Monday, January 11, 2010
PM sees 10% growth soon
PM sees 10% growth soon
The Economic Times, January 9, 2010, Page 1
Says India Moves Slow,But Leaves Behind A Deep Imprint
Our Bureau NEW DELHI
PRIME Minister Manmohan Singh on Friday dangled the carrot of economic growth accelerating to double-digit levels in the next two years before investors and vowed to reduce bottlenecks in setting up projects, a day after steel tycoon LN Mittal lamented about the countrys inability to execute mega investment projects.
Luring non-resident Indians (NRIs) to invest in the country, Mr Singh said the government was optimistic of returning to sustained growth of 9-10 % in a couple of years . Inaugurating the Pravasi Bharatiya Divas, a gathering of the Indian diaspora, he said: I cannot say that we have delivered in full measure on the enormous promise and potential of our country.
The prime ministers forecasts could trigger analysts to upgrade their forecasts. Most independent economists agree that the Indian economy is out of the woods and set to move to a higher growth trajectory in the years ahead.
India, which witnessed an unprecedented growth of more than 9% between 2005 and 2008, desperately needs to set right creaking infrastructure in areas such as power, roads and ports. However, red tape, legal problems with various laws of the states and central government overlapping, and land acquisition from villagers are frustrating industry groups.
But Mr Singh said some had to do with Indias democratic set-up and the diversity of culture , and expressed confidence the country will still move ahead.
I recognise the frustration well-wishers feel when they lament why things dont work faster or why well-formulated plans and policies dont get implemented as well as they should be, Mr Singh said. India may be a slow-moving elephant, but it is equally true that with each step forward , we leave behind a deep imprint , he said and assured that the government would address bottlenecks in infrastructure, farming and healthcare.
Mr Singhs assurance comes after Mr Mittal on Thursday publicly displayed his anger about the crawling pace of projects saying, `` the entire country is to be blamed for the delay in executing the projects .
PM projects 10% growth in 2 years
The Financial Express, January 9, 2010, Page 2
fe Bureaus, New Delhi
India can achieve double-digit growth in the next two years, Prime Minister Manmohan Singh said on Friday, while projecting around 7% growth for the current fiscal.
“We hope to achieve this year a growth rate of around 7%, which is one of the fastest in the world. We are equally optimistic that we can return to and sustain an annual growth rate of 9-10% in a couple of years,” he said.
Speaking at the Pravasi Bharatiya Divas function, Singh promised the government would address bottlenecks in infrastructure, a day after ArcelorMittal chairman Laxmi Mittal criticised the government for slow progress on realising projects. ArcelorMittal and Korean company Posco have endured delays of more than two years in their efforts to build 37 million tonne of capacity in India, at a cost of roughly $37 billion. It is probably true that we are a slow-moving elephant but it is equally true that with each step forward we leave behind a deep imprint, Singh said.
Speaking at the same function, Finance Minister Pranab Mukherjee projected a more robust growth rate of 7.75% for 2009-10. The economy grew at 6.7% in 2008-09, as compared to a 9%-plus growth in the previous three years. He said the stimulus measures have started paying dividends, as the Indian economy grew 7.9% in July-September. The country fiscal deficit, though, is expected to widen to 6.8% of the gross domestic product as a result of these stimulus measures.
The prime minister urged Indians living abroad to look at long-term investments in India and help the government to accelerate growth and social development. “Oversees Indians, however, while being good savers tend to be somewhat conservative investors. Most remittances are placed in bank deposits. Foreign direct investment in India by overseas Indians is low and far short of potential,” Singh said.
The finance minister stressed despite the economic slowdown that struck India last year, the country recorded 8.6% average annual growth rate in the last five years. He promised continuation of the economic reforms started in early 1990s. The government is planning a major overhaul of the direct and indirect taxation regime with announcing its intent to introduce the Direct Taxes Code and the Goods and Service Tax. Prime Minister Manmohan Singh also argued that India would clock 9-10% growth.
