Wednesday, May 13, 2009
Sensex ignores bad news, up 4%
Sensex ignores bad news, up 4%
The Financial Express, May 13, 2009, Page 1
Mumbai: Buoyed by fresh inflows from foreign institutional investors (FIIs) and pension funds, equity indices in Mumbai made huge gains on Tuesday, ignoring, in its wake, poor industrial production data and sobering cues from emerging markets.
After starting the day in the red and remaining volatile, sustained buying at the end of the day saw the markets close with a positive gap. The Sensex added 475.04 points or 4.07% to close at 12,158.03 points. The Nifty ended the day at 3,681.10 points, gaining 126.50 points or 3.56%. Incidentally, emerging-market stocks fell the most in two weeks; the MSCI Emerging Markets Index dropped 1.1% to 715.78 in early trades in London.
“Pension funds, which were sitting on cash, entered the markets, which led the markets during the last hours of trading. Apart from FIIs, domestic institutional investors (DII) were net buyers in the market,” said Anita Gandhi, head of institutional business at Arihant Capital Markets.
The decline in industrial production by 2.3% in March compared to a rise of 5.5% in the same month in 2008 also did not deter buyers. According to provisional BSE figures, FIIs and DIIs were net buyers of Rs 452.18 crore and Rs 177.74 crore, respectively.
Overall, the breadth of the market remained positive as out of 2,586 stocks traded on BSE, 1,410 advanced, 1,101 declined while 75 stocks remained unchanged.
With the last phase of polls completing on Wednesday, dealers feels markets would be unstable on Thursday and Friday, ahead of results on Saturday.
The Financial Express, May 13, 2009, Page 1
Mumbai: Buoyed by fresh inflows from foreign institutional investors (FIIs) and pension funds, equity indices in Mumbai made huge gains on Tuesday, ignoring, in its wake, poor industrial production data and sobering cues from emerging markets.
After starting the day in the red and remaining volatile, sustained buying at the end of the day saw the markets close with a positive gap. The Sensex added 475.04 points or 4.07% to close at 12,158.03 points. The Nifty ended the day at 3,681.10 points, gaining 126.50 points or 3.56%. Incidentally, emerging-market stocks fell the most in two weeks; the MSCI Emerging Markets Index dropped 1.1% to 715.78 in early trades in London.
“Pension funds, which were sitting on cash, entered the markets, which led the markets during the last hours of trading. Apart from FIIs, domestic institutional investors (DII) were net buyers in the market,” said Anita Gandhi, head of institutional business at Arihant Capital Markets.
The decline in industrial production by 2.3% in March compared to a rise of 5.5% in the same month in 2008 also did not deter buyers. According to provisional BSE figures, FIIs and DIIs were net buyers of Rs 452.18 crore and Rs 177.74 crore, respectively.
Overall, the breadth of the market remained positive as out of 2,586 stocks traded on BSE, 1,410 advanced, 1,101 declined while 75 stocks remained unchanged.
With the last phase of polls completing on Wednesday, dealers feels markets would be unstable on Thursday and Friday, ahead of results on Saturday.
Industry shrinks 2.3% in March
Industry shrinks 2.3% in March
Times of India, May 13, 2009, Page 21
NEW DELHI: The index of industrial production (IIP) declined by 2.3% in March compared to the same month last year. According to a Morgan Stanley report, this is the steepest fall in the index since February 1993.
The slowdown in the second half of 2008-09 saw the IIP grow by just 2.4% in 2008-09, against 8.5% in 2007-08. However, bankers and economists feel that a revival in industrial production is imminent.
Crisil chief economist DK Joshi said the IIP would turn positive in April because of the revival in sentiment and increase in expenditure at the ground level due to election campaign. Investment banker Goldman Sachs also projected positive growth in April. In a report, Goldman Sachs said the purchasing managers' index for April has shown its first expansion after contracting for five successive months. Motor vehicle sales have also picked up in the last three months and railway freight has also shown some increase.
