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Builders & Real Estate Bulls Theory Proved Wrong

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Builders & Real Estate Bulls Theory Proved Wrong

Last updated: November 1 2016
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  • Re : Builders & Real Estate Bulls Theory Proved Wrong

    Originally posted by tushart View Post
    Good thinking - though we should not do a mistake of comparing Indian IT with Food and Retail giants.
    I cant control that MBA run such orgs and MBAs have a common way to handle problems. Established industries usually follow standard strategies for growth - the recent clamor on why Infosys does not make a acquisition is one such example.


    Anyway I guess I have no doubt that Indian IT and people employed in it will do exceedingly well if it keeps growing/innovating which is what you are explaining in beautiful words. And that is what I said - if IT grows we have no issues - pyramid keeps growing.

    The problem is only when it stops growing or grows at a slower rate. This is a fear at this point and all we are saying is that if it comes to reality for whatever reason, then we would see people with high cost(high experience) getting laid off and hiring happening at the bottom of the pyramid.
    We should see some new innovative companies come up in banglore or pune (or some other city for all we know) in the next 5-6 yrs. Many senior folks in IT have left recently to start their own companies so innovation is happening plus people have money today to pursue their dreams and software does not take much capital to start unlike a refinery or a airline or a fast food chain. Having so many educated people concentrated in 4-5 cities is bound to produce new ideas and companies.

    I am not -ve about the IT sector - the business will change but talented people will continue to see growth.

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    • Re : Builders & Real Estate Bulls Theory Proved Wrong

      Originally posted by herohiralal View Post
      Agreed but then people should not be surprised with people buying 80 lakh houses as those 20% have cash to burn / invest. Average salary of a 10-12 yrs old in India (non-IT) will be like 2 lakhs or even lower but that does not mean house prices will be somewhere like 10-12 lakhs.

      If areas like wakad, aundh, baner, hinjewadi etc are sought after by people who earn say in the range 10-25 lakhs (IT folks) then price range of 60-80 lakhs for a 2 bhk should not surprise people given the emotional attachment we have with RE, lack of alternate investment options and constant deprecation of the rupee.

      Agree.

      Comment


      • Re : Builders & Real Estate Bulls Theory Proved Wrong

        Originally posted by herohiralal View Post
        We should see some new innovative companies come up in banglore or pune (or some other city for all we know) in the next 5-6 yrs. Many senior folks in IT have left recently to start their own companies so innovation is happening plus people have money today to pursue their dreams and software does not take much capital to start unlike a refinery or a airline or a fast food chain. Having so many educated people concentrated in 4-5 cities is bound to produce new ideas and companies.

        I am not -ve about the IT sector - the business will change but talented people will continue to see growth.
        I am seeing that the R&D, solutioning, innovation is strategically getting killed in India and getting replaced with service industry ... unfortunately the next generation will be trained to work only on money per hour rather than intellectual property or product industry.

        Radical shift is needed and without that the educated folks will only be exploited like cyber coolies...

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        • Re : Builders & Real Estate Bulls Theory Proved Wrong

          Based on my experience of financials - I can assure you that anyone making 20-22 lakhs today is way overpaid from financial perspective. It is just that there is a shortage rather they are in right time right place that they get it. As a decision maker - if person gets a choice that same work can be done by anyone with lesser salary - decision maker would immediately replace. Rather Organizations are already asking managers to do it - a reality.

          BTW... 8000 Rupees a day is damn too much. Traffic police spending whole month doing overtime standing in rain, sun and wind, getting frustrated does not earn that much in a whole month. There is only one way to describe this IT fellow - Lucky - I envy him/her.

          Let me make it clear - I do believe in talent and hard work so there no denial about it. I also advocate it - but one must understand that there is a limit to everything.

          You can work hard and be hugely talented but what matters most is what kind of exposure have you got in those 10 -15 years. Were you designing architectures or implementing something state of the art. Majority of the Indian IT folks loose on this front.
          Also if someone finds himself/herself in a situation after 10-15 years that skill that was their strong point is obsolete then they find themselves in very difficult situation.