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Social security net mooted for Indian workers returning home
Prime Minister Manmohan Singh on Friday said the government is planning a social security net for the global economic crisis-hit workers returning to India. He said security of overseas Indian workers and students was a top priority of his government.
“We are conscious of the need to structure an appropriate ‘Return and Resettlement Fund and we are working on a project to provide a social security safety net for the returning workers,” Singh said inaugurating the Pravasi Bharatiya Divas function.
“About 40% of the total remittances of over $50 billion in 2007-2008 came from skilled and semi-skilled overseas Indian workers. Many of them have been badly affected by the economic crisis,” Singh noted at the function. He said India has been negotiating with countries with large emigrant Indian populations to improve the welfare and protection offered to our workers.
Over the last year, India signed labour agreements with Malaysia, Bahrain and Qatar that create institutional frameworks to look into issues such as recruitment, terms of employment and workers¿ welfare, he said. Ministry of Overseas Indian Affairs has also established the `Indian Community Welfare Fund in 18 countries in which there is a significant overseas Indian workforce, he added.
“We must together position India as a supplier of skilled and trained manpower across a wide spectrum of skill sets and sectors,” he said. He said the government was working to enhance work opportunities for Indian skilled manpower, particularly in the West, by building labour mobility partnerships with key countries in the European Union. India has have finalized one such partnership with Denmark.
NRI investments far short of potential: PM
The Hindu Business Line, January 9, 2010, Page 1
Our Bureau, New Delhi
The Prime Minister, Dr Manmohan Singh, on Friday urged overseas Indians to take a careful look at the long-term investment opportunities now on the horizon pointing out that the Government is optimistic of returning to and sustaining annual growth rate of 9-10 per cent in the next couple of years.
"India today is one of the top investment destinations. Economic opportunities are expanding everywhere. Overseas Indians while being good savers tend to be somewhat conservative investors.
"Most remittances are placed in bank deposits. Foreign Direct Investment in India by overseas Indians is low and far short of potential," the Prime Minister said while inaugurating the Eighth Pravasi Bharatiya Diwas.
The Prime Minister said that the country seeks the `active' involvement of overseas Indians community in accelerating the pace of economic and social development.
The event has been jointly organised by the Ministry of Overseas Indians, Government of Delhi and Confederation of Indian Industry.
Turning his attention to semi-skilled and skilled workers abroad, who account for about 40 per cent of the over $50 billion total remittances received in 2007-08 and had been affected by the economic crisis, Dr Singh said the Government is working on a project to provide a social security safety net for returning workers.
New Direct Taxes Code likely from April 2011
New Direct Taxes Code likely from April 2011
The Hindu Business Line, January 9, 2010, Page 15
Our Bureau, New Delhi
The Finance Minister, Mr Pranab Mukherjee, today said that he was hopeful that the new Direct Taxes Code would be implemented from April next year.
“We are working on tax reforms. I am hopeful that the Direct Taxes Code will be implemented from April 2011”, Mr Mukherjee said in his address at Pravasi Bharatiya Divas, an annual conference for overseas Indians.
Govt urged to release land for affordable housing
Govt urged to release land for affordable housing
The Hindu Business Line, January 9, 2010, Page 17
Mint Homes to complete first project by June.
R. Yegya Narayanan, Coimbatore
The Tamil Nadu Government should loosen its hold on the land bank held by it by inviting bids from builders to develop affordable housing for which there is a lot of pent up demand in Coimbatore, according to Mr Raj Natarajan, Chairman, Mint Homes, Houston, Texas, US.
He said the realty market in Coimbatore was looking up and expected the recovery here to be faster than in other markets.
In the Coimbatore he expects a ‘large growth' with projects‘competitively priced' in the price range of Rs 2,000-Rs 2,500/sq.ft. The size of apartments would range between 800 sq (2 bedroom) and 1,000 sq.ft (3 bedroom) and the cost of thesecould be around Rs 20-25 lakh. He was looking seriously at the affordable housing projects located 10-12 km away from the city centre.
