Insula - 816 Words

Insula In Ancient Rome the buildings referred to as Insula were as common as the modern apartment building. In Roman architecture an insula is a Latin word that means island. An insula was a kind of apartment building that housed most of the urban citizen population of ancient Rome, this included class types of lower or middle-class status. The wealthy families lived in an apartment called a domus, they were large and made for single-family residences. These two kinds of housing were intermingled in the city and not segregated by separate neighborhoods. Only the wealthiest could afford the luxury of living in private homes. The ground-level floor of the insula was used for shops and businesses with the space that they would live†¦show more content†¦The apartments on these floors were usually without heating or running water. This meant they had to use Rome’s public restrooms. The dangerous of fires made the height of the insula go down to 17.75 meters and this happened whe n Nero made the rule after the Great Fire of Rome. There were about 42,000-46,000 insula in the city with the population being around 700,000 to 80,000. These apartments weren’t made to be art, but the ruins have become a remarkable piece of history. â€Å"Few intact examples of Roman insulae remain today – one well preserved building can still be seen at Ostia Antica, the ancient Roman port 15km outside Rome. However, there is another preserved insula much closer to the heart of the ancient city, on via del Teatro di Marcello. It is a somewhat neglected site, completely overshadowed by the more famous and showy attractions of the piazza del Campidoglio and the imposing Altare della Patria in piazza Venezia. Nonetheless, it is an evocative reminder of city life some 2000 years ago.† (Heritage Key.) A Marxist way of looking at these buildings is the way they were built; these buildings were made for middle-class people with the bottom being the biggest space. Obviously the bigger it is the more money it cost. This architecture would have never happened if society hadn’t influenced it. Society needed a place to live and these apartments were the best solution., theShow MoreRelatedThe Eruption Of The Volcano1878 Words   |  8 PagesHerculaneum was 6 km from the foot of Vesuvius, whilst Pompeii was about 10km away. In Herculaneum, the searing heat of the surge caused the people living there to die an instant death due to thermal shock. Their flesh and muscle tissue got vaporised, leaving only the skeletons remaining. The skeletons left provide us a good insight into the lives of the Romans before the volcano erupted. In Pompeii, the pyroclastic surge killed most of the inhabitants immediately, due to the burning hot air that burntRead MoreHouse of the Vetti and House of t he Fawn Essay2749 Words   |  11 Pagesspirits of the woodland which the Romans associated with Pan and Stayrs and the followers of the Greek God Dionysos. This explains that the family were educated to know about Greek myth showing â€Å"High Greek Culture† and â€Å"Roman Cultural Capital.† The House of the Fawn represented the elitist in Pompeii. The owners, which are unknown, would have been the political and monetary elite in Pompeii, and it is suggested that Publius Cornelius Sulla, leader of the Roman Colony in 80 BC owned it but it hasRead MoreArt History7818 Words   |  32 Pagesabout 20 years o Neolithic Period Ââ€" New Stone Age #61607; Begins around 9,000BC #61607; Neolithic Revolution • Agriculture o Allows people luxury of staying in one place; stability and performance o Cornerstone of civilization • Domestic Architecture o Wigwam, Huts, Lean-tos o Native American Indians were considered Neolithic • Refined tools o Spears, Bows and Arrows • Domesticated Animals o Hallmark of luxury, stability, and permanence • Pottery Ââ€" clay art o Bowls and containers

Nature Vs. Nurture in Mary Shelley´s Frankenstein

Nature vs. Nurture Francis Galton, the English Victorian polymath first coined the term, Nature vs. Nurture in 1871, when he considered how much influence our upbringing had on our fate, and whether or not our destiny was preset. Long before the term Nature vs. Nurture was coined, Mary Shelley’s 1818 novel, Frankenstein, explored the idea of nature vs. nurture in the context of creation. The greatest exemplification of Nature vs. Nurture in Frankenstein is explored in the fate of the Creature, who begins his life a seemingly pure creation but eventually involves himself in violent revenge against his creator, Frankenstein. The examination of the Creature’s character must include an overall evaluation of the role Frankenstein had in his life, or lack there of. Within the analysis of Frankenstein’s Creation, the reader is subject to the scientific exploration aspect of the Nature vs. Nurture argument. Finally, we as readers are exposed to how the role of solitude in the evolution of Frankenstein’s character as well as the Creature brings the novel full circle in the evaluation of Nature vs. Nurture, and how much control one has when they decide to play God. In Shelley’s novel, the Creature is responsible for the murder and destruction of his creator, Frankenstein’s, family members and eventual life. The Creature, throughout the novel, is identified as a â€Å"monster,† which can be defined as, â€Å"one who deviates from normal or acceptable behavior or character; a threatening force†Show MoreRelatedNature Vs Nurture : Mary Shelley s Frankenstein2057 Words   |  9 PagesIn Mary Shelley’s Frankenstein, the theme of nature versus nurture is seen throughout the novel. Freud and many psychologists state that nature and nurture influence development because genes and environment, biological and social factors direct life courses, and their effects intertwine. Through the Creature s continual rejection by society and Victor , Mary Shelley shows that social rejection altars the Creature’s attitude towards society and pushes him to be vengeful. In Frankenstein the CreatureRead MoreMary Shelley s Frankenstein - Nature Vs Nurture1857 Words   |  8 PagesEasily one of the most notable themes in Mary Shelley’s Frankenstein, the role of nature versus nurture in developing children, recurs throughout the novel with the two main characters, Frankenstein and his creature, believing in opposite sides of this theme. Favoring nature, Frankenstein maintains that the creature was always evil from the moment of creation, regardless of the creature’s experiences. However, the creature, in his narrative to Frankenstein, argues that â€Å"[he] was benevolent and good;Read MoreFrankenstein : Are Monsters Born Or Created?1058 Words   |  5 PagesFrankenstein: Are Monsters Born or Created? Throughout the novel Frankenstein written by Mary Shelley, the creature is subjected to countless acts of violence and rejection. For a monster to develop, one must have been formerly exploited either by an individual or their society. The creature is not only a physical product of science, but his atrocious behavior is also an explicit result of Victor’s actions toward him. The creature was not born a monster, but slowly morphed into one as he experiencesRead MoreMary Shelley s Frankenstein, And The Modern Prometheus3901 Words   |  16 Pages â€Å"Frankenstein, or the Modern Prometheus†, by Mary Wollstonecraft (Godwin) Shelley Mary Shelley s novel Frankenstein is best known for its influence in popular culture through many film adaptations. It is in fact, however, one of the great novels of ideas. Write an essay that discusses in what sense you think it is a novel of ideas. What are its claims about human reason and human nature? Shelley explores some aspects of human nature, specifically human lust for power and the unfortunate way weRead MoreThemes of Frankenstein3337 Words   |  14 PagesThemes of Frankenstein Frequently, literature is intended to convey a significant idea or theme to it s readers regarding events that occur in our everyday existence. Occasionally these ideas appear in the context of straightforward characterization, but in some literatures, such as Marry Shelley s Frankenstein, these themes come to us in the guise of monsters, goliaths, dragons, gods, and myriads of fantasy-like components that express meaning in ways impossible within the boundaries of realityRead MoreAnalysis Of Mary Shelley s Frankenstein 1525 Words   |  7 PagesThe women in Frankenstein were pure, lifeless and innocent. Elizabeth stands up for Justine’s innocence but cannot prevent her execution. For both Victor and the monster, woman were the last thing they would ask for help, providing comfort and acceptance. For Victor, Elizabeth takes away his guilty conscience. The monster choses female of his kind to feel his awful existence. Both end up destroying the other’s love interest, making woman’s status from object of desire to object of revenge, whichRead MoreAnalysis Of Mary Shelley s Frankenstein 1054 Words   |  5 Pagesshow the control and dominance that men have in society. Frankenstein is particularly notable for its number of absent mothers. This may link to Mary Shelley’s own life, as her birth caused the death of her mother, Mary Wollstonecraft. The main absent mother in the novel, is the motherless monster. Although the monster was not born, he was created by Victor Frankenstein who he sees as a mother figure. Margaret Homans argues that while Frankenstein is creating the monster – while he is pregnant with itRead MoreSome Readers Have Seen Frankenstein as an Illustration of the Fear of the Power of Science. to What Extent Do You Agree with This View Based on Your Reading so Far?1734 Words   |  7 Pagesenlightenment where philosophical thought began and mans concern for a greater psychological form developed. However, duri ng this time of enlightenment and exploration, the values of religion and ethical thought challenged science and its moral reasoning. Frankenstein could be seen as an illustration of the fear of the power of science due to these social changes; however there is evidence within the text to support other aspects such as society and religion being the focal point of fear. On a basic level,Read MoreAn Analysis of Mary Shellys Frankenstein Essay1196 Words   |  5 PagesMary Shelly wrote Frankenstein in a time of wonder. A main wonder was whether you could put life back into the dead. Close to the topic of bringing life back into the dead was whether you could create your own being, like selective breeding however with more power. Perhaps she chose to write this story opposing to one of a Ghost as she felt it was more relevant to her era and wanted to voice her own opinions and concerns to what the future may hold. Playing God, pinching corpses, pretention isRead MoreHomosexuality in Victorian and Elizabethan Literature.6608 Words   |  27 Pagesstory about a vampire that challenged the Victorian gender roles and managed to reverse them, making men faint like women, and making women powerful like men, and called it Dracula. Mary Shelley created a a physical being out of a mans suppressed homosexuality due to his Victorian male upbringing; a man named Frankenstein. Robert Stevenson described what happens when a homosexual male attempts to live double lives to cover up his true feelings, and entitled it The Strange Case of Dr. Jekyll and Mr

Music Appreciat Questions Essay Example For Students

Music Appreciat Questions Essay Describe some of the influence of Latin music in the US in the early part of the twentieth century. Answer: Latin bands were becoming a popular ballroom and club attraction, Afro-Cuban music was also developing and spreading. One major step for this music style was the Woodstock performance of then little known Afro-Cuban band Santa from San Francisco back in 1969. 2. What was the significance of Machismo and His Afro-Cubans? Answer: Because of society racist attitudes during his time in history, it was a bold move to so forwardly acknowledge and emphasize the African roots of their music in their name. They went on to become a largely popular band and took their music to new heights, becoming a sort of bridge between worlds for the fast growing Latin American community. 3. How did Dizzy Gillespie incorporate Latin music into his music? Answer: He asked his friend Mario Abuzz to introduce him to someone who could infuse Afro-Cuban rhythm into his Jazz band. He then met Chain Bozo, the Congo player, whom he asked to remain a armament member of the band after a successful performance at Carnegie Hall in 1947. 4. What was the Palladium? Answer: The Palladium was an old dance studio in midtown Manhattan that later became known as the home of Mambo. It was a major entertainment hub for Ambiances and their audiences. It was a place where people of all races, all cultures, and all classes could come together and Just dance. It has been referred to as the Madison Square Garden of its time and the beginning of true integration in New York City. 5. How did the television and films increase the exposure of the U. S. To Latin music?

