DLF's Q1 profit drops 80% as debt cutting continues
Business Standard, July 31, 2009, Page 4
BS Reporter / New Delhi
DLF Ltd, the country’s largest real estate developer, today reported a decline of 79 percent in its consolidated net profit for the first quarter of 2009-10.
Profit dropped to Rs 396 crore for the three months ended June 30, as compared with a profit of Rs 1,864 crore for the corresponding period last year. This follows a drop of 93 per cent in the fourth quarter profit for the previous fiscal year.
Revenue for the first quarter of FY10 came down by 57 per cent to Rs 1,649.9 crore, as compared with Rs 3,810.6 crore for the corresponding period last year. The company vice chairman, Rajiv Singh, said: “After a few difficult quarters last fiscal, we have seen a fairly good first quarter of the current fiscal. The construction activity has gained momentum and response to new launches has been encouraging.”
Friday, July 31, 2009
DLF's Q1 profit drops 80% as debt cutting continues
Parsvnath Q1 net plunges 81%, co in talks to raise $100-150m
Parsvnath Q1 net plunges 81%, co in talks to raise $100-150m
The Economic Times, July 31, 2009, Page 4
Our Bureau NEW DELHI
DELHI-BASED Parsvnath Developers on Thursday said it is in talks with investors to raise $100-150 million in fresh equity through qualified institutional placement (QIP) within the next two months. The company said that the real estate sector had seen off the worst after its net profit for the June quarter increased 20% on a sequential basis over the March quarter even as it fell as much as 81% over the same quarter last year.
“We see things improving from here on in the property market. With better sentiment and the government announcing a number of measures, including tax benefits for developers of affordable homes and interest subsidy for homebuyers, we think real estate market will bounce back soon,” Parsvnath Developers chairman Pradeep Jain said, adding that demand has slowly started picking up.
The company reported a net profit of Rs 14 crore on revenues of Rs 113 crore for the June quarter. Revenue declined 70% from the year-ago quarter. The company attributed lower sales and profits to poor demand for homes as homebuyers, worried about their personal economic future, stayed away from the residential market last quarter.
Mr Jain said the company planned to raise $100-150 million (approx. Rs 500-700 crore) via QIP, “We will use 60% of QIP fund to repay debt and rest to strengthen our business.”
The company has been able to reduce its debt by Rs 400 crore to Rs 1,600 crore in nine months since September ‘08, he added. Parsvnath’s scrip closed 1.5% up at Rs 116.95 on Thursday. The company’s earnings were announced after the market hours.
IT outsourcing to pick up next year: Study
IT outsourcing to pick up next year: Study
The Economic Times, July 31, 2009, Page 20
Our Bureau BANGALORE
MIRRORING the global trend, India’s IT outsourcing is expected to remain subdued this year, though it’s likely to pick up during the second half of the next year. Springboard Research in its latest study, ‘Inside the End-Users’ Mind - India IT services demand side analysis’ said most enterprises have reported an impact on their IT budgets because of the economic slowdown, with nearly a third of them slowing their ITrelated investments
“For CIOs, the economic slowdown is clearly an opportunity to manage their costs and they have shown an open-minded approach towards IT outsourcing, further accelerated by an emerging emphasis on improving business performance,” said Sudip Saha, senior research analyst for IT Services at Springboard Research.
According to the research body, the Indian IT services market is expected to grow from $4.1 billion in 2007 to $8.1 billion in 2011, recording a CAGR of 18.6%.
The study said that 65% of the IT decision makers in Indian enterprises expect an increase in their investment in IT outsourcing by their company in the next two years, with 29% expecting investment to remain constant.
Mr Saha said many of the Indian companies will not be able to cut down on costs with their internal IT teams and would be looking at outsourcing for budgetary controls.
Fundraising ceremony for developers again
Fundraising ceremony for developers again
The Economic Times, July 31, 2009, Page 15
Private equity players are building up funds for small companies in the realty business
Anirvan GHOSH
SMALL AND medium businesses (SMBs), especially in the real estate sector, have reasons to cheer. Private equity firms say they will raise more than $300 million by October, most of which will be used to fund SMBs in the infrastructure and realty space.
