Monday, April 6, 2009
G – 20 pledges $1 trillion & concerted fiscal steps
G – 20 pledges $1 trillion & concerted fiscal steps
The Financial Express, April 3, 2009, Page 1
Agencies
LondonG-20 leaders agreed a trillion-dollar deal on Thursday to combat the deepest economic downturn since the Great Depression. At their summit, they also signed off on plans to commission blacklists of tax havens, tighten financial norms to bring hedge funds and credit rating agencies under closer supervision, as well as institute new rules on linking executive pay to performance. US stocks jumped on the G-20 news, along with a decision by Washington to loosen accounting rules for toxic assets.
“Concerted measures taken by the G-20 economies will raise world output by 4% by the end of next year,” a final communiqué said. “We are undertaking an unprecedented and concerted fiscal expansion, which will save or create millions of jobs that would otherwise have been destroyed, and that will, by the end of next year, amount to $5 trillion, raise output by 4% and accelerate the transition to a green economy,” the communiqué added.
“We are committed to deliver the scale of sustained fiscal effort necessary to restore growth,” it said. The statement also said G-20 central banks had pledged to maintain expansionary policies as long as necessary and to use all available policy tools.
“This is the day that the world came together, to fight back against the global recession. Not with words, but a plan for global recovery and for reform and with a clear timetable,” British Prime Minister and summit host Gordon Brown said. He said that while there were no quick fixes, the decisions meant that “we can shorten the recession and we can save jobs”.
“For the first time we have a common approach to cleaning up banks around the world, to restructuring of the world financial system. We have maintained our commitment to help the world’s poorest,” Brown said. “This is a collective action of people around the world working at their best.”
Brown said the G-20 also agreed to create a new supervisory body to flag potential problems in the global financial system. He said the G-20 will create a new financial stability board to ensure cooperation across frontiers, to spot risks to the world economy and—together with the IMF—provide “the early warning mechanism that this new global economy needs.”
Brown said it is essential that the world does everything necessary to “rebuild trust” and make sure “a crisis such as this” never happens again.
The sweeping G-20 communiqué bridged a gap between the US and European countries led by France and Germany over how far to push changes on regulation to curb the market excesses that led to the current crisis.
French President Nicolas Sarkozy said the results were beyond what could have been imagined. Addressing a key demand from France and Germany, Brown said the leaders agreed there will be an end to tax havens that do not transfer information on request. “The banking secrecy of the past must come to an end.”
He said leaders agreed to commit new resources of $1 trillion that are available to the world economy through the International Monetary Fund and other institutions. This included $250 billion of IMF reserve units called Special Drawing Rights. This is available to all IMF members, Brown said. In addition, the IMF would see its own resources tripled, with up to $500 billion of new funds.
The G-20 nations also agreed to renounce protectionism and pledged $250 billion in trade finance over the next two years—a key measure to help struggling developing countries, whom they promised to give a greater say in world economic affairs. The G-20 will hold a third summit on the financial crisis by the end of autumn in Japan to follow up the world leaders’ meetings in London this week and in Washington in November, Italy’s Silvio Berlusconi said on Thursday.
The Financial Express, April 3, 2009, Page 1
Agencies
LondonG-20 leaders agreed a trillion-dollar deal on Thursday to combat the deepest economic downturn since the Great Depression. At their summit, they also signed off on plans to commission blacklists of tax havens, tighten financial norms to bring hedge funds and credit rating agencies under closer supervision, as well as institute new rules on linking executive pay to performance. US stocks jumped on the G-20 news, along with a decision by Washington to loosen accounting rules for toxic assets.
“Concerted measures taken by the G-20 economies will raise world output by 4% by the end of next year,” a final communiqué said. “We are undertaking an unprecedented and concerted fiscal expansion, which will save or create millions of jobs that would otherwise have been destroyed, and that will, by the end of next year, amount to $5 trillion, raise output by 4% and accelerate the transition to a green economy,” the communiqué added.
“We are committed to deliver the scale of sustained fiscal effort necessary to restore growth,” it said. The statement also said G-20 central banks had pledged to maintain expansionary policies as long as necessary and to use all available policy tools.
“This is the day that the world came together, to fight back against the global recession. Not with words, but a plan for global recovery and for reform and with a clear timetable,” British Prime Minister and summit host Gordon Brown said. He said that while there were no quick fixes, the decisions meant that “we can shorten the recession and we can save jobs”.
“For the first time we have a common approach to cleaning up banks around the world, to restructuring of the world financial system. We have maintained our commitment to help the world’s poorest,” Brown said. “This is a collective action of people around the world working at their best.”
Brown said the G-20 also agreed to create a new supervisory body to flag potential problems in the global financial system. He said the G-20 will create a new financial stability board to ensure cooperation across frontiers, to spot risks to the world economy and—together with the IMF—provide “the early warning mechanism that this new global economy needs.”
Brown said it is essential that the world does everything necessary to “rebuild trust” and make sure “a crisis such as this” never happens again.
The sweeping G-20 communiqué bridged a gap between the US and European countries led by France and Germany over how far to push changes on regulation to curb the market excesses that led to the current crisis.
French President Nicolas Sarkozy said the results were beyond what could have been imagined. Addressing a key demand from France and Germany, Brown said the leaders agreed there will be an end to tax havens that do not transfer information on request. “The banking secrecy of the past must come to an end.”
He said leaders agreed to commit new resources of $1 trillion that are available to the world economy through the International Monetary Fund and other institutions. This included $250 billion of IMF reserve units called Special Drawing Rights. This is available to all IMF members, Brown said. In addition, the IMF would see its own resources tripled, with up to $500 billion of new funds.
The G-20 nations also agreed to renounce protectionism and pledged $250 billion in trade finance over the next two years—a key measure to help struggling developing countries, whom they promised to give a greater say in world economic affairs. The G-20 will hold a third summit on the financial crisis by the end of autumn in Japan to follow up the world leaders’ meetings in London this week and in Washington in November, Italy’s Silvio Berlusconi said on Thursday.
G-20 summit a turning point in economic recovery
G-20 summit a turning point in economic recovery
The Hindu Business Line, April 5, 2009, Page 4
Washington (PTI): US President Barack Obama on Saturday praised the agreement of the G-20 nations to act together in this financial crisis and said it is a turning point in this global economic slump.
"I'm pleased that after two days of careful negotiation, the G20 nations have agreed on a series of unprecedented steps that I believe will be a turning point in our pursuit of a global economic recovery," Mr. Obama said in his weekly radio address.
Observing that the only way out of a recession, which is global in scope, is with a response that is global in coordination, Mr. Obama said, following the G-20 summit: "All of us are now moving aggressively to get our banks lending again.
All of us are working to spur growth and create jobs."
He said: "And all of us have agreed on the most sweeping reform of our financial regulatory framework in a generation -– (a) reform that will help end the risky speculation and market abuses that have cost so many people so much."
With the American economy inextricably linked to the global economy, worldwide coordination is needed to restore lending, spur job growth, reform financial regulation and ultimately fix our economy, he said.
"If people in other countries cannot spend that means they cannot buy the goods we produce here in America, which means more lost jobs and more families hurting," he said.
Referring to the latest unemployment figures, Mr. Obama said it has gone up to millions after the onset of recession.
"If we continue to let banks and other financial institutions around the world act recklessly and irresponsibly, that affects institutions here at home as credit dries up, and people can't get loans to buy a home or car, to run a small business or pay for college," he said.
The Hindu Business Line, April 5, 2009, Page 4
Washington (PTI): US President Barack Obama on Saturday praised the agreement of the G-20 nations to act together in this financial crisis and said it is a turning point in this global economic slump.
"I'm pleased that after two days of careful negotiation, the G20 nations have agreed on a series of unprecedented steps that I believe will be a turning point in our pursuit of a global economic recovery," Mr. Obama said in his weekly radio address.
Observing that the only way out of a recession, which is global in scope, is with a response that is global in coordination, Mr. Obama said, following the G-20 summit: "All of us are now moving aggressively to get our banks lending again.
All of us are working to spur growth and create jobs."
He said: "And all of us have agreed on the most sweeping reform of our financial regulatory framework in a generation -– (a) reform that will help end the risky speculation and market abuses that have cost so many people so much."
With the American economy inextricably linked to the global economy, worldwide coordination is needed to restore lending, spur job growth, reform financial regulation and ultimately fix our economy, he said.
"If people in other countries cannot spend that means they cannot buy the goods we produce here in America, which means more lost jobs and more families hurting," he said.
Referring to the latest unemployment figures, Mr. Obama said it has gone up to millions after the onset of recession.
"If we continue to let banks and other financial institutions around the world act recklessly and irresponsibly, that affects institutions here at home as credit dries up, and people can't get loans to buy a home or car, to run a small business or pay for college," he said.
Fiscal, monetary measures likely
Fiscal, monetary measures likely
The Financial Express, April 4, 2009, Page 1
Economy Bureau, New Delhi
RBI’s next round of rate cuts, and another fiscal stimulus, could come sooner than the calendar of the general elections may allow for. That’s the most likely fallout of the commitment made by India as well as other leaders in the G-20 communiqué issued in London on Thursday, which US President Barack Obama described as “not a panacea, but a critical step” to help world economies rebound.
