[Reader-list] Stories of Entrepreneurship

[prasad shetty]

Dear Everybody,

The cases are becoming more interesting as they reveal a whole lot of strategies and tactics used by the entrepreneurs. I am sending two more samples of the cases. These are more detailed then the previous ones and disclose a lot about the trade. The language and the details are left raw as they indicate multiple layers of meanings themselves.  


The VEGETABLE VENDOR

He came to Mumbai in 1989 from Mauul taluka in Poona. He was the eldest son of a farmer family and the most educated (9th grade, Marathi medium) among his two brothers and two sisters. So it was upon him to take care of his family. At the age of sixteen, a friend of his father’s offered to take him along to Mumbai and absorb him into his own business in vegetable and fruit vending. 

For two and a half years, he worked for him in return of only food and stay. He stayed in Bandra (E). Every morning, he would go by train to the vegetable wholesale market at Byculla (and Crawford street for fruits).  He would then travel back by local train to set up shop at a corner in a residential locality in the suburbs (Seven Bungalows, Andheri) in the mornings and evenings. In the afternoons, he would vend vegetables door-to-door.

In 1993, he got married to a girl from the same village and decided to start his own business. He borrowed Rs. 600/- from a village friend and bought a ‘tokri’ (basket) at Rs. 60/- from a market in Cotton Green, a ‘tagdi’ (balance) at Rs. 160/- from a market in Nal Bazaar, Masjid Bunder. He also got himself a second class passenger + luggage railway pass and invested the rest in vegetables, which he sold in the same locality in Seven Bungalows, as his old customers had taken a liking to the young boy and he made a profit of Rs. 39/- on the first day.

Rates at the wholesale market vary depending upon the quality of goods and so do his rates. He started door-too-door vending in the afternoons at the society buildings of his old frequent customers and gradually more buildings in the same locality. While the other vegetable vendors from Uttar Pradesh who set up ‘permanent’ shop resisted his door-to-door vending, his customers supported him because he was young and warned them to keep away. For some building societies, he had to acquire a society gate pass, by speaking to the Society Chairman and was required to submit a photograph and permanent address, after which he was made the ‘authorized’ vegetable vendor for the society. Gradually he began a business in vending fruits on Sundays, when the wholesale vegetable market was closed. 

In 1997, he bought a double-storied house (each storey – 7 x 14 sq. ft.) from his savings in Gundavali Gaothan (Andheri East) at Rs. 1,40,000/-. (The house, however, was built in 1993, and that makes him eligible for a free house under the Slum Rehabilitation Scheme. He has got himself registered through his party contacts, but is aware that most eligible people in his locality aren’t. He tries to help them only as far as it will not harm him personally.)

When it became difficult to travel in the overcrowded trains, he travelled by a car (1997), which charged Rs. 60/- per day from 7 Bungalows to Dadar market and back. Actually, the car was bought in his own name for some relatives who were not doing too well financially. Since they had no legal papers, he applied for a loan for them, which they pay back from their own earnings from the escort service business. 

He soon became an anchor for the newcomers from his hometown and thus very popular. When his close cousin stood for the BJP in the assembly elections in Poona and lost, the party approached him to join them. He obliged and has ever since been affiliated to the party. Any work for the village, like installation of pumps, setting up schools, has to be done on the sly without any knowledge of the opposition party till the government stamps its approval or else the project ends before it even begins.

He visits his home town twice a month by share-a-sumo or a bus from Dadar T.T. His father and younger brothers manage farming on their 7 acres of land. They grow jowar, wheat and rice, now that a water pipeline worth 2.5 lakhs has been installed through his party connections. They have also started a poultry farm.

In a year, he has bought two more cars on loan from Apeejay Finance – a Maruti van and a Cargo (LPG). He has hired a driver from U.P. at Rs. 3500/- and leased one of the cars to a courier company ‘Origin’ at Andheri for Rs. 22,000/- (for 3000 km. per month, and Rs. 4/- per extra km). He has leased the other car to another courier service company from 8.30 a.m. to 11.30 p.m. @ Rs. 18,000/- per month and the same overtime charges.  Every morning he gets LPG worth Rs. 400/- filled in the cars at Raj Petrol Pump, Vile Parle. He plans to buy another car – Mahindra Pickup (Rs. 3, 80,000/-) as recommended by the courier company itself. He has already bought a Hero Honda motorbike for household purposes.

On a regular day, he finishes sale of vegetables / fruits by afternoon and then handles maintenance of his cars, and organises accounts for his Chit fund service. He started a chit fund service, which has 40 members today with a collective kitty of Rs. 7, 00,000/- per month. At the end of each cycle, the customers buy him an article of Rs. 10,000/- to Rs. 12,000/- for his services. 

He buys the newer types of vegetables – red, yellow capsicum, mushrooms, broccoli, baby corn, baby potatoes, etc. available in the wholesale market and informs himself of their names and usage through the recipes published in the newspapers. It has helped in increasing his clientele. He is not threatened of supermarkets which sell cheaper and well packaged goods, for he thinks nothing can compete with day-to-day fresh vegetables and fruits.  

He pays an income tax only on his earnings from vending vegetables, which amounts to Rs. 680/- per year. He uses a Nokia 3310 with an Orange (billing) connection that has helped increase his efficiency in multi-tasking of vending vegetables, maintaining his courier vans and his party work. He doesn’t holiday, for his regular day is quite relaxed and occasionally watches cricket on his television set.

He aspires to enrol his son in a military school and hopes he will join the Navy for a better future. His son currently goes to an English medium school nearby, while his daughter goes to a Marathi medium school in their hometown, for its much safer there for her. (There are no English medium schools in their hometown).