Mumbai-based Sage Capital is raising $100 million by September. The funds will be used exclusively to fund SMBs in the areas of infrastructure, real estate and energy. The fund will be looking at small firms, which have a topline of Rs 50 crore or above. It plans to invest from Rs 30 crore to a maximum of Rs 70 crore in each of these firms. Sage Capital’s managing director Manish Kanchan confirmed his fund’s plans but refused to name the companies he is zeroing on. “It has been easier to raise funds in the second half of this year, and we can get cheaper valuations,” he says about Sage’s decision to raise fund at this point in time.
Saffron Asset Advisors plans to raise $105 million by October. “We are looking at smaller players in the real estate sector with serious growth potential,” says managing director Ajoy Veer Kapoor. Saffron has already lined up a few projects for investment through the new fund, and will be announcing these shortly, he adds. The firm eventually plans to raise $500 million over eight years. Standard Life will invest $75 million in fund, which will invest in projects across India, and in SMBs in Tier 2 and 3 cities. Saffron earlier raised 220 million euros through its Euronextlisted Yatra Capital for investing in the Indian real estate market. Venture capital firms invested $117 million over 27 deals during the first six months of 2009, according to a joint study by Venture Intelligence and Global India Venture Capital Association. That was substantially lower as compared to $413 million invested in 67 deals during the first half of 2008 and $402 million invested in 75 deals in the second half.
Things seem to be getting rosier this second half. ASK Investment Holdings is raising $100 million this year, and intends to pick up between 26% and 50% stake in residential projects. “We are into just a notch above low-cost homes,” says managing director Sunil Rohokale.
CSC Group, which is building affordable housing in Bangalore, is in talks for a $15 million funding from such PE players. “We have the model to scale up fast, and are in talks with them,” says CSC’s CEO PC Sukanand.
Most property project delays in Ghaziabad, Gurgaon: Study
Most property project delays in Ghaziabad, Gurgaon: Study
Business Standard, July 31, 2009, Page 2
BS Reporter / Mumbai
Ghaziabad and Gurgaon, the satellite towns in the National Capital Region (NCR), led in terms of the highest proportion of property projects delayed in the country, which were scheduled for completion in 2008 and onwards, a new study has found.
Both these suburbs have 71 per cent of projects delayed, as against the total number of projects scheduled for completion in 2008 and onwards, a study by real estate research firm PropEquity said.
Ghaziabad had 84 projects delayed out of 118 and Gurgaon had 78 of 110. In absolute terms, Bangalore, the country’s IT hub, witnessed the highest number of delays among projects scheduled for completion in 2008 and onwards, while Pune came second.
In Bangalore, 309 of the 575 projects were delayed and the average delay in these projects was nine months. In Pune, 305 of 665 projects were delayed, with an average of eight months. Mumbai came third, with 233 of 501 projects, with an average delay of nine months, the study said.
“A lot of developers were diverting funds meant for a project to other projects, hence cash flow was an issue. Their order book was more than what they could actually execute. Many smaller developers jumped into the property sector and they could not complete the projects, resulting in delays,” said Samir Jasuja, founder and chief executive of PropEquity.
In terms of unsold properties in the 10 cities, Pune, Mumbai and Hyderabad came first, second and third, respectively. Pune, Mumbai and Hyderabad had 36,435 units, 32,120 and 31,536 units unsold in June 2009. In terms of regions, the East had 5 per cent of properties unsold between January to June 2009, and the North, West and South had 23 per cent, 40 per cent and 31 per cent of properties unsold respectively in the period, the study found.
Thane, Mumbai and Gurgaon ranked first, second and third, respectively, in terms of percentage price drop in apartments in the country, as economic downturn and dwindling incomes of home buyers impacted property sales and led to a drop in prices. Between May of 2008 and 2009, Thane (a far eastern suburb of Mumbai), Mumbai and Gurgaon witnessed a drop of 22 per cent, 20 per cent and 19 per cent, respectively.
But in terms of absorption of projects during January-June 2009, Mumbai came the highest with 17,689 units, while Pune and Noida came second and third with 13,899 and 6,808, respectively.
“These cities had a lot of new launches and witnessed high absorption. Mumbai is driven by end-users, while Pune had a mix of end-users and investors,” said Jasuja.
