Demonetisation had a profound blow on the businesses of nation. The industries that seemed to be running smoothly before received a major setback on its planning thus making managing finances become a overwhelming task. Experts predicted that one such commerce which was going to suffer upheaval because of demonetisation was real state with a steep rate of 20 – 30 percent lowering in the prices. It could have shaken the base of any other enterprise but Irfan Razack, Chief Managing Director of Prestige Estates Projects stood indifferent to it.
The 63 year old entrepreneur had a completely different take on the matter. Unlike any other expert his prediction was entirely different. His theory was that real – estate had no downward fall and the land area is not perishable. There might be babbling and munching for few days but, soon nation will realise that real – estate is a cost plus business and net profit margin of other companies are in single digits. Thus, most of them will not be able to meet the compliances of RERA (Real Estate Regulation Act), and the supply will go down thus leading to a steep rise in the price of lands because of less availability of its resource.
People could dismiss his remarks on the matter but this partisan comment from a revered person in his field could not be ignored, especially when he leveraged from his father’s small clothing shop to a real estate tycoon.
This business idea spurted from old Bangalore, where the headquarters of Prestige Group is located. It is known as ‘Falcon House’ based on the group’s emblem. The Falcon is a fierce bird that has a sharp vision. It can locate its prey from a distance, chase it with vigour and change directions at right angles. Similar trait of Prestige groups was shown in past years.
At a short distance from headquarters is located ‘Prestige Shop for Men’ set by Razack Sattar in 1950 to sell fabric and offer tailoring services. The shop still retains its position though it has grown to 20,000 square area now, run by Noaman, Irfan’s younger brother. Formerly the shop had regular customers but now it has expanded to a even larger customer base. Sattar’s three sons Irfan, Rezwan and Noaman assisted their father in running the shop where they developed connection with customers that later helped them grow their business.
They started off as middlemen thus helping deals between buyers and sellers. In mid 1980s they graduated and started constructing buildings. They made sure the delivery was on time with best quality and location, thus subjecting them to the spotlight. The Sattar brothers also played as local boys which eventually helped them in setting up an amiable image. This has facilitated them execute 200 projects.
For a period of time Prestige has been a player in Bangalore but virtually known elsewhere. The business started from scratch and was helped by the agility of family ties. Two things that fell in favour of Prestige were serendipity and carefully planned IPO (Initial Public Offering ).
In the first decade of 21 century Bangalore became the hub of technology thus making national and international companies rush in. This meant requirement of more commercial space. This led to increase in job opportunity thus requisite of flats for the white collar employees. This also meant need for shopping malls for their recreation. This was the serendipitous part.
The next part was making a bet in 2010 to raise money through IPO. Venkat K. Narayan, Chief Financial Officer of Prestige, recalls the market was not so buoyant back then when they decided to go ahead with deal. This led to raising of Rs 1,200 crore which was invested in the market.
In the past three years the profit has gone up by 9.4 percent. The business has been growing substantially. Prestige has not only entered adjacent market of Mysore, Kochi, Hyderabad, Chennai and Mangalore but also distant ones like Ahmedabad and Pune. Today, Prestige has widened its base and earns revenue of 80 percent from residential, 13.6 percent from commercial, 4.5 percent from retail and remaining from hospitality.
A competitor with a more ‘national’ footprint says: “Prestige has also been lucky in the sense that the Southern markets in general and Bangalore realty market in particular has held up well. At least it is better than, say, a Mumbai or NCR market.”
Irfan Razack, though, admits that FY15 was exceptional, “but increasingly, we are also trying not to sell but lease our commercial assets so as to benefit from annual revenues”. Securities trading house Motilal Oswal pointed out that Prestige is probably going to end up with annual revenues of Rs 650 crore this year compared to Rs 520 crore in the previous year.
All the generations of Irfan’s family is becoming a part of the family lineage. His daughter is already a director in the company. Rezwan’s son is also a part of the business. The promoters hold 70 percent of company shares. They are looking forward to maintain a disconnect between ownership and management. For now, Irfan is focussing on continuing his legacy.
Started from a single clothing shop Irfan now owns a real estate business that is nail biting. If there is belief in heart and public dealing is taken well care of no goal is too difficult to achieve.
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