Alacrity Housing - Ethics First


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Case Details:

Case Code : CGOV002
Case Length : 12 Pages
Period : 1990 - 2001
Pub Date : 2001
Teaching Note : Available
Organization : Alacrity Foundations Pvt. Ltd.
Industry : Housing and Construction
Countries : India

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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Unethical Practices in the Indian Housing Industry Contd...

The price too, was never the same as agreed on initially and increased substantially due to the project cost overrun. Laborers were exploited and not paid even minimum wages. There was also discrimination against women. In addition, black money transactions were common in the industry. No contractor or builder objected to this practice. The underworld was also involved in the construction industry. Builders sought the help of the underworld to remove encroachments on the plots they were going to develop. In return, the underworld demanded huge sums of money. To self regulate the industry and weed out corruption, the National Real Estate Development Council (NAREDCO) was established in 1998.

To improve the confidence level of investors and consumers in the real estate sector, NAREDCO took measures to improve transparency in real estate transactions.

It represented all enterprises dealing with various aspects of real estate development including land development; lay-out; planning; construction of residential; commercial and institutional buildings/complexes; development of townships; provision of urban infrastructure (roads, electricity, drainage, sewerage, water supply) and social infrastructure (recreational, educational and medical facilities); architecture; town planning; supply of building materials; estate finance insurance; and estate marketing and brokerage; and other allied fields. A Code of Ethics was developed (Refer Exhibit I). NAREDCO also developed a rating system in association with CRISIL3 to facilitate prudent investment decisions in real estate ventures.

Even though unethical and corrupt behavior was common in the housing and construction industry, one company - Alacrity Housing believed that it paid to run an honest business.

The company strongly opposed to the unethical behavior so common in the industry. It did not believe in giving bribes or dealing in black money. Analysts doubted that such a company could survive for long in a corrupt business environment...

Excerpts >>


3]  Credit Rating and Information Services of India Limited, established in 1987is the pioneer rating agency in India established in 1987.

 

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