Jasuja feels absorption will improve and unsold portions come down as developers increasingly launch affordable projects. “Delays will continue, as execution is becoming a challenge for developers who are finding it difficult to arrange finances,” he said.
Realty developers seek more sops
Realty developers seek more sops
The Hindu Business Line, July 31, 2009, Page 14
Our Bureau, Mumbai
The Confederation of Real Estate Developers Associations of India, while welcoming the subsidising of home loans and extension of tax holidays for projects by the Government, said incentives to developers were disappointing.
Mr. Santosh Rungta, President, CREDAI, said the tax holiday under 80 I B (10) for a mere year to projects approved by March 2008 would not bring about any significant impact on the real estate market and could, at best, benefit a few micro markets.
Moreover, it would create unequal competition among developers as projects approved after March 2008 would not qualify for the incentive.
The real estate sector would only benefit if the tax holiday was extended up to March 2012, he said, adding that it would encourage developers to take up new projects and expedite ongoing ones.
The interest subsidy of one per cent to home loan borrowers for Rs 20 lakh home loans was not adequate.
construction cost
Taking into account the escalation of construction cost, which have resulted in higher property value, it should be hiked by one or two per cent and the scheme extended for loans up to Rs 30 lakh.
Mr Rungta said the housing and real estate sector could substantially contribute to growth rate if more incentives were given for purchase of affordable homes.
Referring to the focus on slum development, he said expectations were that the Government would exempt (slum redevelopment) projects from direct and indirect taxes.
Thursday, July 30, 2009
FM sees revival, 6.7% growth
FM sees revival, 6.7% growth
The Economic Times, July 30, 2009, Page 11
Our Bureau NEW DELHI
FINANCE minister Pranab Mukherjee said on Wednesday he expects the economy to grow by 6.7% this fiscal as the economic downturn has been arrested and the manufacturing sector is witnessing a revival.
“Downturn has been arrested...It is possible to maintain the growth momentum ...(and) achieve the desired level of growth”, the minister said while winding up the debate on the Finance Bill in Rajya Sabha, which returned the Bill, completing the budget exercise for 2009-10.
Noting that signals of a pickup are visible in sectors like steel, cement and construction, Mr Mukherjee said, “We have ended 2008-09 at 6.7%. I do hope we will be able to maintain this level of growth (in 2009-10).”
The Reserve Bank of India on Tuesday projected a growth rate of 6% with an upward bias. Mr Mukherjee said even though the central bank’s projection was conservative, it upgraded the outlook of the economy.
Even global agencies like the International Monetary Fund (IMF) were of the opinion that the Indian economy would grow at 6%-plus, the minister said.
On concerns raised by the members on black money stashed abroad, he said the government was in the process of amending the double taxation treaties with almost 100 countries to provide for a legal framework for exchange of information on the menace. He also warned that if builders do not pass on the benefit of tax holiday to consumers, the same may not be extended in the future.
Pranab pegs growth at 6.7%
Pranab pegs growth at 6.7%
The Financial Express, July 30, 2009, Page 2
fe Bureau, New Delhi
A day after the Reserve Bank of India pegged economic growth at 6% for 2009-10, finance minister Pranab Mukherjee on Wednesday told the Rajya Sabha that he expected growth to stay at the 6.7% level recorded in 2008-09. Pointing to the positive trends in manufacturing sector output as well as core sector production in June, Mukherjee expressed hope that the trend gathered momentum ‘when the busy season comes.’
“With that momentum, it will be possible to achieve the desired level of growth. As you know, normally the RBI’s estimate is a bit conservative; I would not say very conservative, but a bit conservative. Even they have upgraded our GDP growth,” Mukherjee said. The finance minister said international rating agencies and the IMF, which had earlier thought India would grow at 5% or less this year, now agreed that India would have around 6.6% growth.
Explaining the fresh sops announced for the housing sector in the Lok Sabha as amendments to the Finance Bill, Mukherjee said housing activities were slowed down from middle of 2007 to 2008. Sending out a subtle warning to housing project developers, the minister said, “I am reiterating my expectation from developers, who will get this advantage, that it should get reflected in reduced price of houses which they will sell to buyers. Unfortunately, it happens in our country. They forget it and they do not pass it on.”