Why Schools Need The Grading System Essays - Education Reform

Why Schools Need The Grading System C.D. 1/5/99 New School Policy Essay School Number (WHATEVER SCHOOL) is considering a new policy.Students will not receive grades in any classes.Before passing this policy,the principal wants to know how it will affect students.This new policy can have some good effects and bad effects.How would it affect teachers?How would it affect students who plan to go to collage?How would it affect students who usually get bad grades?All these things have to be taken into consideration.In the following paragraphs I will state what I think of this new policy. If students don't recieve grades,how would parents know how their son is doing.Students will not do their homework as much because they are not being graded,so why do it.Why study for tests if its not going to make a difference if you did?If the student needs extra help in a certain class,nobody would know.It would be completely changing hundreds of years of tradition.Grades and school go together to good to just break up the connection altogether.I think report cards are definately needed in schools. School relies on grades.Grades are needed to see what your good and bad in.If you want to be a scientist,you have to know if your good in it.You would also want to go to the right collage.Without grades,none of that is possible without confussion.Grades are useful in a variety of ways,not just to know how you are doing,but to know how others are doing.If you are a manager of a store,and you are looking for a cashier to hire,you don't want to hire anyone bad in math.You have to know what they are good at in order place them in a position.Grades can provide that type of information. Getting back to the point I made earlier,I strongly believe students will slack off on their homework and tests,because it just woulden't matter anymore.You could work on your homework for five hours,and do an extremly good job on it,and their just woulden't be that A+ to be proud of.So that student will eventually start slacking more and more off his homework.That will lead to failure in life.Grades are good for students who are doing bad,cause they can get the help they need to improve themselves.They can say,I got a F in math,I'll try my hardest to bring that grade up. I think grades are definatly needed in school.Without them,what ould school be for.It's a place where you to learn.Without grades,how will you prove you are learning.You go to school to see what you are good in to mabye make a career out of it.You won't know what you are good at,cause you can't prove yourself right.Their is nothing backing you up,or encouraging you to move on to a higher level on a subject.You won't even know how you are donig,cause you need to be tested and graded in order to find out. Acceptance Essays

Singin In the Rain essays

Singin In the Rain essays Singin In The Rain was one of AFIs top ten100 films and the best musical of the 20th century. The movie gives the audience the opportunity to take a light hearted and very often satirical look at the early days of talking pictures. There are many elements of film that make the movie musical Singin In The Rain great. What makes this movie stand out are the sound, especially the music; settings, costumes and make up; and the photography. The music of the film plays and important role because of course it is a musical. One of the songs that is most enjoyable is Good Mornin. The song starts after Cosmo (Donald OConnor) comes up with a proposal that will save Dons (Gene Kelly) movie. The suggestion was that Dons film should be reproduced into a musical. Kathy (Debbie Reynolds) looks at the calendar and begins the Good Mornin tune, because it is in fact a lovely mornin after the brilliant brainstorming that saved Don Lockwoods career. The film was about the 1920s, right before the first talkie film The Jazz Singer and the audiences demand for more talking pictures. The flappers, the cars, even the dull Hollywood parties give off the feeling that you are right there with the characters during the 1920s. The costumes were what gave the film age and set the time of the musical. The difficulties of early day talking picture productions were not exaggerated in the movie Singin In The Rain they showed all the efforts of directors to bring a perfect performance to the screen for the audience. The filming of the movie is spectacular. One of the most beautiful captured scenes was of Kathy (Reynolds) and Don (Kelly) when he crept her into a closed studio set. Kathy walked up top a ladder and Don turned on the large fan that blew through Kathys hair, shined light ...

Russian Revolution Timeline

Russian Revolution Timeline The Russian Revolution of 1917 deposed the czar and installed the Bolsheviks in power. After winning the civil war in Russia, the Bolsheviks established the Soviet Union in 1922. Timelines of the Russian Revolution are often confusing because up until February 1918 Russia used a different calendar than the rest of the Western world. The 19th century, the Julian calendar, used by Russia, was 12 days behind the Gregorian calendar (used by most of the Western world) until March 1, 1900, when it became 13 days behind. In this timeline, the dates are in the Julian Old Style, with the Gregorian New Style (NS) date in parentheses, until the change in 1918. Thereafter, all dates are in the Gregorian. Timeline of the Russian Revolution 1887 May 8 (May 20 NS) - Lenins brother, Alexander Ulyanov, is hanged for plotting to kill Czar Alexander III. 1894 October 20 (November 1 NS) - Czar Alexander III dies after a sudden illness and his son, Nicholas II, becomes the ruler of Russia.November 14 (November 26 NS) - Czar Nicholas II marries Alexandra Fedorovna. 1895 December 8 (December 20 NS) - Lenin is arrested, kept in solitary confinement for 13 months, and then exiled to Siberia for three years. 1896 May 14 (May 26 NS) - Nicholas II crowned czar of Russia. Print Collector/Getty Images / Getty Images 1903 July 17 - August 10 (July 30 - August 23 NS) - The Russian Social-Democratic Labor Party (RSDLP) meeting in which the Party splits into two factions: Mensheviks (minority) and Bolsheviks (majority). 1904 July 30 (August 12 NS) - After having four girls, Czarina Alexandra gives birth to a son, Alexei. 1905 January 9 (January 22 NS) - Bloody Sunday in St. Petersburg begins the 1905 Russian Revolution.October 17 (October 30 NS) - The October Manifesto, issued by Czar Nicholas II, brings an end to the 1905 Russian Revolution by promising civil liberties and an elected parliament (Duma). 1906 April 23 (May 6 NS) - A constitution (the Fundamental Laws of 1906) is created, reflecting the promises made in the October Manifesto. 1914 July 15 (July 28 NS) - World War I begins. 1915 September 5 (September 18 NS) - Czar Nicholas II assumes supreme command of the Russian Army. 1916 December 17 (December 30) - Rasputin is murdered. 1917 February 23-27 (March 8-12 NS) - The February Revolution begins with strikes, demonstrations, and mutinies in Petrograd (also called the March Revolution if following the Gregorian calendar).March 2 (March 15 NS) - Czar Nicholas II abdicates and includes his son. The following day, Nicholas brother, Mikhail announced his refusal to accept the throne. Provisional Government formed.April 3 (April 16 NS) - Lenin returns from exile and arrives in Petrograd via a sealed train.July 3-7 (July 16-20 NS) - The July Days begin in Petrograd with spontaneous protests against the Provisional Government; after the Bolsheviks unsuccessfully try to direct these protests into a coup, Lenin is forced into hiding.July 11 (July 24 NS) - Alexander Kerensky becomes Prime Minister of the Provisional Government.August 22-27 (September 4-9 NS) - The Kornilov Affair, a failed coup by General Lavr Kornilov, commander of the Russian Army.October 25 (November 7 NS) - The October Revolution - the Bolsheviks take over Petrograd (also called the November Revolution if following the Gregorian calendar). October 26 (November 8 NS) - The Winter Palace, the last holdout of the Provisional Government, is taken by the Bolsheviks; the Council of Peoples Commissars (abbreviated as Sovnarkom), led by Lenin, is now in control of Russia. 1918 February 1/14 - The new Bolshevik government converts Russia from the Julian to the Gregorian calendar turning February 1 into February 14.March 3 - The Treaty of Brest-Litovsk, between Germany and Russia, is signed and takes Russia out of World War I.March 8 - The Bolshevik Party changes its name to the Communist Party.March 11 - The capital of Russia is changed from St. Petersburg to Moscow.June - Russian civil war begins.July 17 - Czar Nicholas II and his family are executed.August 30 - An assassination attempt leaves Lenin seriously wounded. Heritage Images / Getty Images 1920 November - Russian civil war ends. 1922 April 3 - Stalin is appointed General Secretary.May 26 - Lenin suffers his first stroke.December 15 - Lenin suffers his second stroke and retires from politics.December 30 - The Union of Soviet Socialist Republics (U.S.S.R.) established. 1924 January 21 - Lenin dies; Stalin will become his successor. Laski Diffusion / Getty Images

Summary of How diversity works Essay Example | Topics and Well Written Essays - 500 words

Summary of How diversity works - Essay Example It has been shown to be crucial in enhancing creativity. It also gives rise to more information and perspectives and hence proper decision making and solution to the problems. Likewise, diversity has been shown to help one change ways of thinking. There are various ways in which diversity is linked to information and innovation. This is seen as different people are brought together. Such people bring different things like information, ideas, and perspectives. It is noted that people differing in terms of issues such as race and gender when brought together bring with them unique information and knowledge. The attributes help in solving a task at hand or easy achievement of the goal. The diversity of gender and racial has been shown through research to enhance innovation and a hence boost of various organizations. Secondly, diversity is shown to have an effect on studies and education. Concern for diversity in this area has been based on productivity and equity. As it exists, gender and culture is said to have a significant influence on science. The influence is seen on what one chooses to study. For example, the male and females may choose to take a different direction of a particular study to generate results that are favorable to their view. Culture, on the other hand, may take a different approach to particular study. The result is good as it led to the development of different insight in a particular field of study. Thirdly, diversity has been shown to lead to an exchange of a wider range of information. Social diversity is said to increased difference in perspective. Members that are less diverse are more likely to agree as compared to socially diverse people. The disagreement in diverse people makes members work hard both cognitively and socially to build a consensus at ease. Such level of concentration has shown to lead to better results. Diversity is also seen in the field of science. Opening science to public participation has led

