Strategic Management Of Real Estate Firm
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- Words: 5,950
- Pages: 76
Subject : g Management g in Real Estate Strategic Developer Firm in Ahmedabad Prepared By Guided By
- SONI VIRAL S. CP 1507 - Prof. Dhaval Mehta
CEPT University, Ahmedabad. M.Tech Construction & Project Management
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Strategic Management can become a critical success factor for success of firm in longer run & needs special attention to be given. Unlike other industry y construction industry y posses complex business structure, hence direct implementation of strategic management which hi h iis proven and d established; bli h d may not ensure desired results. By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
To identify the current strategies followed in construction industry. To formulate alternative strategy to overcome bottlenecks and to identify y action required q for implementation of proposed strategy. To suggest actions required to implement the proposed strategy. By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Strategy – A Strategy is a long term plan of action designed to achieve a particular goal, goal as differential from tactics or immediate action with resources at hand. Strategic g Management g – It is the p process of specifying p y g an organization’s objectives, developing policies & plans to achieve these objectives, and allocating resources so as to implement the plans. It involves development of mission and strategic vision. It is g run in the nature and p provides the organization g with a road long map. The term Strategic Management is used synonymously with the term strategic planning. planning The latter term is more often used in the business world, where as the former is used more in academic world. The purpose of strategic management is to exploit and create new and different opportunities. By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Strategy Formulation – It is the process of determining appropriate courses of action for achieving organizational objectives and there by accomplishing organizational purpose. Strategy Implementation – It involves the method by which strategies are organized or executed d within i hi the h organization. i i
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
According to Chinowsky & Meredith, Technology, communication and market advances are fundamentally changing the global perspectives of time, time distance and spatial boundaries. Two decades ago organizations could identify themselves as local, regional, national or international in scope and expect that these definitions were clearly defined. However these boundaries were blurred to the point where any organization can theoretically participate in a design or construction of any project anywhere across the globe. globe More over the problems of excessive employee turnover, stiff competition and company loyalty are changing at pace that has not previously been encountered in postindustrial times. Chinowsky & Meredith also referred to three issues which demands need of strategic management in construction organizations knowledge workers, new markets and information technology. technology By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
According to shah, the number of variables to be considered id d in i the h decision d i i making ki process is i increasing. Production and other management systems and related technologies become obsolete within a short span of time. time More reliance to be placed on creativity, innovation and new ways of looking at the organization in the world we exist. exist Strategic management sets the major direction for the organization i.e. mission, major products, services to be rendered and major market segments g to be served. The strategic management is the major vehicle for planning and implementing major changes an g must make. organization By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Concept of Strategy :
According to Langford & Male, management theorists agree that strategy deals with the means and organization uses to meet ends. ends Traditionally it has been seen viewed as a set of rules to guide decision makers about organizational behavior. Strategies may be explicit or implicit, may remain within the senior management g team or spread p across the organization and produce a sense of common direction or purpose. According A di to t Chinowsky Chi k & Male, M l strategy t t is i defined d fi d as the th underlying concept that responds to, or anticipates, industry conditions for the purpose of developing long term plans. By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Concept of Strategic Management : Strategic Management in the context of the construction industry comprises the following seven areas: Vision, mission and goals – The starting point for all organization endeavors; establishing a vision provides each members with a direction to follow in all business practices. practices Core competencies – The Business boundries for an organization does best and where its strength resides. resides Knowledge Resources – The Combination of human and technology gy resources that p provide the backbone for completing organization projects. By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Education – A Focus on the and d h information f d formal f l requirement for lifelong and understanding of evolving business conditions. Finance – A broad focus on monetary concerns beyond the project to project concerns of budget and schedule control. Market – The analysis of expanded business opportunities within d domains i that h are related l d to core competencies. i Competition – A focused analysis and understanding of existing, emerging and future competitors in both existing and potential market segments. Strategic Management can be pictured as a series of above segments within i hi an overall ll structure. By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
g to Oluwoye, y , Crawford and Faniran,, According Strategic planning is the process of establishing long-term corporate plans for achieving them within ithi the th prevailing ili environment. i t The typical Strategic planning process in construction firms consists of: defining corporate objectives, conducting internal and external appraisals of company’s y business environment, developing a strategic plan, Implementing the strategic plan, monitoring the plan during the implementation and reviewing where necessary. necessary By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Establish Corporate Objectives Monitor and Review Plan Conduct internal Appraisal of firm’s strength and weakness
Conduct External Appraisal of threats and opportunities in firms business environment
Develop Strategic Plan
Implement Strategic
ByViral Soni, MTech Construction & Plan Project Manageent, CEPT University, Ahmedabad
According to Langford & Male, Innovation is one of the key issues in sustained competitive advantage. advantage Forms & Methods of construction are largely in the hands of the designers. Designers g p provide the spatial p and structural form,, specification p and drawings that impact the production process through buildability. However, the introduction of new material does not rest purely with designers and is very much dependent on procurement method and contractual arrangement p g chosen. Innovation in Construction plant, forming part of the technical system in the production process, rests with equipment manufacturers and lies outside the industry. industry However, However the choice of plant and the manner in which it is deployed in site
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
The primary areas for direct innovation with contractors are:
On site level through the organization of production. Where there h iis a considerable id bl potential i l ffor pre-fabrication f b i i off-site ff i the contractor has to consider the timing and scheduling of these inputs together with how they might be fixed within the structure through the correct choice of craft skill. At Company level by responding to client with new services and new forms of corporate p organizational g design. g In Financial Management. By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Types of Innovation
Technologies Innovation Organizational Innovation Production Innovation Process Innovation
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Barriers to innovation and learning According to Turner, There are many barriers to innovation and learning for any organization.
Competency Traps Fear of failure Fear of blame Fear of innovation stealing by competitors
Rigid control procedures block innovation : Following rigid procedures in construction industry acts as block to innovation. Rigid evaluation criteria Rigid resource utilization Rigid control By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
According to Teague, A dynamic vision and a well defined strategy will count for nothing if execution is lacking; Change is about execution. Successful companies do not strategize their competitors, they over execute them.
strategy if not implemented properly then holds no value to the firm. Implementing strategy falls into two categories: Those strategic elements that relate to ongoing operational issues – how many of which product can be sold, how customers should be handled and so on, on and Those strategic elements that relate to how things should be changed – which amount to ‘projects’ projects in one way or another another. By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Formulate
Establish Business As Usual (BAU) Targets
Strategy/ Vision
Define Obejctives / Goals
Define change D fi h Initiatives/ Deliverables
Establish Strategic Priorities
Prioritised Project Portfolio
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Establish dependencies & Constraints
Construction Industry specific strategies(According to Indian Context) is to be identified by evaluating suitability of various strategies followed by other industries, current strategy followed by Industry is also to be explored Barriers to strategic management in construction industry & reasons for failure of most of organizations in order to achieve effective implementation to be explored. Work plans with responsibility matrix are to be drawn down in order to implement indentified strategies. Evaluation Criteria are to be identified for each implementation step of strategic. strategic Impact of strategy on overall organization & its efficiency in order to achieve defined mission of firm is to be evaluated. By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Chinowsky, P. and Meredith, J. (2000), “Strategic Management in Construction” Journal of Construction Engineering & Management (Jan Feb 2000) pp 11-9. 9. (Jan-Feb Kale, S. and Arditi, D. (2002), “Competitive Positioning in United States Construction Industry” Journal of Construction Engineering & Management (May/June 2002) pp 238246. Langford, D. and Male, P. (2001), “Strategic Management in Construction” ,2nd edition, Blackwell Science, UK. Oluwoye, y JJ., Crawford, L. and Faniran, S. ((2005), ) “Strategic g Planning g Practices in Construction Firms” NICMAR JCM (July 2005) pp 172002-172015. Teague, T (2005), “The Gulf Between Strategy Project and Reality” Project Manager Today (February 2005) pp 14. Turner, J. (2005), “Barriers to Innovation and Learning” Project Manager Today (May 2005) pp 12-14.
