What you don’t know about housing loans in India – Part 1

Last year I bought a home in Chennai and I availed a loan from ICICI bank. In my upcoming blogs I will share what a person like me normally goes through and what you might want to know upfront so that you make an informed decision.

First thing you might want to know: The banks are very forthcoming in giving out loans. You will find that you can easily get a loan of even 1 crore rupees pre-approved with very less paperwork. Gone are the days when it was difficult to get loans. With proof of steady income you can easily get a loan of upto 2x or 3x of your annual gross salary without any problems. You will be amazed by the so called “service” that some banks offer you these days. They send sales people to your homes to get all paperwork filled up. They go above and beyond to hook you up with a loan. You might think that it is wonderful customer service, but watch out if you do not know what you are getting yourself into, you might be up for a huge roller coaster ride. The media does not cover the dark side of this due to obvious reasons, they get significant ad revenue from these big banks. More to follow.

India creates incentives for Semiconductor Fabs

A step in the right direction: The Indian government is finally headed towards creating incentives for Semiconductor fabs. To really make this dream a reality the government should ensure that these SEZs also need to provide required infrastructure (uninterrupted power and other amenities). The dream will remain a dream if they cannot attract Engineering talent (NRI Engineers) back into the country. The government also needs to ensure these SEZs will attract and incentivize non-residential Indians back to their Motherland (ex-pats). For this, they need to provide good environmental and residential infrastructure. They need top class schools that would match standards with those in developed countries.

This is a step in the right direction for the overall Indian economy since this will attract foreign direct investment that will create jobs for a huge non-technical population also. Moreover, this investment is not as liquid as investing in services industry or the stock market. It is easier for MNCs to pull-back from services industry but difficult to pull back from investment in manufacturing (fabs). The semiconductor fab industry is part of a huge food chain. So this will trigger investment from other parts of the food chain. 

India is also a huge market for semiconductor goods. The government should provide special incentives for fabs that produce chips that go into products that are sold inside India.  

Next week, I will be flying to the UK to meet some of our customers. Hopefully I will find time during my flight to complete the HDMI story that is still pending completion.   

Subway Chennai – Quick and Easy Subs with an Indian touch

I met with Gokul at Subway in Khader Nawaz Khan road in Nungambakkam a couple of days back for lunch. They have ensured that looks, ambience and furniture match any Subway that you would find anywhere in the world. The major difference was in the menu: you can find an Indian touch to some items in the menu (like Chicken Tikka). For vegetarians, the Subways in US offer the Veggie Delight and Veggie Patty sub. The subway here also offers the standard Veggie Delight as well as a patty version: Aloo patty. The patty tasted very Indian and I am sure the Indian taste buds that have been used to Subs in US will love this version of the Veggie Patty. The other ingredients and condiments available were exactly the same (tomato, lettuce, onions, olives, etc). The bread varieties were also the same (Italian, wheat, parmesan oregano, etc). I ordered a 6-inch Aloo patty. As far as the sauces go, they had a flyer posted with the suggested sauces for each type of sub and mustard was listed as the recommended sauce for Aloo patty. I always hated mustard with any Sub and decided to try a different one. I was offered mint Mayo, which I believe is the standard Mayonnaise mixed with mint chutney. Without hesitation I went for that one. Once my sub was wrapped, I went to the cash counter and was asked for my choice of a drink. The only options available were the standard carbonated soda-types. This totally goes against the “eat healthy” propaganda pushed by Subway. Of course, the Subways in the US offer sodas as well but they do offer a few choices of bottled juices. The people who have a good appetite for Subs, please note that the size of the bread here is easily 30% smaller than what you might find in the US. If you are real hungry, you should go for a foot-long (12-inch). I enjoyed my highly Indianized sub, the presence of Aloo and mint amidst the standard American sub did taste good, the bread was pretty fresh and soft as well. The same place also has a small ice-cream parlour for a quick dessert after your meal.

If you have a laptop and would like to get connected, there is free wi-fi. I don’t think I have found this in any Subway in the US yet.

Next one on my list is Residency Towers Buffet. Gosh, seems like this blog is becoming a restaraunt review blog. Hopefully, once I am done with my vacation I will start writing more mainstream topics.  