A self assessment on intercultural negotiating skills Essay

A self assessment on intercultural negotiating skills - Essay Example There are different communication styles that can be used and these will be outlined in the paper. Characteristics of a good intercultural negotiator Cross culture communication and negotiation mainly involve people from different cultural backgrounds and this has a bearing on the way they communicate. The culture of different people shape the way people communicate and exchange ideas (Fujio, 2004). According to Armstrong (1994), culture in the organization refers to shared beliefs, values, attitudes as well as assumptions which shape their behaviour as well as the way they view different things around them. All the people in the organization have shared beliefs as well as values. Dbhaibo & Harb (2010) suggest that the way people communicate and behave is shaped by their cultural values. Hofstede’s framework of cultural diversity mainly influences different types of studies that are related to cross cultural communication and management which include the following four dimensi ons of national culture: â€Å"individualism versus collectivism, power distance which is concerned with how power is distributed, uncertainty avoidance which talks about how uncertainty is found to be uncomfortable, quality versus quantity of life† (Robbins, 1993, p. 75). In order for a person to be a good intercultural negotiator, there are many issues that should be considered by the people involved. In case of a distributive type of negotiation, a good intercultural negotiator attempts to discover the other person’s BATNA. The person who suggests a strong offer is likely to achieve positive results as a result of the fact that the other person is likely to concede certain instances (Thompson 2005). The use of statements or questions is also very important since it helps to establish the quality of the relationship that may exist between the two negotiators involved. Thus, a good intercultural negotiator should establish how the other person communicates as well as to try to establish the relationship that exists between parties involved. The other important factor that should be taken into account about what makes a good intercultural negotiator is to try to differentiate between Utilitarian Discourse System (UDS) which is about the message itself and the Confucian Discourse System (CDS) which is concerned about the quality of relationship that exist between the two people communicating with each other. For instance, the Americans prefer the UDS system when negotiating while the Japanese or Chinese prefer CDS. According to a study conducted by Misa Fujio (2004) entitled â€Å"Silence during intercultural communication: a case study,† it can be noted that styles of communication between the people involved in the communication process differ as a result of the fact that they have different cultures. Silence is used as a way of communication by the Japanese this is a different case with the Americans who do not use silence as part of the ir communication process. In order to avoid unnecessary frustration, a good intercultural negotiator must establish the way another person communicates so as to be able to exchange meaningful ideas. Lin & Miller (2003) suggest that negotiation approach is influenced by factors which include national culture, commitment as well as the quality of relationship that exist between the two. For example, the â€Å"Chinese emphasise on collectivism while the Americans focus on individualism (Hsu, 1985 as cited in Lin and Miller, 2003). A good

Nha trang station Essay Example for Free

Nha trang station Essay ?Unfortunately, at the time when the train came at nha trang station, its machinery was damaged. All of passengers on board received notice from the commander of the train is to stay in this city 2 days for them to repair machinery because no train to replace. Staffs at station guided passengers on board to the hotel to rest. Fortunately, I was visited one more a beautiful beach city on my travelling. First day, I woke up early and explored this city on the map. My family decided to travel by self-sufficiency. I went a round the city to watching the beach, it was so pretty and agreeable with fresh sea atmosphere, cool. The people are also very friendly and welcoming when I asked for directions or tourist places, even they willing take my family to tourist place and eating. My family started to go around to visit these beautiful islands by boat. I was so excited to be sitting on the boat for travel around of the islands. I was feeling like I mixed with the nature. Finally my family decided to stop one islands nearby for swimming and eating. An island was very beautiful with caves was created by natural. I went to swim and have fun with my family. I participated in these games service on the island such as diving or Jet Ski and eat seafood with my family on the coast. The whole day for swimming on the island, my family was so tired when we came back to the hotel. At night on this beach city was so dreamy with a lot of colorful brilliant. Everybody came to the coast for relaxing with the cool air, coffee, dinning and sing a song. I walk to coffee shop near the hotel to sit and watch the beach and living of the people present at night while my family was resting at the hotel. Nightlife here is very lively and fun. After that I returned to take a rest at my hotel. A second day, my family took a tour to seafood super market, temple, and some nice place. In the afternoon, my family came to the train station for continuing the journey to Hanoi.

Leader Characteristics Essay -- Sociology Leadership Leader Management

Leader Characteristics Charismatic leadership is one of four subdivisions of the larger concept of transformational leadership (Bass, 1990). Charismatic leaders are self-confident, dominant, purposeful, articulate, influential, idealistic, and expressive. They have high energy levels, strong convictions, the ability to display empathy, and are risk takers (Bass, 1990). By stimulating "ailing corporations, revitalizing aging bureaucracies or launching new enterprises" (Howell and Avolio, 1995), charismatic leaders demonstrate how truly effective they can be. These leaders are often described as visionaries, with a strong sense of the future and a passion for their vision. They are able to achieve the vision by developing strategies to accomplish the long term goals associated with the vision. Expressiveness is an important quality in charismatic leaders. Charismatic leaders can utilize nonverbal cues "to move, inspire, or captivate others" (quoted in Bass, 1990). According to Bass (1990) the charismatic's "tone of voice is engaging and captivating, and their facial expressions are animated." Charismatics must convey an aura of complete self-confidence. This self-confidence enables them to become "larger than life" (Bass, 1990) in the eyes of their followers. Another quality attributed to charismatics is eloquence. In order to reach the audience, he must possess the ability to speak directly to them. The message has to reach the audience in a fundamental way, a way which addresses their needs. High energy levels are necessary for a charismatic to be successful. This allows the leader to "relentlessly promote their beliefs with boundless energy" (Howell and Avolio, 1995). Bass (1990) also notes that charismatic leaders are s... ...ion. These leaders have great power over there followers and it is not always positive, as evidenced by many of the charismatic leaders seen in history. References Bass, Bernard M. Bass. (1990). Bass & Stogdill's handbook of leadership: Theory, research, and managerial applications (3rd ed). New York: The Free Press. Howell, Jane M., & Avolio, Bruce J. (1995). Charismatic leadership: Submission or Liberation? Business Quarterly. 60, 62-70. Mirriam-Webster Dictionary. (1997). Springfield, MA: Mirriam-Webster. Nur, Yusuf Ahmed. (1998). Charisma and managerial leadership: The gift that never was. Business Horizons, 41(4), 19-26. Pillai, Rajnandini, Schriesheim, Chester A., & Williams, Eric S. (1999). Fairness perceptions and trust as mediators for transformational and transactional leadership: A two-sample study. Journal of Management. 25(6), 897-933.