Upmarket buyers
Mr Natarajan said for the upmarket customers, the apartments could be of a bigger size (1,000 sq ft for two bedroom and 1,300 sq ft for 3 bedroom) costing between Rs 35 lakh and Rs 40 lakh for which there was demand.
The luxury home market in the price range of Rs 3,500-6,000/sq.ft, with apartments costing about Rs 70 lakh, in Coimbatore was very small. People in major metros like Mumbai and Delhi are attracted by the climate and quality of life in Coimbatore, he said.
Mint Homes' first project of 136 apartments in Meena Estate area in the city will be completed by the middle of this year. The civil works would be completed by March and the landscaping would be done by June.
Mr Natarajan said his company has signed an agreement with Sri Renga Property Developers to take over its three projects under execution consisting of 144 villas and apartments and has planned to complete all of them in the course of this year.
Consumer scrutiny is stronger now
Consumer scrutiny is stronger now
The Financial Express, January 9, 2010, Page 1
Harshavardhan Neotia
2009 has been a sort of rollercoaster ride, which has fortunately ended on an upswing. The year started off on a rather worrisome note for the economy in general because of the meltdown that started in September 2008 in the US. The real estate sector was particularly adversely impacted, with an air of uncertainty enveloping the business environment.
In India, real estate prices had begun to soften, home loan rates were heading northwards and investors shied away from the market. Even end-users of residential as well as commercial properties tended to defer their decision to purchase and, by and large, the off-take was very sluggish.
As the year progressed, we noticed that the Indian economy stood fairly resilient to the global meltdown. Our banks were still as strong, there was consumption, though low, and there was some hope building despite the gloom. Moreover, housing still being a basic necessity for millions of people in our country, started to catch on.
From the middle of 2009, therefore, we began to see some rise in confidence and a positive sentiment emerged even resulting in some investments and movement. Though the investor community still chose to wait and watch, end-users were crawling back. We saw most of the resurgence being led by the housing & residential sector and some movement even in the commercial & retail sector.
One of my prime learnings and observations with regard to the post-slowdown recovery is the emphasis that a buyer now lays on projects that are well conceptualised, backed by a credible developer with a sound track record. Though buyers were conscious of investing with developers with a good record even earlier, post-slowdown, this factor has emerged even stronger and the consumers’ sense of scrutiny and discretion has enhanced.
What this implies is that for a project to now succeed, it must be carefully planned and executed, abiding by strict deadlines, and must deliver the promised quality. Such projects will certainly be winners.
The retail business has also started behaving differently, post-slowdown. The retail business is more akin to hospitality than realty now.
Developers of malls are expected to keep them attractive by inducing a high level of sustained engagement by way of events, promotions and good maintenance.
Also, increasingly, retailers are weary of the high running and maintenance cost of malls and so they must be designed right from the beginning in such as way that they can be maintained at relatively low cost. Malls must provide for a complete family experience rather than just an avenue for shopping.
Real estate developments even in the commercial and office spaces have become more experiential in nature. Corporate houses are looking at providing a healthy work-life balance to their employees though workspaces that provide a wholesome environment coupled with good infrastructure. Corporate houses are even willing to pay a premium for such an offering.
I am very positive about 2010 and I believe that the worst is now behind us. With quality, timely delivery, good concepts and meticulous execution being the watchwords for the real estate industry, I see a robust pick-up in the coming year. 2010 will certainly be far more promising than 2009.