Goldman Sachs said the excess liquidity in the system, a substantial easing of financial conditions and declines in some key interest rate spreads suggest that activity will pick up in the second half of 2009-10. The bank expected GDP to grow at 5.8% in 2009-10, lower than the expected 6.4% in 2008-09.
The contraction in March has been mainly on account of a 3.3% fall in the manufacturing sector's output, which accounts for nearly 80% in the IIP. However, the main worry is the steep contraction in the output of capital goods by 8.2%. DK Joshi said that this clearly suggested that industry is not investing in the plant and machinery, which will impact the future growth. During the year as whole, the output of capital goods decelerated to 7 per cent from 18 per cent a year ago. Therefore, he said, the recovery will be slow.
Commenting on the dismal growth figures, the Chairman of the Prime Minister's Economic Advisory Council (PMEAC), Suresh Tendulkar, said, ``Recovery is bound to be slow ... but it is picking. International financial markets are stabilising and are also picking up.'' He said that steel, cement and other sectors are reviving.
Joshi said that contraction in March is mainly due to external sector. As the export is down by 33%, the manufacturing sector is bound to under-perform, he pointed out. At the same time, he said that the impact of stimulus package has yet to be realized in the infrastructure sector.
The infrastructure index rose by 2.9% in March compared to 1.3% in February. This clearly suggests that impact of stimulus package has started percolating at the ground level. But, it will take some time to realize its full impact.
As regards the need for another stimulus package to boost industrial output, Tendulkar said the new government, which will assume power after the general elections, will have to make an assessment.
Apart from manufacturing, mining performed poorly with the growth rate slipping to 0.4% during March compared to 4.9% in the same month a year ago. For 2008-09, growth in the mining sector declined to less than half to 2.3% compared to 5.1% in the previous fiscal.
Although electricity generation recorded a growth rate of 6.3% in March, up from 3.7% in the corresponding period a year ago, the output during the year as a whole decelerated to 2.8% from 6.4% in 2007-08.
Interestingly, the IIP figures are prone to revision in subsequent months. The January figure is revised upward to positive 0.4% as against earlier projection of negative growth of 0.5%. The December figure also revised upward from a contraction of whopping 2% to a mere 0.25%. For February figure also, the estimate has been revised from negative 1.23% to negative 0.72%. Goldman Sachs in the report said that the March figure will also likely to be revised upward.
Times of India, May 13, 2009, Page 21
NEW DELHI: The index of industrial production (IIP) declined by 2.3% in March compared to the same month last year. According to a Morgan Stanley report, this is the steepest fall in the index since February 1993.
The slowdown in the second half of 2008-09 saw the IIP grow by just 2.4% in 2008-09, against 8.5% in 2007-08. However, bankers and economists feel that a revival in industrial production is imminent.
Crisil chief economist DK Joshi said the IIP would turn positive in April because of the revival in sentiment and increase in expenditure at the ground level due to election campaign. Investment banker Goldman Sachs also projected positive growth in April. In a report, Goldman Sachs said the purchasing managers' index for April has shown its first expansion after contracting for five successive months. Motor vehicle sales have also picked up in the last three months and railway freight has also shown some increase.
Goldman Sachs said the excess liquidity in the system, a substantial easing of financial conditions and declines in some key interest rate spreads suggest that activity will pick up in the second half of 2009-10. The bank expected GDP to grow at 5.8% in 2009-10, lower than the expected 6.4% in 2008-09.
The contraction in March has been mainly on account of a 3.3% fall in the manufacturing sector's output, which accounts for nearly 80% in the IIP. However, the main worry is the steep contraction in the output of capital goods by 8.2%. DK Joshi said that this clearly suggested that industry is not investing in the plant and machinery, which will impact the future growth. During the year as whole, the output of capital goods decelerated to 7 per cent from 18 per cent a year ago. Therefore, he said, the recovery will be slow.
Commenting on the dismal growth figures, the Chairman of the Prime Minister's Economic Advisory Council (PMEAC), Suresh Tendulkar, said, ``Recovery is bound to be slow ... but it is picking. International financial markets are stabilising and are also picking up.'' He said that steel, cement and other sectors are reviving.