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Identify The Present Strategy Objectives
Analysis
Yes Is the Strategy OK? No Generate Alternatives
Repeat
Evaluate and Choose The Future Strategy Future Strategy
Choose
Implement
Review the Results By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad Strategic Management Process
Implementation
Company Mission
What is
What is Possible What is Possible Company Profile
External Environment Desired
Operating Env.
Strategic analysis and choice Feedback Long Term Objectives ong Term Objectives
Annual Objectives
Grand Strategy Grand Strategy
Operating Strategies
Feedback
Policies
Institutionalization of Strategy
Constrol and evaluation By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Strategic Management Model Ahmedabad
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Land Proposal Check the legal papers and search report through If Prima facie promising yes Any idea of joint venture
No
Avoid A id the Deal
Technical feasibility Market Research Source of funding Is project worthwhile? Finalize the type of Project Focus on price people Feasibility of the Project
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Acceptance of proposal
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
May 1984: With no capital in hand Mr. Jain migrated to Delhi and started as a broker for property selling of some established names. names He also learnt and assisted these companies in assembling land parcels. Having understood the finer norms of housing business Mr. Jain started Parasnath and Associates Pvt. Ltd. Parsvnath Developers Limited is one of India’s leading real estate developers with an experience of more than two decades in g state-of-the-art development p and construction. offering Over the past two decades, Parsvnath Developers Limited has emerged as one of the most progressive and multi-faceted real estate and construction entities in the country country. Through the years, years Parsvnath has stayed truely commitmented to `building a better world’ by transforming barren tracts into landscaped green belts housing world class commercial, residential and recreational properties. properties By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Parsvnath is a company whose business philosophy lies in the commitment to creating architectural marvels using state-of-thestate of the art technology and global architectural, construction and business practices. Parsvnath is passionate about providing cost-effective and holistic solutions for our customers while creating and adding value for their partners and stakeholders stakeholders. Our unwavering focus on these factors catapulted Parsvnath Developers Limited into the top echelons of the Indian Real Estate and Construction Industry in 2007. With a pan-India presence in over 51 cities in 18 states, Parsvnath is steadfastly focused on continuing to create and build p that transform lives and the world around them – be dreamspaces it through contemporary residential spaces, state-of-the-art office complexes, luxurious shopping malls and hypermarkets, posh hotels, futuristic multiplexes, and ultra modern IT Parks and p economic zones. special By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Savvy Group of Companies consists of Savvy Infrastructure Limited, Savvy Construction I f Li i d S C i company, Savvy Infrastructures Company, Savvy Homes Co.,Savvy Organizers and Savvy Realty and Infrastructures Pvt. Pvt Ltd. Ltd Savvy takes pride in the Buildings it builds, so the customers u t m r are r proud pr ud tto b be a p part rt off S Savvy Gr Group up off Companies. Savvy Group S G off C Companies i is i the h brainchild b i hild off iits Directors Jaxay Shah, Sameer Sinha & Jigish Shah; three classmates from engineering college who had a dream to change the landscape of Ahmedabad. Ahmedabad By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
g from L. D. College g of After g graduating Engineering, all three gained valuable experience working in brick and mortar construction companies both in India as well as abroad, before returning i home h to set up ‘Savvy’ ‘S ’ in i 1996. 1996 Savvy Group of Companies was conceived as a professional construction company to satisfy the needs of the discerning customer interested in prime commercial or residential space. Within a decade Savvy established a strong and reliable reputation in the densely saturated construction market of Ahmedabad. By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Discription/ Company
Parsvnath Developers
Savvy Infrastructure
Head office
Delhi
Ahmedabad
B Branch h Offices Offi
Hyderabad, H d b d Goa, G Ch Chandigarh, di h Jammu, J Ahmedabad, Banglore, Cochin, Jaipur, Chennai, Dehradun, lucknow
______
Age of firm (Years)
23
12
Diversification
National ( 51 Cities)
Local (Ahmedabad only)
Ownership
Listed on Both Exchanges (BSE/NSE)
Owned by three Private Partners
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Discription/ Di i i / Company Vision
Parsvnath Developers
Savvy Infrastructure
Vision of a better world Our vision statement can be encapsulated in our corporate philosophy and motto of `building a better world’. To envision, design and construct the most magnificent landmarks and edifices; to contribute t ib t ttangibly ibl iin regional i l and d national development by way of key infrastructure projects, and to protect and preserve the environment we live in. At the end of the day, y our vision is about making the world a better place to live in; to transform and uplift quality of living and lifestyles of each and every individual that comes in contact with us.
From the beginning, the company strived for uncompromised quality, unequaled architectural designs, and conscientious attention to details of the building process in every Project they built. E h project Each j t combines bi th the vision i i of Savvy Group of Companies with that of their clients by articulating their dreams and bringing them to reality. y Purchasers are informed and involved in every step of the construction process. Communication and commitment to detail before before, during and after the closing are part of the recognition earned by Savvy Group of Companies.
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Discription/ Company Mission
Parsvnath Developers
Savvy Infrastructure
Committed to build a better world To cater to the real needs of a growing population To set standards and improve our environment Offer a wide portfolio of international quality products that cater to different markets and segments To deliver value for money and excellent investment returns Take customer relationships and customer satisfaction to new levels To focus on strategic growth Evolve contemporary benchmarks in construction and marketing practices
To provide “more” value for money to our customers. To make safe, clean, efficient and technologically advanced buildings To take utmost care & design buildings from the inside out. To provide sound building utility systems, which form the backbone of our buildings. To provide an aesthetically superior facade to the buildings. To provide high level of building maintenance after it is complete and sold.
