Understanding the demand cycle

Understanding the demand cycle


Brigade Enterprises, which had a turnover of Rs. 1310 crore in FY14-15, is gearing up to achieve a 30 per cent revenue growth in the current fiscal. A key part of its strategy is to deeply understand the dynamic nature of any demand cycle.

Brigade group has come a long way since its inception in 1986 by M. R. Jaishankar. Its revenue has grown steadily and has touched a turnover of Rs. 1310 crore in the March 2015 fiscal, up from Rs. 482 crore five years back. Om Ahuja, CEO Residential, Brigade Enterprises says, “We have been working on a steady growth path. This could be largely attributed to the fact that we are covering all residential needs without focusing on any one particular segment as the demand cycle keeps changing over a period of time.”

In fact, for the first half of the current fiscal, the company’s revenue has gone up to Rs. 703 crore up from Rs. 569 crore during the corresponding previous half year while its net profit shot up by a whopping 145 per cent to Rs. 66 crore. The reason for its higher profitability is the sale of some projects and better realization on the ongoing projects. Listed on the Bombay Stock Exchange, this stock has a market cap of Rs. 17.04 billion and is trading at Rs. 154.40 (December 22, 2015).

In the first half of this fiscal, brigade’s revenue has gone up to rs. 703 Crore up from rs. 569 Crore during the corresponding previous half year, while its net profit shot up by a whopping 145 per cent to Rs. 66 Crore.

While the real estate sector has its own share of woes, the company aims to increase its revenue by 30 per cent in the current fiscal. It has the advantage of being transparent and technologically focused. While this will ease its operational issues, its strong focus on integrated townships and enclaves will aid its growth in the coming years. According to the company, these will be ‘smart’ townships which will include shopping malls, office space, schools, hospitals and hotels to provide residents with all the facilities within easy access. “We intend to tie up consumer needs with our capabilities,” explains Ahuja.

With a debt equity ratio of 0.89:1, the company also has the advantage a credit rating of ‘A’ from both the rating agencies, CRISIL and ICRA, with a ‘positive outlook’, which is an upgrade from ‘stable’.

Sound Investment

In line with the government’s vision to provide homes for everyone by 2022, Brigade group aims to cater to every income group with residential projects in the four metros to begin with.

In addition to possessing their own homes, there is an increasing trend towards migrating to self-contained townships, thus cutting down on commute time for day-to-day activities and experience appreciation of property value. Ahuja gives the example of Brigade Metropolis and says that the property value there has gone up by 100 percent, thus making it attractive for buyers who may live there, or sell later for a profit.

Brigade has currently three projects in Bengaluru that are integrated townships, also providing added features such as a football court, a cricket stadium and a golf course. Each of these townships will also have a mix of housing options, catering to different budgets of potential buyers.

The primary target customers for Brigade Residential are in the age group of 30 years to 50 years and online savvy. Therefore, Brigade has started increasing its digital reach, while strengthening its physical marketing and sales aspect in parallel. “Most customers do a lot of research and know exactly what they want. We have to be able to answer their queries to their satisfaction and meet their needs,” points out Ahuja.

Therefore, the company has upgraded its technology to suit buyer behavior online and uses the Salesforce.com CRM platform to manage customer relationships.

Following the trend

Some of the trends Ahuja points out are that Mysore is a popular investment option for people from the U.S., the Middle East, Chennai and Bengaluru. Mangalore is another popular destination for people from the Middle East, especially as retirement homes. Brigade does special events in the Middle East to cater to this segment.

Brigade has also been focusing on creating green spaces in letter and spirit. Brigade Gateway, for instance, is a 40-acre project in Rajaji Nagar, has cable connections laid in such a way that does not require digging of roads. It is interconnected efficiently to avoid future expenses. Apart from CCTVs connecting the entire property, it has solar power like in all other Brigade properties.

Some of the other upcoming integrated townships include the 130 acre Brigade Orchards and Brigade Meadows near Kanakpura Road.

Team Strength

“The best of strategies need the best people to implement them,” says Ahuja, who took over as the CEO of Brigade Residential in February this year. How to motivate them is critical. Brigade has a 29-year history and has been rated as top employer in real estate, and across industries. “We have several long serving employees who have continued with the organization for a long time,” says he.

In the last nine months, his task was to align the employees to the new strategy and make them comfortable. Ahuja believes in being approachable cutting across hierarchy, as he believes that happy employees lead to satisfied customers.

Riding the Wave

Ahuja points out how there was a period when there was more supply of office space than demand. But in the last one year, due to increased opportunities, 13 million square feet of office space was leased and 1.3 lakh jobs were created. This will create a demand for residential space, and in the next two years, there will not be enough houses. He expects the prices to move up.

Taking Chennai’s example, he points out that there is uneven development in the city. The northern part of the city does not have enough supply of residential options. The southern part has the supply but does not have a social life. Understanding these local dynamics and designing residential spaces to fulfill the gap will be one of Brigade’s focus areas.

In the next few years, Brigade will concentrate on developing properties in the five southern cities of Chennai, Bengaluru, Hyderabad, Mysore and Mangalore. “We are going to catch the upcycle,” he says confidently.

The vision is to continue to be known for best integrated enclaves, transparency and quality and remain a wonderful place for employees to work at.


? Develop integrated enclaves

? Maintain steady growth rate, with aligning employees to the new strategy

? Strengthen its presence in existing cities of Bengaluru, Chennai and Hyderabad and expand in cities such as Mysore, Mangalore and Cochin

? Strive to remain a great place to work at

Meera Srikant has been working with publishers and publications since 1993, writing and editing articles, features and stories across topics. She also blogs and writes poems, novels and short stories during leisure. Writing for The Smart CEO since 2010, she is also a classical dancer.

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