Joshi said that contraction in March is mainly due to external sector. As the export is down by 33%, the manufacturing sector is bound to under-perform, he pointed out. At the same time, he said that the impact of stimulus package has yet to be realized in the infrastructure sector.
The infrastructure index rose by 2.9% in March compared to 1.3% in February. This clearly suggests that impact of stimulus package has started percolating at the ground level. But, it will take some time to realize its full impact.
As regards the need for another stimulus package to boost industrial output, Tendulkar said the new government, which will assume power after the general elections, will have to make an assessment.
Apart from manufacturing, mining performed poorly with the growth rate slipping to 0.4% during March compared to 4.9% in the same month a year ago. For 2008-09, growth in the mining sector declined to less than half to 2.3% compared to 5.1% in the previous fiscal.
Although electricity generation recorded a growth rate of 6.3% in March, up from 3.7% in the corresponding period a year ago, the output during the year as a whole decelerated to 2.8% from 6.4% in 2007-08.
Interestingly, the IIP figures are prone to revision in subsequent months. The January figure is revised upward to positive 0.4% as against earlier projection of negative growth of 0.5%. The December figure also revised upward from a contraction of whopping 2% to a mere 0.25%. For February figure also, the estimate has been revised from negative 1.23% to negative 0.72%. Goldman Sachs in the report said that the March figure will also likely to be revised upward.
FDI inflow falls over 55% in March to $2 bn
FDI inflow falls over 55% in March to $2 bn
The Financial Express, May 13, 2009, Page 2
Reeling under the impact of the global financial crisis, foreign direct investment (FDI) inflows into the country is estimated to have fallen by more than 55% to $2 billion in March 2009 from $4.44 billion in the same month last a year. This is the fifth time in six months that FDI inflows into India have seen a drop.
The figures for March 2009 took the total FDI inflows into the country for 2008-09 to around $27.38 billion, 11.75% more than $24.5 billion in 2007-08, but missed even the reduced target of $30 billion. In 2006-07, India had received only $15.5 billion worth FDI.
The government had initially set a FDI target of $35 billion for 2008-09 and later reduced it to $30 billion. However, it has set a similar target for 2009-10 too.
FDI inflows had dipped by 73% in February 2009 to $1.49 billion from $ 5.67 billion a year ago.
On FDI inflows for 2009-10, Gopal Krishna, joint secretary in the department of industrial policy and promotion (the nodal department for FDI policy), had said last month “there will be some investment (in 2009-10), which will be delayed but overall outlook is positive and optimistic.”
Gopal Krishna said if reinvested earnings were also taken into account, FDI for 2008-09 would be $37.5 billion. FDI for 2009-10, including reinvested earnings would be over $40 billion, he said.
After maintaining a monthly average of $2.8 billion till September in the 2008-09 financial year, FDI inflows fell by 26% in October to $1.49 billion. It slipped by a similar 26% in November to just $1 billion, and by 13% in December to $1.36 billion.
However, it turned upwards in January, rising 55% at $2.74 billion, against $1.77 billion in January 2008.
India has attracted FDI inflows of around $88 billion from April 2000 to February 2009.
On FDI outlook for 2009-10, Jai Sinha, managing director, India, Booz&Co said “India’s GDP may not be growing at 9%. But even at 6%, it is higher than in many other countries. In absolute terms, I don’t think India will have the same FDI inflows in 2009-10 as it had in 2008-09.” “But in terms of how it is overall in comparison with the global FDI, it will be okay,” he added.
A recent survey on Foreign Direct Investment (FDI) in India by global consultants Booz & Company and Amcham, 52% of total respondents said India is an attractive FDI destination.
However, 60% of them were concerned about poor infrastructure, while 55% opined that lack of clarity in FDI guidelines trouble them while making investments. Other worries included red tape and shortage of skilled professionals.