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Discription/ Company
Parsvnath Developers
Savvy Infrastructure
Type of Projects j Handled
IT Park., Townships, Residential, Commercial, Star Hotels, SEZs, Retail
Residential, Commercial, Sports Club
Target Market
Mass (Upper lower to Upper Upper)
Niche (Upper Upper/Corporate)
Number of 114 Current Project
4
JV/MOUs
SAN JOES ICLEI (International Council for Local Environmental Initiative) GUDC (Gujarat Urban Development Company Limited)
No Major JVs other than Local Land Owners
Competitors
Purvankara Developers Omaxe Ltd Sobha Devlopers Brigade Devlopers
Safal Group Sharanam Devlopers
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Discription/ Company
Parsvnath Developers
Savvy Infrastructure
Certifications
ISO 9001 ISO 14001 OHSAS 18001
ISO 9001:2000 CRISIL DA3+
Use of MIS
Yes
Yes
ERP Implemented
Yes
Yes
Corporate p Social Responsibility
General Donations Labour welfare
Schools at site Canteen & Subsidised Food for Labours Medical Facility to workers
Total Area Built 102.11 102 11 million sq. sq ft till date
1 7 million sq ft 1.7
PAT ((March 07))
271.7 Cr
6.16 Cr
Sensitivity to External Economic Environment
Moderate
Low
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Mar '04
Mar '05
Mar '06
Mar '07
Mar '08
112.15 112 15
303.21 303 21
643.83 643 83
1,236.14 1 236 14
1,726.25 1 726 25
0
0
0
0.00
0.00
112.15
303.21
643.83
1,236.14
1,726.25
0.8
3.64
9.93
24.85
65.99
0
0
0
0.00
0.00
112.95
306.85
653.76
1,260.99
1,792.24
Raw Materials
0
0
0
0 00 0.00
0 00 0.00
Power & Fuel Cost
0
0
0
8.90
11.31
2.49
4.28
7.56
28.73
54.13
85.36
221.72
465.79
825.81
1,066.56
0
18.16
62.81
101.58
106.59
3.53
4.15
6.24
7.95
11.80
0
-17.3
-43.13
-93.34
-107.58
879.63
1,142.81
Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure
Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalised Total Expenses
By- Viral Soni, MTech Construction & 91.38 231.01 499.27 Project Manageent, CEPT University, Ahmedabad
Operating Profit PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualised) Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs)
20.77 21.57 0.36 21.21 1.07 0 20.14 0 20.14 1.73 18.41 91.38 0 0.7 0.09
72.2 75.84 1.05 74.79 1.43 0.01 73.35 0 73.35 7.44 65.89 231.02 0 1.65 0.23
144.56 154.49 2.69 151.8 5.88 0.03 145.89 -0.12 145.77 39.55 106.25 499.27 0 6.52 0.91
356.51 381.36 19.30 362.06 14.14 0 347.92 -5.85 342.07 70.28 271.78 879.63 0.00 46.17 7.85
583.44 649.43 39.11 610.32 23.78 0 586.54 0.28 586.82 178.08 408.74 1,142.81 0.00 55.41 9.42
0 82.43 989.14 0 79 94 79.94 10 74 10.74 0 20 20 By- Viral Soni, MTech Construction & 0 CEPT 124.15 Project Manageent, University,20.34
1,846.96 14 71 14.71 25.00 79.19
1,846.96 22 13 22.13 30.00 97.81
Ahmedabad
Sources of Fund (Rs in Cr)
Mar '04
Mar '05
Mar '06
Mar '07
Mar '08
12 mths
12 mths
12 mths
12 mths
12 mths
Total Share Capital
8 24 8.24
8 24 8.24
98 91 98.91
184 7 184.7
184 7 184.7
Equity Share Capital
8.24
8.24
98.91
184.7
184.7
Share Application Money
0
0
0
0
0
Preference Share Capital Reserves
0 29.57
0 94.09
0 102.24
0 1277.98
0 1621.9
0 0 0 37.81 102.33 201.15 48.47 120.7 235.85 0 0 0 48.47 120.7 235.85 ByViral Soni, MTech Construction & Project Manageent, CEPT University, 86.28 223.03 437
0 1462.68 1011.83 0 1011.83 2474.51
0 1806.6 1604.42 97.85 1702.27 3508.87
Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities
Ahmedabad
Application of Funds (Rs in Cr) Mar '04
Mar '05
Mar '06
Mar '07
Mar '08
12 mths 7.17
12 mths 20.5
12 mths 44.65
12 mths 94.39
12 mths 164.78
Less: Accum. Depreciation Net Block
3.14 4 03 4.03
3.32 17 18 17.18
9.02 35 63 35.63
23.1 71 29 71.29
45.31 119 47 119.47
Capital Work in Progress Investments
0 0.28
0 4.21
17.27 4.2
38.73 82.86
101.51 80.57
134.48
235.69
389.42
1341.91
1914.58
12.98
43.38
63.77
422.59
1130.24
2.59
61.79
13.12
16.05
18.22
150.05
340.86
466.31
1780.55
3063.04
11.34
147.67
398.11
891.79
1116.47
Gross Block
Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit
0
22 32 22.32
28 13 28.13
528 31 528.31
403 36 403.36
161.39 0
510.85 0
892.55 0
3200.65 0
4582.87 0
Current Liabilities Provisions
75.57 3.88
296.51 12.71
454.24 58.4
734.77 184.24
1013.47 362.08
Total CL & Provisions
79.45
309.22
512.64
919.01
1375.55
Net Current Assets
81.94
201.63
379.91
2281.64
3207.32
0.03
0.03
0
0
0
86.28
223.05
437.01
2474.52
3508.87
25.05 By- Viral Soni,0MTech Construction & 47.44 Project Manageent, CEPT University, 20.34 0 124.15 Ahmedabad
119.26
276.87
79.19
97.81
Miscellaneous Expenses Total Asset Contingent Liabilities Book Value (Rs)
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Identify the current strategies followed by Real Estate developers.
Interpretation of financial statements of successful developer. Quantitative Ranking of factors considered by local players with regard to their overall business strategy. Hypothesis check by market survey conducted for target segment. By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Propose new strategy for “Savvy Savvy Infrastructure Ltd”
Broad level Strategy gy Operation level Strategy
Action Required to Implement proposed strategy
Function Vs Responsibility b l Matrix.
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Interpretation of financial statements of Parsvnath Developers Values in Cr
Mar '04
Mar '05
Mar '06
Mar '07
Mar '08
Total Income
112.95
306.85
653.76
1260.99
1792.24
Total Expenses
91.38
231.01
499.27
879.63
1142.81
Expenses as % of total Income
80.9
75.28
76.37
69.76
63.76
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Mar '04 Total Income
Mar '05
Mar '06
Mar '07
Mar '08
112.95
306.85
653.76
1260.99
1792.24
E l Employee Cost C
2 49 2.49
4 28 4.28
7 56 7.56
28 73 28.73
54 13 54.13
Other Manufacturing Expenses
85.36
221.72
465.79
825.81
1066.56
0
18.16
62.81
101.58
106.59
g and Selling Admin Expenses
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Mar '04 Mar '05 Mar '06 Mar '07 Mar '08 Sales Turnover
112.15
303.21
N P Net Profit fi
18 41 18.41
65 89 65.89
643.83 1236.14 1726.25 106 25 106.25
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
271 78 271.78
408 74 408.74
Mar '04
Mar '05
Mar '06
Mar '07
Mar '08
Equity Capital + Reserves
29.57
94.09
102.24
1277.98
1621.9
Total ota Debt
48.47 8.
120.7 0.
235.85 35.85
1011.83 0 .83
1702.27 0 .
Total Liabilities
86.28
223.03
437
2474.51
3508.87
Net Profit (PAT)=
18.41
65.89
106.25
271.78
408.74
Mar '04 / Ratio D/E Rate of Return
1.64
Mar '05 1.28
Mar '06
Mar '07
2.31
By- Viral Soni, MTech Construction & 21.34 29.54 24.31 Project Manageent, CEPT University, Ahmedabad
Mar '08
0.79
1.05
10.98
11.65
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Comparatively Low Financial Risk. Competitive Advantage – Utilization of Learning g Curve in Operational p Efficiency. y High short term liquidity. Distributed Market Risk – Having Diversified Portfolio in product range and location wise. Organic g g growth of over all business y year by y year. By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Considering overall business strategy, respondent firms were asked to give rating to following factors on scale of 5 to 1 based on its importance for their strategy. Rating Scale Extremely Imp
