We're realigning to market, internal targets: Tata Housing MD Sanjay Dutt

You have to align to local markets and focus on the needs of customers in that market and deliver to their expectations, says Tata Housing MD Sanjay Dutt

Last year, Tata Sons merged Tata Housing Development and Tata Realty & Infrastructure and roped in veteran Sanjay Dutt to lead the entity as managing director. Dutt spoke to Raghavendra Kamath about the changes he has made and the plans ahead. Edited excerpts:

After you joined the company as managing director, what are the ‘course corrections’ you have undertaken?

I don’t call them course corrections. I will say real estate or any business is dependent on market sentiment, regulations and opportunities. All three have impacted the real estate sector. If you look at the airlines industry, it was offering full range of services such as cuisine, entertainment and so on. Today, it has come to offering no-frills service and is more focused on reaching passengers on time to their destination. Likewise, in real estate, the focus is on timely completion and making sure people can afford it. So, like other businesses, we are realigning to the market to focus on which we have internally agreed. For instance, if there are six cities, 12 locations could be ideal for office and 20 may be ideal for residential markets. But those cities may have different situations for residential development. Some places may be suitable for affordable and some may be for aspirational housing. So, you have to align to local markets and focus on the needs of customers in that market and deliver to their expectations.

There is a perception that only the affordable segment is selling in the residential market. The premium segment is stuck. What are your views?

To a country with so much diversity, it is difficult to answer this question. But in most markets, the emphasis is on end users. As a result, affordable homes are more in demand because that’s where the masses of the country are. I think when you look at the pyramid of demand, the highest share is of the mass, then mid and the small percentage is for luxury or premium. In value terms, the premium or luxury segment is extremely large and attractive. In many places, Tata Housing is getting 15 to 20 per cent premium because we are giving more aspirational products. But we are giving same experience for the family, which is paying Rs 50 lakh to Rs 60 lakh.

After the ILF&S issue, loan rates have gone up sharply for developers. Your views?

For the industry, it has gone up but for Tata Housing and Tata Realty, we have been the beneficiary of having good ratings and good relationship with institutions. It has not gone up for us.

You recently talked up about scaling up business and getting into office and shopping centre developments. Can you elaborate?

Actually, we want to grow in all key cities of the country. We would like to be there where the political and investment environment is conducive for real estate development. We would describe ourselves as a full-fledged real estate development company. We would like to do all kinds of residential and commercial projects. Commercial includes offices, both corporate office and IT parks and IT SEZs at least till March 2020. Within residential, we certainly want to remain very active in affordable homes. However, the definition of affordable homes will be ours.  It should not be misunderstood with the definition of the government. 

Are you doing low-cost housing now, those below Rs 10 lakh-Rs 15 lakh?

No.  That’s why I was conscious in telling you that we have our own definition of low cost housing. If we are going into places where jobs are and where economic activity is, we will cater to people in those segments.

Why did you go out of the low-cost housing segment?

I don’t think so. It is not question of moving out. If you are focused on where the jobs are in the coutry, it is predominantly led by the services sector in key cities. It is led by IT, e-commerce, etc, where affordability is Rs 50 lakh to Rs 60 lakh and above. So, we are catering to that segment.

How far will the budget provisions help developers?

The Budget sops will encourage sentiment that the government is giving a lot of incentives. Those who are sitting on the fence can take a call on buying a house now or later because of this relaxation. This relaxation would not be available in the future. That’s a positive change. Whether it will drastically change the residential sector and all the inventory will go away, the answer is no.