This blog is rather a part two continuation of one of my previous blogs ( https://sriblog247.wordpress.com/2018/05/31/can-a-squirrel-changed-your-life/) . For the benefit of those who might not have read my previous post, It was about the events and situational choices that changed the path of my life which made me come back to India for good. I thought it would be prudent to share my bit of experience as an entrepreneur in my second innings after I returned back to to India . The year was 2006.
One last Saturday at the DFW ( Dallas Forth worth) airport I was waiting to board my flight back home for good . My wife and kids have already left for home a couple of months back . I was in the process of liquidating and winding off assets before returning back for good . Couldn’t really say how I felt , Should I be glad that I am returning back to India for good or should I be sad that I am leaving a country that gave anything and every thing I wanted ( Except disgust, discomforts, distrust and heartburn) .
Any way I was starring out of the glass panels at the boarding gates when the crack of the public announcement system interrupted my thoughts. Yes, it was time to board and my mind for no reason was humming Don McLean’s “Bye Bye Miss American pie” . Little was I aware of what was to befall , nor did I take cognizance of what the next stanza of the song said “And them good ole boys were drinking whiskey and rye Singin’ this’ll be the day that I die, This’ll be the day that I die”
After hours of grueling flying , disturbed sleep, the much forgettable in flight food that gave me a feel of eating dead preserved mummies and some transit in Europe I have finally landed at Chennai International airport . Chennai airport code has an emotional connect , Yes it is “MAA” meaning ‘Mother” . But all emotions stop there and die off as soon as you get off your flight.I headed straight for Immigration counter ,but even before I could get there I was greeted by a sharp stinging mosquito bite on my cheek which in fact confirmed in a nostalgic manner that I have indeed really reached Chennai.
I was greeted ( not really , but grinned at ) by a customs clearance officer who some how forgot how to smile , or may be he looked better that way , Any way he finished my immigration verification with the elegance of a bus conductor and I rushed to the toilet ( Rest rooms mean something else in Indian English or rather Hinglish) to relieve myself . Come on , Oh God, please , even a mortuary or a slaughter house would have had a better ambiance , A visit to Chennai airport toilet affirmed my belief that Somalia would have been a better paradise to live.
First week at trying to set up a business in India . Remember it was still early 2006s and the so called culture of VCs, Angles or demon investors never existed in India . And even if they did, they would never invest on conventional / traditional businesses as they don’t really grow exponentially to meet their 10x expectation of ROI within 3 years.I chose to become a construction contractor and a promoter of value for money budget housing as I had prior exposure to this industry.
Now, That proved to be good decision only if you could bootstrap or self fund your projects sufficiently. The next alternate option to seek funds was the so called banking system . When approached , the bankers wanted a three years income tax returns, P&L , balance sheet , etc with the next 3 years projections for a company which was in its first year of inception . Some nationalized bankers turned me away point blank stating that RBI ( The reserve bank of India) has issued a 150% risk rating on commercial real estate and so advances are curtailed to this industry and this doesn’t come under prime lending sector industries.May be RBI though airlines , beer making and Fashion diamond jewelry are less risky business and needed to be under the prime lending sector and not housing . Any way time has answered that too.
I can not imagine a country so backward which doesn’t consider some thing as fundamental as housing under prime lending sector . if housing and real estate was such a risky proposition then why do these hypocrites ( the political nethas and the administrative civil services babaus who formulate such policies ) invest so much on real estate assets. So the next option was to raise loans through project finance .
Yes some private sector banks were interested to work with us . But they wanted a 150% to 200% collateralization of the credit tendered . and secondly these credits weren’t cheap unlike the credits from nationalized bankers to the prime lending sectors which hovered around 9.75 % to 10.5% . Cost of finding real estate projects by private bankers was any where between 14.5% to 18% . Some how through hook or crook i managed to obtain a paltry working capital funding of 50 lakhs from a private sector banker after colletralizing them for almost 200% of the limits extended to set sail my little boat.
And after spending some more years in this industry i was given to understand that the major source of funding real estate projects to politically affiliated builders was the ill gotten black money of Indian politicians and the civil service babaus . And funnily they charged lesser interest than the nationalized bankers and were happy to collect the interest than the principle. Or was this the reason to discourage funding to real estate sector by nationalized bankers , so that artificial demand can be created in the grey money funding market. Any way I don’t think that i can advocate this .
First interactions with Indian authorities. Unfortunately real estate has too many approvals and clearances to be obtained from many governmental agencies which saw these as avenues and boon for improving both their personal and also the governmental revenues . The best part In India is that there is a broker for every thing . You just pay them to get the work done and they operate for a fee . May be this is the only thing which has improved the ease of doing business in India .
Lack of government support : Though Indian real estate is the second largest employer of the unskilled and illiterate masses ( Not that the first one is Indian politics though it might appear to be so , it is agriculture) there has been little or no support to this sector from the government at all which i feel is a conscious neglect by them. Secondly this industry has so many legal interactions and the pathetic state of Indian judiciary system desires much to be improved . Failing which there could be no solutions to conflicts rendering business unviable . Corruption is rampant at each approval that needs to be obtained from competent authorities ( That’s the official technical jargon designation for these highly inefficient and incompetent authorities) right from grass root . Even the so called real estate regulation act has only pinned the responsibility on the promoter but has failed miserably to lay strong guide line for the governmental agencies to respond in a time bound manner. I feel that at times such hypocritical rules are made only to appease the common public and for personal brownie points.
The list of woes goes on and on . Need less to say how uncompetitive Indian restate scenario is mostly due to rampant corruption and infeasible and un realistic regulations. A lot desires to be done in this industry which was once destroyed by foolish governmental moves and policies should it survive .
My recommendations : Try becoming an enterpruner in India especially in a sector that interacts frequently with governmental agencies and receives very little financial assistance or support of any form . That would be the toughest assignment of your life. It is like fighting a battle in Vietnam without ammunition and even bullet proof gears where you never know where death comes from . don’t be surprised if you mind suddenly starts signing Don McLeans’s lines ““And them good ole boys were drinking whiskey and rye Singin’ this’ll be the day that I die, This’ll be the day that I die”” from Bye Bye Miss American Pie. If you survive then it means that you have the necessary skills to do business any where in the world and in any type of country . It is time for you to move your business to better developed nations which have lesser corruption and whose governments have better regulations and legal enforcement . Because even if you manage to just about survive in this highly infectious and unsupported environment (were access to any thing and every thing needs special privileges) you would definitely flourish in better countries . Why business ,just try driving your car in Indian traffic where driving in the same direction on both the sides of the road seems to be perfectly legal. Trust me , Living , learning and trying to do business in India is like getting the best of immortal life saver vaccination in the world and once you are vaccinated you are immortal.No wonder we Indian do really well in better nations .
Note: This blog has been from my personal experiences so far and the opinion expresses are purely mine .