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In India, the housing and construction sector accounted for about 40-50% of
the capital expenditure on infrastructure projects in a year. The sector
contributed significantly to the economy, enhancing GDP, increasing income
and generating employment. The construction activity accounted for about
50% of the development outlay in India. Till the late 1980s, the housing and
construction sector was not given the status of an industry. The sector
required a scientific approach for the management of materials, machines,
manpower and money, and general management discipline to become
organized and get the status of an industry.
With the formulation of the National Housing Policy (NHP) in 1989-
1990, the construction business started to be recognized as an industry. In
addition, the government lost its monopoly status in the industry; instead, it
now became a facilitator and monitor of the industry. Soon after the NHP was
announced, the industry grew alarmed at the unethical practices followed by
many people in the industry. Because of this unethical behavior, there was
crisis of confidence between the supplier and the consumer.
Time and cost overruns were also very common. The builders never
seemed to give possession of the flat/house on time. The price too, was
never the same as agreed on initially and increased substantially due to the
project cost overrun. Laborers were exploited and not paid even minimum
wages. There was also discrimination against women.
To self regulate the industry and weed out corruption, the National
Real Estate Development Council (NAREDCO) was established in 1998. To
improve the confidence level of investors and consumers in the real estate
sector, NAREDCO took measures to improve transparency in real estate
transactions. It represented all enterprises dealing with various aspects of
real estate development including land development; lay-out; planning;
construction of residential; commercial and institutional buildings/complexes;
development of townships; provision of urban infrastructure (roads,
electricity, drainage, sewerage, water supply) and social infrastructure
(recreational, educational and medical facilities); architecture; town
planning; supply of building materials; estate finance insurance; and estate
marketing and brokerage; and other allied fields. A Code of Ethics was
developed. NAREDCO also developed a rating system in association with
CRISIL to facilitate prudent investment decisions in real estate ventures.
Karnad's views on the dignity and glory of the human being were
influenced by philosopher and novelist Ayn Rand. His views on organization
and management by Peter Drucker. He set up a management consultancy to
test his ideas. The consultancy showed mixed results. Though clients
seemed happy and did not mind paying a fee to listen to the
recommendations, they were not very enthusiastic when it came to
implementation. They felt that the consultancy comprised of "smart young
people with ideas, but really quite impractical."
However, Karnad was not discouraged by the response. He decided to
pursue his convictions by launching his company operations in 1981.
The customers had to pay only the price that was agreed on
when they signed the contract. Alacrity also promised to pay customers the
rent they would have to pay for living elsewhere, if there was a time overrun.
"Given the general ignorance and apathy of the environment at large, the
task of town planning and urban development appears to us to be ambitious
in itself. For its successful performance we would require to organize and
direct all the available strengths in human resources, irrespective of whether
they come from the private sector or government sector. These strengths
would include:
• the stringency of the Development Control Rules,
• the procedural discipline of the 'green channel',
• the belief and conviction of honest entrepreneurship,
• and the commitment and enthusiasm of both government authority and
private enterprise
By the middle of 1988, Alacrity would have completed more than 40 projects
within the city, all of which would manifest the inherent values of the
Development Control Rules. The apartments in these projects would have
been priced nearly Rs.100/- per square feet less than the price charged by
others for comparable quality and service, thereby laying to rest the myth
that the Development Control Rules can be observed only at a prohibitive
cost to the consumer. If, by then, Alacrity's buildings along with the
constructions of other like-minded builders accounted for even 25% of the
total area put up by apartment builders in the city, the Development Control
Rules would be well on the way to gaining popular acceptance."
During its initial years, Alacrity continuously posted a net loss. In the
first year of its operations, Alacrity reported a loss of Rs 42 lakhs. Karnad
was surprised as he had followed the principle of moderation. Employee
salaries were low and everybody led a fairly simple life style. Karnad called
the loss product/business development cost.
However, the founder and the core members of the group were
confident that they could continue to follow their corporate philosophy (Refer
Table II). They also believed that they could deal with any downturn in the
industry. This optimism was reflected in the pledge taken by 31 senior
executives of the Alacrity group on its seventeenth anniversary.
TABLE II
ALACRITY'S CORPORATE PHILOSOPHY
• The quality of life of an individual is truly enhanced only when the quality of
life of the society in which the individual lives is improved
• Professional fulfillment for any institution is attainable only when it accepts
public accountability for its contribution to social / national causes.
• A business mission can be worthwhile and enduring only if it is in line with
national goals and priorities.
• In the conduct of business integrity - 'not knowingly to do harm' - is the only
moral touchstone, and excellence the only performance touchstone.
• Business development can be integrated with social/national development
only if there is uncompromising respect for laws and regulations and faithful
compliance therewith.
Source: www.alacrityhomes.com