Are you Making Money or is The Money Making you?

One would think that the Director of Kimaya Builders, will be a person with a very strong opinion about money and the way it should be personally handled. But not Ayushman, he is just like you and us; trying to live a normal life, not attaching too much importance to money.“My attitude towards money is very vague. You only need a certain amount to get by, you don’t necessarily need it to keep you happy. Does my daughter’s hug cost me money? Does she need money to hug me? No.” Profound, we’d say coming from a businessman whose business deals with 100s of Crores every day almost.“I started out with a BCom from Mumbai, went on to do an MBA course abroad and came back to India to join my father’s business. We diversified for a bit from construction to imports, but came back to construction in 2009.” He muses, also referring to what he has learnt over these last 10 years and how there has been a sea of changes in the real estate industry itself. “You have to learn to identify an opportunity.There was an abundance of land back then, good opportunities, good builders and a large scope of growth. Today, the property costs are 4 times the per sq. ft. rate that was on offer back then, and there is no land left to develop. So, you redevelop.” He goes on to explain that there are two bodies that release projects for redevelopment- MHADA (Maharashtra Housing and Area Development Authority) and SRA (Slum Rehabilitation Authority).

“The SRA projects take about 5 years to just get the paperwork completed, there are a lot of checks, scrutiny etc. Also, we are talking about 200, 300, even 400-500 people here. We have to convince everyone, pay them the rent and moving out takes time. Moreover, they might be politically inclined, some of them won’t move out due to vendetta etc. but you have to take the right channels- talk to the police, get SRA evacuation approval etc.We do this day in and day out.” MHADA is easier comparatively, there are challenges there too, but you are dealing with different people who already understand the meaning of a better house, you don’t have to explain to them. “Despite of the extra efforts, slum rehabilitation is a feeling like no other. The look of happiness on their faces when they see their houses, with their own kitchens, bathrooms and no gutter flowing through their houses; it’s priceless, inexplicable.” And the remaining land is what he gets to keep and sell.Ayushman is very matter-of-fact about the comparison between the two eras. “See, the era before demonetization was different with customers paying 50-60% of the cost as down payments and we could invest that in construction. But now, if you see the hoardings, it is as low as 2-10%. That is not enough. So, we have to go for construction loans.”It is not as easy as it sounds, Ayushman explains. With MAHA RERA (Maharashtra Real Estate Regulation Authority), coming into the picture, there are norms that the businesses are supposed to adhere to. There are escrow accounts that are used to repay loans and collect down payments. It is more transparent, 2019 if different than 2009.“Of course, the ease of getting NOCs approved is much higher now; ease of doing business as they call it. But at the same time, the developmental costs have gone up, and so have the liasioning costs. Give and take, pros and cons. But the lowering of GST has certainly given a boost to the sales.”What do they do then, to keep the money rolling?

“We rely on construction loans. Banks would be a better option but we prefer NBFCs because they are much quicker and interest rates are much more competitive. And if the sales are not as expected, we go for top-up construction loans. Managing funds is the key for construction”

It is a lot about relationships, he adds, when asked about the interest rates or choice of NBFC.

“There is a level of trust that you build with the people you deal with, they know your papers are clean, they know your repayment records and they are willing to back you.”

Ayushman doesn’t have as much affinity to money as you’d expect someone like him to have, because he knows the nuances more than a common man; because it is a part of his business. Even though he started investing very young, 25, he maintains he did not have a plan; his investments were need-based.

“I had a relative who was an LIC agent, so I bought that. Again, bought my medical insurance from him. But now I realize insurance is something I can fall back on, because look at the kind of business I am in.

It is risky, right? Also, my elder daughter is a child with special needs. So, I think it is only wise to cover the expected hospitalization expenses. I am also very careful about having the workers on site and the building insured. But he has not applied for his own business risk insurance, has not found it relevant as yet.“Personally speaking, money is a double-sword; it can make you happy but it can also give you sorrow. Of course, you need to save for the future, for your family and children but there’s only a limited use of money, realistically speaking. Beyond that, it is your greed or need to fit that can make it very complicated.” His financial advisor, is a friend, again.

“I have invested in shares and mutual funds. I am not an active trader when it comes to shares. My friend, he takes care of whatever small amount of money I provide him and keeps sharing the status once or twice a month.

And my wife invests in gold etc.”
“He also has a home loan on him! Surprising, isn’t it? Being in the construction business himself. But not for him. “Why would you assume that I’d just keep a flat from the building I am making? I already have a home and I want a bigger one, I shall take a loan like people normally do. How is it different from any other person? I have a car loan too.” He prefers going through trusted people, like his relationship manager from the bank he has his savings account in.

“I am already playing huge and risky games professionally, that need not necessarily reflect in my personal finances. I am a long-term investor; you have to go steady and go strong- that’s my motto.

Be comfortable with what you invest in. I don’t believe in advisors telling me they will get me 140-150% returns. I mean they might, but I am not okay trading in choppy markets and risking my peace. Also, no one can really guarantee you these kinds of returns.”

Hence, he’d rather go with someone who speaks the truth, presents believable facts and has a history of trustworthiness.

“We earn because we are in a race. Not knowing why, we are running it, driven by need and greed. It is a thin line that at times becomes blurred when you run after money too much. And hence, you make money till you make money, do not let the money make you.”

• Making money is always possible until you can invest diligently in assets like Mutual funds. Moreover, risks and creating wealth can be balanced if invested for a longer tenure. Along with investing in Mutual Funds, having funds aside for insurance, such as Health insurance and life insurance, is also an indirect way to keep growing your assets.
• Insurance- No one can eliminate the risks that life can have, but one can be prepared to support any such incidence. In case of any health risks in the family, health insurance takes care of expenses incurred during the treatment. Life insurance is a substitute for income loss in case of the death of the primary breadwinner.
• Mutual funds- Investing in mutual funds is the best way to build your wealth. If you are a beginner in mutual fund investment or do not have enough time to track the funds, it is best to hire an advisor whom you can trust with your finances. Investing in funds would be easier if it is goal-oriented.
• Last but not least, you can make money till you know when and where to invest them so that you can get the desired returns.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.