PGDMB-16

Group-09

SECTION-C

Atrayee Chakraborty
Roll28
Debanjan
Paul
Roll-34

Introduction:
Inception :

Started as a soil testing consultancy by four civil engineers with

limited capital but strong domain knowledge

Expanded into civil construction activities and other infrastructure

related sectors

Development into a major player across Infra sectors

o

Established itself as a pioneer in the civil construction through

projects in India and the Middle East

Expanded across the value chain into high value, complex

construction projects and diversified across sectors such as
industrial civil structures, power projects, roads, transmission
tower manufacturing etc

Started real estate developments in Gurgaon

Unprecedented growth in real estate

o

Management increasingly focused on real estate given higher

growth -Established Unitech as a leader in the real estate sector

20x growth in value of work undertaken between FY2003 and

FY2008

Situation Analysis

SWOT Analysis
1. Indias second largest real estate investment
company and largest real estate builder
2. Offers a diversified product mix
Strengths

3. Has decades of real estate experience and

expertise
4. Strong national presence
5. Wide customer and partner base

Weaknesses

1. Decline in operational performance and Low

returns are a concern
2. Global presence and international tie-ups are very
less
1.Growth prospects in real estate in India

Opportunitie 2.Expand in new geographies

s
3.Reduction in interest rates

1.Shrinking supply of skilled professionals

Threats

2.Environamental regulations
3.Increase in interest rates

5C ANALYSIS
CUSTOMERS:
Advertising: Newspapers, Online Property Sites and
other property search portals
Market Size and Potential Growth:
a. Market Size as on 31.3.2015: Rs. 4225.32 crore
b. Real Gross Value Added growth from 6.6% in
FY2014 to
7.2% in FY2015

c. Increase of FDI inflows increased from USD 36,046

million
in 13-14 to USD 44,876 million
d. Successful delivery of projects will start a virtuous
cycle of
cash generation facilitating reduction of debt

Customer Wants and Needs:

a. Locational preference: Posh, vicinity towards

essential
services, peaceful surroundings
b. Astrological factors like Vaastu
c. Spacious but affordable
d. Absence of excessive transactional costs

Motivation to buy:
a. Attractive pricing
b. Easy finance schemes
c. Modern facilities
d. Good resale value

Distribution Channels:
a. Brokers
b. Online realty sites
c. Real Estate Fairs
d. Realty Magazines

Quantity and Frequency of Purchase:

a. 7 to 10 years

Income level of customer:

a. Flats upto Rs 1 crore: Rs 25-30lakh p.a
b. 1-3 crores: Rs 40-45 lakhs p.a
c. 3 crores+ : Rs 6075 lakhs p.a

COLLABORATORS:
Agencies: Online realty portals, Realty Magazines
Suppliers:

a. Brokers can bring customers

b. Banks/Financial Institutions can bring finance
scheme
offers
Partnerships:

a. Banks
b. Brokers
c. Transport companies to provide pick-drop
services to
prospective buyers

CLIMATE:
a. Proactive reform agenda by government to
stimulate growth
b. Tackle politically difficult structural issues that
have
stalled investments
c. Creation of Real Estate Investment Trusts (REITs)
d. Strong monetary policy leading to high domestic
interest
rates increasing financing costs of
developers and enduser demand
e. Increase in buying power of general population
f. More awareness regarding real estate trends
among people

COMPANY:

a. To satisfy every customer's need for a better

experience through quality construction and employee
contentment.
b. Well-managed architectural and engineering
closely worked with internationally acclaimed architects,
c. The value proposition of developing the existing
portfolio of
infrastructure businesses in a focused
manner by leveraging the Companys over 30 years of
rich experience in executing infrastructure projects.
d. Since infrastructure businesses will require
significant growth
capital, the Board thought it prudent
to pursue them in a new entity.
e. This Company focuses on the real estate
business, which includes residential, commercial and
retail space development, integrated township
development, in-house project management, and fund

COMPETITORS:
DLF Ltd

Presence across 30 cities in India

Residential, townships, commercial complexes, IT parks, hotels

etc pan its project coverage

It is the only real estate company to be listed in BSE Sensex,

NSE Nifty, MSCI India Index and MSCI Emerging Markets Asia
Index

Shapoorji Pallonji
Mumbai-based Shapoorji Pallonji Group has joined hands with
Standard CharteredPrivate Equity, International Finance
Corporation (IFC)an arm of the World Bankand the Asian
Development Bank (ADB) to tap demand for affordable homes in
India amid a downturn in the broader real estate market.