Commercial Vehicle Market in India

2010 Commercial Vehicle Market in India-Industry Report Commercial Vehicle Market in India-Industry Report Table of Contents Executive Summary3 Usage Segment6 Market share & Competition Situation8 Key Opportunities14 Key Success factors15 Financial Analysis17 Regulatory Advantage & legal frameworks22 Recent Mergers & Acquisitions26 Industry SWOT27 Market forecast with Macroeconomic assumptions28 PEST Analysis30 Annexure32 List of Industry Associations32 Executive SummaryIndia being the second most populated and seventh largest nation in the world provides a vast and untapped market for automobile giants. The de-licensing in 1991 provided the well-deserved growth essentials, which attracted international automobile majors to set up their production facilities in the country to take advantage of various facilities available. According to my research, the economic slowdown has had moderate negative effects on commercial vehicle market. The slowdown of commercial activities i n infrastructure, construction, manufacturing and other sectors resulted in sluggish demand for commercial vehicles.However, in 2009-10, the commercial vehicle segment regained its growth momentum, both in terms of production and sales, on the strong fundamentals of recuperating demand from almost all prominent sectors. Especially, passenger carriers registered notable sales momentum and boosted the overall commercial vehicle development outlook. In coming years, rapid expansion of cities to suburban areas will also create more demand for mass transportation vehicles in the country. It is expected that a major part of India will be well connected by 2013-14, which will fuel the demand for commercial passenger carriers in the country.Keeping this in mind, we have projected the sales of commercial passenger carriers to register nearly 13% CAGR between 2010-11 and 2013-14. On utility vehicle front, the country posted one of the fastest year-on-year production growths in 2009-10. In 200 8-09, manufacturers were forced to halt their production capacity amid falling domestic and export demand for utility vehicles. Consequently, the production saw a massive 11% drop in the same year. With recovering vehicle demand from schools, corporates and public sector organizations, the production grew strongly at the rate of 24. % in 2009-10. We anticipate this trend to continue in coming years also, thus enabling the country to become a dominant utility vehicle player in global arena. This report is an outcome of extensive research and objective analysis on Utility Vehicle, Multipurpose Vehicle and Commercial Vehicle markets in India. The report provides detailed data and statistics on production, sales and export trends for each of the abovementioned market segment. It studies all the past and present trends prevailing in the market to give the future market outlook.Industry in India ———————————â€⠀Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€- KEY POINTS 1. ————————————————- Automobile production and sales went up in 2007-08 as compared to 2002-03. 2. ————————————————- They reached a peak in 2009-10 3. ————————————————- Sales of commercial vehicles are growing day by day due to the growing construction industry and commercial developments and many other conditions such as growing urbanization. ———————————————— ————————————————- KEY POINT S 4. ————————————————- Automobile production and sales went up in 2007-08 as compared to 2002-03. 5. ————————————————- They reached a peak in 2009-10 6. ————————————————- Sales of commercial vehicles are growing day by day due to the growing construction industry and commercial developments and many other conditions such as growing urbanization. ———————————————— High economic growth of India has worked wonders for most of its industries. With advantages like low labor costs, easy availability of raw materials and well qualified employees, Indi a has established many industries thereby marking the beginning of an era of rapid industrialization. This has led to the increase in employment rate and income levels, giving rise to a more affluent middle class in the country, which serves as an active consumer base for most of the industries, including the automobile industry.India opened its automobile industry to global players with the de-licensing of the industry in 1991. As a result, automobile production and sales went up strongly in 2007-08 from 2002-03 levels. Even amid global economic slowdown, the industry was able to sustain its positive growth momentum. Moreover, in 2009-10 automobile production and sales surged phenomenally and India emerged as a potential competitor of the largest automobile markets such as China and Japan. Sales of commercial vehicles, particularly light commercial goods carriers are touching new heights, both in domestic and export markets.The growing construction industry and commercial developme nts have opened new vistas for light commercial goods carriers. But medium and heavy commercial vehicles will also see high demand in the domestic market due to infrastructure development like hydro power projects, port development and mining industry. Commercial passenger vehicles will also hit the peak due to increasing urbanization and growing need to commute from rural and sub-urban areas to industrial areas for work. All these are creating suitable conditions for India to emerge as an automobile production hub in the future.The sectors which have major contribution in LCV sales in the country are expected to see sustained capital expenditure in coming years. For instance, the organized retail sector which is growing at an annual pace of 30% is highly untapped and the players are planning to aggressively increase their presence in Tier-2 and Tier-3 cities. This will further boost the demand of commercial vehicles as they are largely deployed in redistribution of consumption good s. Usage Segment * Transport operators: This segment includes all fleet operators and owner-operators.There are around 200,000 road transport operators in India. However, most of them are small owner-driven firms. Road freight transportation is highly fragmented with the truck operators owning less than five trucks estimated to account for over 75% of the truck fleet. It is estimated that 77% of truck fleet is under operators who own 5 trucks or less; 10% belonged to those with 6-10 trucks; 4% belonged to those with 11-15 trucks; 3% belonged to those with 16-20 trucks; and only 4% of fleet belonged to those with more than 20 trucks. Thus, the industry is characterised by intense competition.The high competition is the result of relatively lower capital requirement, ease of obtaining driving licenses and permits. The small operators are involved mainly in the physical movement of goods and depend on brokers and other fleet operators who in turn depend on the booking agents for obtain ing business. These operators do not have the geographical reach and necessary infrastructure to tap business on a continuous basis, and thus rely on brokers. Fleet operators are the medium and large, organised-sector players in the transportation industry. The arge fleet operators are small in number, and generally operate throughout the country. These fleet operators primarily work on a hub and spoke model. The hub and spoke distribution system enables optimisation of costs and higher revenues for the transport companies/ fleet operators. These transport companies generally have formal contracts with the users, which is very rare in the case of small operators. Some larger fleet operators have ventured into offering value-added services such as courier and express cargo business and providing third party logistic services. Companies: This segment accounts for a small proportion of CV sales. Some companies located in industrial areas use these vehicles primarily for employee and ma terial transportation while a few companies use them for secondary distribution of the goods from warehouses to distributors, such as wholesalers and retailers. * Government organisations: The vehicle purchases made by municipal authorities, State transport undertakings, and various other Government departments primarily include LCVs and special application vehicles. Private bus operators: There has been a significant increase in the number of private bus operators in the country as State transport undertakings have proved inadequate in meeting the increasing demand for transportation. These vehicles are used as passenger carriers or chartered buses. ————————————————- ————————————————- Key points ————————â⠂¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€- ————————————————- Key points ————————————————- Zzzzzzzzzz ————————————————- Yyyyyyyyyyyyyy ———————————————— Key points ————————————————- Zzzzzzzzzz ————————————————- Yyyyyyyyyyyyyy ——————————à ¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€- Key points Market Structure & Segmentation ————————————————- Enter key points: ————————————————- Enter key points: The commercial vehicle market can be divided into four segments: 1. Segment A-High performance and image sensitive- The consumers in segment A are brand conscious and are willing to pay any price for that brand.But, they usually don’t compromise on quality. However, that doesn’t means they are loyal to one brand. To target such type of consumers, companies have to concentrate on performance as the main criteria. 2. Segment B-Balanced perspective-The consumers in segment B are the most difficult ones to please. They want both price and performance rolled into one product. To target suc h type of consumers, companies have to concentrate on delivering high performance at the best prices. Hence, they have to keep their operating costs to a minimum. 3. Segment C-ROI and quick payback period sensitive- .Segment D-Extremely price sensitive-The consumers in segment D want a product at an economical price and for this, they are ready to compromise on performance if they are offered a good price. To target such type of consumers, companies have to design products keeping costs at a minimum even if that means a medium or low performance but the main criteria is that price should be the best in the industry. Market share & Competition Situation The following are the main players in the Production of Commercial Vehicles in India; * Ashok Leyland Ltd. * Hindustan Motors Ltd. * Telco Force motors Ltd. ( Previously known as Bajaj Tempo Ltd) * Eicher Motors Ltd. * Mahindra & Mahindra Ltd. * Swaraj Mazda Ltd. * Tata Motors * Ashok Leyland Ashok Leyland Ashok Leyland is one of the biggest players in the Production of Commercial Vehicles in India. Ashok Leyland is one of the oldest automotive company of India. It was set up in 1948 in Madras (now called Chennai) to assemble Austin cars. However, the company's future changed after British Leyland made equity participation. Hence the company became Ashok Leyland in 1955 and started the Production of Commercial Vehicles.They offer a wide range of in Heavy and Light Commercial Vehicles varying from buses, trucks, engines to special application vehicles. They were the first company in the history of Indian to win the ISO 9002 Certification in 1993. Again it became the first Indian company to receive ISO/TS 16949 Corporate Certification. Their global ambition is very simple, it is; Global Standards, Global Markets. Hindustan Motors Ltd Hindustan Motors Ltd is one of the oldest car manufacturing company of India. It was founded in 1942. It manufactures a wide range of vehicles from cars to trucks to school bu ses to trekker to porter.However, it is more popular for one of its particular car model called the Ambassador. But, at the same time it does manufacture a lot of Commercial Vehicles as well. It was one of the leading players in cars till the early 80's but could not maintain its position after globalization came into effect and the markets were opened. It has its manufacturing plants in Uttarpara- West Bengal, Pithampur- Madhya Pradesh, Thiruvallur- Tamil Nadu and Hosur- Tamil Nadu. Telco Telco deals with Heavy Commercial Vehicles, Light Commercial Vehicles, Multi-Utility Vehicles etc.Telco was set up in 1945 to manufacture steam locomotives. Now it's the largest private sector company in Commercial Vehicle manufacturing. The four manufacturing plants of Telco are located in Jamshedpur in Jharkand, Pimpri and Chinchwad in Pune ( Maharashtra) and Lucknow in Uttar Pradesh. It has a market share of 31. 