineries (now known as BPCL Kochi Refinery). Unfortunately, I could work there only for a year as the management did not regularise my batch citing uncertainties that prevailed following the assassination of the then Prime Minister Rajiv Gandhi.

Looking back, I strongly feel that it was a blessing in disguise for me. Later, I associated with a Bengaluru-based architect who came to Kochi as part of an apartment project. I was given the target of completing the 12-unit project within 10 months. Unlike the present day work site, swarmed by teams of professionals working in tandem, I had to look after the entire activities at the construction site – from procurement of materials to quality control to wage distribution, and even other sundry jobs. But it gave me a 360-degree exposure to the profession. And, we completed the work in eight months which taught me the importance of delivering projects on time. From seeing the happiness of the customers, I realised that it was the essence of the real estate business.

The entrepreneur in me started gradually evolving at that time.  I was simultaneously doing small housing projects along with one of my college mates. The successful completion of apartment projects gave me confidence to do bigger projects, which resulted in the inception of Santhi Homes in 1994. Under the banner, we did a residential complex with 12 flats at Vidya Nagar in Kochi. Once it reached the delivery stage, Kerala witnessed the first real estate crash. The year was 1996. Realty sector came to a standstill. We did small projects and survived. The market revived in 2001. Till 2006, we did 12 projects in Kochi, including three high-rise projects.

Birth of Asset Homes

In 2006, it occurred to me that we need to change the approach. I was for an action plan to achieve faster growth even while remaining consumer-oriented. The difference in perceptions resulted in us parting ways, and thus was born Asset Homes in November 2006. We completed our first project in 2008.

We were able to identify appropriate locations, construct marketable products, fix competitive prices and ensure delivery as promised. Within no time, all the units under 10 housing projects undertaken by us were sold. And, of course, the customers were happy, too. Till today, Asset Homes does not have a case in the Consumer Court. However, being a promoter I was not happy about the execution of projects. Despite selling 10 projects, brand value eluded us. To address this issue, we developed systems in the organisation, set up management hierarchy, scheduled regular meetings, developed a mechanism for doing follow-ups and started doing external auditing.

In spite of streamlining our functioning, we were not getting the sufficient pull from the market which is the outcome of brand value. Customers were not coming to us. We still had to reach out to them. It was at this point that I decided to learn more about management. I did my Post Graduation in Real Estate Management from IIM, Bengaluru. Later, I completed the Executive Education Programme from Harvard Business School, Boston. Both helped me immensely in the running of the company.

In 2008, real estate sector plunged into another recession. The market is yet to recover completely. However, the company grew along with the recessionary period since we have not compromised on our ethics and quality parameters. This absence of common ground on many issues impacting our clients has cost me dear with some of my partners leaving the company. For me, Asset Homes is my life. My strength is the spirited workforce. There are employees who have been with me for the past 20 years. We have a chief managers’ team, senior managers’ team and a 20-member team for Vision 2020. All inter-departmental meetings for the next year have already been scheduled.

Joint venture mode

One of the main reasons behind the accelerated growth of Asset Homes is our decision to adopt joint venture (JV) route for projects. I got this idea from the first project that I did along with the Bengaluru-based architect. If your aim is to do more projects, you cannot afford to invest heavily in land. Currently, Asset Homes has around 65 JV partnerships and we have a dedicated division to engage with them.

Your company envisions being the ‘Most Reliable Realty Brand in India’ by the year 2020. What is the plan of action?

To achieve the dream christened Vision 2020, we did an organisational restructuring in 2013. We also constituted a seven-member advisory board consisting of leading professionals from various fields who can guide, plan and implement strategic decisions.

Fixing brand ambassadors for the company was one part of the strategy. The decision to appoint actors Prithviraj and Asha Sharath as brand ambassadors of Asset Homes and Asset Delight respectively has proved very effective. We believe that like us, Prithvi, too, earned laurels in his career through hard work and sheer passion. Each brand brings an image to the people’s mind. In that sense, we feel that Prithviraj is best suited as far as Asset Homes is concerned. We selected Asha Sharath for Asset Delight in the same way. She is a proven talent and has a strong standing in the public, particularly among the NRK community.

What was the idea behind re-branding your Customer Service Division as Asset Delight?

Asset Delight is part of our endeavour to transform the company into a completely customer-centric brand. Every customer will have the question, what is in it for me? For them, the most important aspect is the service that we provide. However, most of the builders would try to evade that question. The moment you consider that your business is only about constructing flats or apartments and nothing more, your failure as a builder has begun.

We realised that we should do a lot more for our customers. And we introduced insurance coverage scheme, a first-of-its-kind initiative in the country.

For us, the idea emerged when we witnessed the havoc caused by natural disasters in Visakhapatnam as well as Chennai. Following flash floods in Chennai, entire power generators set up in the basement floors of high-rise residential properties got damaged. The situation was similar in the case of common area facilities. Each occupant had to shell out substantial amount of money to restore these facilities. If individual customers have to avail comprehensive insurance scheme for their apartments, they will have to shell out huge amount. Moreover, the coverage will be only for dwelling unit and not for common area. For the benefit of our customers, we have negotiated and reduced the premium, which we pay on behalf of them.