The partnership will invest about $200 million (aroundRs.1,280

crore today) to build 20,000 homes across the country.

Standard Chartered, along with IFC and ADB, will invest 70% of
the $200 million

Remaining 30% will come from Shapoorji Pallonji.

Challenges faced:

To begin with, the sub-prime crisis led global economic

meltdown in 2008 and its aftermath squeezed liquidity from
the system and real estate demand largely shifted from
investors to final property users.

The Government of India and the Reserve Bank of India (RBI)

focused solely on managing inflation and adopted a strong
monetary policy mechanism that drove domestic interest
rates to very high levels

Also, the extant policy framework virtually put a freeze on the

capital flows to the real estate sector.

Finally, from 2011-2014, the Indian economy witnessed a

major slowdown and the investor and consumer confidence hit
major lows.

In this economic uncertainty many held back on critical long

term investment decisions like buying a house.

External Developments:

Revival in economic growth. Real Gross Value Added (GVA)

growth, which had slumped to 4.8% in FY2013, increased
first to 6.6% in FY2014 and then to 7.2% in FY2015.

FDI inflows increased from US$36,046 million in 2013-14 to

US$44,876 million in 2014-15.

With inflation under control - consumer price index (CPI)

inflation for industrial workers reduced from 10.9% in 2013
to 6.4% in 2014 - the RBI has eased monetary policy a bit
and we have witnessed 4 reductions in the Repo rate

The Government of India has also indicated a proactive

reform agenda to stimulate growth. This included positive
announcements on infrastructure spending, manufacturing
and focus on greater skill development and job creation.

Efforts made to streamline creation of Real Estate

Investment Trusts (REITs ) is a positive development that
can help bring in some amount of liquidity into the system.

Unitechs Perspective:

Unitechs key differentiator is project execution

They developed their own in-house construction team to

give impetus to the process of execution.

Challenge :they are still struggling to cope with is that of

liquidity shortage.

In this backdrop, for Unitech, FY2015 has essentially

been about generating sufficient liquidity to ramp up
construction activity at its project sites.

During the year, two of the Company's affiliates

transferred their economic interest in four IT SEZs/Parks.
This transaction resulted in a reduction of over Rs. 1000
Crores of consolidated debt and other liabilities.

The Company also exited completely from the wireless

business and extinguished all its liabilities and
obligations related to that business.

As a strategic intent, they remain committed to

deleveraging their balance sheet. However, it must be
noted that they continue to have a large delivery
backlog.

In the last 3 quarters of FY2015, they did not launch a

single project. They will continue to develop products
with their land assets as per market requirements and
the cash position of the Company.

Unitech CSR programme "Saankalp" continues to

undertake activities focused on social and community
development.

Vision-Strategy-Business
Model Congruence

Vision
The clear focus going forward is to address the need for
speed across different business functions. Broadly
speaking, there are three areas where speed is essential:

First, there is the need to build organisational speed to

quickly adapt to a fast changing business environment.

Second, there is the need to shorten cash cycles. The

focus should be on maximizing Internal Rates of Return
(IRR) of projects.

Third, there is the need to increase the speed of project

execution

Strategy

Achieve a high growth by providing a pan India presence

with focus on market experiencing strong economic
activities

Focus on high value added activities of the real estate value

chain , quick recycling of capital to maximize returns

Land bank acquition- early identification of potential growth

areas. Focus on the suburbs of key town and cities. Avoid
open auction process.

Focus on residential segment while having a diversified

portfolio

Create destination by undertaking large mixed use projects

in the suburbs of the cities

Maintain edge in product design quality

Develop and nurture relationship with all stakeholders

Attract and retain high quality talent

External / Industry
Analysis

Porters Five Forces Model

THREAT OF NEW ENTRANTS

There will be decrease in profitability due to increase in the

number of entrants.