The document clearly says expansionary government spending will continue: “We are committed to deliver the scale of sustained fiscal effort necessary to restore growth.” On the prospects for a rate cut, the G-20 says, “Interest rates have been cut aggressively in most countries, and our central banks have pledged to maintain expansionary policies for as long as needed and to use the full range of monetary policy instruments, including unconventional instruments, consistent with price stability.”
RBI is slated to announce its monetary policy review on April 21. The central bank has already cut its short-term lending, or repo, rate by 400 basis points since October. The fall in inflation to 0.31% gives RBI greater room to cut key rates, although bankers expect it to maintain status quo in the near term.
Underscoring the role of countries like India, China and Brazil with that of the developed world to tackle the economic crisis, Obama said at his news conference on Thursday evening at the conclusion of the summit: “We felt that it was very important to strengthen our international financial institutions because developing countries, emerging markets are threatened—even though they may not have been the cause of this crisis—they are threatened by capital flight; they’re threatened by reduced trade finance, drops in consumer demand in developed countries that were their export markets.”
However, Manmohan Singh said in London that India had no plans to approach the IMF for support. “We do not visualise any need in the near future to go to the IMF,” Singh said, adding that India would, instead, consider raising its contribution to the fund in proportion to the enhanced quota.
In its quarterly research on emerging economies issued on Friday, Barclays Capital projected the Indian GDP to grow by 4% in 2009-10. The IMF has estimated that world growth in real terms would resume and rise to over 2% by the end of 2010. ADB too expects a recovery in 2010. The Barclays report also expects RBI to let the rupee depreciate by another 10% to support growth. The rupee is currently at 50.30 to a dollar.
The Centre is also widely expected to enhance its borrowings going forward, though some experts and institutions argue India has no more fiscal headroom. ADB said in its 2009 outlook that India has no scope for another fiscal stimulus. But Planning Commission deputy chairman Montek Singh Ahluwalia said last week that the economy might need “some more stimulus”.
Following the G-20 pledge, India may also have to rewrite its company laws to ensure that pay for senior company executives relate to their performance. At present, companies only need to mention the salary of key executives in their annual reports, but don’t ask shareholders to vote on them.
The Financial Express, April 4, 2009, Page 1
Economy Bureau, New Delhi
RBI’s next round of rate cuts, and another fiscal stimulus, could come sooner than the calendar of the general elections may allow for. That’s the most likely fallout of the commitment made by India as well as other leaders in the G-20 communiqué issued in London on Thursday, which US President Barack Obama described as “not a panacea, but a critical step” to help world economies rebound.
The document clearly says expansionary government spending will continue: “We are committed to deliver the scale of sustained fiscal effort necessary to restore growth.” On the prospects for a rate cut, the G-20 says, “Interest rates have been cut aggressively in most countries, and our central banks have pledged to maintain expansionary policies for as long as needed and to use the full range of monetary policy instruments, including unconventional instruments, consistent with price stability.”
RBI is slated to announce its monetary policy review on April 21. The central bank has already cut its short-term lending, or repo, rate by 400 basis points since October. The fall in inflation to 0.31% gives RBI greater room to cut key rates, although bankers expect it to maintain status quo in the near term.
Underscoring the role of countries like India, China and Brazil with that of the developed world to tackle the economic crisis, Obama said at his news conference on Thursday evening at the conclusion of the summit: “We felt that it was very important to strengthen our international financial institutions because developing countries, emerging markets are threatened—even though they may not have been the cause of this crisis—they are threatened by capital flight; they’re threatened by reduced trade finance, drops in consumer demand in developed countries that were their export markets.”
However, Manmohan Singh said in London that India had no plans to approach the IMF for support. “We do not visualise any need in the near future to go to the IMF,” Singh said, adding that India would, instead, consider raising its contribution to the fund in proportion to the enhanced quota.
In its quarterly research on emerging economies issued on Friday, Barclays Capital projected the Indian GDP to grow by 4% in 2009-10. The IMF has estimated that world growth in real terms would resume and rise to over 2% by the end of 2010. ADB too expects a recovery in 2010. The Barclays report also expects RBI to let the rupee depreciate by another 10% to support growth. The rupee is currently at 50.30 to a dollar.
The Centre is also widely expected to enhance its borrowings going forward, though some experts and institutions argue India has no more fiscal headroom. ADB said in its 2009 outlook that India has no scope for another fiscal stimulus. But Planning Commission deputy chairman Montek Singh Ahluwalia said last week that the economy might need “some more stimulus”.
Following the G-20 pledge, India may also have to rewrite its company laws to ensure that pay for senior company executives relate to their performance. At present, companies only need to mention the salary of key executives in their annual reports, but don’t ask shareholders to vote on them.
Norms for GIS-based land records soon
Norms for GIS-based land records soon
The Financial Express, April 4, 2009, Page 3
Sandip Das, New Delhi
One of the ambitious programme to modernise the land records in rural India , the government is in the process of formulating guidelines in consultation with the Indian Space Research Organisation and other technical bodies prior to its formal launch across the country.
According to a senior official with the department of land resources (DRI), under the ministry of rural development, the nodal ministry to implement the programme, the guidelines would be finalised over the next few months prior to its formal launch at the state levels. Initially 19 states are expected to launch the programme aims at ‘creating a single window to handle land records’.
After the Cabinet approval, the government last year had announced a new scheme — the National Land Records Modernisation Programme (NLRMP) replacing the then existing centrally sponsored schemes of Computerisation of Land Records (CLR) and Strengthening of Revenue Administration & Updating of Land Records (SRA & ULR).
The NLRMP aims at using modern technologies such as Geographic Information System (GIS) and Global Positioning System (GPS) for updating records and conclusive titles in the rural areas of the country.
To be completed by the end of the 12th Five Year Plan (2012-2017), the programme cost is estimated to be Rs 5,656 crore, of which the Centre’s share would be Rs 3,098 crore while the states would contribute Rs 2,558 crore.
“We are now simplifying the technical guidelines provided by ISRO so that it would be easier for the states to adopt and implement them,” DRI secretary Rita Sinha said.
The scheme envisaged by the DLR is expected to provide land titles to more than 700 million rural population, relying on high-resolution satellite imagery. The ministry plans to work with the state governments to replace the present system of registration of land deeds and documents as provided for in the Registration Act. However, under the NLRMP, the land involving litigation will not be surveyed. It is also expected to make land acquisition easier for industrial activities.
NLRMP is an important measure as presently in rural India , presumptive titles are given which are not certified by the states. So they remain private documents and do not get the status of public records that have evidentiary value under provisions of the Evidence Act. This renders the right of the owner to the land title, presumptive at best.
The Registration Act, 1908 provides for registration of deeds and documents but not registration of titles. Even though the Transfer of Property Act, 1882, mandates compulsory registration of transfer of immovable property, lack of state guarantee of title to land contributes to the unsatisfactory state of affairs in conveyancing in the country.
According to the draft guidelines for implementation of NLRMP, aims to develop a modern, comprehensive and transparent land records system in the country. The programme also envisage activities such as data entry or re-entry and data conversion of all the textual records including mutation records, update of all survey & settlement records including creation of original cadastral records wherever needed.
“The programme will modernise land records management, minimise scope of land disputes, enhance transparency in the land records maintenance system,” Sinha said. However, she said the training of Potawari or a land record clerk at Tehsil level is key to the success of the programme. Thus under the NLRMP, the training of Potawaries will be given key importance.
The rural development ministry, through CLR & SRA & ULR, have supported efforts of states for land records update and computerisation. But in the absence of the system of conclusive titles with title guarantee which is essential for security of property rights, large number of lands remain locked under litigation.
Under the till now existing schemes of SRA & ULR, states like Andhra Pradesh, Gujarat, Madhya Pradesh, Rajasthan among others have already completed their revenue records data entries, while states like Gujarat , Madhya Pradesh, Tamil Nadu and Uttar Pradesh among others have stopped manual issue of their revenue records.
How it works
• The NLRMP aims at using modern technologies such as Geographic Information System and Global Positioning System for updating records and conclusive titles in the rural areas of the country
• To be completed by the end of the 12th Plan, the programme cost is estimated to be Rs 5,656 crore
• The scheme envisaged by DLR is expected to provide land titles to more than 700 million rural population
The Financial Express, April 4, 2009, Page 3
Sandip Das, New Delhi
One of the ambitious programme to modernise the land records in rural India , the government is in the process of formulating guidelines in consultation with the Indian Space Research Organisation and other technical bodies prior to its formal launch across the country.
According to a senior official with the department of land resources (DRI), under the ministry of rural development, the nodal ministry to implement the programme, the guidelines would be finalised over the next few months prior to its formal launch at the state levels. Initially 19 states are expected to launch the programme aims at ‘creating a single window to handle land records’.
After the Cabinet approval, the government last year had announced a new scheme — the National Land Records Modernisation Programme (NLRMP) replacing the then existing centrally sponsored schemes of Computerisation of Land Records (CLR) and Strengthening of Revenue Administration & Updating of Land Records (SRA & ULR).
The NLRMP aims at using modern technologies such as Geographic Information System (GIS) and Global Positioning System (GPS) for updating records and conclusive titles in the rural areas of the country.