The Financial Express, May 13, 2009, Page 2
Reeling under the impact of the global financial crisis, foreign direct investment (FDI) inflows into the country is estimated to have fallen by more than 55% to $2 billion in March 2009 from $4.44 billion in the same month last a year. This is the fifth time in six months that FDI inflows into India have seen a drop.
The figures for March 2009 took the total FDI inflows into the country for 2008-09 to around $27.38 billion, 11.75% more than $24.5 billion in 2007-08, but missed even the reduced target of $30 billion. In 2006-07, India had received only $15.5 billion worth FDI.
The government had initially set a FDI target of $35 billion for 2008-09 and later reduced it to $30 billion. However, it has set a similar target for 2009-10 too.
FDI inflows had dipped by 73% in February 2009 to $1.49 billion from $ 5.67 billion a year ago.
On FDI inflows for 2009-10, Gopal Krishna, joint secretary in the department of industrial policy and promotion (the nodal department for FDI policy), had said last month “there will be some investment (in 2009-10), which will be delayed but overall outlook is positive and optimistic.”
Gopal Krishna said if reinvested earnings were also taken into account, FDI for 2008-09 would be $37.5 billion. FDI for 2009-10, including reinvested earnings would be over $40 billion, he said.
After maintaining a monthly average of $2.8 billion till September in the 2008-09 financial year, FDI inflows fell by 26% in October to $1.49 billion. It slipped by a similar 26% in November to just $1 billion, and by 13% in December to $1.36 billion.
However, it turned upwards in January, rising 55% at $2.74 billion, against $1.77 billion in January 2008.
India has attracted FDI inflows of around $88 billion from April 2000 to February 2009.
On FDI outlook for 2009-10, Jai Sinha, managing director, India, Booz&Co said “India’s GDP may not be growing at 9%. But even at 6%, it is higher than in many other countries. In absolute terms, I don’t think India will have the same FDI inflows in 2009-10 as it had in 2008-09.” “But in terms of how it is overall in comparison with the global FDI, it will be okay,” he added.
A recent survey on Foreign Direct Investment (FDI) in India by global consultants Booz & Company and Amcham, 52% of total respondents said India is an attractive FDI destination.
However, 60% of them were concerned about poor infrastructure, while 55% opined that lack of clarity in FDI guidelines trouble them while making investments. Other worries included red tape and shortage of skilled professionals.
PE investments fall 75% in 1 Year
PE investments fall 75% in 1 Year
The Financial Express, Corporates & Markets, May 13, 2009, Section I, Page 1
Mumbai: The downturn in the Indian private equity investment market still continues. For the month of April 2009, private equity investors invested $276 million in 16 deals compared to 31 deals announced with an investment of $1,050 million in April 2008. The total amount invested comes to $829 million in 60 deals in April 2009.
The average deal size decreased to $21 million in April 2009 as compared to $39 million in April 2008. About 88% of the number of private equity deals were in the unlisted companies in April 2009 as compared to 86% in 2008, according to the first PE investment report released for April by JM Financial.
Last month, telecom, media & entertainment and infrastructure sectors witnessed the highest activities in terms of deal values, accounting for 22%, 19% and 18% respectively of the total PE investments.
However, according to an earlier study by Venture Intelligence, the IT & ITeS industry registered 13 deals worth $95 million during Q1 2009, followed by manufacturing (with 4 deals worth $36 million) and BFSI (3 deals worth $53 million).
Top deals for the month include $52 million by 3i and Oman Investment Fund in Neo Sports Broadcasting Pvt Ltd; $50 million by IDFC Project Equity in SPVs of Ashoka Buildcon Ltd; $40 million by Axious Investments in Quippo Telecom Infrastructure Ltd and $30 million by Navis Capital in Edutech.
For the quarter ended March 31, 2009, PE firms’ investments fell 87% to $526 million across 36 deals. The corresponding period of last year had witnessed 133 deals totalling $3.9 billion and deals in first quarter of 2009 remains lower compared to the immediate previous quarter which had seen $1.2 billion investments.
About $11.5 billion was invested in 292 deals in 2008 as compared to $15.9 billion in 290 deals in 2007. Last year, real estate, telecom and financial services sectors witnessed the highest activities in terms of deal values accounting for 31%, 11% and 9% respectively of the total PE investments.