2% in Multi Utility Vehicle Segment. Force motors Ltd. (Previously known as Bajaj T empo Ltd) Force motors Ltd. (Previously known as Bajaj Tempo Ltd) is a promising company in the Commercial Vehicle segment. The company is now working on the project of introducing state-of-the-art range of trucks.The company has different technological collaboration with many international giants. Hence, it has an upper edge with new and modern technology. They are also working on eco friendly CNG bus engines. They are the only company to have a full range of Commercial Load carrying vehicles. Eicher Motors Ltd. Eicher Motors Ltd. deals with the manufacturing of Commercial Vehicles. They mainly deal with buses, trucks and chassis. These products comply with all the specifications of BS II norms. Its CNG Technology is also known to be the very best in the market. Mahindra ;amp; Mahindra Ltd.Mahindra ;amp; Mahindra Ltd. has a hugh Indian market with Multi Utility Vehicles. It was originally set up in 1945 to cater to general purpose utility vehicles. However, today it is one of the t op five manufacturers of tractors in the world. Swaraj Mazda Ltd. Swaraj Mazda Ltd. deals with the manufacturing of Light Commercial Vehicles. They mostly manufacture buses, trucks, police personnel carrier, ambulance, water tankers and special vehicles. The company was formed in 1983 and production started from 1985. Tata Motors Tata Motors is one of the most important fore runners of the Indian automobile industry.They believe in focus and state-of-the-art facilities. They probably have the best infrastructure required for the assurance of manufacturing quality vehicles. They deal with M;amp;H Commercial Vehicles, Intermediate Commercial Vehicles, Light Commercial Vehicles, Small Commercial Vehicles, Utility Vehicles Etc. In the Commercial Vehicles segment, they mostly manufacture buses and trucks. They even have a good range of passenger vehicles as well. Market Share of Major Players: The Commercial Vehicle Market is divided into following categories: 1. Light Commercial Vehicle s 2. Heavy Commercial Vehicles 3.Medium Commercial Vehicles Table 1-Market share of different players in commercial vehicle industry Type of Vehicle| TATA| Ashok Leyland| Mahindra| Eicher Motors| Force Motors| Swaraj Mazda| HindustanMotors| Volvo| Tatra| Trucks| 64%| 24%| -| 8%| -| 3%| -| ;lt;1%| ;lt;1%| Buses| 40%| 30%| 7%| 5%| 10%| 6%| 1%| 1%| -| Temposand Lorries| 59%| ;lt;1%| 32%| 4%| 3%| 3%| ;lt;1%| -| -| In the MHCV goods carrier segment, TML is the market leader with a 68% share in 9MFY2010, which represents a sharp increase from 63% in FY2008. While new players have entered the MHCV segment, some of them have limited their presence to niche segments—e. . VIL in the higher tonnage RV and HT segment; Tatra in the higher tonnage RV segment. Although the competitive intensity has increased with the entry of new players, TML and ALL continue to dominate on account of established product performance, strong brands and customer support, wide servicing network and availabilit y of spares (ease of servicing). Although TML and ALL dominate nearly all sub-segments in MHCV goods carriers market, EML has a strong presence in the 7. 5-12 tonnes segment, with a market share of 39% in 9MFY2010. However, while EML’s market share in the 7. -12 tonnes segment has declined from 53% in FY2003, TML’s market share has increased from 27% to 47% in 9MFY2010. ————————————————- Enter key points ————————————————- Enter key points Key Drivers 1. Strong economic growth- A revival of economic reforms and better economic policy in first decade of the 21st century accelerated India's economic growth rate. The Gross Domestic Product (GDP) in India expanded at an annual rate of 8. 80 percent in the last reported quarter. From 2004 until 2010, Indi a's average quarterly GDP Growth was 8. 37 percent reaching an historical high of 10. 0 percent in September of 2006 and a record low of 5. 50 percent in December of 2004. The economy has posted an average growth rate of more than 7% in the decade since 1997, reducing poverty by about 10 percentage points. In recent years, Indian cities have continued to liberalize business regulations. By 2008, India had established itself as the world's second-fastest growing major economy. Economists predict that by 2020, India will be among the leading economies of the world. According to the BRIC report, published by Goldman Sachs, India will be the second largest economy after China by 2043. . Robust industrial growth -The industrial sector is one of the main sectors that contribute to the Indian GDP. The country ranks fourteenth in the factory output in the world. The industrial sector is made up of manufacturing, mining and quarrying, and electricity, water supply, and gas sectors. The indus trial sector accounts for around 27. 6% of the India GDP and it employs over 17% of the total workforce in the country. 3. Low interest rates –Although the interest rate has been a little high this year, it has been around 6. 0% on an average for the past 5 years which has boosted trade. 4. Road and Infrastructure development -The most distinct part of India’s physical infrastructure development in recent years is the development of road network across the country; per sq. km. of surface area in India is now endowed with one km of roadways. India has one of the largest road networks in the world, aggregating to 3. 34 million km. The country’s road network consists of Expressways, National Highways, State Highways, Major District Roads, Other District Roads and Village Roads.The road network, as on December 2007, comprises 66,590 km of National Highways, 128,000 km of State Highways, 470,000 km of Major District Roads and about 2. 65 million km of other District and Rural Roads. The National Highways Development Project (NHDP), the largest highway project ever undertaken by the country, is being implemented by the National Highway Authority of India (NHAI). NHDP Phase I ;amp; II envisage 4/6 laning of about 14,279 km of National Highways, at a total estimated cost of Rs. 650 million (at 2004 prices).These two phases 109 comprise of Golden Quadrilateral (GQ), North-South and East-West Corridors, Port Connectivity and other projects. The Golden Quadrilateral (GQ-5,846 km) connects the four major cities of Delhi, Mumbai, Chennai and Kolkata. The North-South and East-West Corridors (NS-EW-7,300 km) connect Srinagar in the North to Kanyakumari in the South, including spur from Salem to Kochi and Silchar in the East to Porbandar in the West. 5. Good Agricultural production -Today, India ranks second worldwide in farm output. Agriculture and allied sectors like forestry and logging accounted for 16. % of the GDP in 2007, employed 52% of the total workforce and despite a steady decline of its share in the GDP, is still the largest economic sector and plays a significant role in the overall socio-economic development of India. India is the largest producer in the world of fresh fruit, anise, fennel, badian, coriander, tropical fresh fruit, jute, pigeon peas, pulses, spices, millets, castor oil seed, sesame seeds, safflower seeds, lemons, limes, cow's milk, dry chillies and peppers, chick peas, cashew nuts, okra, ginger, turmeric guavas, mangoes, goat milk and buffalo milk and meat.It also has the world's largest cattle population (281 million). It is the second largest producer of cashews, cabbages, cotton seed and lint, fresh vegetables, garlic, egg plant, goat meat, silk, nutmeg. mace, cardamom, onions, wheat, rice, sugarcane, lentil, dry beans, groundnut, tea, green peas, cauliflowers, potatoes, pumpkins, squashes, gourds and inland fish. It is the third largest producer of tobacco, sorghum, rapeseed, coconuts, hen's eggs a nd tomatoes. India accounts for 10% of the world fruit production with first rank in the production of mangoes, papaya, banana and sapota. 6.Good replacement demand- There has been good replacement demand recently for commercial vehicles. Decisions about replacing vehicles are relatively complicated: people compare the transportation services they get from their present vehicle and the costs associated with running it, with the services they could get from another vehicle, given the costs of buying and selling vehicles and of running the new one. Replacement decisions are also affected by developments in the used-vehicle market: when people replace vehicles, they may buy either new or used, and they very often sell a vehicle on the used-vehicle market when they acquire another.Thus, although only production and sales of new vehicles affect the industry’s contribution to GDP, demand for new vehicles is influenced by prices, quantities, and qualities in the used-vehicle market. Key Challenges / Barriers 1. Increasing Competition and WTO Regime 2. Cyclicality of businesses 3. Increasing Customisation and Application Profileration-While the earlier paradigm aimed at meeting the needs of segments of consumers, the new paradigm treats every customer as unique.The development of technology has made it possible to address the needs of individual customers, the day may not be very far off when a customer wanting to buy a toilet soap may have to put his/her hand into a scanner which will sense the skin complexion and pop out a pouch of liquid soap that is ideally formulated to suit his/her skin. Also, innovation is more than creativity; it is the commercial realization of creativity. Consumers like what they have but also crave change. The word â€Å"New, Improved, Better† can influence the customer preference.Innovation is the life blood of Marketing. Creative ideas are valuable but the greater part is harnessing them to profitable productive change. 4. C ompetition from alternative modes- The alternative modes of transport are the telecom, air and port services. These services have grown exponentially as compared to the traditional commercial vehicle sector. Container port traffic has increased from less than a million in 1991 to about 5 million in 2005 with an annual growth rate of about 266 percent since 1991.Also, the increase in air freight and air transport has been around 15% whereas the increase in fixed line and mobile phone subscribers has been around 150% from 1991-2005. 5. Stiff Emission and other Regulatory Changes- The emission norms have become really strict these days. From the earlier emission norms of Euro 3 in metro cities and Euro 2 in rest of the country, the automobile companies have to ensure that the automobiles produced in or after 2009-10 adhere to Euro 4 in metro cities and Euro 3 in rest of the country. 6. Operating Cost Pressures 7.Increased Customer Awareness- In the 21st century, the customer has become very aware due to the various sources of information available to him. Now, it is very difficult to fool the customer as he can get the full information with the click of a button. Hence, companies have to keep the customer needs in mind while designing a product. 8. Accelerated Technology upgradation requirements and other change needs Key Opportunities Enter key points Enter key points †¢ Vibrant Indian Economy †¢ Automotive Industry showing double digit growth in all segments †¢ Growing engineering and IT capability for manufacturing Auto Component Industry :Culturally compatible-Quality, Experience and Values Key Success factors * Ability to enhance and vary product mix – A diverse and broad product mix enables a manufacturer to serve a wide variety of transportation solutions across different load levels. * Sales and distribution service network * Balance between outsourcing and in-house production * Quality: A company must have good quality product to ga in a customer trust. This would also help in building long term relationship with the consumer and also gain viral marketing. Environment: A company need to adapt to the surrounding environment and must act in a way to improve and sustain environment around it. ————————————————- Enter key points: ————————————————- 1 ————————————————- 2 ————————————————- 3 ————————————————- Enter key points: —————â⠂¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€- 1 ————————————————- 2 ————————————————- 3 Enter key pointsEnter key points Market Entry Strategy * Collaboration for Manufacturing Excellence and Process Design * Production Sharing in India & Europe for a Holistic Service Capability * Partnering for Global Requirements * Merger & Acquisition * Establish JV ————————————————- Enter key points: ————————————————- 1 ———————————à ¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€Ã¢â‚¬â€- 2 ————————————————- 3 ————————————————- Enter key points: ————————————————- 1 ———————————————— 2 ————————————————- 3 Financial Analysis Commercial Vehicles- Recent Trends During FY2004-07, CV sales volumes growth in the domestic market had been healthy led by buoyant economic activity, easy access to finance, entry of new truck financing companies, increased momentum in highway construction, b etter operating economics of new trucks, and a Supreme Court (SC) order prohibiting overloading of trucks. However, continued hardening of interest rates and a slowdown in economic activity has impacted CV sales volumes since FY2008.Since mid-2008, domestic CV sales volumes have declined significantly because of an economic slowdown, slowdown in index of industrial production (IIP), tighter credit conditions and constraints in the availability of vehicle finance from banks and non-banking finance companies (NBFCs). Though in-house vehicle financing of major manufacturers has increased, the additional credit flow was unable to fully offset the decrease in credit availability from outside sources. As compared with a year on year (yoy) growth of 9. 2% in Q1FY2009, domestic CV sales declined 1. 8% (yoy) during Q2FY2009, and by a sharp rate of 47. % (yoy) in Q3FY2009, and 35. 7% (yoy) in Q4FY2009. The rate of decline was lower at 12. 1% (yoy) in Q1FY2010 primarily because of 16% (yoy) gr owth in LCV segment. A significant proportion of trucks are purchased by small truck operators in the unorganised sector, who may have to pay a relatively higher rate of interest as compared with large-fleet operators, and are more vulnerable to interest rate fluctuations and slowdown in economic activity. Production: The Indian automobile sector, described as the sun rise sector, had been growing at a healthy double digit rate till 2006-07.However, it witnessed a downturn during the later half of 2007-08 and 2008-09 due to global economic slowdown. To tide over the situation, the Government of India took immediate remedial action and announced three stimulus packages. As a result of this, the overall position has improved since July, 2009 onwards. In the year 2008-09 the industry witnessed a modest growth in production at 2. 