To be completed by the end of the 12th Five Year Plan (2012-2017), the programme cost is estimated to be Rs 5,656 crore, of which the Centre’s share would be Rs 3,098 crore while the states would contribute Rs 2,558 crore.
“We are now simplifying the technical guidelines provided by ISRO so that it would be easier for the states to adopt and implement them,” DRI secretary Rita Sinha said.
The scheme envisaged by the DLR is expected to provide land titles to more than 700 million rural population, relying on high-resolution satellite imagery. The ministry plans to work with the state governments to replace the present system of registration of land deeds and documents as provided for in the Registration Act. However, under the NLRMP, the land involving litigation will not be surveyed. It is also expected to make land acquisition easier for industrial activities.
NLRMP is an important measure as presently in rural India , presumptive titles are given which are not certified by the states. So they remain private documents and do not get the status of public records that have evidentiary value under provisions of the Evidence Act. This renders the right of the owner to the land title, presumptive at best.
The Registration Act, 1908 provides for registration of deeds and documents but not registration of titles. Even though the Transfer of Property Act, 1882, mandates compulsory registration of transfer of immovable property, lack of state guarantee of title to land contributes to the unsatisfactory state of affairs in conveyancing in the country.
According to the draft guidelines for implementation of NLRMP, aims to develop a modern, comprehensive and transparent land records system in the country. The programme also envisage activities such as data entry or re-entry and data conversion of all the textual records including mutation records, update of all survey & settlement records including creation of original cadastral records wherever needed.
“The programme will modernise land records management, minimise scope of land disputes, enhance transparency in the land records maintenance system,” Sinha said. However, she said the training of Potawari or a land record clerk at Tehsil level is key to the success of the programme. Thus under the NLRMP, the training of Potawaries will be given key importance.
The rural development ministry, through CLR & SRA & ULR, have supported efforts of states for land records update and computerisation. But in the absence of the system of conclusive titles with title guarantee which is essential for security of property rights, large number of lands remain locked under litigation.
Under the till now existing schemes of SRA & ULR, states like Andhra Pradesh, Gujarat, Madhya Pradesh, Rajasthan among others have already completed their revenue records data entries, while states like Gujarat , Madhya Pradesh, Tamil Nadu and Uttar Pradesh among others have stopped manual issue of their revenue records.
How it works
• The NLRMP aims at using modern technologies such as Geographic Information System and Global Positioning System for updating records and conclusive titles in the rural areas of the country
• To be completed by the end of the 12th Plan, the programme cost is estimated to be Rs 5,656 crore
• The scheme envisaged by DLR is expected to provide land titles to more than 700 million rural population
Cement industry may bow to govt pressure
Cement industry may bow to govt pressure
Business Standard, April 5, 2009, Page 5
Chandan Kishore Kant / Mumbai
Stung by the government’s response to the recent price hikes, the cement industry has hinted that they would not increase the prices further.
The department of industrial policy and promotion (DIPP) had said that the price hike by the cement industry was unacceptable in the face of excise reliefs given to the players.
Since February, there has been three rounds of price rises, taking the average price up by around Rs 10-15 for a 50-kg bag.
In 2007, the government announced several measures to keep cement prices under check. But the last few months saw the government taking several favourable decisions for the cement industry such as excise duty cuts, re-imposition of countervailing duty on cement imports from Pakistan and opening of the export route.
However, top cement makers told Business Standard that they were unhappy with the government’s reaction on “something which is purely market-driven.” They further added that on an year-on-year basis, cement prices were ruling only marginally higher.
Hari Mohan Bangur, president, Cement Manufacturers’ Association (CMA), said, “Raising the price is a company’s individual decision and CMA does not have the power to ask the players to reduce prices.”
Bangur is also the chairman and managing director of the North-based Shree Cement.
“The government is harping on a wrong thing. In a free market economy, why does the government provide us (the cement industry) coal linkages at a controlled price? Cement prices are ruled by the market dynamics and there is no collective decision of hiking prices,” said an executive of a company who did not wish to be named.
Amrit Lal Kapur, managing director of Ambuja Cements, said, “Any further rise in prices seems unlikely and we have no intention to hike prices. Cement prices will remain stable and as demand will slow down in the next couple of months, prices will be under pressure as incremental capacities will outpace the demand.”
According to Bangur, cement prices already had declined during the later part of the last year. So, looking at today’s prices and comparing them the last year’s price in the same period, it is up only 4-5 per cent, added Bangur. “This is not as high as it is being made out to be,” added Bangur.
Vinod Juneja, managing director, Binani Cement, said that price rise was purely a demand and supply game. “It is not a continuous scenario. In near future, prices will be rationalised. For the time being, we have no plans to raise the prices,” added Juneja.
Industry sources told Business Standard that over a month back, the DIPP secretary had convened a meeting of cement makers. They added that Uttar Pradesh witnessed a sharp rise in demand, resulting in shortages. This has led players operating in UP to go for specific price rise.
A K Saraogi, chief financial officer of the Kanpur-based J K Cement, said, “The maximum retail price (MRP) has not seen much change. It is about 3-5 per cent. It is not the companies but the dealers who are raising prices.”
Business Standard, April 5, 2009, Page 5
Chandan Kishore Kant / Mumbai
Stung by the government’s response to the recent price hikes, the cement industry has hinted that they would not increase the prices further.
The department of industrial policy and promotion (DIPP) had said that the price hike by the cement industry was unacceptable in the face of excise reliefs given to the players.
Since February, there has been three rounds of price rises, taking the average price up by around Rs 10-15 for a 50-kg bag.
In 2007, the government announced several measures to keep cement prices under check. But the last few months saw the government taking several favourable decisions for the cement industry such as excise duty cuts, re-imposition of countervailing duty on cement imports from Pakistan and opening of the export route.
However, top cement makers told Business Standard that they were unhappy with the government’s reaction on “something which is purely market-driven.” They further added that on an year-on-year basis, cement prices were ruling only marginally higher.
Hari Mohan Bangur, president, Cement Manufacturers’ Association (CMA), said, “Raising the price is a company’s individual decision and CMA does not have the power to ask the players to reduce prices.”
Bangur is also the chairman and managing director of the North-based Shree Cement.
“The government is harping on a wrong thing. In a free market economy, why does the government provide us (the cement industry) coal linkages at a controlled price? Cement prices are ruled by the market dynamics and there is no collective decision of hiking prices,” said an executive of a company who did not wish to be named.
Amrit Lal Kapur, managing director of Ambuja Cements, said, “Any further rise in prices seems unlikely and we have no intention to hike prices. Cement prices will remain stable and as demand will slow down in the next couple of months, prices will be under pressure as incremental capacities will outpace the demand.”
According to Bangur, cement prices already had declined during the later part of the last year. So, looking at today’s prices and comparing them the last year’s price in the same period, it is up only 4-5 per cent, added Bangur. “This is not as high as it is being made out to be,” added Bangur.
Vinod Juneja, managing director, Binani Cement, said that price rise was purely a demand and supply game. “It is not a continuous scenario. In near future, prices will be rationalised. For the time being, we have no plans to raise the prices,” added Juneja.
Industry sources told Business Standard that over a month back, the DIPP secretary had convened a meeting of cement makers. They added that Uttar Pradesh witnessed a sharp rise in demand, resulting in shortages. This has led players operating in UP to go for specific price rise.
A K Saraogi, chief financial officer of the Kanpur-based J K Cement, said, “The maximum retail price (MRP) has not seen much change. It is about 3-5 per cent. It is not the companies but the dealers who are raising prices.”
Rising cement prices to hit affordable housing projects
Rising cement prices to hit affordable housing projects
The Financial Express, April 4, 2009, Page 9
Mona Mehta, Mumbai
The real estate segment, especially affordable housing projects in certain metros, is taking a hit due to repeated rise in cement prices. For, top builders have started witnessing 10% dip in margins and 5-8% hike in construction costs.
Cement prices have increased almost four times since January 2009, by Rs 3-5 per bag each time. Currently, the real estate sector accounts for about 65% of total cement consumption. Experts, meanwhile, believe that cement prices will rise further.
Nayan Shah, chief executive officer, Mayfair Housing Private Ltd, told FE, “Construction costs for our affordable housing projects in Virar and Thane have shot up by 5-7%. Such projects usually allow us builders margins up to 10%. But, now, we feel that we will be left with no margins; that is a worrisome scenario.”
Competitor Kanakia Spaces, meanwhile, is witnessing a dip in sales. Vishal Doshi, the company’s assistant business manager, business development and marketing, said, “The increase in cement prices will surely have a negative effect, not only on builders developing affordable homes, but also overall. Margins in affordable housing projects are anyway very conservative; hence, increases in costs will surely give way to a dip in margins.”
Lalit Kumar Jain, president, Promoters Builders Association of Pune (PBAP) and VP, Credai, said, “It is not only price rise; basic cement price at Rs 265 per 50 kg itself is very high; such prices are not sustainable for affordable housing.”
He argued that 50 kg cement bags should be priced at Rs 125.
“Cartelisation among cement companies is the cause for the high prices; it allows them to raise prices at their own will,” said Jain.
Anand Gupta, general secretary, Builders' Association of India (BAI), too said that cartelisation by cement manufacturers is the root cause for frequent hikes in cement prices. “The hike is creating a lot of uncertainty in deciding construction costs and is leading to unnecessary and multiple disputes between owners and contractors," he said.