The Financial Express, Corporates & Markets, May 13, 2009, Section I, Page 1
Mumbai: The downturn in the Indian private equity investment market still continues. For the month of April 2009, private equity investors invested $276 million in 16 deals compared to 31 deals announced with an investment of $1,050 million in April 2008. The total amount invested comes to $829 million in 60 deals in April 2009.
The average deal size decreased to $21 million in April 2009 as compared to $39 million in April 2008. About 88% of the number of private equity deals were in the unlisted companies in April 2009 as compared to 86% in 2008, according to the first PE investment report released for April by JM Financial.
Last month, telecom, media & entertainment and infrastructure sectors witnessed the highest activities in terms of deal values, accounting for 22%, 19% and 18% respectively of the total PE investments.
However, according to an earlier study by Venture Intelligence, the IT & ITeS industry registered 13 deals worth $95 million during Q1 2009, followed by manufacturing (with 4 deals worth $36 million) and BFSI (3 deals worth $53 million).
Top deals for the month include $52 million by 3i and Oman Investment Fund in Neo Sports Broadcasting Pvt Ltd; $50 million by IDFC Project Equity in SPVs of Ashoka Buildcon Ltd; $40 million by Axious Investments in Quippo Telecom Infrastructure Ltd and $30 million by Navis Capital in Edutech.
For the quarter ended March 31, 2009, PE firms’ investments fell 87% to $526 million across 36 deals. The corresponding period of last year had witnessed 133 deals totalling $3.9 billion and deals in first quarter of 2009 remains lower compared to the immediate previous quarter which had seen $1.2 billion investments.
About $11.5 billion was invested in 292 deals in 2008 as compared to $15.9 billion in 290 deals in 2007. Last year, real estate, telecom and financial services sectors witnessed the highest activities in terms of deal values accounting for 31%, 11% and 9% respectively of the total PE investments.
Economy-market disconnect
Economy-market disconnect
The Economic Times, Editorial, May 13, 2009, Page 14
Hope Triumphs Over Experience
ON A day when the sensex vaulted 475 points, industrial production data showed a shocking 2.3% decline in March. For two months the world economy has performed dismally, yet stock markets have shot up 40-50% across continents. This glaring disconnect requires a cogent explanation. The standard explanation is that confidence is surging globally as the economy is bottoming out, and will soon rise. History shows that markets start rising four to eight months before the real economy does. However, history also shows that many market rallies during a long recession are temporary, and soon reversed. Four of the biggest bull runs occurred in 1929-33, in the depth of the Great Depression, as investors kept betting on a new bull market that did not come. Optimism can be self-fulfilling: if enough people think the worst is over and so start spending and lending on a big scale, the recession will indeed end. But the International Monetary Fund, not usually a market bear, projects that the current Great Recession will continue till 2011. The IMF projects a fall in world GDP for the first time ever in 2009, followed by an increase of 1.9% in 2010 — and any global increase less than 2% constitutes a global recession. So, even if the real economy has indeed bottomed, no V-shaped recovery may follow. The recovery may be weak, halting and lengthy. The IMF estimates that Indian GDP in 2009-10 will grow by only 4.8%, down from an estimated 6.5% in 2008-09.
The markets have caught fire as the latest news suggests economies are no longer falling off a cliff, and that free fall is being followed by gentler decline. Yet even gentler decline is recessionary. The latest US data suggest credit card losses could hit $82-181 billion by late 2010. Commercial real estate is crashing. And corporate bond defaults are spreading. India is better off than the US, yet dismal industrial data suggest Indian banks could soon face rising defaults. The economy-market disconnect must end soon. Either the real economy will look up, or else markets will fall again. We can hope for the best, but should prepare for the worst.