It has been difficult for the new entrants to get a hold because of
cost reduction in expansion plans by corporates in real estate,
little scope in commercial construction, and strong rivalry
between existing firms.

Result: Relatively weak threat of new entrants

BARGAINING POWER OF BUYERS

Powerful customers are able to exert pressure to drive down

prices, or increase the required quality for the same price, and
therefore reduce profits in an industry.

Customers significantly influence the business operations in real

estate.

Customers do possess a threat of integrating backwards.


BARGAINING

POWER OF SUPPLIERS

An important category of suppliers is the bank. They have the

power to decide whether to fund a venture or not and at what rate.

Banks have now become highly conservative especially after the

economic downturn.

Are significantly affected by the monetary regulations like the Repo

rate & CRR formulated by the Central Bank of the country. This is in
turn affects the real estate sector.

Consequently the bargaining power of suppliers is very strong

THREAT OF SUBSTITUTE PRODUCTS AND SERVICES

In real estate business, substitute might be some type of totally

new retail space, some new location for office space or
rehabilitation instead of new construction.

The threat of substitute in real estate business and its impact on

profitability of the industry is quite ambiguous and difficult to
establish given the economic downturns and the recovery mode of
the real estate business cycle.

RIVALRY AMONG EXISTING COMPETITORS

Rivalry is strong due to the large no. of real estate

firms operating in India (65 in total) and the difficulty
to differentiate

The services offered by real estate companies cannot

be differentiated because these firms dont offer a
product, other than the facilities they lease and this
itself is very difficult to quantify.

In the current economic crisis, there is minimal

profitability and only companies with large cash
reserves are likely to survive.

EFE Matrix
SL.N
O

1
2
3
4
5

1
2

External Opportunities

high growth in urban areas

growth of population in cities
foreign remittance investment
change pattern of family
less effective substitues

External Threats

housing loan interest rate

bureacratic process of approval
urban population into middle income
3 group
4 inflation
5 political instability
TOTAL

Weigh
t

0.15
0.2
0.05
0.05
0.15

0.05
0.05

Ratin
g

3
3
4
2
3

2
1

0.2
0.05
0.05
1

3
1
2

Weighted
Score

0.45
0.6
0.2
0.1
0.45

0.1
0.05
0.6
0.05
0.1
2.7

Industry Profit Pool Analysis (2014)

Segment
Real Estate and
related activities
Transmission towers
Property Management
Hospitality
Others

% Share of
Profit

% Share of
Revenue

58%
11%
22%
-2%
10%

77%
13%
5%
2%
4%

Industry Profit Pool

Analysis (2015)

Internal Analysis

Balanced Scorecard

Balanced Scorecard

IFE Matrix

1
2
3
4

1
2
3

Internal Strength

comparitively lower cost

lower supplies expenses
qualified educated labourforce
require less amount of
capital equity

Internal Weakness

lack of updated technology

no specific standard format
no specific guideline on
earthquake
TOTAL

Weigh Ratin Weighted

t
g
Score

0.25
4
1
0.1
2
0.2
0.05

0.05

0.2

0.6

0.2
0.1

3
1

0.6
0.1

0.1
1

0.3
2.85

Business Model Analysis

Value Proposition
Company will focus on the real estate business, which will
include residential, commercial and retail space development,
integrated township development, in-house project
management, and fund and asset management
Segmentation

Product or Service Offerings

Saankalp is a CSR initiative of Unitech. Saankalp

focuses mainly on core development issues like
healthcare, labour welfare, child education and skill
building.
Unitech has always been responsible towards protecting
and preserving the environment. Unitech has registered
all its commercial developments in NCR in LEED Core and
Shell rating LEED (Leadership in Energy and Environment
Design).
As far as social forestry is concerned, Unitech brand is
associated with "Green".

Unitech aims at delivering 100% customer satisfaction by

using online methods to get feedback from the customer
by the following ways:

Customer Query:
Customer Complaints:

Value Chain Analysis

Cost Model

(All figures in Rs.