Gagan Singh, managing director, project development services, Jones Lang LaSalle Meghraj (JLLM), however, feels that while there have been fluctuations in cement prices, these have had only an insignificant bearing on developers' overall ability to carry on business.
“Judging the market as it stands now, we would rather say that developers' ongoing lack of realism regarding expectations of margins will have a far greater impact on their bottomlines. Their ability to source right-priced land for affordable housing schemes will be of pertinence in this respect. Flux in construction costs is always factored into the project; it is realism in expectations and strategy that will help developers derive real value in a changing world.”
The Financial Express, April 4, 2009, Page 9
Mona Mehta, Mumbai
The real estate segment, especially affordable housing projects in certain metros, is taking a hit due to repeated rise in cement prices. For, top builders have started witnessing 10% dip in margins and 5-8% hike in construction costs.
Cement prices have increased almost four times since January 2009, by Rs 3-5 per bag each time. Currently, the real estate sector accounts for about 65% of total cement consumption. Experts, meanwhile, believe that cement prices will rise further.
Nayan Shah, chief executive officer, Mayfair Housing Private Ltd, told FE, “Construction costs for our affordable housing projects in Virar and Thane have shot up by 5-7%. Such projects usually allow us builders margins up to 10%. But, now, we feel that we will be left with no margins; that is a worrisome scenario.”
Competitor Kanakia Spaces, meanwhile, is witnessing a dip in sales. Vishal Doshi, the company’s assistant business manager, business development and marketing, said, “The increase in cement prices will surely have a negative effect, not only on builders developing affordable homes, but also overall. Margins in affordable housing projects are anyway very conservative; hence, increases in costs will surely give way to a dip in margins.”
Lalit Kumar Jain, president, Promoters Builders Association of Pune (PBAP) and VP, Credai, said, “It is not only price rise; basic cement price at Rs 265 per 50 kg itself is very high; such prices are not sustainable for affordable housing.”
He argued that 50 kg cement bags should be priced at Rs 125.
“Cartelisation among cement companies is the cause for the high prices; it allows them to raise prices at their own will,” said Jain.
Anand Gupta, general secretary, Builders' Association of India (BAI), too said that cartelisation by cement manufacturers is the root cause for frequent hikes in cement prices. “The hike is creating a lot of uncertainty in deciding construction costs and is leading to unnecessary and multiple disputes between owners and contractors," he said.
Gagan Singh, managing director, project development services, Jones Lang LaSalle Meghraj (JLLM), however, feels that while there have been fluctuations in cement prices, these have had only an insignificant bearing on developers' overall ability to carry on business.
“Judging the market as it stands now, we would rather say that developers' ongoing lack of realism regarding expectations of margins will have a far greater impact on their bottomlines. Their ability to source right-priced land for affordable housing schemes will be of pertinence in this respect. Flux in construction costs is always factored into the project; it is realism in expectations and strategy that will help developers derive real value in a changing world.”
BJP promises low-tax, low-interest regime; silent on disinvestment
BJP promises low-tax, low-interest regime; silent on disinvestment
The Financial Express, April 4, 2009, Page 1
fe Bureau, New Delhi
US companies with Indian operations are in for a shock if the BJP wins the upcoming Lok Sabha polls. The party’s strategy to put the slowing domestic economy back on a high-growth path envisages imposing restrictions on the local operations of foreign firms if their home countries restrict the hiring of Indian workers with valid work visas—as the Obama administration has done for US companies receiving federal aid.
Significantly, the party’s election manifesto unveiled on Ramnavami, Friday, ostensibly to reiterate its Hindutva commitment, outlines 16 steps to revive the economy “from recession to job-generating growth”. Terming the incumbent UPA’s recent attempts to backtrack from its inflation-obsessed monetary policies as “half-hearted”, the BJP has promised “determined, direct and visible” interventions to revitalise growth.
Mooting a low-tax, low-interest regime that puts more money in the hands of the people, the BJP promises to double the threshold for personal income-tax exemption to Rs 3 lakh, as well as exempt interest on bank deposits by individuals. Pension receipts will be made tax-free as well. “Good governance, development and security, these summarise our promises,” said the BJP’s prime ministerial candidate, LK Advani.
Competing with the Congress in poll pledges, the BJP promises an array of populist measures including 35 kg of foodgrain for the poor at Rs 2 a kg, farm loans at 4% and an income-tax-free regime for soldiers and paramilitary forces. However, for a party that made a strong case for disinvestment, the document is conspicuously silent on the subject.
Like the Congress, the BJP also promises a goods & services tax, but has specified a rate of 12%-14%, which economists say point to a hike in service tax, excise and Vat. For India Inc, it has promised to scrap the fringe-benefit tax and rationalise the minimum alternate tax. As a fiscal stimulus, the party vowed to put infrastructure projects on the fast track, with at least 15-20 km of new highways every day.
Taking a pot shot at the Congress’ handling of the Satyam Computer Services scam, the BJP manifesto says: “Regulatory bodies, which are supposed to monitor the performance and balance sheets of companies, will be strengthened to prevent corporate fraud that dents India’s image and has a direct impact on the market and investors.”
The manifesto does not say how these sops would be financed, except for promising to repatriate back black money stashed away in overseas tax havens. Advani has already raked up the issue of illegal money in foreign banks, saying that its retrieval could result in funds of Rs 4 crore for each village in the country for infrastructure projects.
“While the BJP’s economic agenda is more specific than that of the Congress, there shouldn’t be too much difference between the two parties on actual implementation. The UPA was leaning more towards social sector projects to revive the economy and the BJP seems to be making up for it,” said Sonal Varma, economist at Nomura.
The Financial Express, April 4, 2009, Page 1
fe Bureau, New Delhi
US companies with Indian operations are in for a shock if the BJP wins the upcoming Lok Sabha polls. The party’s strategy to put the slowing domestic economy back on a high-growth path envisages imposing restrictions on the local operations of foreign firms if their home countries restrict the hiring of Indian workers with valid work visas—as the Obama administration has done for US companies receiving federal aid.
Significantly, the party’s election manifesto unveiled on Ramnavami, Friday, ostensibly to reiterate its Hindutva commitment, outlines 16 steps to revive the economy “from recession to job-generating growth”. Terming the incumbent UPA’s recent attempts to backtrack from its inflation-obsessed monetary policies as “half-hearted”, the BJP has promised “determined, direct and visible” interventions to revitalise growth.
Mooting a low-tax, low-interest regime that puts more money in the hands of the people, the BJP promises to double the threshold for personal income-tax exemption to Rs 3 lakh, as well as exempt interest on bank deposits by individuals. Pension receipts will be made tax-free as well. “Good governance, development and security, these summarise our promises,” said the BJP’s prime ministerial candidate, LK Advani.
Competing with the Congress in poll pledges, the BJP promises an array of populist measures including 35 kg of foodgrain for the poor at Rs 2 a kg, farm loans at 4% and an income-tax-free regime for soldiers and paramilitary forces. However, for a party that made a strong case for disinvestment, the document is conspicuously silent on the subject.
Like the Congress, the BJP also promises a goods & services tax, but has specified a rate of 12%-14%, which economists say point to a hike in service tax, excise and Vat. For India Inc, it has promised to scrap the fringe-benefit tax and rationalise the minimum alternate tax. As a fiscal stimulus, the party vowed to put infrastructure projects on the fast track, with at least 15-20 km of new highways every day.
Taking a pot shot at the Congress’ handling of the Satyam Computer Services scam, the BJP manifesto says: “Regulatory bodies, which are supposed to monitor the performance and balance sheets of companies, will be strengthened to prevent corporate fraud that dents India’s image and has a direct impact on the market and investors.”
The manifesto does not say how these sops would be financed, except for promising to repatriate back black money stashed away in overseas tax havens. Advani has already raked up the issue of illegal money in foreign banks, saying that its retrieval could result in funds of Rs 4 crore for each village in the country for infrastructure projects.
“While the BJP’s economic agenda is more specific than that of the Congress, there shouldn’t be too much difference between the two parties on actual implementation. The UPA was leaning more towards social sector projects to revive the economy and the BJP seems to be making up for it,” said Sonal Varma, economist at Nomura.
NHB for separate body to handle mortgage loans
NHB for separate body to handle mortgage loans
Business Standard, April 6, 2009, Page 8
BS Reporter / Chennai
National Housing Bank (NHB), which regulates and lends to housing finance institutions, said it was in talks with Indian Banks’ Association (IBA), an association of banks and financial institutions, to set up a joint body that would handle technical issues regarding mortgage loans.
The proposed body would also develop a uniform standard for the valuation of housing loans, said S Sridhar, CMD of NHB, at a conference here.
The new body would also appoint independent mortgage counsellors, who will “educate and help” prospective home buyers, Sridhar said during his address at the conference on housing finance organised by NHB, IBA and the Consumer Association of India. NHB, a regulator for 43 housing finance companies in the country, would train the mortgage counsellors, who can be chartered accountants, bank managers, insurance advisors or “anyone who has financial background”, he said. The counsellors will be paid by home buyers for their services, said Sridhar.
Business Standard, April 6, 2009, Page 8
BS Reporter / Chennai
National Housing Bank (NHB), which regulates and lends to housing finance institutions, said it was in talks with Indian Banks’ Association (IBA), an association of banks and financial institutions, to set up a joint body that would handle technical issues regarding mortgage loans.