96% over 2007-08. In the year 2009-10 (April 2009 to December, 2009), passenger vehicle segment, two-wheeler segment, three-wheeler segment and commercial vehi cle segment have all recorded a growth of 24. 55%, 19. 0%, 16. 04% and 15. 10% respectively over the corresponding period last year (CLPY). The details of actual production of various automobile segments during the year 2006-07 to 2009-10 (upto December, 2009) are given below: ————————————————- [Type a quote from the document or the summary of an interesting point. You can position the text box anywhere in the document. Use the Text Box Tools tab to change the formatting of the pull quote text box. ] ————————————————- [Type a quote from the document or the summary of an interesting point.You can position the text box anywhere in the document. Use the Text Box Tools tab to change the formatting of the pull quote text box. ] Automobile Production Trends: Segment| 2 006-07| 2007-08| 2008-09| 2009-10| Passenger Vehicles| 1,545,223| 1,777,583| 1,838,593| 2,351,240| Commercial Vehicles| 519,282| 549,006| 416,870| 566,608| Three Wheelers| 556,126| 500,660| 497,020| 619,093| Two Wheelers| 8,466,666| 8,026,681| 8,419,792| 10,512,889| Total| 11,087,997| 10,853,930| 11,172,275| 14,049,830| Table 2-Automobile Production Trends Exports:The period from April-December 2009 saw growth in automobile exports sliding sharply to 10. 4% (yoy) with deceleration in almost all segments. Although CV exports declined 14. 6% (yoy) in 9MFY2010, the decline was lower than the decline of 28% (yoy) in FY2009. CVs and 3Ws segments recorded declines of 14. 6% (yoy) and 1. 9% (yoy) respectively during 9MFY2010. Although exports of 4Ws increased at a high rate of 30% (yoy) in 9MFY2010, this represented a decline from the high rate of 54% in FY2009. 2W export growth slid from 22. 5% (yoy) in FY2009 to 7. % (yoy) in 9MFY2010 attributable to a sharp decline in growth of motorcyc le exports. Although export growth has decelerated sharply in 9MFY2010, there has been a recovery in Q3FY2010 attributable partly to the base effect. The key reason for the decline in export growth was the fall in auto sales especially the CVs in the major destination markets of Asia, Africa, US, and Europe. Automobile Exports Trends Segment| 2006-07| 2007-08| 2008-09| 2009-10| Passenger Vehicles| 198,452| 218,401| 335,729| 446,146| Commercial Vehicles| 49,537| 58,994| 42,625| 45,007|Three Wheelers| 143,896| 141,225| 148,066| 173,282| Two Wheelers| 619,644| 819,713| 1,004,174| 1,140,184| Total| 1,011,529| 1,238,333| 1,530,594| 1,804,619| Table 3-Automobile Exports Trends Figure 1-Monthly Exports of Commercial Vehicles The exports of CVs which were growing till FY2008, registered a decline in early FY2009, though there was minor recovery in Q2FY2009, due to the growth in LCVs exports but that was also short-lived. The rate of decline was lower in Q2FY2010, and subsequently CV exports increased 50% (yoy) in Q3FY2010. However, this was largely due to the base effect.CVs segment was the worst hit by the economic downturn in the American and European countries, but the decline after peaking in Q3FY2009, has been showing some signs of recovery. Evidence for the US and Canada suggests that the sharp reduction in CV sales since mid-2008 has been magnified by the lack of access to credit, leading many firms to postpone their CV purchases. This implies that continued improvement in financial market conditions could provide an impetus to CV sales. Domestic Sales: Overall production growth declined from 0% (yoy) in Q2FY2009 to sharp declines of 50. % (yoy) in Q3FY2009, and 43. 5% (yoy) in Q4FY2009. However, production declined at a lower rate of 19. 5% (yoy) in Q1FY2010, because of recovery in LCV production. MHCV production continued to decline at a high, albeit lower rate through Q2FY2010. Overall CV production actually increased 4. 4% (yoy) in Q2FY2010, followed by an exceptionally high increase of 95. 4% (yoy) in Q3FY2010, albeit on a low base. Domestic MHCV sales increased at a 3-year CAGR of 10. 4% to 270,994 units during FY2008, followed by sharp declines thereafter till Q1FY2010. The less than 3. tonnes category is the largest segment, accounting for 84% of domestic goods LCV sales in 9MFY2010. This segment has reported very high growth rate during FY2005-08, primarily because of the superior price-performance ratio, and the launch of ACE by Tata Motors Ltd. (TML). The LCV segment is dominated by TML and the high growth in goods carrier segment during the last few years has been driven by the launch of Tata Motors’ 207DI (a 2-tonne pick-up vehicle), which enabled the company to strengthen its presence in this segment. During FY2006-07, growth was driven by the launch by TML of a mini-truck—the TATA ACE (with a GVW of 1. 5 tonnes). Since FY2006, the demand growth for this LCV goods carrier has been higher than other sub-segments , driven by the trend of increase in consumption of consumer goods and durables in smaller cities/towns and restrictions on goods movement by bigger vehicles in metros/bigger cities especially during daytime. The increasing popularity of the lower tonnage LCVs can be attributed to the increasing distribution of goods inside Indian towns and villages that need small vehicles because of disaggregated nature of freight generation and narrow roads.The increasing popularity of door-to-door service has contributed to the growth of LCVs in the recent past. As these vehicles have relatively lower acquisition costs, the fleet operators may prefer them to carry small cargo. The corporates not only look for speedy, reliable, door- to- door services, but also for a complete logistic solution that minimises the costs of transport, logistics and inventory. With the share of the high value consumer goods (which call for timely transportation and better handling) increasing, lower tonnage LCVs are expected to witness higher growth in the medium-term.Automobile Domestic Sales Trends Table 4 –Automobile Domestic Sales Trends Segment| 2006-07| 2007-08| 2008-09| 2009-10| Passenger Vehicles| 1,379,979| 1,549,882| 1,552,703| 1,949,776| Commercial Vehicles| 467,765| 490,494| 384,194| 531,395| Three Wheelers| 403,910| 360,781| 349,727| 440,368| Two Wheelers| 7,872,334| 7,249,278| 7,437,619| 9,371,231| Total| 10,123,988| 9,654,435| 9,724,243| 12,292,770| Figure 2-Monthly Domestic Sales of Commercial VehiclesRegulatory Advantage & legal frameworks In India the Rules and Regulations related to driving license, registration of motor vehicles, control of traffic, construction & maintenance of motor vehicles etc are governed by the Motor Vehicles Act 1988 (MVA) and the Central Motor Vehicles rules 1989 (CMVR). The Ministry of Shipping, Road Transport & Highways (MoSRT&H) acts as a nodal agency for formulation and implementation of various provisions of the Motor Vehi cle Act and CMVR.Figure 4 –Regulatory Framework of Indian Automobile Industry In order to involve all stake holders in regulation formulation, MoSRT&H has constituted two Committees to deliberate and advise Ministry on issues relating to Safety and Emission Regulations, namely – * CMVR- Technical Standing Committee (CMVR-TSC) * Standing Committee on Implementation of Emission Legislation (SCOE) CMVR- Technical Standing Committee (CMVR-TSC) – This Committee advises MoSRT&H on various technical aspects related to CMVR.This Committee has representatives from various organisations namely; Ministry of Heavy Industries & Public Enterprises (MoHI&PE)), MoSRT&H, Bureau Indian Standards (BIS), Testing Agencies such as Automotive Research of India (ARAI), Vehicle Research Development & Establishment (VRDE), Central Institute of Road Transport (CIRT), industry representatives from Society of Indian Automobile Manufacturers (SIAM), Automotive Compone nt Manufacturers Association (ACMA) and Tractor Manufacturers Association (TMA) and representatives from State Transport Departments. Major functions the Committee are: To provide technical clarification and interpretation of the Central Motor Vehicles Rules having technical bearing, to MoRT&H, as and when so desired. * To recommend to the Government the International/ foreign standards which can be used in lieu of standard notified under the CMVR permit use of components/parts/assemblies complying with such standards. * To make recommendations on any other technical issues which have direct relevance in implementation of the Central Motor Vehicles Rules. * To make recommendations on the new safety standards of various components for notification and implementation under Central Motor Vehicles Rules. To make recommendations on lead time for implementation of such safety standards. * To recommend amendment of Central Motor Vehicles Rules having technical bearing keeping in view o f Changes in automobile technologies. CMVR-TSC is assisted by another Committee called the Automobile Industry Standards Committee (AISC) having members from various stakeholders in drafting the technical standards related to Safety. The major functions of the committee are as follows: * Preparation of new standards for automotive items related to safety. * To review and recommend amendments to the existing standards. Recommend adoption of such standards to CMVR Technical Standing Committee * Recommend commissioning of testing facilities at appropriate stages. * Recommend the necessary funding of such facilities to the CMVR Technical Standing Committee, and * Advise CMVR Technical Standing Committee on any other issues referred to it The National Standards for Automotive Industry are prepared by Bureau of Indian Standards (BIS). The standards formulated by AISC are also converted into Indian Standards by BIS. The standards formulated by both BIS and AISC are considered by CMVR-TSC f or implementation.Standing Committee on Implementation of Emission Legislation (SCOE) – This Committee deliberates the issues related to implementation of emission regulation. Major functions of this Committee are – * To discuss the future emission norms * To recommend norms for in-use vehicles to MoSRT&H * To finalise the test procedures and the implementation strategy for emission norms * Advise MoSRT&H on any issue relating to implementation of emission regulations. Based on the recommendations from CMVR-TSC and SCOE, MoSRT&H issues notification for necessary amendments / modifications in the in Central Motor Vehicle Rules.In addition, the other Ministries like Ministry of Environment & Forest (MoEF), Ministry of Petroleum & Natural Gas (MoPNG) and Ministry of Non-conventional Energy Sources are also involved in formulation of regulations relating to Emissions, Noise, Fuels and Alternative Fuel vehicles. Tax Structure 1. State VAT Rate and Classi fication of goods Uniform rate structure across the country helps in avoiding diversion of trade from one State to another, checks unhealthy competition and reduces tax evasion. It helps automobile industry to plan and commit long term investments.Basic rationale needs to be developed for generation of revenue from industrial products. This should be long term and the share of taxation in the total value of the ultimate customer needs to be defined. SIAM recommends such a policy in taxing goods and services under VAT. Total taxes from both Centre and State as proposed by SIAM not to exceed 25%. Considering Cenvat at 16%, Designated rate should not exceed 9%. The classification of goods should be aligned to central taxes to reduce litigation. Uniform classification across all States and central taxes would create favourable environment for growth of industry.No separate classification of Capital Goods 2. Multiple levies and Industrial input One of the stated objectives of VAT is to r educe multiple levies. Number of rates under VAT should be 0%, 4% & RNR in addition to 1% on precious metal and 20% on petroleum products. All other levies like Octroi, Entry Tax should be abolished. Inputs used in the manufacturing should be taxed at 4% against issue of declaration. There should not be any specific list of industrial input, as it will deprive the benefit to the industry using input other than the one mentioned in the list.Reduced rate on industrial input will avoid refund problem and avoid unnecessary interaction with the Department. Further when interstate transactions are zero rated, manufacturer selling predominantly in interstate ends up having huge input tax credit without set-off. Automobile manufacturers having one manufacturing facility in the country sells more than 80% of the production outside the Sate and forced to seek refund from the State Government for excess input tax credit. SIAM suggests VAT rate of 4% on all industrial input to mitigate the refund issue. 3. Set-off mechanismSet-off of tax paid should be allowed for all inputs including raw material, components, consumables, fuel and capital goods. Tax paid on services should be allowed to be set-off. Tax paid on capital goods should be allowed as set-off in full in the same year to avoid confusion and litigation later. 