Creativity of a different kind in real estate
Srinivasan Gopalan, CEO, Ozone Group, brings creativity to every project and also manages a risk-free business strategy
Smart leaders understand that their job requires them to identify trade-offs, choosing what not to do as much as what to do. Grading the importance of various initiatives in an environment of finite resources is a primary test of leadership. And no one understands this better than Srinivasan Gopalan, CEO, Ozone Group.
The quick-thinking Gopalan is well versed with the rules of the game. Having spent years in the real estate business, he has seen the oscillations. His primary tenet is that at a time when location was the mainstay of development, today the criteria for success is delivery. Gopalan says, “A developer may have swooped on the best of location. But what good is that if you cannot deliver the project on time? In fact, location today is a given rather than a USP.”
Having joined the Ozone Group five years ago, his priority was to continue with a steady stream of projects. Over the last couple of years, the group has launched and completed or is in the process of completing maximum number of projects. But how they ensure that projects are completed on time are some of the convictions the group lives by: Clear titles, up-to-date approvals, least complications, positive feasibility report, and a proper financial analysis in place. Gopalan doesn’t believe in compromising on any of these.
Of course, other factors that are equally critical to him is a balanced approach to customers and commitment to delivering according to their requirements.
Build them up
India’s geography and its typical set of inhabitants has compelled developers to build novel kinds of homes and offices. While high-rises are the norm in Mumbai, stand-alone homes (villas) or plotted developments is what drives demand in other locations. Of course, with the scarcity of land at sought-after locations, apartments are soon becoming the way. But here the sizes would vary, along with the ticket size.
For long, the Ozone Group has consistently looked at the southern market. So Bengaluru and Chennai is where it has thrived and continues to do so. But then it considered Mumbai where it is racing to complete five projects. Gopalan says, “As a policy, we have looked at variety in our developments based on the city, demand and the location. One has to ideate projects that will not only see demand, but also bring in cash flows. The rise in debt money and the increasing cash crunch is intimidating developers to create projects to stay in business.”
The company has also followed a very prudent policy when it comes to long-term plans. At a time when developers are scrambling for land or tying up with others for developments, Ozone Group has consistently built land banks half a decade ago. “There is no new investment in land banks. The way ahead is to capitalise on existing land banks and encash them as quickly as possible. In fact, what you see as maximum projects now is only quicker launches and faster sales,” says Gopalan.
He admits that the company has been highly energetic on the sales and marketing front. The promoter and its employees ensure that 30-40% sales must happen in the first quarter after a project has been launched. “It helps rake in the money for construction and timely delivery. Without losing our focus, the projects team is responsible for completing the structure on time so that we can start looking at new projects,” he adds.
Ozone Group also follows a distinctive approach to ensure continuous business. Gopalan’s keen business sense (he is a Chartered Accountant by qualification) has helped him identify projects that have been obstructed due to various reasons. Ozone Group liaises with the financial institution involved in the project and offers to help complete them and also sell them. Of course, all this for a fee. The judicious Gopalan considers all aspects of the project before stepping in and proposes sale only if the price is right. “This is the most risk free strategy that we have adopted,” he says.
Within its own projects, the company follows a debt-equity ratio and shares an excellent rapport with several FIs.
With slow sales, developers are obliged to reduce margins so as to reduce inventory. In hindsight, some reasons could be that they had not built projects that would delight customers. Gopalan says that the fine art is to find the right customer, sell, and exit the project. It’s in everyone’s interest. “Today, it’s the ticket size that calls the shots. Due diligence in each project and happy customers and partners will tilt the scales in your favour,” he adds.
With a sense of pride, he lets in on the fact that 40% of its sales are word-of-mouth. Force de majeure may delay projects, but that is occasional.
Big tasks often require incremental progress. As every golfer and tennis player knows, one must keep one’s eye on the ball. In the same vein, multiple projects call for a focused approach what with strategies being different for every project. Ozone Group is balancing different strategies across projects, be they its own or those earned as development managers. In Mumbai alone, it is simultaneously working on five projects — two of its own and three as development managers. For instance, it took over The Gateway project from an FI and after bringing in preferential capital of its own, completed the project, sold stock and is now waiting for the completion certificate. It emulated a similar thought of line to the Kingsville project in Wadala. Gopalan says, “Our reputation precedes us and FIs seem content to work with us. We get paid and it helps the institution write off debts. But there is a reason behind this,” he says with a smile.
A volatile Mumbai market that has only entrenched itself deeper into debt because of the magnitude of the projects it took on and its inability to complete on time has led FIs to approach other competent developers willing to take on such tasks. On a serious note, Gopalan says that sometimes success eludes developers because they fail to adopt different strategies for different markets. “The dynamics of the market are incomparable. So are the construction methodologies. We are clear that we will not take up additional risks outside the ambit of development and sales. Moreover, working with an FI offers a higher comfort level as working with a developer. Two developers would find it hard to work together as the chances of winning streaks are lower,” he avers.
Looking in the right direction
In modern life, it’s easy to fall into the trap of being “too busy chasing cows to build a fence”. Gopalan refuses to be deceived by such actions. Instead, he maintains that his team has been thoughtful of looking at creating developments that become marque ones and set the trend for others. Some of its projects such as Ozone Urbana and The Autograph (among others) have become destinations by themselves. Speaking thoughtfully, Gopalan says, “We prefer to look for projects that have a selling USP. The league in which we play has little or no competition and gives us an edge. I would like to point out that one of the reasons for our success is that our projects are planned to the last detail. None of our projects are pending OCs.”
For an 11-year-old company, the Ozone Group has been very discerning and offering its customers a novelty hitherto unknown or unseen. The project team has carefully considered brief to its architects to absorb maximum FSI, thus making the project viable. More time is spent on the interiors as comfort of inhabitants is the ultimate goal. “One of the prime focus of any project is planning for zero wastage. Then there is the element of efficient and sufficient lighting that must infuse the apartments and corridors. Our promoter is an architect by profession and no unworthy design would pass muster if he was not content with the design,” adds Gopalan.
It also works with international architects for concepts. But Gopalan entrusts much faith in Indian architects too. “Indians have a peculiar way with daily routine and chores. Our lifestyle is far removed from Europeans and designing apartments for the Indian mindset would only baffle them,” he says cheerfully.
Interestingly, few would have heard of the concept of convertible homes — a home that converts into a 2BHK at night and functions as a 1BHK during day. Modular furniture imported from the Lcove London (Ozone Group has a tie up with the company) has found acceptance from customers who cannot afford a 2BHK and have accepted this format. These revolutionary space-saving convertible homes come under the banner of – OZONE XL 1BHK homes. They have become extremely popular.
Construction technology and methodology has become a mainstay of most modern projects. Spoilt for choice in today’s market, the Ozone Group adopts them as and when necessary, based on project to project. However, it must make business sense. Gopalan says, “We play a larger role in the lower ticket size market. Adopting high-end technology for a project where apartments range between Rs 5000-10,000 would make it highly unviable. Technology comes at a cost and cannot be absorbed in projects of this size. Currently, we go with MIVAN, Pre-fabrication, among others. It would suit high-rise projects that call for such methods.”
However, the Ozone Group is looking at advanced technologies at its premium projects in Mumbai.
Similarly, sustainability is at the heart of its initiatives. Right from solar power to water saving, the company indulges its customers.
There is something that Ozone Group, and Gopalan, in particular are doing right. It would be only right to say that if most real estate developers followed suit, stalled projects would have been few and far between.