REAL ESTATE AGENT

He worked as a sales officer for Heinz, Glaxo (Worli, Mumbai) and retired from Glaxo in 2002, at the age of sixty years. Four – five years before retirement, he mooted on the idea to become a real estate agent, for it required no investment and he had seen some friends who were estate agents and doing pretty well, and the work pattern was similar to his own present job of selling a commodity, only the product had changed. He bought himself a handbook for Rs. 400/- to learn about the various procedures involved including registrations, stamp duty, etc. As his sales jurisdiction kept shifting from Napean Sea Road to Mahim, to Colaba to Andheri to Malad, he started contacting real estate agents, friends, and other relevant people to spread the word about his newly acquired status of a self – employed real estate agent and to learn about the property rates, market fluctuations apart from the technicalities.
  
(He soon got a bungalow, owned by a friend, sold. He contacted an Estate Buyer who was interested in the property and the deal came through. Another friend approached him with an interest to buy a house. After acquiring the budgetary details and the other requirements i.e. a 5 BHK bungalow in Juhu Scheme, he contacted various Estate Agents in Juhu, who showed him various properties and on selection of a likened property, the deal was initiated.)

When a deal is through and token money is exchanged, the estate agent finds out if the seller is a primary, secondary, tertiary owner, the mortgage status of the property, share certificates-if there are any dues pending to the society, etc. Once the agreement is signed, and the No Objection Certificate obtained, the client pays for the stamp duty and registration. The buyer and the seller share the Society Transfer Fees. In some cases, the charges towards the real estate agent are also part of the agreement, but it is not a necessity. Most of the remuneration towards the real estate agent is by word of mouth. The Estate Agent bears the cost of advertising in newspapers, magazines, etc, and his own phone bills to network with other agents. The agent doesn’t require a license to practise.

There are two types of estate agent deals – one where there is a single Estate Buyer and single estate seller – who get their commission from their respective clients - In ‘side by side’, there may be multiple Estate Buyers or/and multiple Estate Sellers and they share the commission from their respective clients. The commission charged is generally 2%, however, for a good property higher commission is negotiated and in reverse, a lower commission is charged for a distress sale. In the other type – a monopoly – while a building is being constructed, the builder asks for a deposit of around Rs. 15 lakhs (however that is negotiable depending upon the saleable area - number of storeys, rate per sq. ft. etc.), under the condition that all or 50% the flats should be sold within a deadline, usually six months. This is recorded in an agreement on paper. Again, all the expenditure on hoardings, advertisements, etc. are borne by the agent, in return he gets 2% on the sale of each flat. Even if a customer approaches directly, the agent gets 2% on the sale of the flat. If another agent brings a customer, then he gets 1% on the sale. If the agent has a good rapport with the builder, having worked on multiple projects together, then no deposit is expected – only faster sale of flats.

Only when the agent has a monopoly (by word of mouth only) of a property/ies (‘sole sale agency’), does he invest in advertisements (in newspapers, magazines) – usually he publishes a joint advertisement for the multiple properties on which he has a monopoly. An advertisement in the Times costs Rs. 2000/- when paid directly. However there is an authorised ad agent in Dhake Colony, Andheri, who receives 20 % on the ad published by him. Since he has an arrangement with such an agent, he gets 5 – 10% concession on the ads.

In case of rented properties, the agent receives two months rent (again negotiable); rent is determined by the market rate and whether the property is un/furnished. If the property is leased for 11 months or 33 months or 5 years as in the agreement, the agent receives another month’s rent at the time of the renewal (at current market rate) or through mutual understanding an extra one month’s rent + 10% at the time of the deal itself.

For all the paper work, he goes to an office in Bandra that only produces stamp duty and registration papers. They prepare all the necessary papers along with three copies at an average of Rs. 5,500/- Rs. 8,000/-. A lawyer would charge Rs. 20,000/- for the same work.

Since there are so many real estate agents in the market, it becomes imperative to establish and maintain as many networks as possible through circle of friends and acquaintances, and other real estate agents. He even travels upto Vashi if there is a good project and simultaneously meets the local estate agents, exchanges cards and develops a professional relation. He has been able to maintain such networks right from Colaba to Borivali to V.T. to Thane. He has even sold off a project for a friend in Poona. He doesn’t own a vehicle and mostly travels by local train.

A good service includes negotiating for a good deal for the client, the legal paperwork; follow up after sale of the property, ensuring possession of the property, etc. If the property is purchased on loan, then the full payment is through clean money – sometimes, the full payment is paid part by black money, depending upon the clients’ requirements – and the agent receives his commission on the total exchanged, part in white, part black. However, it becomes very tough to receive the due payment towards the commission, for a lot of clients do not appreciate the third party cost, in spite of getting all the work done, so they pay a small token instead. The agent cannot use force for that would cut off one channel of his networks, so a compromise is made in hope that more projects will be procured from that end.

Our agent does not operate in an office and hence doesn’t have any staff to pay salaries to. Also that means he doesn’t have staff to show properties to the clients and does it all himself. He uses a cell phone to do most of his networking and travels by train as and when required. He doesn’t refer to the newspapers for realty rates because there is always a variation of 20 – 30%. He gets all his market information from other agents with whom he has a good rapport. He doesn’t plan to open an office for that would require a huge investment or get into a partnership. He, however, does hope to expand his presence in the real estate market for plots, residential + commercial properties and rented properties. 


Prasad Shetty
Residence: 501, Marigold, Opposite Shakti Motors, New Link Road, Malad (W),
Mumbai 400 064 INDIA
Phone: +91-9820912744
-------------- next part --------------
An HTML attachment was scrubbed...
URL: http://mail.sarai.net/pipermail/reader-list/attachments/20050426/1d9dddb4/attachment.html