The Economic Times, Editorial, May 13, 2009, Page 14
Hope Triumphs Over Experience
ON A day when the sensex vaulted 475 points, industrial production data showed a shocking 2.3% decline in March. For two months the world economy has performed dismally, yet stock markets have shot up 40-50% across continents. This glaring disconnect requires a cogent explanation. The standard explanation is that confidence is surging globally as the economy is bottoming out, and will soon rise. History shows that markets start rising four to eight months before the real economy does. However, history also shows that many market rallies during a long recession are temporary, and soon reversed. Four of the biggest bull runs occurred in 1929-33, in the depth of the Great Depression, as investors kept betting on a new bull market that did not come. Optimism can be self-fulfilling: if enough people think the worst is over and so start spending and lending on a big scale, the recession will indeed end. But the International Monetary Fund, not usually a market bear, projects that the current Great Recession will continue till 2011. The IMF projects a fall in world GDP for the first time ever in 2009, followed by an increase of 1.9% in 2010 — and any global increase less than 2% constitutes a global recession. So, even if the real economy has indeed bottomed, no V-shaped recovery may follow. The recovery may be weak, halting and lengthy. The IMF estimates that Indian GDP in 2009-10 will grow by only 4.8%, down from an estimated 6.5% in 2008-09.
The markets have caught fire as the latest news suggests economies are no longer falling off a cliff, and that free fall is being followed by gentler decline. Yet even gentler decline is recessionary. The latest US data suggest credit card losses could hit $82-181 billion by late 2010. Commercial real estate is crashing. And corporate bond defaults are spreading. India is better off than the US, yet dismal industrial data suggest Indian banks could soon face rising defaults. The economy-market disconnect must end soon. Either the real economy will look up, or else markets will fall again. We can hope for the best, but should prepare for the worst.
Tatas’ nano housing plan takes off in style
Tatas’ nano housing plan takes off in style
The Economic Times, May 13, 2009, Page 20
Sells 3,500 Applications In First Two Days Of Booking, Website Receives 15 lakh Hits In Four Days Of Announcement
Sanjeev Choudhary NEW DELHI
TATA Group has sold around 3,500 application forms for its low-cost housing project, Shubh Griha near Mumbai, in the first two days of booking, threeand-a-half times the number of apartments the company is planning to build under the project, a company executive said.
The pricing of the project has taken many by surprise. Its Shubh Griha website has received 15 lakh hits in four days since announcement of the project. This includes 6.7 lakh hits from the US and 3.3 lakh hits from India, as per the executive.
“The response only reflects the huge demand for housing in that segment,” Tata Housing managing director Brotin Banerjee said, adding that the company had already sold off all printed forms in just two days. Ten branches of State Bank of India started selling forms across Mumbai on Monday.
The bank branches located in the western suburbs linked to Boisar have seen better sales of application forms, a senior marketing executive said, adding that the company was receiving enquiries from many other cities, including Delhi and Bangalore.
Being able to generate a good response for a housing project located quite away from the city limits is significant, given the current state of slowdown in the real estate sector. Most realty companies have seen their sales shrink dramatically in the past six months as economic slowdown and high cost of borrowing dissuaded aspiring buyers. India’s largest realty company DLF sold just 600 apartments in the Rs 30-50 lakh category during the January-March quarter.
Tata Housing, a subsidiary of Tata Sons, announced last Wednesday that it will build 1,000 apartments at Boisar, around 35 km from Virar and 100 km from southern end of Mumbai, under Shubh Griha brand for a price tag of Rs 3.9-6.7 lakh. Tata is offering three types of houses: one room kitchen of 283 sq ft and 360 sq ft and one bed room, hall, kitchen of 465 sq ft. The forms can be purchased and bookings made till May 25 after which the company will take a month to scrutinise forms and announce the list of allotees through a draw. The application form comes for Rs 200 with Rs 10,000 being the booking amount. “The Shubh Griha project has enhanced the group’s brand equity. Our projects in other cities too will get a favourable response from home buyers and investors,” another senior marketing executive at Tata Housing said.
Tata Housing is not as established a builder as DLF, Unitech or Hiranandani, in the residential segment. The company has done limited number of housing projects so far, mostly in joint venture with local developers.