The proposed body would also develop a uniform standard for the valuation of housing loans, said S Sridhar, CMD of NHB, at a conference here.
The new body would also appoint independent mortgage counsellors, who will “educate and help” prospective home buyers, Sridhar said during his address at the conference on housing finance organised by NHB, IBA and the Consumer Association of India. NHB, a regulator for 43 housing finance companies in the country, would train the mortgage counsellors, who can be chartered accountants, bank managers, insurance advisors or “anyone who has financial background”, he said. The counsellors will be paid by home buyers for their services, said Sridhar.
He added that NHB was also planning to float a mortgage depository system. He said the National Mortgage Depository System would help arrest “double financing on the same property”. “This will also make the industry more transparent,” he said. Initially, all banks would be linked to the system. Later, all state governments would be connected to it in a phased manner, Sridhar added.
Lower rates in realty
Lower rates in realty
The Hindu Business Line, April 5, 2009, Page 15
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Price reduction is likely to be more pronounced in new projects than in those under construction.
--------------------------------------------------------------------------------
Moumita Bakshi Chatterjee
Hit by slowdown blues and a massive credit crunch, real estate players are biting the bullet and lowering prices on new and existing residential projects.
Recently, DLF Ltd reduced rates by 20 per cent on two ongoing projects — OMR Chennai and New Town Heights, Gurgaon. Market watchers believe that the move could prompt others to follow suit.
For instance, Omaxe says it has dropped prices by nearly 15 per cent, but only for new projects (Vrindavan, in Allahabad and Indore, is a case in point).
While the company insists it has not “reduced” rates on existing projects, it admits to offering a 5-10 per cent discount to customers who pay instalments on time.
Price correction
Overall, the real estate prices have corrected by 25-40 per cent over the last six months. With funds drying-up from investors, speculators, PE and banks, realtors realise that the funds are only available with end-users, who, in turn, are looking at value for money, says Mr Anuj Puri, Managing Director, Jones Lang LaSalle Meghraj.
DLF came under media glare recently when it slashed prices for its Chennai and Gurgaon projects. Besides this, the company has also launched two more projects at “lower prices” in Bangalore and Hyderabad — against the initially intended price of nearly Rs 3,000 per sq.ft, it has now announced a rate of Rs 2,200-2,300 per sq.ft, says a DLF official.
“In the case of existing projects, there was consumer demand for bringing the rates down. However, in the case of the upcoming projects, there had been an apprehension that the sales could get hit on account of two factors — consumer worry over future cash flows, and their expectation that prices will fall in future. By reducing the rates, we have been able to infuse demand and address these two concerns,” the official adds.
According to DTZ, the last 3-6 month period has seen a 10-15 per cent price correction across the Delhi NCR micro-markets. “The correction has been more pronounced in the peripheral locations of Delhi NCR. There is a correction of 10-15 per cent on the quoted values,” a DTZ representative said.
New projects cheaper
Analysts feel that the price reduction is likely to be more pronounced in the case of new projects than those under construction and nearing completion. This is because on existing projects the end-user is sure on delivery timelines. For new projects, customers are discounting the risk of delivery, analysts opine.
So have the residential prices finally bottomed out? No one really can tell for sure. Naturally, most players claim that the prices are unlikely to tank further. According to Mr Rohtas Goel, CMD, Omaxe, “So far the lack of demand in the market has forced the real estate companies to announce price drops, but I do not think that there is any further scope. Builders cannot afford to cut rates, going forward.”
Agrees Mr Puri of Jones Lang LaSalle Meghraj. “In many cases, I feel that the prices have touched the bottom. For instance, in Gurgaon where rates were initially pegged at Rs 6,500-7,000 per sq.ft, they have now come down to Rs 3,250 per sq.ft. I believe that where the prices have hit the year 2005-range, there is no scope for any more reduction now,” he points out.
In fact, there are cases where builders are going all out to win customer confidence by offering ‘price guarantee’ of sorts. This essentially means that if a builder decides to cut rates on a particular project for the unsold inventory, he would cough-up the differential to its old customers who may have shelled-out more for the same project initially.
This guarantee is being offered only in cases where the builder is reasonable sure that the prices won’t come down in a hurry.
Assured value
Lodha Group, for instance, is offering “best value guarantee” scheme to its luxury housing project customers in South and Central Mumbai. “This is aimed at building customer confidence in the project,” says Mr Abhishek Lodha, the company’s director.
Mr Lodha admits that the new pricing in overall real estate sector is reflecting the market reality. “In our eight new projects, the prices have been pegged 15-20 per cent lower than what they would have been, say, a year ago,” he adds.
The Hindu Business Line, April 5, 2009, Page 15
--------------------------------------------------------------------------------
Price reduction is likely to be more pronounced in new projects than in those under construction.
--------------------------------------------------------------------------------
Moumita Bakshi Chatterjee
Hit by slowdown blues and a massive credit crunch, real estate players are biting the bullet and lowering prices on new and existing residential projects.
Recently, DLF Ltd reduced rates by 20 per cent on two ongoing projects — OMR Chennai and New Town Heights, Gurgaon. Market watchers believe that the move could prompt others to follow suit.
For instance, Omaxe says it has dropped prices by nearly 15 per cent, but only for new projects (Vrindavan, in Allahabad and Indore, is a case in point).
While the company insists it has not “reduced” rates on existing projects, it admits to offering a 5-10 per cent discount to customers who pay instalments on time.
Price correction
Overall, the real estate prices have corrected by 25-40 per cent over the last six months. With funds drying-up from investors, speculators, PE and banks, realtors realise that the funds are only available with end-users, who, in turn, are looking at value for money, says Mr Anuj Puri, Managing Director, Jones Lang LaSalle Meghraj.
DLF came under media glare recently when it slashed prices for its Chennai and Gurgaon projects. Besides this, the company has also launched two more projects at “lower prices” in Bangalore and Hyderabad — against the initially intended price of nearly Rs 3,000 per sq.ft, it has now announced a rate of Rs 2,200-2,300 per sq.ft, says a DLF official.
“In the case of existing projects, there was consumer demand for bringing the rates down. However, in the case of the upcoming projects, there had been an apprehension that the sales could get hit on account of two factors — consumer worry over future cash flows, and their expectation that prices will fall in future. By reducing the rates, we have been able to infuse demand and address these two concerns,” the official adds.
According to DTZ, the last 3-6 month period has seen a 10-15 per cent price correction across the Delhi NCR micro-markets. “The correction has been more pronounced in the peripheral locations of Delhi NCR. There is a correction of 10-15 per cent on the quoted values,” a DTZ representative said.
New projects cheaper
Analysts feel that the price reduction is likely to be more pronounced in the case of new projects than those under construction and nearing completion. This is because on existing projects the end-user is sure on delivery timelines. For new projects, customers are discounting the risk of delivery, analysts opine.
So have the residential prices finally bottomed out? No one really can tell for sure. Naturally, most players claim that the prices are unlikely to tank further. According to Mr Rohtas Goel, CMD, Omaxe, “So far the lack of demand in the market has forced the real estate companies to announce price drops, but I do not think that there is any further scope. Builders cannot afford to cut rates, going forward.”
Agrees Mr Puri of Jones Lang LaSalle Meghraj. “In many cases, I feel that the prices have touched the bottom. For instance, in Gurgaon where rates were initially pegged at Rs 6,500-7,000 per sq.ft, they have now come down to Rs 3,250 per sq.ft. I believe that where the prices have hit the year 2005-range, there is no scope for any more reduction now,” he points out.
In fact, there are cases where builders are going all out to win customer confidence by offering ‘price guarantee’ of sorts. This essentially means that if a builder decides to cut rates on a particular project for the unsold inventory, he would cough-up the differential to its old customers who may have shelled-out more for the same project initially.
This guarantee is being offered only in cases where the builder is reasonable sure that the prices won’t come down in a hurry.
Assured value
Lodha Group, for instance, is offering “best value guarantee” scheme to its luxury housing project customers in South and Central Mumbai. “This is aimed at building customer confidence in the project,” says Mr Abhishek Lodha, the company’s director.
Mr Lodha admits that the new pricing in overall real estate sector is reflecting the market reality. “In our eight new projects, the prices have been pegged 15-20 per cent lower than what they would have been, say, a year ago,” he adds.
Past prices perfect for now
Past prices perfect for now
The Hindu Business Line, April 5, 2009, Page 15
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Overwhelming response to HDIL offer for Mumbai projects.
--------------------------------------------------------------------------------
— Paul Noronha
The pricing looks very attractive for home-seekers in Mumbai.
S. Shanker
Could residential demand pick up if prices are rolled back to levels prevalent a few years back?
Yes, seems to be the answer going by the experience of one of the largest developers in Mumbai — Housing Development and Infrastructure Ltd (HDIL).
Property buyers in Mumbai appear to be looking for 2004 prices in the current economic scenario, going by the responses that HDIL got last fortnight.
One of the large-scale real estate developers in Mumbai, HDIL has executed 32 projects spanning over 28 million sq.ft of saleable area, besides four million sq.ft under slum rehabilitation schemes in the city since 1996.