5
very y Imp p
4
Imp
3
less Imp
2
Not Imp
1 By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
ORGANIZATIONS 1
F a c t o r s
2
3
4
5
6
7
8
9
10
1. Aggressive Land Acquisition Strategy
4
5
3
4
5
4
2
2
4
5
2. External Sources of Finance
3
2
4
3
1
2
5
3
3
1
33. On site Project Management
2
3
4
3
3
5
1
3
5
3
4. Timely y Completion p
3
4
3
3
3
5
2
4
4
3
5. Unique Design
2
4
2
2
5
3
4
4
2
4
6. Quality of Work
4
3
3
2
3
3
4
2
3
2
7. Competitive Pricing
5
1
4
4
2
2
2
3
4
3
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Ratings
Factors
=FxW/ N
1
2
3
4
5 FxW
0
2
1
4
3
38
3.8
1
2
2
4
1
1
27
2.7
6
1
1
5
1
2
32
3.2
3
4. Timely Completion
0
1
5
3
1
34
3.4
2
5. Unique Design
0
4
1
4
1
32
3.2
3
6 Quality of Work 6.
0
3
5
2
0
29
29 2.9
5
1 Soni, MTech 3 2 3 By- Viral Construction & Project Manageent, CEPT University, Ahmedabad
1
30
3
4
1. Aggressive Land Acquisition Strategy 2 External Sources of 2. Finance 3. On site Project Management
7. Competitive Pricing
Rank
Rank
Factors
1
1. Land Acquisition Strategy
2
4. Timely Completion
3
3. On site Project Management
3
5. Unique Design
4
p Pricing g 7. Competitive
5
6. Quality of Work
6
2. External Sources of Finance
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Survey Form Format
Q.1
Ap property p y matching gy your basic area requirement q is available at extremely lucrative location, (i.e. Road Facing, Posh locality and Well developed Infrastructure) would you pay 20 to 30% Premium price with compared to property rate at average location? A> Yes B> No
Q.2
A Project with Unique Design Concept (Such as Green Building, Integrated Township, Vernacular homes & weekend y remote area with reasonably y Homes)) is located in relatively comparable pricing, would you buy it? By- Viral Soni, MTech Construction & A> Yes B>No Project Manageent, CEPT University, Ahmedabad
Q p y is available at very y attractive p g Q.3 A Property price range but carries very standard design and is situated at under developed location, what would be you buying decision? A> Will Buy B> Wont Buy Q.4 Your family’s cumulative annual income is A> 4,50,000 to 7,00,000 B> 7,00,000 to 10,00,000 C> 10,00,000 to 15,00,000 D> Above 15,00,000 By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
( I ) More than 70 % people from target segment will buy a property in project with very lucrative location and pay 20 to 30% premium price for the same. ( II ) More than 75% of target segment will invest in project with Unique Design concept. ( III ) More than 30% of the target segment will respond positively if prices are brought down on by standardizing designing and compromising p g location. All three assumptions are then checked as hypothesis by Z test at 95% Confidence level and 5% error level. level By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Question Hypothesis Number
Yes
No
Ho thesis
Zcal Value
Ztab Value
Status
(I)
1
26
9 >0.70
0.5801194
1.96 Accept
( II )
2
24
11 >0.75
0.8192465
1.96 Accept
( III )
3
6
29 >0.30
2.0182358
1.96 Reject
Note :-
Zcal = |p-P| / {P (1-P) / n}^0.5 Where p = value projected from survey in terms of %age P = Value assumed in Hypothesis in terms of %age n = Size of Sample Survey
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
• • • • •
• • •
•
Strength Unique Design Concepts Well identified project location Focussed target market Very low financial risk Advance technology orientation
Opportunity Broad loyal customer base Potential to raise Debt Can Leverage combination of its Technical Know-how and Unique Design Concepts to gain rare competitive advantage Geographical Diversification can explore potential investment opportunities opportunities.
• • • •
• •
Weakness Products for only high end market.(High Priced Projects) Low D/E ratio. Lack of geographical diversification No rare competitive advantage over other players
Threats Current strategy of unique designs can easily be imitated by competitors. High market risk is involved as most of the undertaken projects are premium priced projects and located in same city. city
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Proposed Strategy Structure
Rare Compititive Advantage
Broad Level Strategy
Operational Level Strategy
Functional Strategy 1
Functional Strategy 1
Responsible Entity 1
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Functional Strategy 1 Responsible Entity 2
Competitive Advantage ::Project Concepts which are Uniquely Designed, Designed Superiorly located & supported with technological g know how and continuous innovations.
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Develop Brand name in Unique Design and Premium Projects. Identify y future development p p pattern and Invest in Strategic locations. Increase Debt Leverage. g Diversify in neighbouring cities within Gujarat. Develop p in-house design g innovation centre. Emphasise on Superior quality and use of advance technology. gy By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Design Concept
Unique Designs. Use of Advanced Technology. gy Added services to provide more value for money. Continue with niche market segment
Project Location
Pro actively acquire strategic locations in developing and d to t be b d developed l d area. Aggressive investment in Land pockets across the various locations. Diversify in the neighbouring cities in first five year By- Viral Soni, MTech Construction & Project Manageent, CEPT University, phase. Ahmedabad
j g ,Q y and Time duration Project Management, Quality Use comprehensive planning, monitoring and controlling techniques. Provide superior quality at all level of projects as market segment targeted is Upper-Upper, high quality standards are to be maintained. Strictly follow the time schedule for every stage of the project. project
Finance à Evaluate possibility of the raising finance from debt sources. à Increase D/E ratio to support diversification. à Undertake Financial feasibility before each project
commencement and link financial reporting with overall planning of the project. By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
HR :
Marketing & Sales
Develop In house Design Innovation centre, implement employee reward scheme for promoting suggestions and innovation at every level. Integrated g Recruitment and Training gp program. g
Develop strong brand loyalty. Promote concept in such a way that – minimum threshold of the quality is assumed by the ‘savvy’ name.
Legal
Comprehensive title clearance checks before entering into the project. Cautious and hassle free approach to be practiced. By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Responsible entity SR.