4. Interstate transactions All interstate transactions should be at zero rate. Further automobile manufacturers ‘Stock Transfer' goods by setting up huge facilities to strengthen distribution net work in order to reach the product to the customer at the earliest and at least cost.This mechanism should not be affected even under VAT. 5. Sales Tax Incentives Automobile manufacturers have made huge investments, which are in phases in unviable locations. These locational disadvantages are partially offset by fiscal incentives. Any detrimental variations or withdrawal will affect the viability of such investments. This may adversely impact the country's image as an attractive investment destination. It is heartening to note that all States have agreed in principle to honour all existing incentives under VAT SIAM suggests the following: Incentive| SIAM Suggestion|Input Tax Exemption| Refund Input Tax separately – adopt Maharashtra model| Output Tax Exemption| Continue exemption, Option to Defer output tax| Output Tax Deferral| Continue Deferment, refund input tax separately| Input Tax Exemption ;amp; Output Tax Exemption| Refund Input Tax separately,Option to Defer output tax| Input Tax Exemption ;amp; Output Tax Deferral| Refund Input Tax separately,Option to Defer output tax| Table 5-Tax Structure in Automobile Industry 6. Refunds Due to various reasons there is no alternative but to seek refund from the Government in case of excess credit.Given the state of finances, refunds will be difficult and uncertain while locking up working capital for industry. Refunds should be honoured within 15 days from the date of filing retu rns and credited to the assessee's account. Alternatively, VAT Entitlement Certificate on the lines of freely tradable DEPB may be considered Recent Mergers & Acquisitions 1. Merger of Ashok Leyland and IVECO,Italy 2. Merger of Eicher and Mitsubishi,Japan 3. Merger of M&M and Nissan Motor Company,Japan 4. Merger of Swaraj Mazda and Mazda Motor Company,Japan Industry SWOT Strengths: Automobile industry is an established and an evergreen industry. * India is the strongest player in the small car segment of the global automobile market. * Indian companies are the best cost innovators. * The automotive industry has long been known for its development and promulgation of the assembly-line. * Some of the greatest developments in the automotive supply chain lie in the development of Just-In-Time (JIT) inventory methods. * Through the use of advanced technologies, assembly line manufacturing, and JIT inventory management, the automotive industry has been able to achieve significant gains in productivityWeaknesses: * India is lacking in proper infrastructure. * This is slowing the pace of growth of auto industry. * Companies are not improving after sale services. Opportunities: * The automotive ecosystem is in the midst of significant change, with increasing challenges in consumer demands, technology development, and globalization. * While demand for incumbent technologies will remain strong, alternative power trains could capture more than 20 percent of the global market by 2020, depending upon boundary conditions such as fuel taxation and emissions regulation set by governments as well as oil price development. Storage is in the heart of the next generation of efforts for fuel economy. * More realistic scenario will emerge for technologies using Hydrogen as automotive fuel. * Intelligent use of NCES (Non conventional energy sources) for powering Public Transport. Threats: * Global Crisis * Companies not focussing on R&D are under great risk * High competi tion from foreign players * Lack of technology for Indian companies Market forecast with Macroeconomic assumptions Investments in future: The market is so large and diverse that a large number of players can be absorbed to accommodate buyer needs.The sector not only has global players looking to invest and expand but leading domestic companies are also pumping in huge sums into expanding operation. Some of the investments made by various companies or organisations are as follows: * Investment Planning Commission has set target of attracting foreign investment worth US$5 billion for the next five years (in automobile industry). * Rasandik Motors, a group company of Rasandik Engineering Industries India plans to set up a three-wheelers unit at Nanjangud in Mysore district of Karnataka. Work on the project was expected to commence by July 2010. An Indian automotive site called wheelsunplugged. com suggests that Daimler is planning to invest US$700 million-$1 billion to increase the cap acity of its planned truck assembly plant at the SIPCOT Industrial Park in Oragadam, near Chennai in Tamil Nadu. An initial capacity of 70,000 units a year is planned from a 1,000-acre site. * Mercedes-Benz plans to invest e700 million to increase the production capacity of its trucks in its manufacturing plant in Chennai. While the infrastructure is expected to address future expansion plans of the company, details of the time frame of investment were not disclosed.The German car maker is also on course to increase its headcount three-fold at its R&D centre in Bangalore by next year and will invest close to Rs. 450 crore on infrastructure and people-related costs. * Bharat Forge invested US$ 135 million in its Pune plant for increasing capacity to 240,000 tonnes. * Amtek Auto is expanding capacity of its casting unit to 70,000 tonnes per annum. * Rico Auto is investing Rs 350 million to expand its capacity. * Apollo Tyres plans to invest US$469. 58m to increase production capac ity in India and abroad. * Robert Bosch of Germany will invest U$201. 0 million in its subsidiaries over the next two years. * Ceat has inaugurated the Radial tyre greenfield project in Gujarat with an investment of Rs 7,000 million, which will create employment opportunities for 1,000 people. Demand forecast: Before looking at the forecast demand of automobiles, specially, commercial vehicles, let us look at the demand forecasting process used in automobile industry In forecasting the demand, we have used various statistical methods considering all the relevant demand drivers for each segment. Then, models were prepared considering an exhaustive list of variables such as: Macro-economic variables-GDP components, industrial production, inflation, interest rates, stock indices -Sector variables- model launches, vehicle price, inter-segment competition -Enablers/barriers- Finance availability, road connectivity Forecasts for 2010-11 Automobile Segments| 2010-2011 growth over 2009-10(% )| Passenger Cars| 12-13| Utility Vehicles| 13-14| Commercial vehicles(goods)| 19-20| ————————————————- Enter key points: ————————————————- 1 ————————————————- 2 ———————————————— 3 ————————————————- Enter key points: ————————————————- 1 ——————————— —————- 2 ————————————————- 3 Commercial vehicles(buses)| 4-5| Two wheelers| 9-10| Three wheelers(goods)| 5-6| Three wheelers(passengers)| 8-9| Table 6-Demand Forecast for 2010-11 Some of the key forecasts made with respect to growth of commercial vehice industry are: †¢ Expected demand in Passenger segment to grow at 6% CAGR in volume terms over the period FY05-FY10. Goods segment to show 4. 6% CAGR over the same period. †¢ Light Commercial Vehicles to grow at a rate of 20% YOY. †¢ Heavy Commercial vehicles to grow at a rate of 12% YOY. PEST Analysis Economic Scenario The fortunes of the CV industry are closely related to the general economic conditions prevailing in a country. The demand for transportation is directly proportional to the growth of the economy, mobility of population, and other related factors. In nearly al l countries, a close connection between growth in transport, goods traffic and economic growth can be observed.The effects are two-fold: * Increasing economic development causes more traffic. Increasing amounts of goods, greater transportation distances, enhanced division of labour (globalisation), new production technologies (e. g. just-in-time production), higher levels of commuter traffic, and an increase in business travel are producing a growth in goods transport and production-related passenger transport. The increase in the prosperity of private households, together with the reduction in the working week and the working life, produce an increase in holiday and leisure transport. The mobility of people and goods is a precondition for greater productivity and economic growth. The latter result from enhanced division of labour, faster structural change, the exploitation of new raw and other materials and greater competitiveness in international trade. POLITICAL SCENARIO: The gov ernment has taken many initiatives to promote foreign direct investment (FDI) in the industry; a few of them are given below: * Automatic approval for foreign equity investment up to 100 per cent of manufacture of automobiles and components is permitted. * The automobile industry has been delicensed. There are no restraints on import of components. Besides the above mentioned initiatives, the government has envisaged the Automotive Mission Plan 2016 to promote growth in the sector. It targets: * Emerging as the global favourite in the area of design and manufacture of automobiles and auto components. * Taking the output to US$ 145 billion, accounting for more than 10 per cent of the GDP. * Offering additional employment to 25 million people by 2016. ? TECHNOLOGICAL SCENARIO: Road Infrastructure Development 52000 + Kms Road development project taken up under NHAI * 5851 Kms of Golden Quadrilateral (93% completed) 7300 Kms of NSEW corridor (Phase I&II) –(11% completed) â₠¬â€œ Target Date – Dec’09 * 380 Kms of Port Connectivity (29% completed) – Target Date – Dec’12 * 46000 KM Length of Road Development- US $ 27Bn Project in progress – Completion by Dec’12 Port Infrastructure Development * Port Infrastructure upgradation projects ~ US $ 16 Bn. in progress * Upgradation of major ports through private sector involvement (13 projects are operational and 4 under implementation) * Development of container terminals (in 6 ports of total 15 million TEUs capacity) – Target Date – 2013-14 * Projects worth US$ 13. 3 billion proposed under National Maritime Development Programme (NMDP) –Target Date – 2013-14 * Additional port handling capacity of 530 MMTA in major ports Annexure List of Industry Associations The automobile industry like any other industry has a number of associations to look after its interests. They provide a greater bargaining power to the industry and act as a sourc e of bridge between the industry and the government. They help in formulating laws for the industry and help in getting technology from abroad.These associations enable the industry to lobby hard to get extra incentives in the Union budget in the form of reduced import duties etc. They also act as data banks and provide insightful researches into the industry and they also regularly conduct auto fairs and exhibitions. Some of the major automobile Manufacturers Association along with a brief description of their profiles is as follows: Society of Indian automobile Manufacturers ( SIAM)-This is the apex body of the automobile industry in the country representing nearly thirty eight vehicle and vehicular engine manufacturers in the country.It is an important channel of communication between with the Government and other national and international organizations. It works with all quarters of the industry and helps in formulating policies for the automobile industry. It also enhances com munication between all the stake holders of the industry and helps in technological up gradation though collaboration with foreign players. For more details of the organization log on to http://www. siamIndia. com/ The Automotive Component Manufacturers Association of India (ACMA)-This organization is the nodal agency for all the automobile component manufacturers in the country.They have nearly 500 hundred members and their supply form the majority of the components in the organized sector. Like SIAM, this association also helps in dissemination of information about the industry, enhances trade promotion, technological up gradation and quality enhancement thus playing an important role in the development of the industry. It also sends delegation to foreign countries and participates in international trade fairs and regularly publishes data about the sector. More information about the organization can be sought from http://www. acmainfo. om/ Federation of automobile Dealers Associat ion (FADA)-This association is the apex body of automobile dealers in India and it was established in 1964 to promote and protect the interests of the retail automobile market in the country. The four founder members of FADA which have played a key role in the formation of the association are as follows: †¢The automobile Dealers Association of Maharashtra, Mumbai †¢Motor Industries Association, Kolkata †¢Automobile Traders Association, Delhi †¢Motor Vehicles and Allied Industries Association , Chennai Click http://www. adaweb. com/ for more details. Motor and Equipments Manufacturers Association (MEMA)-This association as the name suggests represents the interest of the automobile equipment manufacturers by making the companies associated with this trade more profitable and efficient. It provides useful information about the industry, valuable market research, government representation and other valuable commercial services. The body was established in 1904 and s ince then they have provided valuable service to the light motor vehicle and the heavy industries.To know more click http://www. mema. org/index. php List of graphs and tables * Table 1-Market Share of Different Players in Automobile Sector * Table 2-Automobile Production Trends * Table 3-Automobile Domestic Sales Trends * Table 4-Automobile Exports Trends * Table 5-Tax Structure in the Automobile Industry * Table 6-Demand forecast for 2010-11 * Figure 1-Monthly Domestic Sales of Commercial Vehicles * Figure 2-Monthly Exports of Commercial Vehicles * Figure 3-Regulatory Framework of Automobile Industry

