BackAs realty firms diversify, business structures change
Realty firms are gradually altering the quintessential promoter-backed company structures
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Bengaluru: Real estate companies are incorporating different management structures and gradually altering the quintessential promoter-backed company structures as they grow larger, diversify businesses, enter new markets and boost sales targets.
For instance, Bengaluru-based Brigade Enterprises Ltd has adopted a multiple chief executive (CEO) structure, in which its three main business segments—residential, commercial office and retail and hospitality—are headed by different CEOs.
All of them report to chairman and managing director M.R. Jaishankar, said a company spokesman.
Vineet Verma is CEO, Brigade Hospitality Services Pvt. Ltd, Vishal Mirchandani, CEO, retail and commercial, and in February, Om Ahuja joined as CEO of the residential business, which was earlier looked after by Jaishankar.
“Delegation of authority is important. Residential is a key driver of Brigade’s business and 75-80% of the topline (revenue) comes from this segment. A focus area now is to look beyond Bengaluru, in cities such as Chennai, Hyderabad and GIFT City, Ahmedabad," said Ahuja, who was CEO at property advisory JLL India earlier. “We are also looking at rapid expansion, and evaluating at least a dozen projects in Bengaluru, some of which will get started soon."
Often held in suspicion for the opacity of real estate transactions and run as family businesses rather than under a corporate structure, developers are perhaps moving out of their comfort zone, according to property analysts.
Mumbai-based Lodha Group, one of the largest developers in the country, has taken many measures to de-centralize the organization over the years and is looking to further strengthen that as it develops Palava, a 4,500 acre so-called smart city in suburban Mumbai; it has also entered the London property market.
The company has 12 functional heads, each looking after individual segments such as land acquisition.
The chief marketing officer, chief operating officer and chief financial officer report to the managing and deputy managing directors, who share responsibilities.
“As the scale of operations grows large and when you employ 4,000 people, it is critical to be functionally organized and incorporate empowered structures in the organization. While I may not be involved in all decision-making processes, if there is a certain decision that’s not in the normal course of business, then it comes to the directors," said Abhishek Lodha, managing director, Lodha Group.
The company, which has a development director exclusively for Palava, is now also scouting for a CEO for its London business, but till then Lodha and his brother, deputy managing director Abhinandan, are looking after the latter.
“More corporate governance and trained manpower are indications that real estate companies are putting systems in place, the success of organizations would depend on how you allow them to take decisions," said Anuj Puri, chairman and country head, JLL India.
While attracting professional talent is a good sign, retention of this talent will be A challenge if decision-making remains concentrated in the hands of the promoter, said Puri.
Noida-based Supertech Ltd, which has faced litigation issues in its projects and with its investors and buyers, has appointed a CEO for the first time for its Haryana business, as the company aims to significantly ramp up its Gurgaon operation and sales.
New CEO Rakesh Kumar Jain is to manage sales marketing, look after construction, liaise with government agencies, and has a team of nearly 100 people, said Mohit Arora, managing director, Supertech. Jain will report to Arora.
“Inventory value of the projects being planned in Gurgaon is almost ₹ 15,000 crore, which is as much as our inventory that we are selling in Noida. This year, we are focusing on delivery in Noida but in Gurgaon, the focus will be to market and sell our new projects," he said.
Two mid-sized Bengaluru firms, Ozone Group and Assetz Infrastructure Pvt. Ltd, are both deploying multiple points of authority.
Ozone Group CEO Srinivasan Gopalan, who came on board last year, has reshaped the management structure with new people on board, to focus more on individual markets and projects to boost sales and operations.
S. Vasudevan, chairman and managing director, Ozone Group, who was much more hands-on earlier, is now mainly responsible for interacting with bureaucrats and government agencies while the CEO is the single hook in terms of running the company, said Gopalan.
Less than a decade-old Assetz, promoted by Ben Salmon, also the CEO, and Rajpal Chaudhary, has appointed Mallanna Sasalu as managing director of its brand new township business. The company is also in the process of appointing two more managing directors for the industrial and office space verticals, both of whom will report to Salmon.
“The enabling tool of our entrepreneurial organization is a matrix management structure across each of our business verticals," said Salmon.
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