Function
1 Strategy Formulation 2 Increase Debt leverage g Develop In House 3 Innovation Centre
BOD
CEO
CFO
√
√
√
√
√
√
√
√
Unique Design 4 Concepts Development
√
Identify Future 5 Development Pattern
√
6 Develop a Land Bank Achievng Superior 7 Quality Standards Q li S d d Diversification in other 8 Cities Project Management & 9 Timely Completion y p Developing Strong 10 Brand loyalty Building Technical 11 Knowledge Bank Projecting Financial f & performance & 12 Financial Reporting
√
√
√
√
√ √
√
√
√
√
√
√
√ √
IT
√
√
√
√ √
√
√ √
√
√ √
√
√
√
√
√
√
√
√
GM ‐ BD
√ √
√ √
GM‐ GM‐ Marketin GM‐HR Operati g ons
Sr Projec Structu Legal t Chief Consulta ral Manag Architect designe nt ers r
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√ √
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
√
Almost all the Organization in Construction industry who have defined strategy, it remains limited to Vision/Mission statement and rarely implemented with dedicated action plan. Strategies is to be designed and to be revised time to time based on changes in internal & external factors. S d iis li Study limited i d ffor local l l environment i off the h city and proposed strategy is specific to the studied organization. organization By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Ganesh Developers Manpasand Labh SN Developers Savvy Safal Balaji Devlopers Devark Developers Parsvnath Devlopers Vasani Devlopers
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
- SONI VIRAL S. CP 1507 - Prof. Dhaval Mehta
CEPT University, Ahmedabad. M.Tech Construction & Project Management
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Strategic Management can become a critical success factor for success of firm in longer run & needs special attention to be given. Unlike other industry y construction industry y posses complex business structure, hence direct implementation of strategic management which hi h iis proven and d established; bli h d may not ensure desired results. By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
To identify the current strategies followed in construction industry. To formulate alternative strategy to overcome bottlenecks and to identify y action required q for implementation of proposed strategy. To suggest actions required to implement the proposed strategy. By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Strategy – A Strategy is a long term plan of action designed to achieve a particular goal, goal as differential from tactics or immediate action with resources at hand. Strategic g Management g – It is the p process of specifying p y g an organization’s objectives, developing policies & plans to achieve these objectives, and allocating resources so as to implement the plans. It involves development of mission and strategic vision. It is g run in the nature and p provides the organization g with a road long map. The term Strategic Management is used synonymously with the term strategic planning. planning The latter term is more often used in the business world, where as the former is used more in academic world. The purpose of strategic management is to exploit and create new and different opportunities. By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Strategy Formulation – It is the process of determining appropriate courses of action for achieving organizational objectives and there by accomplishing organizational purpose. Strategy Implementation – It involves the method by which strategies are organized or executed d within i hi the h organization. i i
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
According to Chinowsky & Meredith, Technology, communication and market advances are fundamentally changing the global perspectives of time, time distance and spatial boundaries. Two decades ago organizations could identify themselves as local, regional, national or international in scope and expect that these definitions were clearly defined. However these boundaries were blurred to the point where any organization can theoretically participate in a design or construction of any project anywhere across the globe. globe More over the problems of excessive employee turnover, stiff competition and company loyalty are changing at pace that has not previously been encountered in postindustrial times. Chinowsky & Meredith also referred to three issues which demands need of strategic management in construction organizations knowledge workers, new markets and information technology. technology By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
According to shah, the number of variables to be considered id d in i the h decision d i i making ki process is i increasing. Production and other management systems and related technologies become obsolete within a short span of time. time More reliance to be placed on creativity, innovation and new ways of looking at the organization in the world we exist. exist Strategic management sets the major direction for the organization i.e. mission, major products, services to be rendered and major market segments g to be served. The strategic management is the major vehicle for planning and implementing major changes an g must make. organization By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Concept of Strategy :
According to Langford & Male, management theorists agree that strategy deals with the means and organization uses to meet ends. ends Traditionally it has been seen viewed as a set of rules to guide decision makers about organizational behavior. Strategies may be explicit or implicit, may remain within the senior management g team or spread p across the organization and produce a sense of common direction or purpose. According A di to t Chinowsky Chi k & Male, M l strategy t t is i defined d fi d as the th underlying concept that responds to, or anticipates, industry conditions for the purpose of developing long term plans. By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Concept of Strategic Management : Strategic Management in the context of the construction industry comprises the following seven areas: Vision, mission and goals – The starting point for all organization endeavors; establishing a vision provides each members with a direction to follow in all business practices. practices Core competencies – The Business boundries for an organization does best and where its strength resides. resides Knowledge Resources – The Combination of human and technology gy resources that p provide the backbone for completing organization projects. By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Education – A Focus on the and d h information f d formal f l requirement for lifelong and understanding of evolving business conditions. Finance – A broad focus on monetary concerns beyond the project to project concerns of budget and schedule control. Market – The analysis of expanded business opportunities within d domains i that h are related l d to core competencies. i Competition – A focused analysis and understanding of existing, emerging and future competitors in both existing and potential market segments. Strategic Management can be pictured as a series of above segments within i hi an overall ll structure. By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
g to Oluwoye, y , Crawford and Faniran,, According Strategic planning is the process of establishing long-term corporate plans for achieving them within ithi the th prevailing ili environment. i t The typical Strategic planning process in construction firms consists of: defining corporate objectives, conducting internal and external appraisals of company’s y business environment, developing a strategic plan, Implementing the strategic plan, monitoring the plan during the implementation and reviewing where necessary. necessary By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Establish Corporate Objectives Monitor and Review Plan Conduct internal Appraisal of firm’s strength and weakness
Conduct External Appraisal of threats and opportunities in firms business environment
Develop Strategic Plan
Implement Strategic
ByViral Soni, MTech Construction & Plan Project Manageent, CEPT University, Ahmedabad
According to Langford & Male, Innovation is one of the key issues in sustained competitive advantage. advantage Forms & Methods of construction are largely in the hands of the designers. Designers g p provide the spatial p and structural form,, specification p and drawings that impact the production process through buildability. However, the introduction of new material does not rest purely with designers and is very much dependent on procurement method and contractual arrangement p g chosen. Innovation in Construction plant, forming part of the technical system in the production process, rests with equipment manufacturers and lies outside the industry. industry However, However the choice of plant and the manner in which it is deployed in site
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
The primary areas for direct innovation with contractors are:
On site level through the organization of production. Where there h iis a considerable id bl potential i l ffor pre-fabrication f b i i off-site ff i the contractor has to consider the timing and scheduling of these inputs together with how they might be fixed within the structure through the correct choice of craft skill. At Company level by responding to client with new services and new forms of corporate p organizational g design. g In Financial Management. By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Types of Innovation
Technologies Innovation Organizational Innovation Production Innovation Process Innovation
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Barriers to innovation and learning According to Turner, There are many barriers to innovation and learning for any organization.
Competency Traps Fear of failure Fear of blame Fear of innovation stealing by competitors
Rigid control procedures block innovation : Following rigid procedures in construction industry acts as block to innovation. Rigid evaluation criteria Rigid resource utilization Rigid control By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
According to Teague, A dynamic vision and a well defined strategy will count for nothing if execution is lacking; Change is about execution. Successful companies do not strategize their competitors, they over execute them.
strategy if not implemented properly then holds no value to the firm. Implementing strategy falls into two categories: Those strategic elements that relate to ongoing operational issues – how many of which product can be sold, how customers should be handled and so on, on and Those strategic elements that relate to how things should be changed – which amount to ‘projects’ projects in one way or another another. By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Formulate
Establish Business As Usual (BAU) Targets
Strategy/ Vision
Define Obejctives / Goals
Define change D fi h Initiatives/ Deliverables
Establish Strategic Priorities
Prioritised Project Portfolio
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Establish dependencies & Constraints
Construction Industry specific strategies(According to Indian Context) is to be identified by evaluating suitability of various strategies followed by other industries, current strategy followed by Industry is also to be explored Barriers to strategic management in construction industry & reasons for failure of most of organizations in order to achieve effective implementation to be explored. Work plans with responsibility matrix are to be drawn down in order to implement indentified strategies. Evaluation Criteria are to be identified for each implementation step of strategic. strategic Impact of strategy on overall organization & its efficiency in order to achieve defined mission of firm is to be evaluated. By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Chinowsky, P. and Meredith, J. (2000), “Strategic Management in Construction” Journal of Construction Engineering & Management (Jan Feb 2000) pp 11-9. 9. (Jan-Feb Kale, S. and Arditi, D. (2002), “Competitive Positioning in United States Construction Industry” Journal of Construction Engineering & Management (May/June 2002) pp 238246. Langford, D. and Male, P. (2001), “Strategic Management in Construction” ,2nd edition, Blackwell Science, UK. Oluwoye, y JJ., Crawford, L. and Faniran, S. ((2005), ) “Strategic g Planning g Practices in Construction Firms” NICMAR JCM (July 2005) pp 172002-172015. Teague, T (2005), “The Gulf Between Strategy Project and Reality” Project Manager Today (February 2005) pp 14. Turner, J. (2005), “Barriers to Innovation and Learning” Project Manager Today (May 2005) pp 12-14.