Responding to MPs’ queries on disinvestment under the UPA-II, Mukherjee said, “Disinvestment is a continuing process. There is nothing dramatic about it. From 1991 onwards, if I remember correctly, we have mobilised Rs 53,000 crore. It is an obvious and continuous process — by whatever nomenclature you may call it —disinvestment or people’s participation or strategic sale.” Dismissing the notion that the Centre was eager to push disinvestment to fix the soaring fiscal deficit, the finance minister said proceeds from stake sales would be invested in the National Investment Fund (NIF) as per the policy. “...From the corpus of the NIF, it may be used for specific social sector projects. Part of it will be utilised for meeting the public sector requirements like upgradation, modernisation and expansion. Therefore, it is not merely to meet the fiscal deficit,” he underlined.
Responding to BJP MP Ravi Shankar Prasad’s queries about Prime Minister Manmohan Singh’s commitment to initiate action on unearthing black money stashed abroad within 100 days, Mukherjee said that actions had been initiated. “Now we are going to accept the code which has been prescribed by G-8 countries by which the exchange of information will take place. The legal framework for that is the avoidance of double taxation. We have entered into such avoidance of double taxation agreements with various countries, which are nearly 100,” the minister said.
“We have taken up amending the provisions of those Acts so that exchange of information is possible. Certain countries have their own secrecy banking rules. Switzerland is well known for it,” Mukherjee said, in reference to a particular recent case where information was shared with India on the condition that it could not be made public.
“But in the context of the financial crisis, now they have agreed to share this information, provided there is a legal framework and it is required only for the purpose of tax collection, not for any other purpose. Keeping that in view, we are proceeding. Therefore, action to bring back the money, which has been stashed away, is also being taken,” the FM said.
Domestic market to lead IT growth
The Hindu Business Line, July 30, 2009, Page 4
Nasscom projects 15-18% rise; core export markets stabilising.
Our Bureau, Chennai
The domestic market seems to be coming to the aid of the IT-BPO industry, because it is projected to grow 15-18 per cent, even as the export market is likely to grow a mere 4-7 per cent.
For sure, the export market is about thrice as much as the domestic market, but in a slowdown, anything helps.
Export revenues
Last year, the industry’s export revenues grew 16.3 per cent, says Nasscom, but calculations show only a 14.6 per cent growth, from $40.4 billion in the previous year.
The root of the discrepancy lies in reckoning of Satyam Computer’s accounts, which are yet to be restated.
Disclosing Nasscom’s projections at the body’s annual meet here, the Chairman, Mr Pramod Bhasin, stressed that even a 4-7 per cent growth is good, given the economic environment.
He noted that core markets such as North America and verticals such as the banking and financial services industry “have started to stabilise”.
The domestic IT-BPO market is projected to grow at a higher rate — between 15 and 18 per cent — to reach around Rs 67,000 crore, compared with Rs 57,000 crore last year.
In dollar terms, domestic revenues were $12.5 billion in FY-09, Nasscom said.
Fiscal 2009 figures grew 21 per cent over Rs 47,000 crore in fiscal 2008.
The domestic market witnessed enhanced focus in the year ended March 2009 with “large transformational deals in telecom and e-governance, with contract value of outsourcing deals growing by 32 per cent, Mr Bhasin told newspersons after releasing the Nasscom outlook for the industry in 2009-10.
Growth break-up
Within the export segment, IT services have grown in FY-09 by 14.7 per cent to $26.5 billion; BPO exports are up by 16.5 per cent to $12.7 billion; engineering services and product exports up 11 per cent to $7.1 billion.
The industry employed nearly 2.2 million in 2009 fiscal, adding about 200,000 jobs in the fiscal year ended March 2009 (FY09).
In the previous year, the industry added between 250,000 and 300,000, according to Mr Som Mittal, President, Nasscom. In February 2009, Nasscom had said that the industry might add, aided by job offers at campuses, a net of one lakh jobs in FY10. TCS, for instance, has made 24,500 campus offers for this year.
Mr Pramod Bhasin, Chairman of Nasscom and CEO, Genpact said, “The demand will be there for people, but the focus would be on quality. The industry has spent a lot over the years in training, and this trend may not continue over time."
"It is time that the government and educational institutions spend more time on training and education,” he said.
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