The Development of Housing Finance in the Changing Business Scenario

THE DEVELOPMENT OF HOUSING FINANCE IN THE CHANGING BUSINESS SCENARIO Mr. P. S. Ravindra** ABSTRACT Traditionally in India, most people used to depend on their provident fund and gratuity amounts received after retirement while considering buying a home. However, with the emergence of housing finance as a major business in the country, an increasingly large number of people are going for housing loans. The housing sector in India is facing an estimated shortage of 4. 1 crore houses and according to the Ninth Plan, the demand-supply gap in urban housing is 3. 3 crore houses. The industry comprises of nearly 383 housing finance companies although disbursements from only the leading 26 institutions are eligible for re-finance from National Housing Bank, which is the regulatory body for these companies. These Housing Finance Companies (HFCs) constitute nearly 95 % of the total disbursement by the industry . The tax exemption on the interest paid on housing loans has also been extended up to the year 2003. This move will benefit the salaried employees, especially the middle-class populace. A dream of providing 25 lakh rural houses has been envisaged in the budget. Out of these, 12 lakh houses will be built under the ‘India Awas Yojana’ and another one-lakh houses would be provided under the ‘Credit-cum-Subsidy’ scheme for families with an annual income below Rs. 32,000. Moreover, around 1. 5 lakh houses to be constructed under the ‘Golden Jubilee Rural Housing Finance Scheme’ will be eligible for refinance from the NHB. The industry is witnessing a boom at present boosted by the generous budget sops and rock bottom real estate prices. The demand is a result of genuine individual needs for housing. The prospects of the industry would be further strengthened on the amendments to the Rent Control Act and repealing of the controversial Urban Land Ceiling Act. This research paper focuses on the Demand for Housing sector, Market Profile, Market Trends, Price Sensitivity factors and outlook of Development of Housing Finance in the changing Business scenario. ____________________________________________________________ ____________ _________________nd Ceiling Act. _________________________________________________________ THE DEVELOPMENT OF HOUSING FINANCE IN THE CHANGING BUSINESS SCENARIO Mr. P. S. Ravindra** Introduction Roti, Kapada aur Makaan are the three basic necessities of human beings. Traditionally in India, most people used to depend on their provident fund and gratuity amounts received after retirement while considering buying a home. However, with the emergence of housing finance as a major business in the country, an increasingly large number of people are going for housing loans. Incomes of families are rising and their purchasing capacity as well as loan repaying capacities is going up. Property prices are more or less on a stabilizing trend. A large number of home loan options are available. HFCs are becoming increasingly liberal. Interest rates have been progressively falling. The Government of India has been giving substantial encouragement to the housing sector. The social structure of the Indian families is going through a sea change as the joint family is fast giving way to the nuclear family concept. The pressure to have one’s own home is high among these families. Highlights †¢ Significantly, there has been no dearth of demand for housing and consequently for finances for the same have been abundant. †¢ Market dynamics play a pivotal role in determining the lending rates. Considering the same, the housing finance industry has been in a slump in recent times. †¢ The entry of banks into the housing finance sector has posed a serious threat to already existent players in the field. †¢ The housing sector is witnessing a clash between major players. Foremost amongst this is the ICICI and HDFC imbroglio. The later is giving sleepless nights to HDFC. †¢ Tax sops provided by the Government of India is a significant step towards upholding the future prospects of this industry. Sector Comments Nearly 25 lakh houses are built every year in India. However, the nation’s requirement is around 65 lakh houses per annum. The housing sector in India is facing an estimated shortage of 4. 1 crore houses and according to the Ninth Plan, the demand-supply gap in urban housing is 3. 3 crore houses. In case, all these urban housing dwellings were to be built, it would require an investment of Rs. 150,370 crore. Traditionally, the housing finance business has been yielding a margin of around 2 per cent. The skill of the players is in converting their advances that have a maturity period of 15-30 years with the deposits that mature within three years. Though, the National Housing Bank (NHB) refinances housing loan up to Rs. lakh disbursed to the lower income group, this is just a negligible proportion of advances to the major players. The primary sources of funds are fixed deposits, debentures, private placement of bonds and borrowings from banks and financial institutions. Thus, efficient financial management has a key role to play in this industry. Lending rates are predominantly market-driven and in view o f the same, the housing finance industry has been in a slump in recent times with there being low demand from builders and investors alike. Furthermore, the entry of banks into the housing finance sector has also not augured well for the industry. Most housing finance companies cater mainly to the higher income group having reasonably assured creditworthiness. In a scenario marked with the absence of speedy foreclosure regulations, most companies prefer to stay away from rural and the Low-Income Group   (LIG). However, it must be noted that demand for housing in the Middle-Income Group and High Income Group segments has also recorded a steady rise lately. Market profile The Indian housing finance sector is crowded with players of all sizes and nature: government organisations, insurance companies, banks, housing finance companies and co-operative organisations like HUDCO and NHB. Major players in the Industry are HDFC, LIC Housing Finance, Dewan Housing, Can Fin Homes, SBI Home Finance and Gujarat Rural Housing. The youngest entrant into the Industry, which is penetrating rapidly, is ICICI. Interestingly, both Can Fin Homes Limited and its parent Canara Bank are into housing finance. It is the same with quite a few banks, for example, SBI and SBI Home Finance Limited, Bank of Baroda and BOB Finance, Vysa Bank and Vysyabank Housing. Though HDFC and ICICI also have their banking arms, they compete with each other in personal loans, but not housing loans. The industry comprises of nearly 383 housing finance companies although disbursements from only the leading 26 institutions are eligible for re-finance from National Housing Bank, which is the regulatory body for these companies. These Housing Finance Companies (HFCs) constitute nearly 95 % of the total disbursement by the industry. However, owing to the slump in real estate market over the last few years, the industry posted a fairly low disbursement growth. Market trends The housing sector is witnessing a clash between major players. HDFC had ruled this sector with a lion’s stranglehold. It was smooth sailing for HDFC all these years and it seemed that its monopoly was there to stay forever. However, out of the blue emerged ICICI Home Loans, when this financial institution decided to clash arms with HDFC on its home front. Within a year of its launch, ICICI Home Loans is giving the industry leader, HDFC, sleepless nights. Undercutting in the interest rates is all in the game and so is every other trick in the book. HDFC is gathering its wits to beat its competitor at its own game. It launched an aggressive hoarding campaign designed in the style of ‘follow the leader’. HDFC has launched its website propertymartindia. com as a joint venture with the Mahindras. Following suit, ICICI too, launched its home portal indiahomeseek. com. So the war rages on both at the retail level and also in the form of a cyber war. ICICI has lowered its prime lending rates on short and medium term loans from 13 per cent to 12. 5 per cent. Thus, bringing the interest on housing loans at par with the foreign exchange loans. HDFC also reduced the interest rates on its housing loans from 13. 25 per cent to 13 per cent. It went an extra mile to woo the borrowers of loans up to Rs. crore by allowing them the facility to either opt for a fixed interest rate of 13 per cent or a floating interest rate of 12. 5 per cent. As the name indicates, a borrower opting for the first choice will have to repay the loan at an interest rate of 13 per cent irrespective of any future hike or cut in the rates. Those choosing the second option would be subject to the vagaries of the interest mar ket and may gain or lose in the bargain. The company has also reduced the interest on loans borrowed by non-resident Indians. These loans repayable within five years will attract an interest rate of 11. 5 per cent per annum while loans ith a term of 6-10 years will be charged interest at 12. 5 per cent. The above rates are under the fixed interest rate option. Similar floating rate loans would be charged at 5 per cent less interest. Originally, only the commercial banks offered housing loans on floating interest rates, now that HDFC is offering loans at a 12 per cent floating rate, ICICI also has a floating rate home loan in the pipeline. Price sensitivity factors †¢ Noteworthy fact here is that NHB refinance to the HFCs comprises a mere 7% of the loans disbursed. In other words, most HFCs have to arrange for a major part of the disbursals from their own resources. Thus, low spreads, mismatched asset and liability, competition posed by banks with recent regulations requiring commercial banks to invest 40 per cent of their advances towards the priority sector, etc. pose problems for the lending division. †¢ The first housing finance company to cut down its interest rate after RBI slashed the PPF interest rate by 1 per cent on January 14, 2000 was HUDCO. When the National Housing Bank, the refinancing agency of all housing finance companies, slashed its rates by up to 50 basis points, it triggered off a virtual interest war in the industry. HDFC, ICICI, LIC Housing Finance, PNB Housing Finance Limited and a host of others followed suit. In a game of one-upmanship, the companies have been vying with one another to offer the best deal in a rapidly growing market. †¢ CRISIL has forecast an increase in the interest rates in the second half of this year. This will be due to the demand of funds by the Centre and also the corporates exceeding the supply. The Central Government has projected a Rs. 31,000 crore higher borrowing this year than last year’s figure of Rs. 86,000 crore. The State Government borrowings would add up to a further Rs. 7,500 crore and the corporate demand would be higher by Rs. 11,000 crore. As compared with the supply, CRISIL expects the short fall to be around Rs. 15,800 crore. To make up this short fall, even if there is a 1 per cent cut in CRR, interest rates are still bound to increase. †¢ The Union Budget 2000-01 has given a shot in the arm to the industry by raising the exemption a pplicable to individual borrowers on the interest paid on housing loans to Rs. 1 lakh. The existing tax rebate of 20 per cent under section 88 of the Income tax Act of 1961, covered repayment of housing loans, subject to a maximum of Rs. 0,000. The same has now been doubled to Rs. 20,000. This, coupled with the lowering of the interest rate would enable a borrower to enjoy tax exemption upto a loan of Rs. 7. 5 lakh for a 15-year term. He can now have access to better tax planning options on account of the exemption and a lower Equated Monthly Installment (EMI) due to longer term of repayment. Furthermore, individuals who already own a house can now invest in a new house and yet claim exemption from capital gains on the sale of the asset. The tax exemption on the interest paid on housing loans has also been extended up to the year 2003. This move will benefit the salaried employees, especially the middle-class populace. A dream of providing 25 lakh rural houses has been envisaged in the budget. Out of these, 12 lakh houses will be built under the ‘India Awas Yojana’ and another one-lakh houses would be provided under the ‘Credit-cum-Subsidy’ scheme for families with an annual income below Rs. 32,000. Moreover, around 1. 5 lakh houses to be constructed under the ‘Golden Jubilee Rural Housing Finance Scheme’ will be eligible for refinance from the NHB. The industry has found new avenues such as securitisation, which are expected to be launched in the market very soon. This mechanism would require a pool of assets (mortgages), which would be sold by the HFCs to NHB. These assets in turn would act as a Special Purpose Vehicle (SPV) and would be sold as pass through certificates to investors, which initially would be from groups earning pension funds, mutual funds, financial institu tions, commercial banks and other trusts or institution which require monthly fixed income. The mortgages would be for loans up to a period of 10 years, on which HFCs would earn 16 % from borrowers. The spread is to be passed back to the concerned HFCs in the form of premium at purchase of mortgages or service charge over a period of time. It is expected that with the success of securitisation the circulation of funds would increase coupled with cash flows generated by these funds. Furthermore, a secondary market for mortgages would become feasible for HFCs. Outlook The industry is witnessing a boom at present boosted by the generous budget sops and rock bottom real estate prices. The demand is a result of genuine individual needs for housing. The prospects of the industry would be further strengthened on the amendments to the Rent Control Act and repealing of the controversial Urban Land Ceiling Act. Thus, the housing finance industry is on solid ground and has interesting prospects ahead. As for the small players, they will have to take the harsh decision to either exit the industry or merge with bigger entities. It is also amply clear that in the future, industry leader HDFC will have to share the spoils with the aggressive young turk – ICICI. Notwithstanding the competition, the customer has nothing to lose as he can choose the best loan scheme from the ICICI and HDFC fold, with minimum interest and a nil processing fee. Conclusion Despite the abovementioned factors, several bottlenecks still exist in the industry, which have to be taken care of before any of the above can bring about an improvement in the prospects of the industry. From an overall viewpoint demand for housing is ever rising and the same would be reflected on the demand for funds. Hence, the profitability of the industry should commence on the positive track in the future. Now housing finance products are at par with other consumer goods, where use of all marketing mix has become necessary for the banks to attract and retain customers. References 1. Basu D. N and Mehta V. K. , 1993. Housing Finance System India, Urban India, XIII, (1) January-June: 36-50. 2. Manoj P. K. 2004. Dynamics of housing finance in India, 3. Vora P. P 2002. The Indian housing finance system, Housing Finance Investment. 15(Jan): 18-25. 4. Nambirajan, R, 2001. Home Loans and Tax benefits, Indian Infrastructure, May, pp. 42-43. http://www. indianloans. com http://www. indiainvest. com http://www. lichousing. com * * * * *