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Identify The Present Strategy Objectives
Analysis
Yes Is the Strategy OK? No Generate Alternatives
Repeat
Evaluate and Choose The Future Strategy Future Strategy
Choose
Implement
Review the Results By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad Strategic Management Process
Implementation
Company Mission
What is
What is Possible What is Possible Company Profile
External Environment Desired
Operating Env.
Strategic analysis and choice Feedback Long Term Objectives ong Term Objectives
Annual Objectives
Grand Strategy Grand Strategy
Operating Strategies
Feedback
Policies
Institutionalization of Strategy
Constrol and evaluation By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Strategic Management Model Ahmedabad
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Land Proposal Check the legal papers and search report through If Prima facie promising yes Any idea of joint venture
No
Avoid A id the Deal
Technical feasibility Market Research Source of funding Is project worthwhile? Finalize the type of Project Focus on price people Feasibility of the Project
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Acceptance of proposal
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
May 1984: With no capital in hand Mr. Jain migrated to Delhi and started as a broker for property selling of some established names. names He also learnt and assisted these companies in assembling land parcels. Having understood the finer norms of housing business Mr. Jain started Parasnath and Associates Pvt. Ltd. Parsvnath Developers Limited is one of India’s leading real estate developers with an experience of more than two decades in g state-of-the-art development p and construction. offering Over the past two decades, Parsvnath Developers Limited has emerged as one of the most progressive and multi-faceted real estate and construction entities in the country country. Through the years, years Parsvnath has stayed truely commitmented to `building a better world’ by transforming barren tracts into landscaped green belts housing world class commercial, residential and recreational properties. properties By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Parsvnath is a company whose business philosophy lies in the commitment to creating architectural marvels using state-of-thestate of the art technology and global architectural, construction and business practices. Parsvnath is passionate about providing cost-effective and holistic solutions for our customers while creating and adding value for their partners and stakeholders stakeholders. Our unwavering focus on these factors catapulted Parsvnath Developers Limited into the top echelons of the Indian Real Estate and Construction Industry in 2007. With a pan-India presence in over 51 cities in 18 states, Parsvnath is steadfastly focused on continuing to create and build p that transform lives and the world around them – be dreamspaces it through contemporary residential spaces, state-of-the-art office complexes, luxurious shopping malls and hypermarkets, posh hotels, futuristic multiplexes, and ultra modern IT Parks and p economic zones. special By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Savvy Group of Companies consists of Savvy Infrastructure Limited, Savvy Construction I f Li i d S C i company, Savvy Infrastructures Company, Savvy Homes Co.,Savvy Organizers and Savvy Realty and Infrastructures Pvt. Pvt Ltd. Ltd Savvy takes pride in the Buildings it builds, so the customers u t m r are r proud pr ud tto b be a p part rt off S Savvy Gr Group up off Companies. Savvy Group S G off C Companies i is i the h brainchild b i hild off iits Directors Jaxay Shah, Sameer Sinha & Jigish Shah; three classmates from engineering college who had a dream to change the landscape of Ahmedabad. Ahmedabad By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
g from L. D. College g of After g graduating Engineering, all three gained valuable experience working in brick and mortar construction companies both in India as well as abroad, before returning i home h to set up ‘Savvy’ ‘S ’ in i 1996. 1996 Savvy Group of Companies was conceived as a professional construction company to satisfy the needs of the discerning customer interested in prime commercial or residential space. Within a decade Savvy established a strong and reliable reputation in the densely saturated construction market of Ahmedabad. By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Discription/ Company
Parsvnath Developers
Savvy Infrastructure
Head office
Delhi
Ahmedabad
B Branch h Offices Offi
Hyderabad, H d b d Goa, G Ch Chandigarh, di h Jammu, J Ahmedabad, Banglore, Cochin, Jaipur, Chennai, Dehradun, lucknow
______
Age of firm (Years)
23
12
Diversification
National ( 51 Cities)
Local (Ahmedabad only)
Ownership
Listed on Both Exchanges (BSE/NSE)
Owned by three Private Partners
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Discription/ Di i i / Company Vision
Parsvnath Developers
Savvy Infrastructure
Vision of a better world Our vision statement can be encapsulated in our corporate philosophy and motto of `building a better world’. To envision, design and construct the most magnificent landmarks and edifices; to contribute t ib t ttangibly ibl iin regional i l and d national development by way of key infrastructure projects, and to protect and preserve the environment we live in. At the end of the day, y our vision is about making the world a better place to live in; to transform and uplift quality of living and lifestyles of each and every individual that comes in contact with us.
From the beginning, the company strived for uncompromised quality, unequaled architectural designs, and conscientious attention to details of the building process in every Project they built. E h project Each j t combines bi th the vision i i of Savvy Group of Companies with that of their clients by articulating their dreams and bringing them to reality. y Purchasers are informed and involved in every step of the construction process. Communication and commitment to detail before before, during and after the closing are part of the recognition earned by Savvy Group of Companies.
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Discription/ Company Mission
Parsvnath Developers
Savvy Infrastructure
Committed to build a better world To cater to the real needs of a growing population To set standards and improve our environment Offer a wide portfolio of international quality products that cater to different markets and segments To deliver value for money and excellent investment returns Take customer relationships and customer satisfaction to new levels To focus on strategic growth Evolve contemporary benchmarks in construction and marketing practices
To provide “more” value for money to our customers. To make safe, clean, efficient and technologically advanced buildings To take utmost care & design buildings from the inside out. To provide sound building utility systems, which form the backbone of our buildings. To provide an aesthetically superior facade to the buildings. To provide high level of building maintenance after it is complete and sold.