Elliots Beach Besant Nagar – Display of disparity between the economic classes

A few days back, I woke up a little bit early. This was when I had not completely gotten rid of my jet-lag yet. I did my yoga and looked at the watch. The time was 6:30 am. I decided go check out the Bay of Bengal from what used to be one of our favorite hang-out spots during the college days, Elliots beach in Besant Nagar. I took my dad’s new two-wheeler, a Honda activa, and headed towards the beach.

The beach was not that crowded during the morning hours, just a few people doing thier routine walks and work outs.

 

The beach has NOT gone through any huge make over in the past 5 years or so. One noticeable thing was the litter present along the entire stretch of sand, in-spite of the efforts from Exnora. The increase in litter could also be due to the sheer number of people who visit this place due to its growing popularity. There were some things that struck my mind and I would like to share those in this column. The biggest thing that struck me was when you visually look at the landscape around the beach in all directions you will notice visuals that depict the growing disparity between the rich and the poor in this city.

If you look a few hundred metres away to your left or right along the coastline you would notice the slums (huts made from mud and straw). I am guessing that this is where the local fishermen reside since I saw a whole bunch of fishing boats in front of the stretch of huts along the coast.

 

If you turn 90 degrees and look away from the ocean in the opposite direction, you would notice a whole bunch of Beach Bungalows easily priced above Rs. 3 crore (around $650,000). 

This is a classic example of the growing disparity between the rich/higher income group and the poor/lower income group. A Rs. 3 crore bungalow and a Rs.3000 hut co-exist within a few hundred metres. The boom in the IT industry has fuelled a steep growth in the real estate prices. Unfortunately, the salaries of unskilled workers and most non-IT workers have not gone up by the same rate. This has made homes in the city just a mere dream/imagination for the non-IT population and even harder for the unskilled and uneducated population. Although the government allocates housing for economically downtrodden, the long term solution to this problem would only be better education and economic growth in other non-tech fields. Pushing IT is good since it generates revenue today, but thought needs to be put in how the benefits and surplus made from this field and other tech industries can be redirected in improving other sectors of the local economy as well.

Some other scenes from the beach.

Stay tuned for my thoughts on Subway-Chennai and the buffet at Residency Towers.

Italy in Chennai

I met with a bunch of my SVCE college mates at Little Italy restaurant. When I grew up in India, there was no concept of a full-fledged Italian restaurant in Chennai. I was looking forward for this one. Little Italy is a nice Italian restaurant in the Nungambakkam area at the intersection of Haddows road and Nungambakkam High Road (Basement of the building called El Dorado). I was eagerly waiting to see how this place would compare to other Italian restaurants I have dined in Europe and the US.  As soon as we walked in we were handed menus. After going through the menu I figured it is an all vegetarian restaurant, which makes me believe it is catered more towards the local population. The menu had a good spread of Appetizers, Pasta and Pizza. We ordered garlic bread, masala garlic bread, Bruschetta as starters. The masala garlic bread was invariably the best. This indianized version of the garlic bread contains something like regular cheese with some chillies and masala sandwiched in between the two halves of the bread. The overall service at the restaurant was pretty decent. We were a group of people meeting after a long time and we had enough time to chat with each other along the course of the meal. 

As far as drinks go, I ordered fresh pomegranate juice, which I can never imagine getting in an Italian restaurant anywhere in Europe or the US. All Chennai restaurants irrespective of what cuisine they serve offer fresh juices in their menu, which I always love.

We ordered a couple of pastas, a thin crust pizza and something that looked like a lasagna (my friend ordered this and I did not care to find out what it was called). The main courses arrived and the waiter started serving portions of the pasta I ordered to everybody at the table. Of course, I also got to eat portions of the pizza and lasagna. The act of sharing portions of the main course with everybody in the table seems to be common in all high end restaurants in the city. This is very uncommon in Europe and US. You always eat what you ordered. The appetizers are the only ones that usually get split. The food was indeed very good. The sauces and the preparation were pretty authentic. The quality was better than the Italian food I have had in a few places in the US.

The ambience of the place was also pretty nice. I did not see anybody smoking and I was not able to smell any trace of prior smoking in the air. That makes me believe it is a non-smoking restaurant. After the meal we decided to go to Subway to get some ice cream for dessert. Subway for dessert? This again is not common across the pacific. There were no subways in India when I grew up. It is one of my favorite quick lunch spots in the US. I will cover Subway-Chennai tomorrow since I will be having lunch with Gokul (http://tggokul.wordpress.com) tomorrow there.