BUILDING BLOCKS
The pricing of the project has taken many by surprise. Enquiries are also pouring in from Bangalore & Delhi
Given the current state of the realty sector, good response for a project located away from the city is significant
India’s largest realty company DLF sold just 600 apartments in the Rs 30-50 L category during the January-March quarter
The Economic Times, May 13, 2009, Page 20
Sells 3,500 Applications In First Two Days Of Booking, Website Receives 15 lakh Hits In Four Days Of Announcement
Sanjeev Choudhary NEW DELHI
TATA Group has sold around 3,500 application forms for its low-cost housing project, Shubh Griha near Mumbai, in the first two days of booking, threeand-a-half times the number of apartments the company is planning to build under the project, a company executive said.
The pricing of the project has taken many by surprise. Its Shubh Griha website has received 15 lakh hits in four days since announcement of the project. This includes 6.7 lakh hits from the US and 3.3 lakh hits from India, as per the executive.
“The response only reflects the huge demand for housing in that segment,” Tata Housing managing director Brotin Banerjee said, adding that the company had already sold off all printed forms in just two days. Ten branches of State Bank of India started selling forms across Mumbai on Monday.
The bank branches located in the western suburbs linked to Boisar have seen better sales of application forms, a senior marketing executive said, adding that the company was receiving enquiries from many other cities, including Delhi and Bangalore.
Being able to generate a good response for a housing project located quite away from the city limits is significant, given the current state of slowdown in the real estate sector. Most realty companies have seen their sales shrink dramatically in the past six months as economic slowdown and high cost of borrowing dissuaded aspiring buyers. India’s largest realty company DLF sold just 600 apartments in the Rs 30-50 lakh category during the January-March quarter.
Tata Housing, a subsidiary of Tata Sons, announced last Wednesday that it will build 1,000 apartments at Boisar, around 35 km from Virar and 100 km from southern end of Mumbai, under Shubh Griha brand for a price tag of Rs 3.9-6.7 lakh. Tata is offering three types of houses: one room kitchen of 283 sq ft and 360 sq ft and one bed room, hall, kitchen of 465 sq ft. The forms can be purchased and bookings made till May 25 after which the company will take a month to scrutinise forms and announce the list of allotees through a draw. The application form comes for Rs 200 with Rs 10,000 being the booking amount. “The Shubh Griha project has enhanced the group’s brand equity. Our projects in other cities too will get a favourable response from home buyers and investors,” another senior marketing executive at Tata Housing said.
Tata Housing is not as established a builder as DLF, Unitech or Hiranandani, in the residential segment. The company has done limited number of housing projects so far, mostly in joint venture with local developers.
BUILDING BLOCKS
The pricing of the project has taken many by surprise. Enquiries are also pouring in from Bangalore & Delhi
Given the current state of the realty sector, good response for a project located away from the city is significant
India’s largest realty company DLF sold just 600 apartments in the Rs 30-50 L category during the January-March quarter
DLF promoters up stake for sale on good response
DLF promoters up stake for sale on good response
Business Standard, May 13, 2009, Page 1
Arun Kumar / New Delhi
Bid process started late Tuesday evening; to be concluded on Wednesday.
Strong response from institutional buyers has prompted the promoter family of India’s largest real estate company DLF to raise the shareholding it had put up for sale from 100 million shares or 6 per cent to 168 million shares or nearly 10 per cent to raise Rs 3,850 crore from qualified institutional investors, including foreign investors.
The process, which is being overseen by Deutsche Bank and JP Morgan, started late Tuesday evening and is expected to close before the stock market opens on Wednesday.
The price band for the issue is Rs 223-230. Sources, however, said the issue is expected to conclude at roughly Rs 228 per share. DLF’s Tuesday closing prices on the Bombay Stock Exchange was Rs 236.25.
The transaction will be concluded through bulk deals on the stock exchanges on Wednesday, sources said. Routing bulk deals through the stock markets would save the K P Singh family capital gains tax of 20 per cent plus surcharge, said bankers close to the transaction. Trading on the market would attract only the Securities Transaction Tax of 0.125 per cent.