Facing hard home truths
Facing hard home truths
The Economic Times, January 11, 2010, Page 1
Overseas Indians often have big problems when investing in real estate in India
Ishani Duttagupta & Ravi Teja Sharma NEW DELHI
NEW Jersey-based Susheela Verma is embroiled in a bitter dispute with her own family members over a 10,000 sq ft property in Gurgaon. I had invested in the property in 1999 and issued a limited power of attorney to my brother to oversee the construction on the site. My nephew was employed by me with a salary to help with the construction of the house. My investment is a few crores, but since 2006 my brother and his family have taken over illegal possession of my house. And because I dont live in India they have bribed the local agencies, and Im not able to get my property back, she says. Theres hardly anything unusual about this episode, except when you learn that Verma is a lawyer herself.
The local police and courts have not helped me in any way even though I have approached them and since I have a law practice in the US, I cant spend too much of time here fighting against my own family, says a desperate Verma. While it is ironic that a legal expert finds herself in this situation , many other prominent overseas Indians too encounter similar problems while investing in Indian property.
It could start with a dream to own a modest home in ones country of origin. Or it could even be an emotional bond that a second generation person of Indian origin feels with her parents homeland that makes her seek transfer of title of family property willed to her in a village in Punjab. Or it could turn into a poignant court battle by an aged NRI couple which wish to return home from the West but find that unscrupulous land-grabbers have taken possession of their apartment in Mumbai. Overseas Indians who have now become an important segment of investors in Indian real estate, putting in over a million dollars every year, often find themselves being duped by promoters or even getting into acrimonious legal battles with their relatives they once trusted.
There are instances when weve seen NRI families battling over division of land and property in control of custodians in India. A horrified NRI may discover that he has been divested of his share of family property on arriving in India, on the basis of fraudulent papers. Sometimes frantic NRI family members try to implement family settlements thwarted by local relatives occupying property locally. These are all real life instances which we have been dealing with, says Anil Malhotra, a Chandigarhbased lawyer who specialises in legal matters relating to NRIs and PIOs (persons of Indian origin).
London-based businessman and renowned philanthropist Raj Loombas family made full payments for two flats in Ghaziabad in Delhis NCR region two years ago and have not yet been given possession. The promoter keeps making excuses and we know that the project is yet to be complete. A consumer court has given a judgment in our favour but even that has not helped my wife and daughter in getting their flats, says a frustrated Mr Loomba.
Its a similar story for a group of overseas Indians who invested their hard earned money in a Maytas Properties project which has turned into a nightmare.
Infrastructure lending is high growth area
Infrastructure lending is high growth area
The Hindu Business Line, January, 11, 2010, Page 3
K. Ram Kumar Priya Nair
Infrastructure lending has emerged as a high growth area for Indian banks in the current financial year amidst the overall slack in credit growth.
At a time when India is showing the ‘promise' of achieving a 7.0-7.5 per cent GDP growth when advanced economies are trying hard to come out of recession, it is a no-brainer that only infrastructure – mainly power, roads, ports, airports, and oil rigs – build-up can ensure continued socio-economic development on sustainable basis.
Notwithstanding the fact that they face serious asset-liability mismatches and get little support by way of tax concessions (despite making innumerable representations to the Finance Ministry in the last few years), banks have risen to the challenge of financing infrastructure projects.
As per the latest available Reserve Bank of India data, year-on-year (as on August 28, 2009), banks clocked a robust 44.7 per cent growth in credit to the infrastructure sector (or Rs 93,647 crore in absolute terms) as compared with 36.1 per cent growth (or Rs 55,533 crore) .
Overall, the year-on-year credit growth as on August 28, 2009 was subdued at 13.3 per cent (or Rs 3,08,718 crore) as compared with 26.5 per cent (or Rs 4,84,805 crore) as on August 29, 2008.
Given that infrastructure project developers are showing robust appetite for credit, bankers are laying much store by this segment of borrowers to grow their balance sheets.
They are hoping that in the coming few quarters, drawals will begin from their ‘healthy' loan sanctions pipeline, which currently is estimated to run into a few thousand crore rupees for each bank.