Correction on CavinKare

CavinKare is not an MNC headquartered outside India as indicated in my previous blog. Thanks to Srivathsan for correcting me.

The New Chennai of India

This trip to Chennai has certainly got me thinking. Lots of noticeable changes. Although, I have been to Chennai 3 times since I left to the US in 1999, this trip has made me thinking more because of 2 reasons: I have the time to sit back, relax and think about it since I unplugged myself totally from work; Chennai is in fact going through a pretty rapid change from a standard of living and economical stand point.

From a looks stand point, it has NOT gone through any astronomical change, except that the traffic has increased in a lot of places. The increase in middle class and upper middle class income and the easily available bank loans have contributed to spur in the amount of traffic (more cars). The basic infrastructure in the heart of the city has not kept up with the increase in the standard of living and the traffic. Lot of bumpy roads still. No decrease in the pollution as well. However there is a lot of development and changes in the periphery of the city especially the southern periphery. A step in the right direction is that the city has started expanding into what used to be called remote suburbs around a decade back. I went to take a look at real estate investment I had purchased last year in Perungudi, adjacent to the Old Mahabalipuram Road, short formed OMR. I could see buildings on the way whose architecture is very contemporary in some cases. The local government is also expanding OMR to a 6-lane Highway (popularly known as IT corridor) that connects Taramani and Adyar area in the city to the Sholinganallur area. This stretch is rapidly developing, both in terms of commercial buildings as well as inhabitation.

The real estate prices have taken off. In 2006, they have gone up around 50% in most prime localities and upto 100% in a few places. The price range is anywhere from Rs.3000 per sq ft in the developing suburbs up to Rs. 7000 in the heart of the city. Although people attribute this to the IT boom, the prices have increased at a much more steeper rate than the rate at which IT salaries have increased. The reason for this is two fold: Liberally available bank loans and a supply of new homes that stays below the current demand. I personally don’t think the real estate prices here are going to crash any time soon, since there continues to be only more new jobs created and a demand for land and homes in the prime areas that continues to exceed the supply. A young couple with double income in the tech field or the BPO (Business Process Outsourcing) field can afford an apartment(flat)with a loan. However, they will have to shell out a humongous chunk of their salaries on the monthly payment for the loan. This section of community have come to terms with the “Living with Debt” culture mostly prevalent in developed countries. They are banking on the expectation that there will be a continued increase in salary levels.

One other thing that struck my attention is the acquisition of local companies by multi-national firms, not necessarily in the tech industry. Hershey’s  is looking at the food business of Godrej for a partnership deal which might exceedRs.400 crore (around 88 million dollars).  Lots of international brand names, are acquiring or merging with local brand names and paying a huge premium to just get a foothold into the market.

Cavinkare, again an MNC, has acquired Ruchi ( the famous south indian pickle brand) for Rs. 15.5 crore to get a foothold into the growing food industry in India. Globalisation has not just stopped with Pepsi, Coke and Microsoft. It is getting its roots to a much deeper level into local consumables and retail industry. Recent targets for global funding include theatres (cineplexes) and Malls. I will not be surprised if there comes a day when McDonalds will consider buying the Muniyandi Vilas chain.  

On a technology front, while the IT services and BPO services continue to grow, some young entreprenuers have ventured into developing some innovative products. The global venture capitalists (VCs) have started paying attention to Indian start-ups. My classmate from undergrad covers this at great length in his blog http://tggokul.wordpress.com. His blog was partly responsible in inspiring me to start my own blog. Local start-up industry picking up is a very is an encouraging trend. Indian companies and professionals should start moving up the value chain rather than continuing to operate in the services and human talent outsourcing industry. With the world becoming more flat, there is bound to be more competition to the Indian services companies from developing countries both in the South Asian region, Russia and South America. With rising salaries and rising operating costs in India, the tech industry can continue to grow at current rates in say a decade from now only if they start thinking about moving up the value chain and start developing products. The people are certainly capable. It is just a change in outlook and boldness from the entreprenuerial community that is needed. 

In my next blog, I will cover my impression of the new outlets and restaurants in Chennai.