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Q1. The real estate sector was poised to make a comeback in 2020, but now with the Covid-19 crisis it’s facing new challenges. How can the sector steer itself from this crisis?
Real estate, construction and urban infrastructure are the most important sectors of the economy of a country anywhere in the world. The unfortunate tragedy is that it is not being recognised by the top leaders of the country. It will not be bouncing back, but limping back. I want it to limp to bounce back in an aggressive manner, and it can be done. It can be done if plans are thought through carefully by the policymakers. Government needs to incentivise developers to make those products which customers need and at a price which is affordable.
You’ve got to make the demand side simple, affordable, low rate accessible, guaranteed by insurance and remember that one size doesn’t fit all. The sector does not need a small impetus, but major attention by bringing vital reforms for the long run.
Q2. Given the uncertainty the businesses are facing, do you think promoters need to step forward to prune debt levels?
When you run an enterprise, I believe you have to be fully involved, and the philosophy is to grow that enterprise by running it efficiently and support it continuously by putting money back. That’s what we did. When we wanted to reduce our debt, we also put money into the company. So the answer is, yes, you should always trim debt to a manageable level. But, you can’t run an enterprise without debt. Manageable healthy debt is good for a corporation because it makes you hungry and accountable.
When we realised our debt was getting a little out of control, we came forward with our own stake dilution to ensure that we reduce debt to a manageable level. And I do believe other companies that are highly leveraged should likewise do that, and promoter should put in money because that shows their confidence in their own company.
Q3. What, according to you, the biggest challenges real estate is facing and based on your experience, what will help resolve these issues?
The bigger challenge, unfortunately, is that there isn’t enough recognition at the topmost level about the importance of this key sector in the national development. How do we accommodate the cross migration of people coming into cities? they will always come, you cannot stop them in from villages. We need to encourage creation of demand, make it very easy for a person to own a home, getting mortgage at cheaper rates and putting them on rent.
Also, one doesn’t get this artificial classification of affordable and middle income, let the market decide that. Augment the supply of houses by providing liquidity and land. Government should have the power to acquire land for habitation purposes, particularly for the economically weaker section. Government can provide infrastructure to connect through rail and road. This will be a healthy collaboration between private and public sector.
Urbanisation policies have gone wrong over the years from day one. That’s why we have such a messy situation wherein 50-60% population still lives in slum. Why do we have Dharavi-like places all across India. Now, there’s only one man who can set it right, Prime Minister Narendra Modi. He is the most dynamic and upright Prime Minister, who has the capacity to take decisions and has the guts to do it.
Q4. What do you think Covid-19 has taught developers and urban planners about migration, city planning and the way forward?
There’s a lot to learn from the reverse migration of labourers and the way they are walking hundreds of miles, there was no plan in place for them. They came with the hope for a better living, better things, but they are disappointed.
Urbanisation, over the years, has been neglected or wrongly executed. We need to call for a complete reorientation and restructuring of urban policy. This should envisage creation of habitation units, efficient transportation back and forth. We can create satellite areas linked with trains with rapid transport and those areas need to have all facilities including schools, hospitals, markets, etc.
Make rental housing available to every section of society from low to middle to even the high-income group. Look abroad, in the US and UK, people are encouraged to buy more houses and taxes are reduced by more than half as long as they put it on rent, but if you don’t rent it out, then taxes will be high. That pushes people to buy and make rental stock available.
Q5. What developers or government need to do to ensure that consumers start trusting the market again?
These are legacy issues, thanks to some developers’ failure to realign their priorities and earlier unregulated way of working until the RERA (Real Estate Regulation and Development Act) came in. Now with the RERA in place, it’s impossible for anyone to do that.
So those things in my view, if I were the government, I will handle them in a different manner. America did it once; any incomplete building, invite industrial corporations, give them full indemnity, allow them to set off whatever they invest into completing the buildings so long as they handover apartments to consumers within a specified time. Whatever they incur, allow them to set it off against their profits, they can take the loan and but loan has to be paid back to the bank in time. So it is the tax incentive for those profitable companies that will drive them to invest into finishing incomplete projects.
Q6. Although DLF was a promoter-driven entity, you were among the rare realty companies that adopted a corporate structure early, listed the company and brought in professional CEOs. What prompted you to adopt this management style?
I had a unique privilege of being on the board of the greatest corporate company in the world called GE. I learned hell of a lot from (former GE chairman) Jack Welch, who became a personal friend. To succeed in life, you need to be transparent, which comes only when you are made accountable. Listing requirements make a company accountable to not only shareholder but equally to the government and other stakeholders. In 2007, we decided to take DLF into a different growth trajectory by transforming it into corporate structure. I am proud that DLF is the most compliant company today.
Q7. What have been the most challenging and satisfying business decisions you took during your career?
The most challenging time for us was 1978 when the business had come to a grinding halt due to change in land policies in Delhi. We had no cash on our books but just great brand name and a balance sheet. We almost took decision to sell DLF for Rs 25 lakh, but my sister-in-law and wife requested me to revive the company instead. I deliberated over the decision for 2-3 days; the thought that came to my mind was that I had no knowledge of real estate and the company had no money and banks were not allowed to support land buying.
It was then when I decided to revive the company and to encash on the credibility of the DLF brand and we moved to Gurgaon given the liberal land policy there. We negotiated with farmers in such a way using our goodwill that they became our financiers and also trusted us as their partner.
Q8. What will keep you busy after stepping down as the chairman of DLF?
I’m too young at the moment, am not one of those 90-year-olds who would sit down and just rest. I will be involved in corporate social responsibility and philanthropic initiatives through DLF Foundation. I will ensure DLF continues to have a harmonious balance as a profitable and efficiently-run enterprise that cares for people especially the under-privileged. I’ve personally never been inactive. I play golf and like travelling, meeting friends. Besides, my son Rajiv keeps consulting business with me.
Q9. You are known to be a connoisseur of fine art and your close connect with art masters like MF Husain and Satish Gujral. Do you believe the artist in you has been superseded by a businessman?
No, in fact, it’s the other way round. I believe every good human being has both art and culture in him. Look at Prime Minister Modi, he is making such great efforts to make people realise the importance of cleanliness and sanitation. Yes, I have a passion for art and I believe businessmen should have a passion for art and culture that improves your outlook in business.
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