The highlights of Asset Delight include: ‘Asset family of the month’ wherein the Delight Department personnel visit a family every month at each location and reinforce ties with them; ‘Asset customer on board’ as part of which we invite one customer to our management meeting held every month and give him/her an opportunity to share his/her views about the brand, projects and the services offered; Customers who have attended the meeting will become part of Delight Circle; As part of Delight Serve initiative, customers are given an easy-to-operate mobile application with a unique customer ID for booking all maintenance needs.

Please share the growth target and the company’s expansion plans.

If we could launch projects as planned, our sales target for 2016-17 is 700 flats. In the current market situation, this is on the higher side. I believe, sale of 750 units along with Rs. 500 crore turnover would be the realistic figure for a top performer in Kerala market this fiscal.

Currently, we have projects in 14 towns across eight districts in Kerala. Frankly speaking, there is no scope for expansion other than specialty projects. Retirement homes are an emerging space in the Kerala realty market. Our elderly-friendly housing project is coming up in Thiruvalla. The dwelling units will have special features for the convenience of senior citizens. And hence, the cost of construction will be high.

Currently, there is no plan to diversify but we are expanding the business to markets outside Kerala. As far as our Sri Lankan project is concerned, we are in the final stages of discussion. A high-level Sri Lankan delegation visited our various projects. A delegation from the company also visited Sri Lanka in this regard. The plan is to invest in a 70-acre residential township project in Colombo. The project will be undertaken by a different company, which will be a joint venture with a local company there.

Regarding expansion plans, we have identified 50 upcoming towns in South India. If things pan out as expected, we may announce the project within the next six months. We are looking at a completely different business model. We are certainly exploring funding options. But, we are yet to decide whether to choose the private equity (PE) route or opt for an SPV for investments outside Kerala.

But I am quite confident about one thing. If any PE firm decides to invest in realty sector in Kerala, Asset Homes would be their first choice for various reasons. We are transparent and a professionally-run company. The collective engineering experience of our staff would cross 2000 years. In the last financial year alone, we created 10 lakh man-days.

What will the new Real Estate Regulation and Development Act help achieve?

The recently-introduced Real Estate Regulation and Development Act lays more stress on the interests of customers and the security of their investments. It is going to transform real estate investments into a more secure and safe category. However, there are certain flaws which we feel would be rectified once the rules are framed. The intention of the Act is good and it protects the interests of the customers. Only those who engage in fair business practices will survive. If it has to be effective, stakeholders in the government utility sector should also be brought under the purview of the Act.

Oil crisis and impact on NRKs are a big worry for industries like real estate. How do you see this panning out?

Around 50 per cent of sales come from the NRK segment. The ongoing crisis has affected the sector to a certain extent. There is financial crunch due to cut in salaries and other benefits. But we have not seen cancellations particularly because of this crisis. You know, the biggest boom happened in Kerala’s realty sector during Kuwait war. So, it has both sides to the story. Now there are cases of NRK families returning to Kerala and settling here. This is an opportunity too.

But we have to accept the fact that our market is small. If you do a good job, you will immediately get results. Ten per cent of market players account for 90 per cent of sales. I believe, a recessionary market is better for both customers as well as market leaders. When there is a boom, everyone will be reaping dividends except the customers. Chances are high that customers may be ditched by fly-by-night operators. Consider a scenario where you sell 50 units out of 100 in a market and selling 100 units in a market of 1000 units. What will be your market share in both cases?

What is the industry doing in the area of skill development?

It is a big problem and maintaining quality standards is becoming a tough challenge. The sad part is that we only get inexperienced people to work at construction sites. And we are training them at the site through continuous supervision which is proving very difficult. The situation is forcing us to use pre-fabricated products. For instance, we have started using ready-made doors so that the workers need to learn only to fit the door properly. Builders believe that it is the government’s job to impart training. Even if you decide to train people, I do not think people will turn up.  People here would either become a Collector or Broker. (laughs)

However, we have made it compulsory for our employees to undergo training related to their profession as well as career advancement for five days a year.

What is your advice for aspiring entrepreneurs?

Entrepreneurship is an art. There is lot of self-learning. People say it is hereditary, I do not think so. We can show examples and point out opportunities. I believe, to become an entrepreneur one should have the capacity to fix certain grey areas. It is not something that we learn inside a startup incubator. At the same time, one should also realise his or her strengths and weaknesses. If you can be a good manager and compassionate, you will succeed as an entrepreneur.

Behind the Success

Sunil Kumar is all praise for the directors and members of the advisory board for whatever Asset Homes has achieved so far. The two directors of the company are N Mohanan, a distinguished entrepreneur based in Kochi and Dr. M P Hassan Kunhi, a Qatar-based businessman who belongs to Kannur district. “Their decades of experience and entrepreneurial passion to excel make them real assets for the company,” Sunil said. The seven-member Advisory Board includes Dr. Babu T Jose, former Director of CUSAT; Dileep Narayanan, Founder and CEO of Organic BPS, an award winning ad agency; M George Korah, Managing Partner of Korah & Korah Chartered Accountants; Joseph Philip, Founder and former Managing Partner of Skyline Builders; V K Madhav Menon, Mentor and Management Expert; Naveen Philip, MD, Popular Mega Motors and Radha Unni, Director, Catholic Syrian Bank.