Primarily into residential housing, HDIL priced its March launches, comprising one- and two-BHK (bedroom-hall-kitchen) apartments at Kurla, a central suburb in the city, at Rs 5,251 a sq.ft — a level of pricing that prevailed there in 2004. The response has been overwhelming and the company, which opened bookings on March 6, has sold over 85 per cent of the 756 apartments till date.
Even in the present market conditions, where builders have lowered rates across the city, the Kurla project appears to be at least 30 per cent lower than the prevailing rates in the locality.
The second project of 413 apartments at Andheri, an upmarket locality close to the airport, too garnered good response so much so that the company has raised the price from Rs 7,651 a sq.ft to Rs 7,951 a sq.ft.
“We were looking for first-time buyers, who were pushed to the sidelines over the last three-four years and who form a sizable population of the working class in Mumbai,” says Mr Hariprakash Pandey, Deputy General Manager - Finance, HDIL.
Referring to the Kurla project, Mr Pandey says the offering of one and two BHK in the range of Rs 50 lakh fitted the bill of the middle and upper-middle classes who are willing to pay that much more for a central location with good road and rail connectivity, besides other infrastructure. “Many of our buyers told us that they had gone in for no more than a Rs 30 lakh loan by bringing in the balance as margin money,” he said.
The Andheri property too has its advantages, though the company managed to leverage on the prevailing rentals at the locale to arrive at the price point. With two BHK rentals at Rs 50,000-60,000 and buyers known to correlate rentals to the equated monthly instalments of bank loans, the pricing was seemingly attractive. “More importantly, there is no fresh supply coming in at the moment in the locality and the price is close to 40 per cent lower than the 2007 prices,” says Mr Pandey.
HDIL has lined up two more such launches in the coming months, where the price band would look overtly competitive to home-seekers.
Opts out of Dharavi
HDIL has pulled out of the Rs 15,000-crore Dharavi Redevelopment Project and may instead look for contracts from the bid winners.
Mr Pandey said the contract had become unviable and there was a great deal of uncertainty over the biding process. Further, there was no clarity in execution — how much space would have to be provided to the slum dwellers — 269 sq.ft or 400 sq.ft, besides the issue of premium the government sought for the slum resettlement project.
In 2007, the company was awarded the Mumbai international airport slum rehabilitation project as part of the Mumbai airport expansion project, which involves resettling 85,000 slum families by 2012.
Under phase I, HDIL plans to resettle 20,000 slum families on 38 acres at a cost of Rs 3,200 crore by December.
The Hindu Business Line, April 5, 2009, Page 15
--------------------------------------------------------------------------------
Overwhelming response to HDIL offer for Mumbai projects.
--------------------------------------------------------------------------------
— Paul Noronha
The pricing looks very attractive for home-seekers in Mumbai.
S. Shanker
Could residential demand pick up if prices are rolled back to levels prevalent a few years back?
Yes, seems to be the answer going by the experience of one of the largest developers in Mumbai — Housing Development and Infrastructure Ltd (HDIL).
Property buyers in Mumbai appear to be looking for 2004 prices in the current economic scenario, going by the responses that HDIL got last fortnight.
One of the large-scale real estate developers in Mumbai, HDIL has executed 32 projects spanning over 28 million sq.ft of saleable area, besides four million sq.ft under slum rehabilitation schemes in the city since 1996.
Primarily into residential housing, HDIL priced its March launches, comprising one- and two-BHK (bedroom-hall-kitchen) apartments at Kurla, a central suburb in the city, at Rs 5,251 a sq.ft — a level of pricing that prevailed there in 2004. The response has been overwhelming and the company, which opened bookings on March 6, has sold over 85 per cent of the 756 apartments till date.
Even in the present market conditions, where builders have lowered rates across the city, the Kurla project appears to be at least 30 per cent lower than the prevailing rates in the locality.
The second project of 413 apartments at Andheri, an upmarket locality close to the airport, too garnered good response so much so that the company has raised the price from Rs 7,651 a sq.ft to Rs 7,951 a sq.ft.
“We were looking for first-time buyers, who were pushed to the sidelines over the last three-four years and who form a sizable population of the working class in Mumbai,” says Mr Hariprakash Pandey, Deputy General Manager - Finance, HDIL.
Referring to the Kurla project, Mr Pandey says the offering of one and two BHK in the range of Rs 50 lakh fitted the bill of the middle and upper-middle classes who are willing to pay that much more for a central location with good road and rail connectivity, besides other infrastructure. “Many of our buyers told us that they had gone in for no more than a Rs 30 lakh loan by bringing in the balance as margin money,” he said.
The Andheri property too has its advantages, though the company managed to leverage on the prevailing rentals at the locale to arrive at the price point. With two BHK rentals at Rs 50,000-60,000 and buyers known to correlate rentals to the equated monthly instalments of bank loans, the pricing was seemingly attractive. “More importantly, there is no fresh supply coming in at the moment in the locality and the price is close to 40 per cent lower than the 2007 prices,” says Mr Pandey.
HDIL has lined up two more such launches in the coming months, where the price band would look overtly competitive to home-seekers.
Opts out of Dharavi
HDIL has pulled out of the Rs 15,000-crore Dharavi Redevelopment Project and may instead look for contracts from the bid winners.
Mr Pandey said the contract had become unviable and there was a great deal of uncertainty over the biding process. Further, there was no clarity in execution — how much space would have to be provided to the slum dwellers — 269 sq.ft or 400 sq.ft, besides the issue of premium the government sought for the slum resettlement project.
In 2007, the company was awarded the Mumbai international airport slum rehabilitation project as part of the Mumbai airport expansion project, which involves resettling 85,000 slum families by 2012.
Under phase I, HDIL plans to resettle 20,000 slum families on 38 acres at a cost of Rs 3,200 crore by December.
Realty prices to decline: Edelweiss
Realty prices to decline: Edelweiss
Business Standard, April 6, 2009, Page 2
Business Standard, April 6, 2009, Page 2
Realtors seek to barter houses against bills, find no takers
Realtors seek to barter houses against bills, find no takers
The Economic Times, April 3, 2009, Page 9
Sanjeev Choudhary, ET Bureau
NEW DELHI: Caught between a credit squeeze and demand crunch, realty players want to barter houses to settle pending supplier bills, but contractors say they can’t forego hard cash and settle for flats in a falling property market.
At least three major realty brands operating in the national capital region have offered apartments in their ongoing projects to contractors and suppliers of building material, industry insiders told ET. “There are several real estate companies that are falling behind on payments and asking contractors to settle for apartments instead,” says PR Swarup, director general of Construction Industry Development Council. Swarup refuses to name any company, but ET has learnt the firms taking this route include even listed players.
A Delhi-based realty firm, a prominent name in the sector, is developing a major residential project in the city and has offered apartments to its contractors. “We have made an offer but the contractor is asking for a discount. If we reduce apartment prices, we will also expect the contractor to bring down the bill value for the work he has done on our project,” says a company executive corroborating this.
Another Delhi-based listed mid-size developer and a highly-leveraged Gurgaonbased listed real estate company too have offered to sell their apartments to their contractors and building material suppliers to settle dues.
This enthusiasm doesn’t have many takers at the other end. “Even if we were to take apartments, they will have to be sold someday to generate revenue. If developers can’t sell these homes, how can we do it?” asks Arun Sahai, CEO of Ahluwalia Contracts, which has been offered houses in a major project in Delhi. Ahluwalia Contracts, a Rs 1200-crore Delhi-based listed construction company, is currently engaged in the execution of several residential projects, including the prestigious Commonwealth Games Village. “Barter will not help. We are focused on construction and without a regular cashflow, our work will get stalled,” says Mr Sahai.
Shailendra Chouksey, director, JK Lakshmi Cement, says his company has become more choosy in supplying cement and ready-mix concrete to builders these days, given the delay in payments. “Builders are under pressure. Most of them have been delaying payments,” he says.
Real estate sector has been under pressure for almost a year because of dramatic decline in sales, credit crunch and unavailability of private equity. Extraordinarily high prices together with high financing cost have made houses unaffordable for home buyers. An economic downturn has further weakened sentiments in the housing market with several existing and potential home buyers suffering or facing the threat of job and salary cuts.
The Economic Times, April 3, 2009, Page 9
Sanjeev Choudhary, ET Bureau
NEW DELHI: Caught between a credit squeeze and demand crunch, realty players want to barter houses to settle pending supplier bills, but contractors say they can’t forego hard cash and settle for flats in a falling property market.
At least three major realty brands operating in the national capital region have offered apartments in their ongoing projects to contractors and suppliers of building material, industry insiders told ET. “There are several real estate companies that are falling behind on payments and asking contractors to settle for apartments instead,” says PR Swarup, director general of Construction Industry Development Council. Swarup refuses to name any company, but ET has learnt the firms taking this route include even listed players.
A Delhi-based realty firm, a prominent name in the sector, is developing a major residential project in the city and has offered apartments to its contractors. “We have made an offer but the contractor is asking for a discount. If we reduce apartment prices, we will also expect the contractor to bring down the bill value for the work he has done on our project,” says a company executive corroborating this.
Another Delhi-based listed mid-size developer and a highly-leveraged Gurgaonbased listed real estate company too have offered to sell their apartments to their contractors and building material suppliers to settle dues.