Proceeds from the sale are expected to be invested in DLF Assets Ltd (DAL), the promoter-owned real estate trust, which is in the midst of restructuring. Of this, around Rs 2,100 crore will be used to pay hedge fund DE Shaw, which had invested $400 in 2007 through optionally convertible preference shares. The rest will be used to repay part of DAL’s Rs 5,400 crore debt to DLF Ltd.
After the transaction, the promoters’ stake will drop to 78.6 per cent from the current 88.5 per cent. Asked about the sale, DLF Vice-Chairman Rajiv Singh said, “I am not in a position to react because bankers are advising us on the issue.”
Meanwhile, in a separate transaction DLF is expected to acquire DAL for Rs 7,500 crore. This effectively means DAL will have to incur a loss of Rs 2,500 crore, since it acquired assets from DLF for Rs 10,000 crore in 2007-08.
Apart from DE Shaw, DAL raised $700 million from Symphony Capital through optionally convertible preference shares with a coupon rate of 4 to 6 per cent to fund the asset acquisition from DLF.
D E Shaw was assured of an exit route from DAL after a planned listing on the stock exchange in two years. That route has closed since the real estate market has crashed and is unlikely to see a revival of interest from equity investors in the near future.
Although the due diligence of DAL is complete, sources said the transaction would be concluded after DE Shaw is paid. DAL, after getting the fund infusion from promoters is expected to pay off DE Shaw so to conclude the transaction, sources said.
Business Standard, May 13, 2009, Page 1
Arun Kumar / New Delhi
Bid process started late Tuesday evening; to be concluded on Wednesday.
Strong response from institutional buyers has prompted the promoter family of India’s largest real estate company DLF to raise the shareholding it had put up for sale from 100 million shares or 6 per cent to 168 million shares or nearly 10 per cent to raise Rs 3,850 crore from qualified institutional investors, including foreign investors.
The process, which is being overseen by Deutsche Bank and JP Morgan, started late Tuesday evening and is expected to close before the stock market opens on Wednesday.
The price band for the issue is Rs 223-230. Sources, however, said the issue is expected to conclude at roughly Rs 228 per share. DLF’s Tuesday closing prices on the Bombay Stock Exchange was Rs 236.25.
The transaction will be concluded through bulk deals on the stock exchanges on Wednesday, sources said. Routing bulk deals through the stock markets would save the K P Singh family capital gains tax of 20 per cent plus surcharge, said bankers close to the transaction. Trading on the market would attract only the Securities Transaction Tax of 0.125 per cent.
Proceeds from the sale are expected to be invested in DLF Assets Ltd (DAL), the promoter-owned real estate trust, which is in the midst of restructuring. Of this, around Rs 2,100 crore will be used to pay hedge fund DE Shaw, which had invested $400 in 2007 through optionally convertible preference shares. The rest will be used to repay part of DAL’s Rs 5,400 crore debt to DLF Ltd.
After the transaction, the promoters’ stake will drop to 78.6 per cent from the current 88.5 per cent. Asked about the sale, DLF Vice-Chairman Rajiv Singh said, “I am not in a position to react because bankers are advising us on the issue.”
Meanwhile, in a separate transaction DLF is expected to acquire DAL for Rs 7,500 crore. This effectively means DAL will have to incur a loss of Rs 2,500 crore, since it acquired assets from DLF for Rs 10,000 crore in 2007-08.
Apart from DE Shaw, DAL raised $700 million from Symphony Capital through optionally convertible preference shares with a coupon rate of 4 to 6 per cent to fund the asset acquisition from DLF.
D E Shaw was assured of an exit route from DAL after a planned listing on the stock exchange in two years. That route has closed since the real estate market has crashed and is unlikely to see a revival of interest from equity investors in the near future.
Although the due diligence of DAL is complete, sources said the transaction would be concluded after DE Shaw is paid. DAL, after getting the fund infusion from promoters is expected to pay off DE Shaw so to conclude the transaction, sources said.
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