          However talented a person may be - after age of 35, person will loose against youngster on key basics - speed of learning, liabilities, risk taking attitude, newer technologies. If you cross 45 - your body will loose as well.
          I am not saying this happens with everyone - but it happens with most of the folks - its nature. The only thing matters in such a situation is your experience/exposure.

          IT industry today is driven by not how talented/hardworking people are but by what talent/hard work is needed to do the job and if you call it a business then this is same across all types of businesses.
          Infinite growth is an illusion - there will be a day when growth stops - question is - is it now, after 10 years or after 100 years - no one knows. Only thing we can do is to innovate/work hard and pray that your destiny keeps you on the track.


          Originally posted by herohiralal View Post
          Income is a reflection of talent and execution skill of an individual. So income will increase if the person is talented and can execute really well. Most of your friends who passed college in 2006 are 7 yrs old in the industry and their time will come to earn big money if they can learn more and understand the domain and how businesses work.

          A person earning 1.8 lakhs per annum 10 yrs ago is able to earn 20-22 lakhs today not by just doing the same old stuff that he/she did back in 2003 or 2006 but by learning new things. Just joining a IT firm dosent guarantee success and salary increases more than inflation. Its a private sector which is very competitive and
          Last edited by tushart; August 16 2013, 02:20 PM.

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          • Re : Builders & Real Estate Bulls Theory Proved Wrong

            Is this just a tip of iceberg ?

            Came across the news which says KFA lenders in trouble due to overvalued collateral in the form of RE. Posting the link below.

            Kingfisher Airlines lenders stumped as value of pledged properties crashes - The Economic Times

            The article quotes it as property price crash. But i think this must be because of overvalued RE as collateral. Only when KFA has defaulted and while trying to recover, it comes out that the asset value was much lesser than quoted.

            This must be just a tip of iceberg. The banks have been seeing rising NPAs but no one would have accounted the real value of collateral against which the loans were issued, these are inflated on paper.

            With Many RE firms neck deep into debt, time to check the value of collateral against which the loans were issued. If RE sees correction with lower demand, such loans will be at great risk.
            Last edited by realpune; August 16 2013, 01:15 PM.

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            • Re : Builders & Real Estate Bulls Theory Proved Wrong

              The Tech industry is per se a cost plus operating margin sector, unlike manufacturing or for that matter even some services like banking. The buyer/client decides on the talent they want to hire and the IT company takes them on the roll - the pay of the techie is a component of what the buyer/client has agreed to pay to the IT company. This is true, the IT company will not flinch to hire a less than average profile if the client has okeyed the same.

              So its not about right place right time, qualification, quality of experience etc., when it comes to the Indian IT sector - it continues to be a body shopping segment operating on a fixed bid basis for projects. Very few product development companies exists in true sense and they too are finding it a struggle to move away from their consulting behaviour to a true product development/management company.
              Last edited by rsrsin; August 16 2013, 02:44 PM.

              Comment


              • Re : Builders & Real Estate Bulls Theory Proved Wrong

                Originally posted by tushart View Post
                Based on my experience of financials - I can assure you that anyone making 20-22 lakhs today is way overpaid from financial perspective. It is just that there is a shortage rather they are in right time right place that they get it. As a decision maker - if person gets a choice that same work can be done by anyone with lesser salary - decision maker would immediately replace. Rather Organizations are already asking managers to do it - a reality.

                BTW... 8000 Rupees a day is damn too much. Traffic police spending whole month doing overtime standing in rain, sun and wind, getting frustrated does not earn that much in a whole month. There is only one way to describe this IT fellow - Lucky - I envy him/her.

                Let me make it clear - I do believe in talent and hard work so there no denial about it. I also advocate it - but one must understand that there is a limit to everything.

                You can work hard and be hugely talented but what matters most is what kind of exposure have you got in those 10 -15 years. Were you designing architectures or implementing something state of the art. Majority of the Indian IT folks loose on this front.
                Also if someone finds himself/herself in a situation after 10-15 years that skill that was their strong point is obsolete then they find themselves in very difficult situation.