This enthusiasm doesn’t have many takers at the other end. “Even if we were to take apartments, they will have to be sold someday to generate revenue. If developers can’t sell these homes, how can we do it?” asks Arun Sahai, CEO of Ahluwalia Contracts, which has been offered houses in a major project in Delhi. Ahluwalia Contracts, a Rs 1200-crore Delhi-based listed construction company, is currently engaged in the execution of several residential projects, including the prestigious Commonwealth Games Village. “Barter will not help. We are focused on construction and without a regular cashflow, our work will get stalled,” says Mr Sahai.
Shailendra Chouksey, director, JK Lakshmi Cement, says his company has become more choosy in supplying cement and ready-mix concrete to builders these days, given the delay in payments. “Builders are under pressure. Most of them have been delaying payments,” he says.
Real estate sector has been under pressure for almost a year because of dramatic decline in sales, credit crunch and unavailability of private equity. Extraordinarily high prices together with high financing cost have made houses unaffordable for home buyers. An economic downturn has further weakened sentiments in the housing market with several existing and potential home buyers suffering or facing the threat of job and salary cuts.
Realty stocks surprise gainer
Realty stocks surprise gainer
The Times of India, April 3, 2009, Page 19
TIMES NEWS NETWORK
Chennai: Major construction-related stocks led by realty giant DLF, Jaiprakash Associates, HDIL, IVRCL Infra and Indiabulls Real Estate helped increase investor wealth by $1.5 billion as around 50 shares representing the sector rose by an average 4.7% on Thursday as the benchmark index rescaled 10,000 peak.
This surprised marketmen as they see no new reason for construction-related stocks, especially real estate, to go up as challenges confronting these companies remain. However, the investors and traders at the markets were bullish on real estate as the BSE Realty index, (which is down 21% for the year), gained 150 points or 9.13%. Except Unitech (unchanged) and Akruti (5% down), all the other 12 constituents were up between 3-16%, BSE data shows. The BSE Realty index captures price movements of only 14 stocks. But a bigger action was witnessed in the construction-related counters with companies involved in contracting, civil construction, housing and real estate finding favour with investors.
While Delhi-based DLF topped the investor wealth added list with Rs 4,537 crore (15% up), Jaiprakash Associates (engaged more in the civil construction side) added Rs 1,338 crore to its investor kitty as its stock rose 13%. The stock of Mumbai-based HDIL gained 13% adding Rs 323 crore to its investor wealth, IVRCL Infra gained Rs 250 crore by virtue of its 14.7% stock rise, Indiabulls Real Estate added Rs 238 crore with its 9.2% stock jump.
The Times of India, April 3, 2009, Page 19
TIMES NEWS NETWORK
Chennai: Major construction-related stocks led by realty giant DLF, Jaiprakash Associates, HDIL, IVRCL Infra and Indiabulls Real Estate helped increase investor wealth by $1.5 billion as around 50 shares representing the sector rose by an average 4.7% on Thursday as the benchmark index rescaled 10,000 peak.
This surprised marketmen as they see no new reason for construction-related stocks, especially real estate, to go up as challenges confronting these companies remain. However, the investors and traders at the markets were bullish on real estate as the BSE Realty index, (which is down 21% for the year), gained 150 points or 9.13%. Except Unitech (unchanged) and Akruti (5% down), all the other 12 constituents were up between 3-16%, BSE data shows. The BSE Realty index captures price movements of only 14 stocks. But a bigger action was witnessed in the construction-related counters with companies involved in contracting, civil construction, housing and real estate finding favour with investors.
While Delhi-based DLF topped the investor wealth added list with Rs 4,537 crore (15% up), Jaiprakash Associates (engaged more in the civil construction side) added Rs 1,338 crore to its investor kitty as its stock rose 13%. The stock of Mumbai-based HDIL gained 13% adding Rs 323 crore to its investor wealth, IVRCL Infra gained Rs 250 crore by virtue of its 14.7% stock rise, Indiabulls Real Estate added Rs 238 crore with its 9.2% stock jump.
Sensex up 447 pts on global cues
Sensex up 447 pts on global cues
The Times of India, April 3, 2009, Page 19
MUMBAI: Positive global cues gave markets the push that set the two major indices BSE sensex and NSE nifty--for a further rise of 15-20% from the current levels. The sensex, after opening nearly 200 points higher, rallied through the session to close at 10,349, up 447 points on the day. Nifty ended 151 points higher at 3,211. These indices ended near their five-month closing highs.
With the US market showing strength on Wednesday despite talks of bankruptcy for auto giant General Motors, Asian markets picked up the cues on Thursday. The rally in other parts of the region forced Dalal Street investors to jump in and realty, metals and oil & gas led the gainers. FMCG was the only laggard with BSE's FMCG index closing a marginal 0.3% lower. At the end of the session, investors were richer by Rs 1.37 lakh crore with BSE's market capitalisation now at Rs 32.4 lakh crore.
The news that G20, the group of 20 most influential countries in the world, pledged $1 trillion for reviving the global economy, could further boost market sentiment when Dalal Street opens on Monday. Markets are closed on Friday for Ram Navmi.
US stocks added to gains on Thursday after the board that sets US accounting standards agreed to give banks more flexibility in applying mark-to-market accounting to their toxic assets.
Optimism was also boosted as leaders of the G20 nations agreed to put an additional trillion dollars into the ailing global economy through extra funding for groups like the IMF. The Dow Jones industrial average climbed 275 points, or 3.54%, to 8,037 in early trading.
Although not much has changed at the fundamental level in the domestic market over the last few weeks, technical charts are throwing up interesting prospects for nifty as well as sensex, chartists said. "Though there is some resistance at around the 10,700 level for sensex, we are looking at a 11,800-12,500 range for the index in about four weeks,'' said Anant Rao, deputy-head, derivatives, SBI Caps Securities.
On nifty, the range is 3,450-3,650, said Sudhanshu Pandey, technical analyst, LKP Shares. "For long, nifty was unable to break the 2,500-3,150 range. On Thursday, the index closed above 3,150 and now we expect some sharp upmove in the next 4-6 weeks,'' Pandey said.
Chartists said the best case scenario for nifty is 3,900-4,000 level, a spurt of about 30% from the current level. For sensex that translates to above the 13,000 mark.
However, a technical analyst with a local brokerage had a word of caution: "The short term peak for sensex and nifty could coincide with the election results and that could follow some sharp corrections.''
Over the next few weeks, market's direction will also be impacted by results for the January-March quarter, market players said. Among frontline stocks, Infosys will start the results season on April 15. At the end of the month, RBI will announce its annual policy statement which could also affect sentiments.
In Thursday's market, DLF, Jaiprakash Associates, Tata Motors, Reliance Communication and ONGC led the sensex gainers. Among the 30 sensex stocks, only Hindalco ended in the red. In the broader market, gainers outnumbered laggards by a ratio of nearly 4:1 with 2,014 advances to 535 declines.
Turnover on the bourses also showed a sharp rise. On BSE, the turnover at Rs 4,926 crore was substantially higher than last month's average daily turnover of about Rs 3,500 crore.
The Times of India, April 3, 2009, Page 19
MUMBAI: Positive global cues gave markets the push that set the two major indices BSE sensex and NSE nifty--for a further rise of 15-20% from the current levels. The sensex, after opening nearly 200 points higher, rallied through the session to close at 10,349, up 447 points on the day. Nifty ended 151 points higher at 3,211. These indices ended near their five-month closing highs.
With the US market showing strength on Wednesday despite talks of bankruptcy for auto giant General Motors, Asian markets picked up the cues on Thursday. The rally in other parts of the region forced Dalal Street investors to jump in and realty, metals and oil & gas led the gainers. FMCG was the only laggard with BSE's FMCG index closing a marginal 0.3% lower. At the end of the session, investors were richer by Rs 1.37 lakh crore with BSE's market capitalisation now at Rs 32.4 lakh crore.
The news that G20, the group of 20 most influential countries in the world, pledged $1 trillion for reviving the global economy, could further boost market sentiment when Dalal Street opens on Monday. Markets are closed on Friday for Ram Navmi.
US stocks added to gains on Thursday after the board that sets US accounting standards agreed to give banks more flexibility in applying mark-to-market accounting to their toxic assets.
Optimism was also boosted as leaders of the G20 nations agreed to put an additional trillion dollars into the ailing global economy through extra funding for groups like the IMF. The Dow Jones industrial average climbed 275 points, or 3.54%, to 8,037 in early trading.
Although not much has changed at the fundamental level in the domestic market over the last few weeks, technical charts are throwing up interesting prospects for nifty as well as sensex, chartists said. "Though there is some resistance at around the 10,700 level for sensex, we are looking at a 11,800-12,500 range for the index in about four weeks,'' said Anant Rao, deputy-head, derivatives, SBI Caps Securities.
On nifty, the range is 3,450-3,650, said Sudhanshu Pandey, technical analyst, LKP Shares. "For long, nifty was unable to break the 2,500-3,150 range. On Thursday, the index closed above 3,150 and now we expect some sharp upmove in the next 4-6 weeks,'' Pandey said.
Chartists said the best case scenario for nifty is 3,900-4,000 level, a spurt of about 30% from the current level. For sensex that translates to above the 13,000 mark.