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Discription/ Company
Parsvnath Developers
Savvy Infrastructure
Type of Projects j Handled
IT Park., Townships, Residential, Commercial, Star Hotels, SEZs, Retail
Residential, Commercial, Sports Club
Target Market
Mass (Upper lower to Upper Upper)
Niche (Upper Upper/Corporate)
Number of 114 Current Project
4
JV/MOUs
SAN JOES ICLEI (International Council for Local Environmental Initiative) GUDC (Gujarat Urban Development Company Limited)
No Major JVs other than Local Land Owners
Competitors
Purvankara Developers Omaxe Ltd Sobha Devlopers Brigade Devlopers
Safal Group Sharanam Devlopers
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Discription/ Company
Parsvnath Developers
Savvy Infrastructure
Certifications
ISO 9001 ISO 14001 OHSAS 18001
ISO 9001:2000 CRISIL DA3+
Use of MIS
Yes
Yes
ERP Implemented
Yes
Yes
Corporate p Social Responsibility
General Donations Labour welfare
Schools at site Canteen & Subsidised Food for Labours Medical Facility to workers
Total Area Built 102.11 102 11 million sq. sq ft till date
1 7 million sq ft 1.7
PAT ((March 07))
271.7 Cr
6.16 Cr
Sensitivity to External Economic Environment
Moderate
Low
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Mar '04
Mar '05
Mar '06
Mar '07
Mar '08
112.15 112 15
303.21 303 21
643.83 643 83
1,236.14 1 236 14
1,726.25 1 726 25
0
0
0
0.00
0.00
112.15
303.21
643.83
1,236.14
1,726.25
0.8
3.64
9.93
24.85
65.99
0
0
0
0.00
0.00
112.95
306.85
653.76
1,260.99
1,792.24
Raw Materials
0
0
0
0 00 0.00
0 00 0.00
Power & Fuel Cost
0
0
0
8.90
11.31
2.49
4.28
7.56
28.73
54.13
85.36
221.72
465.79
825.81
1,066.56
0
18.16
62.81
101.58
106.59
3.53
4.15
6.24
7.95
11.80
0
-17.3
-43.13
-93.34
-107.58
879.63
1,142.81
Sales Turnover Excise Duty Net Sales Other Income Stock Adjustments Total Income Expenditure
Employee Cost Other Manufacturing Expenses Selling and Admin Expenses Miscellaneous Expenses Preoperative Exp Capitalised Total Expenses
By- Viral Soni, MTech Construction & 91.38 231.01 499.27 Project Manageent, CEPT University, Ahmedabad
Operating Profit PBDIT Interest PBDT Depreciation Other Written Off Profit Before Tax Extra-ordinary items PBT (Post Extra-ord Items) Tax Reported Net Profit Total Value Addition Preference Dividend Equity Dividend Corporate Dividend Tax Per share data (annualised) Shares in issue (lakhs) Earning Per Share (Rs) Equity Dividend (%) Book Value (Rs)
20.77 21.57 0.36 21.21 1.07 0 20.14 0 20.14 1.73 18.41 91.38 0 0.7 0.09
72.2 75.84 1.05 74.79 1.43 0.01 73.35 0 73.35 7.44 65.89 231.02 0 1.65 0.23
144.56 154.49 2.69 151.8 5.88 0.03 145.89 -0.12 145.77 39.55 106.25 499.27 0 6.52 0.91
356.51 381.36 19.30 362.06 14.14 0 347.92 -5.85 342.07 70.28 271.78 879.63 0.00 46.17 7.85
583.44 649.43 39.11 610.32 23.78 0 586.54 0.28 586.82 178.08 408.74 1,142.81 0.00 55.41 9.42
0 82.43 989.14 0 79 94 79.94 10 74 10.74 0 20 20 By- Viral Soni, MTech Construction & 0 CEPT 124.15 Project Manageent, University,20.34
1,846.96 14 71 14.71 25.00 79.19
1,846.96 22 13 22.13 30.00 97.81
Ahmedabad
Sources of Fund (Rs in Cr)
Mar '04
Mar '05
Mar '06
Mar '07
Mar '08
12 mths
12 mths
12 mths
12 mths
12 mths
Total Share Capital
8 24 8.24
8 24 8.24
98 91 98.91
184 7 184.7
184 7 184.7
Equity Share Capital
8.24
8.24
98.91
184.7
184.7
Share Application Money
0
0
0
0
0
Preference Share Capital Reserves
0 29.57
0 94.09
0 102.24
0 1277.98
0 1621.9
0 0 0 37.81 102.33 201.15 48.47 120.7 235.85 0 0 0 48.47 120.7 235.85 ByViral Soni, MTech Construction & Project Manageent, CEPT University, 86.28 223.03 437
0 1462.68 1011.83 0 1011.83 2474.51
0 1806.6 1604.42 97.85 1702.27 3508.87
Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities
Ahmedabad
Application of Funds (Rs in Cr) Mar '04
Mar '05
Mar '06
Mar '07
Mar '08
12 mths 7.17
12 mths 20.5
12 mths 44.65
12 mths 94.39
12 mths 164.78
Less: Accum. Depreciation Net Block
3.14 4 03 4.03
3.32 17 18 17.18
9.02 35 63 35.63
23.1 71 29 71.29
45.31 119 47 119.47
Capital Work in Progress Investments
0 0.28
0 4.21
17.27 4.2
38.73 82.86
101.51 80.57
134.48
235.69
389.42
1341.91
1914.58
12.98
43.38
63.77
422.59
1130.24
2.59
61.79
13.12
16.05
18.22
150.05
340.86
466.31
1780.55
3063.04
11.34
147.67
398.11
891.79
1116.47
Gross Block
Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit
0
22 32 22.32
28 13 28.13
528 31 528.31
403 36 403.36
161.39 0
510.85 0
892.55 0
3200.65 0
4582.87 0
Current Liabilities Provisions
75.57 3.88
296.51 12.71
454.24 58.4
734.77 184.24
1013.47 362.08
Total CL & Provisions
79.45
309.22
512.64
919.01
1375.55
Net Current Assets
81.94
201.63
379.91
2281.64
3207.32
0.03
0.03
0
0
0
86.28
223.05
437.01
2474.52
3508.87
25.05 By- Viral Soni,0MTech Construction & 47.44 Project Manageent, CEPT University, 20.34 0 124.15 Ahmedabad
119.26
276.87
79.19
97.81
Miscellaneous Expenses Total Asset Contingent Liabilities Book Value (Rs)
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Identify the current strategies followed by Real Estate developers.
Interpretation of financial statements of successful developer. Quantitative Ranking of factors considered by local players with regard to their overall business strategy. Hypothesis check by market survey conducted for target segment. By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Propose new strategy for “Savvy Savvy Infrastructure Ltd”
Broad level Strategy gy Operation level Strategy
Action Required to Implement proposed strategy
Function Vs Responsibility b l Matrix.
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Interpretation of financial statements of Parsvnath Developers Values in Cr
Mar '04
Mar '05
Mar '06
Mar '07
Mar '08
Total Income
112.95
306.85
653.76
1260.99
1792.24
Total Expenses
91.38
231.01
499.27
879.63
1142.81
Expenses as % of total Income
80.9
75.28
76.37
69.76
63.76
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Mar '04 Total Income
Mar '05
Mar '06
Mar '07
Mar '08
112.95
306.85
653.76
1260.99
1792.24
E l Employee Cost C
2 49 2.49
4 28 4.28
7 56 7.56
28 73 28.73
54 13 54.13
Other Manufacturing Expenses
85.36
221.72
465.79
825.81
1066.56
0
18.16
62.81
101.58
106.59
g and Selling Admin Expenses
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Mar '04 Mar '05 Mar '06 Mar '07 Mar '08 Sales Turnover
112.15
303.21
N P Net Profit fi
18 41 18.41
65 89 65.89
643.83 1236.14 1726.25 106 25 106.25
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
271 78 271.78
408 74 408.74
Mar '04
Mar '05
Mar '06
Mar '07
Mar '08
Equity Capital + Reserves
29.57
94.09
102.24
1277.98
1621.9
Total ota Debt
48.47 8.
120.7 0.
235.85 35.85
1011.83 0 .83
1702.27 0 .