                However talented a person may be - after age of 35, person will loose against youngster on key basics - speed of learning, liabilities, risk taking attitude, newer technologies. If you cross 45 - your body will loose as well.
                I am not saying this happens with everyone - but it happens with most of the folks - its nature. The only thing matters in such a situation is your experience/exposure.

                IT industry today is driven by not how talented/hardworking people are but by what talent/hard work is needed to do the job and if you call it a business then this is same across all types of businesses.
                Infinite growth is an illusion - there will be a day when growth stops - question is - is it now, after 10 years or after 100 years - no one knows. Only thing we can do is to innovate/work hard and pray that your destiny keeps you on the track.
                Nobody will be continued for long if they are overpaid.

                If you think 22 Lac is not justifiable at any position/role, what would you call 32 LPA which one of my friend earn in one of your typical jhadu pocha service company. I am sure his managers must be earning more than him.:-)

                All that matters is the value you bring to the table. Nobody can put a blanket and say he/she is overpaid

                Comment


                • Re : Builders & Real Estate Bulls Theory Proved Wrong

                  No offense meant to anyone. Since discussion was about talent and value that is added by talent - wanted to hint people to take a pause and think if they are really adding a value that justifies salary they get. I did not mean to be judgmental.




                  Originally posted by RP Pune View Post
                  Nobody will be continued for long if they are overpaid.

                  If you think 22 Lac is not justifiable at any position/role, what would you call 32 LPA which one of my friend earn in one of your typical jhadu pocha service company. I am sure his managers must be earning more than him.:-)

                  All that matters is the value you bring to the table. Nobody can put a blanket and say he/she is overpaid

                  Comment


                  • Re : Builders & Real Estate Bulls Theory Proved Wrong

                    "Lenders, who are in the process of taking over possession of Kingfisher House in Mumbai, have valued the two key immovable securities — the Goa Villa and the Mumbai office — at Rs128 crore. This is considerably less than the Rs200 crore ascribed to the properties by Kingfisher at the time of the loan in 2010 and a fraction of Rs6,000 crore owed by the airline."
                    I am sure the banks concerned would have independently valued the property and found tis true value and paid only a part of the laon based on collateral provided or they were carried by flamboyance of the borrower.
                    Rs3000 crores has been paid on brand value which is now negative.Big companies manage to get loans which get"provided " as a loss.Who is really accountable? Depositor money gets lent to big businesses and when crunch comes,banks find that the main owner has hardly anything on his own name and belongs to group companies.Banks suffer losses due to bad debts.What risk analysis is done? What due diligence is done? When the airline stopped flying high why did the banks/lenders not call in the loans?
                    Whe you asan ordinary home loan customer approaches the bank,the list of formalities is long and your financial history is checked and laon amounts carefully restricted.but when it comes to big corporates- Suzlon,KFA rules get loosened.
                    The photograph of owners of such defaulting companies should also be displayed in public.
                    Higher level officials in the banks concerned are the culprits for this loss or keeping quite when KFA was becoming a loss making enterprise.
                    “A bank is a place where they lend you an umbrella in fair weather and ask for it back when it begins to rain.”

                    . so why did they fail to recall the loans in time and save public interest.Very fishy this story of corporate loans.

                    Comment


                    • Re : Builders & Real Estate Bulls Theory Proved Wrong

                      Originally posted by RP Pune View Post
                      Nobody will be continued for long if they are overpaid.

                      If you think 22 Lac is not justifiable at any position/role, what would you call 32 LPA which one of my friend earn in one of your typical jhadu pocha service company. I am sure his managers must be earning more than him.:-)

                      All that matters is the value you bring to the table. Nobody can put a blanket and say he/she is overpaid
                      I have seen B.Tech engg. earning 1.5L/yr. to 15L/yr. in jobs with almost same work exp. That is the tragedy in India. In USA, starting salary is $ 50-60K and usually goes up to 100-150K because annual increment is 3-4% and everyone lives a happy life. This is the reason why there is no middle-class in India and USA is full of it.

                      Comment

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