However, a technical analyst with a local brokerage had a word of caution: "The short term peak for sensex and nifty could coincide with the election results and that could follow some sharp corrections.''
Over the next few weeks, market's direction will also be impacted by results for the January-March quarter, market players said. Among frontline stocks, Infosys will start the results season on April 15. At the end of the month, RBI will announce its annual policy statement which could also affect sentiments.
In Thursday's market, DLF, Jaiprakash Associates, Tata Motors, Reliance Communication and ONGC led the sensex gainers. Among the 30 sensex stocks, only Hindalco ended in the red. In the broader market, gainers outnumbered laggards by a ratio of nearly 4:1 with 2,014 advances to 535 declines.
Turnover on the bourses also showed a sharp rise. On BSE, the turnover at Rs 4,926 crore was substantially higher than last month's average daily turnover of about Rs 3,500 crore.
Hurdle to Emaar bailout, DDA seeks bank guarantee
Hurdle to Emaar bailout, DDA seeks bank guarantee
Business Standard, April 3, 2009, Page 5
Neeraj Thakur / New Delhi
The cash to be issued as an interim bailout from the government to Emaar MGF for next year’s Commonwealth Games is ready for issue, but awaits a bank guarantee.
The Union urban development ministry has sanctioned issue of a first instalment of Rs 100 crore agreed on to the cash-strapped firm, but Delhi Development Authority (DDA) first wants the guarantee.
Emaar MGF is the developer of the Commonwealth Games village. It was to finance the construction by taking deposits for sales of two-thirds of the 1,168 apartments to be built to house the athletes -- those who booked are to get the flats after the Games. The remaining flats were to go to DDA, which would sell these separately.
However, Amaar has run into money problems and the flats are not ready. Residential prices in major cities across the country have dropped, as demand has seen a sharp slump. Emaar wanted Rs 12,750 per sq ft from flat buyers; it got few takers.
In December, it wrote to DDA, saying it needed another Rs 1,000 crore to complete the project. It had, it said, already spent Rs 1,400 crore.
The government is yet to take a final decision on the request. It has agreed only to a first instalment of Rs 100 crore, pending a decision on how many flats DDA will buy from Emaar’s two-thirds share. A decision on how many will be taken after a four-member valuation panel gives its proposal. The cost of each flat is yet to be agreed on, as they aren’t ready; barely 40 per cent of the work on site was completed as of March 31. Which is why DDA wants the gurantee.
Business Standard, April 3, 2009, Page 5
Neeraj Thakur / New Delhi
The cash to be issued as an interim bailout from the government to Emaar MGF for next year’s Commonwealth Games is ready for issue, but awaits a bank guarantee.
The Union urban development ministry has sanctioned issue of a first instalment of Rs 100 crore agreed on to the cash-strapped firm, but Delhi Development Authority (DDA) first wants the guarantee.
Emaar MGF is the developer of the Commonwealth Games village. It was to finance the construction by taking deposits for sales of two-thirds of the 1,168 apartments to be built to house the athletes -- those who booked are to get the flats after the Games. The remaining flats were to go to DDA, which would sell these separately.
However, Amaar has run into money problems and the flats are not ready. Residential prices in major cities across the country have dropped, as demand has seen a sharp slump. Emaar wanted Rs 12,750 per sq ft from flat buyers; it got few takers.
In December, it wrote to DDA, saying it needed another Rs 1,000 crore to complete the project. It had, it said, already spent Rs 1,400 crore.
The government is yet to take a final decision on the request. It has agreed only to a first instalment of Rs 100 crore, pending a decision on how many flats DDA will buy from Emaar’s two-thirds share. A decision on how many will be taken after a four-member valuation panel gives its proposal. The cost of each flat is yet to be agreed on, as they aren’t ready; barely 40 per cent of the work on site was completed as of March 31. Which is why DDA wants the gurantee.
Unitech to clear Rs. 1,000 cr debt burden by June
Unitech to clear Rs. 1,000 cr debt burden by June
Business Standard, April 4, 2009, Page 4
Raghavendra Kamath & Neeraj Thakur / Mumbai/new Delhi
Delhi-based property developer Unitech is planning to slash its total debt by at least Rs 1,000 crore by June through sale of assets, issuing convertible instruments and pre-sale of apartments, company executives said.
The company had nearly Rs 10,465 crore of debt on March 31, 2008, and after repaying some of that and rolling over debt with the nationalised banks and mutual funds in the past fiscal, its debt is still over Rs 8,000 crore. It was planning to reduce this to Rs 7,000 crore in the next two to three months, the sources said.
They added that options are being explored to also raise as much as Rs 500 crore through convertible instruments, with buy-back options three years later. A Unitech spokesperson declined to comment on the fund-raising plans.
The company was also expecting cash flow of Rs 1,700 crore in the current financial year from sale of existing properties, pre-sales of residential apartments and customer receivables, sources said. The company expected to get nearly Rs 500 crore from that last category of Rs 1,350 crore, the sources said.
However, analysts tracking the company say it will be tough to raise funds through asset sales in the current environment. “While parts of Unitech’s efforts have been successful, particularly in the telecom stake sale and sale of the hotel in Gurgaon, we believe further asset sales in the current environment will be difficult,”’ Citigroup analysts said in a recent report.
They are also concerned about the projected cash inflows. “The company relies mostly on its projects in Kolkata and Gurgaon for operational cash flow. The current situation of the market is not conducive for the company to generate more than Rs 800 crore worth of cash in a fiscal,” said Rupesh Sankhe, equity analyst, Centrum Broking.
However, Sankhe is optimistic on the company’s ability to raise money through its debtors. “The company will not have problem in getting this money,” Sankhe added.
Unitech has been selling assets to raise funds and repay its debt. The company got Rs 380 crore from the stake sale in its telecom arm — Unitech Wireless — to Norway’s Telenor. A company executive said it might use this amount to repay Rs 500 crore due to mutual funds by April 19 and roll over the rest.
The company has also sold its Gurgaon hotel to an investor in Delhi for around Rs 235 crore, of which it has got 45 per cent of the proceeds. The company was also in talks with buyers to sell its office complex at Saket in South Delhi, from which it was expected to make around Rs 500 crore, and some amount from the sale of hospital/school plots and hotel assets this year, sources said.
The company had to repay a debt of Rs 2,500 crore to banks and mutual funds by March 31, 2009. The company has rolled over Rs 1,000 crore it has taken from banks and around Rs 500 crore that it owed to mutual funds. The company has repaid Rs 400 crore from mutual funds and restructured another Rs 600 crore.
“We may use part of the Rs 380 crore received from Telenor to repay mutual funds and roll over the rest,” a company official said.
Business Standard, April 4, 2009, Page 4
Raghavendra Kamath & Neeraj Thakur / Mumbai/new Delhi
Delhi-based property developer Unitech is planning to slash its total debt by at least Rs 1,000 crore by June through sale of assets, issuing convertible instruments and pre-sale of apartments, company executives said.
The company had nearly Rs 10,465 crore of debt on March 31, 2008, and after repaying some of that and rolling over debt with the nationalised banks and mutual funds in the past fiscal, its debt is still over Rs 8,000 crore. It was planning to reduce this to Rs 7,000 crore in the next two to three months, the sources said.
They added that options are being explored to also raise as much as Rs 500 crore through convertible instruments, with buy-back options three years later. A Unitech spokesperson declined to comment on the fund-raising plans.
The company was also expecting cash flow of Rs 1,700 crore in the current financial year from sale of existing properties, pre-sales of residential apartments and customer receivables, sources said. The company expected to get nearly Rs 500 crore from that last category of Rs 1,350 crore, the sources said.
However, analysts tracking the company say it will be tough to raise funds through asset sales in the current environment. “While parts of Unitech’s efforts have been successful, particularly in the telecom stake sale and sale of the hotel in Gurgaon, we believe further asset sales in the current environment will be difficult,”’ Citigroup analysts said in a recent report.
They are also concerned about the projected cash inflows. “The company relies mostly on its projects in Kolkata and Gurgaon for operational cash flow. The current situation of the market is not conducive for the company to generate more than Rs 800 crore worth of cash in a fiscal,” said Rupesh Sankhe, equity analyst, Centrum Broking.
However, Sankhe is optimistic on the company’s ability to raise money through its debtors. “The company will not have problem in getting this money,” Sankhe added.
Unitech has been selling assets to raise funds and repay its debt. The company got Rs 380 crore from the stake sale in its telecom arm — Unitech Wireless — to Norway’s Telenor. A company executive said it might use this amount to repay Rs 500 crore due to mutual funds by April 19 and roll over the rest.
The company has also sold its Gurgaon hotel to an investor in Delhi for around Rs 235 crore, of which it has got 45 per cent of the proceeds. The company was also in talks with buyers to sell its office complex at Saket in South Delhi, from which it was expected to make around Rs 500 crore, and some amount from the sale of hospital/school plots and hotel assets this year, sources said.
The company had to repay a debt of Rs 2,500 crore to banks and mutual funds by March 31, 2009. The company has rolled over Rs 1,000 crore it has taken from banks and around Rs 500 crore that it owed to mutual funds. The company has repaid Rs 400 crore from mutual funds and restructured another Rs 600 crore.
“We may use part of the Rs 380 crore received from Telenor to repay mutual funds and roll over the rest,” a company official said.
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