Total Liabilities
86.28
223.03
437
2474.51
3508.87
Net Profit (PAT)=
18.41
65.89
106.25
271.78
408.74
Mar '04 / Ratio D/E Rate of Return
1.64
Mar '05 1.28
Mar '06
Mar '07
2.31
By- Viral Soni, MTech Construction & 21.34 29.54 24.31 Project Manageent, CEPT University, Ahmedabad
Mar '08
0.79
1.05
10.98
11.65
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Comparatively Low Financial Risk. Competitive Advantage – Utilization of Learning g Curve in Operational p Efficiency. y High short term liquidity. Distributed Market Risk – Having Diversified Portfolio in product range and location wise. Organic g g growth of over all business y year by y year. By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Considering overall business strategy, respondent firms were asked to give rating to following factors on scale of 5 to 1 based on its importance for their strategy. Rating Scale Extremely Imp
5
very y Imp p
4
Imp
3
less Imp
2
Not Imp
1 By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
ORGANIZATIONS 1
F a c t o r s
2
3
4
5
6
7
8
9
10
1. Aggressive Land Acquisition Strategy
4
5
3
4
5
4
2
2
4
5
2. External Sources of Finance
3
2
4
3
1
2
5
3
3
1
33. On site Project Management
2
3
4
3
3
5
1
3
5
3
4. Timely y Completion p
3
4
3
3
3
5
2
4
4
3
5. Unique Design
2
4
2
2
5
3
4
4
2
4
6. Quality of Work
4
3
3
2
3
3
4
2
3
2
7. Competitive Pricing
5
1
4
4
2
2
2
3
4
3
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Ratings
Factors
=FxW/ N
1
2
3
4
5 FxW
0
2
1
4
3
38
3.8
1
2
2
4
1
1
27
2.7
6
1
1
5
1
2
32
3.2
3
4. Timely Completion
0
1
5
3
1
34
3.4
2
5. Unique Design
0
4
1
4
1
32
3.2
3
6 Quality of Work 6.
0
3
5
2
0
29
29 2.9
5
1 Soni, MTech 3 2 3 By- Viral Construction & Project Manageent, CEPT University, Ahmedabad
1
30
3
4
1. Aggressive Land Acquisition Strategy 2 External Sources of 2. Finance 3. On site Project Management
7. Competitive Pricing
Rank
Rank
Factors
1
1. Land Acquisition Strategy
2
4. Timely Completion
3
3. On site Project Management
3
5. Unique Design
4
p Pricing g 7. Competitive
5
6. Quality of Work
6
2. External Sources of Finance
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Survey Form Format
Q.1
Ap property p y matching gy your basic area requirement q is available at extremely lucrative location, (i.e. Road Facing, Posh locality and Well developed Infrastructure) would you pay 20 to 30% Premium price with compared to property rate at average location? A> Yes B> No
Q.2
A Project with Unique Design Concept (Such as Green Building, Integrated Township, Vernacular homes & weekend y remote area with reasonably y Homes)) is located in relatively comparable pricing, would you buy it? By- Viral Soni, MTech Construction & A> Yes B>No Project Manageent, CEPT University, Ahmedabad
Q p y is available at very y attractive p g Q.3 A Property price range but carries very standard design and is situated at under developed location, what would be you buying decision? A> Will Buy B> Wont Buy Q.4 Your family’s cumulative annual income is A> 4,50,000 to 7,00,000 B> 7,00,000 to 10,00,000 C> 10,00,000 to 15,00,000 D> Above 15,00,000 By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
( I ) More than 70 % people from target segment will buy a property in project with very lucrative location and pay 20 to 30% premium price for the same. ( II ) More than 75% of target segment will invest in project with Unique Design concept. ( III ) More than 30% of the target segment will respond positively if prices are brought down on by standardizing designing and compromising p g location. All three assumptions are then checked as hypothesis by Z test at 95% Confidence level and 5% error level. level By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Question Hypothesis Number
Yes
No
Ho thesis
Zcal Value
Ztab Value
Status
(I)
1
26
9 >0.70
0.5801194
1.96 Accept
( II )
2
24
11 >0.75
0.8192465
1.96 Accept
( III )
3
6
29 >0.30
2.0182358
1.96 Reject
Note :-
Zcal = |p-P| / {P (1-P) / n}^0.5 Where p = value projected from survey in terms of %age P = Value assumed in Hypothesis in terms of %age n = Size of Sample Survey
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
• • • • •
• • •
•
Strength Unique Design Concepts Well identified project location Focussed target market Very low financial risk Advance technology orientation
Opportunity Broad loyal customer base Potential to raise Debt Can Leverage combination of its Technical Know-how and Unique Design Concepts to gain rare competitive advantage Geographical Diversification can explore potential investment opportunities opportunities.
• • • •
• •
Weakness Products for only high end market.(High Priced Projects) Low D/E ratio. Lack of geographical diversification No rare competitive advantage over other players
Threats Current strategy of unique designs can easily be imitated by competitors. High market risk is involved as most of the undertaken projects are premium priced projects and located in same city. city
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Proposed Strategy Structure
Rare Compititive Advantage
Broad Level Strategy
Operational Level Strategy
Functional Strategy 1
Functional Strategy 1
Responsible Entity 1
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Functional Strategy 1 Responsible Entity 2
Competitive Advantage ::Project Concepts which are Uniquely Designed, Designed Superiorly located & supported with technological g know how and continuous innovations.
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Develop Brand name in Unique Design and Premium Projects. Identify y future development p p pattern and Invest in Strategic locations. Increase Debt Leverage. g Diversify in neighbouring cities within Gujarat. Develop p in-house design g innovation centre. Emphasise on Superior quality and use of advance technology. gy By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Design Concept
Unique Designs. Use of Advanced Technology. gy Added services to provide more value for money. Continue with niche market segment
Project Location
Pro actively acquire strategic locations in developing and d to t be b d developed l d area. Aggressive investment in Land pockets across the various locations. Diversify in the neighbouring cities in first five year By- Viral Soni, MTech Construction & Project Manageent, CEPT University, phase. Ahmedabad
j g ,Q y and Time duration Project Management, Quality Use comprehensive planning, monitoring and controlling techniques. Provide superior quality at all level of projects as market segment targeted is Upper-Upper, high quality standards are to be maintained. Strictly follow the time schedule for every stage of the project. project
Finance à Evaluate possibility of the raising finance from debt sources. à Increase D/E ratio to support diversification. à Undertake Financial feasibility before each project
commencement and link financial reporting with overall planning of the project. By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
HR :
Marketing & Sales
Develop In house Design Innovation centre, implement employee reward scheme for promoting suggestions and innovation at every level. Integrated g Recruitment and Training gp program. g
Develop strong brand loyalty. Promote concept in such a way that – minimum threshold of the quality is assumed by the ‘savvy’ name.
Legal
Comprehensive title clearance checks before entering into the project. Cautious and hassle free approach to be practiced. By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Responsible entity SR.
Function
1 Strategy Formulation 2 Increase Debt leverage g Develop In House 3 Innovation Centre
BOD
CEO
CFO
√
√
√
√
√
√
√
√
Unique Design 4 Concepts Development
√
Identify Future 5 Development Pattern
√
6 Develop a Land Bank Achievng Superior 7 Quality Standards Q li S d d Diversification in other 8 Cities Project Management & 9 Timely Completion y p Developing Strong 10 Brand loyalty Building Technical 11 Knowledge Bank Projecting Financial f & performance & 12 Financial Reporting
√
√
√
√
√ √
√
√
√
√
√
√
√ √
IT
√
√
√
√ √
√
√ √
√
√ √
√
√
√
√
√
√
√
√
GM ‐ BD
√ √
√ √
GM‐ GM‐ Marketin GM‐HR Operati g ons
Sr Projec Structu Legal t Chief Consulta ral Manag Architect designe nt ers r
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√ √
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
√
Almost all the Organization in Construction industry who have defined strategy, it remains limited to Vision/Mission statement and rarely implemented with dedicated action plan. Strategies is to be designed and to be revised time to time based on changes in internal & external factors. S d iis li Study limited i d ffor local l l environment i off the h city and proposed strategy is specific to the studied organization. organization By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
Ganesh Developers Manpasand Labh SN Developers Savvy Safal Balaji Devlopers Devark Developers Parsvnath Devlopers Vasani Devlopers
By- Viral Soni, MTech Construction & Project Manageent, CEPT University, Ahmedabad
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