Crores)

Portfolio Decisions

BCG Matrix for Unitech Real Estate (In comparison

with the competitor products)

Product Portfolio Strategy

Unitech

Real Estate focuses on primarily these segments:Residential Projects

Commercial Projects
Retail Projects
Hospital Projects
Under

the above segments, the product portfolio

comprises of:Residential Projects Apartments, Floors, Plots, Villas
(Three Price Categories: Up to 1 Crore, 1-3 Crore, 3 Crore)
Commercial Projects Projects
Retail Projects Projects
Hospitality Projects Projects

 The

Indian real estate market is expected to touch

US$ 180 billion by 2020.
The housing sector alone contributes 5-6 per cent to
the country's Gross Domestic Product (GDP).
In the period FY08-20, the market size of this sector is
expected to increase at a Compound Annual Growth
Rate (CAGR) of 11.2 per cent
Unitech should focus on increasing revenues of
residential projects and minimize costs as it is
expected to grow significantly in the near future.
Retail sector and commercial sector should at present
try to capture more of the market share through
competitive and attractive pricing and discount
schemes.
Hospitality

sector needs cost minimization techniques

like lessening unnecessary features, better

Future Growth Options

Future Growth Options

Using Ansoff Matrix

Market Penetration
(Existing Markets-Existing
Products)
The

market is still recovering from the effects of

the 2008 sub-prime crisis
Attract customers and increasing volume profits
by offering attractive discounts and special
bonus services .
Introduce Unitechs own cab drive-and-drop
facilities in its real estate properties at a little
cheaper rate than the cab industry standards
More customers would find the deals attractive
and promote through word-of-mouth.

Market Development
(New Markets - Existing
Products)
Increase

its reach to customers.

Predominantly present in the NCR Region,
Chennai and Kolkata.
Company to set up their businesses in other
cities like Bangalore, Mumbai, Pune, etc. where
there is much more growth opportunities.
Set up businesses in cities where there is less
competition in infrastructure and real estate but
fast urbanization like Durgapur, Guwahati,
Ludhiana and other smart cities.

Product Development
(Existing Markets New
Products)

Amusement Parks:
Amusement

park under development spread

over 62 acres at Rohini,North West Delhi. The
complex comprises of a shopping mall-Metrowalk
and adventure island in addition to the 22 ride
amusement park and a water park. Unitech Infra
would hold 50% in the proposed SPV developing
the Rohini amusement park
A development agreement with the Chandigarh
Administration for developing an amusement and
theme park on 74 acres of land in Chandigarh

Diversification
(New Markets New
Products)

Township
Unitech

Infra plans to enter into township

management services contract with the
upcoming townships being developed by Unitech
Proposed foray into power generation for captive
usage for the townships
Pursue opportunities in municipal facilities
management projects that are likely to be
developed under Public Private Partnership route

Recommendation of future strategy

New Trend in India:

Indias

warehousing and logistics real estate

segment has benefited immensely from the
expansion in e-commerce over the last two years.

The

emerging retail segment took up about 1.7

million square feet of warehousing space across
Mumbai, Chennai, Bangalore and the Delhi
National Capital Region in 2014.

25%of

the total warehousing/logistics space

uptake across India in 2014 was by e-retail players
(more than seven times over that of 2013)

New Trend in India:

Indias logistics sector still has a lot more to achieve in order to

stand out in the global market. This can be done primarily by the
gradual improvement of two major aspects, e.g., transportation
as well as warehousing and storage.

Recommendation for Unitech:

Should focus on modern industrial real estate
development in India.
Experienced team of professionals should work with
customers across India.
Should allocate capital base to create the critical
industrial and logistics infrastructure that India needs.
All buildings are to be designed using global best
practices and incorporate high clear heights, wide
column spacing, flat and super-flat floors that can
support high cube racking, high dock-door ratios and
concrete truck courts wide enough to handle largest
trucks.
Building interiors are to be customized to meet tenant

Recommendation for
Unitech:
Industrial parks are to be designed for efficient and
cost effective operations. Parks are master planned to
allow for the efficient movement and
loading/unloading of trucks, have ample truck and
vehicle parking, and common amenities. Parks should
offer manufacturing and logistics space for lease, and
a complete range of built-to-suit facilities.
Features include:
Industrial grade power and water
High quality wide approach roads and internal
road infrastructure
Efficient traffic circulation
24-hour park security
Parking area for large containers and trucks
Facilities for drivers