In the context of the Prime Minister's latest statement at the Pravasi Bharatiya Divas 2010 function in Delhi late last week that the country will return to a 9-10 per cent growth trajectory in the next couple of years, bankers feel that it is imperative that the Government as well as the Reserve Bank of India put in place enabling measures that will encourage infrastructure lending.
Enabling measures
What are the enabling measures that the banks are seeking?
Banks have moved the Finance Ministry seeking the benefit of tax deduction in respect of income received from financing infrastructure projects via introduction of a new section (Section 80LB) in the Income-Tax Act, 1961.
They want 100-per-cent tax deduction on income earned from infrastructure financing for five consecutive years beginning with assessment year 2011-12 and 50 per cent deduction for the subsequent five consecutive assessment years. “If tax deduction is allowed, then banks will be more enthusiastic about lending to infrastructure projects. As our post-tax yield will be higher, we will be in a position to charge project developers lower interest rates,” said a senior official of a public sector bank.
According to the Indian Banks' Association, the primary constraints for banks in financing infrastructure projects arise from their funding structure and applicable liquidity ratios (cash reserve ratio and statutory liquidity ratio).
While banks' resources are mainly in the form of deposits, which are typically of maturities up to three years, infrastructure projects require long-term financing i.e. for tenures extending beyond 15 years.
Apart from asset-liability mismatch, interest rate risk and pricing are also key issues. “With regard to infrastructure lending, there is an overall asset-liability mismatch because funds are required for 14-15 years, but deposits are of shorter maturity. Today, all banks are supporting infrastructure lending. But going ahead, individual sectoral gaps could arise. Whether we can meet sectoral requirements is a big question,” said Mr M.D. Mallya, Chairman and Managing Director, Bank of Baroda.
Take-out financing
Bankers are hoping that ‘take-out' financing, which has been a long time coming, takes off this time round.
Take-out financing, which was mooted over a decade ago by IDFC and State Bank of India, is a mechanism designed to enable banks to avoid asset-liability maturity mismatches that could arise out of extending long-term loans to infrastructure projects.
Under this mechanism, banks financing infrastructure projects enter into an arrangement with a financial institution to transfer, say after seven years, to the latter the outstanding on their books.Given the multiplier effects of infrastructure projects, the time may be ripe for the Government and the RBI to make small concessions to banks so that 9-10 per cent growth envisaged by the Prime Minister in the coming few years can become a reality.
China plans to keep 'hot money' out of realty market
China plans to keep 'hot money' out of realty market
The Economic Times, January 11, 2010, Page 18
Crude oil imports at record
China increased crude oil purchases to a record last year to meet rising demand spurred by the government’s $586 billion stimulus spending. Crude oil imports reached 203.8 million metric tonnes last year, or 4.1 million barrels a day, according to preliminary data released by the General Administration of Customs on Sunday. Net purchases reached a record 198.7 million tonnes.
Government stimulus may boost China’s 2009 economic growth by more than 8%, according to official forecasts. The world’s fastest-growing major economy may increase its refining capacity by 2.9 million barrels a day between 2008 and 2014 to meet increased fuel consumption, the Paris-based International Energy Agency said in a report on December 11.
“Oil imports have surged in 2009 also as the nation has been increasing emergency stockpiling,” Wang Aochao, head of China energy research at UOB-Kay Hian, said by telephone in Shanghai. “We expect imports to still rise more than 10% this year.”
China has finished building its emergency oil reserves under the first phase of its stockpiling plan, the National Energy Administration said in June. Late last year, the country started building stockpile bases under the second phase.
Net crude oil imports rose to 20.9 million tonnes last month, from 16.7 million tonnes in November, data showed. Imports of oil products, including gasoline and diesel, fell 5.4% to 37 million tonnes last year and reached 3.3 million tonnes in December, the customs data showed. Exports of oil products gained 46% to 25 million tonnes in 2009 and stood at 3.67 million tonnes in December.
Exports of coal, used in power generation and steelmaking, declined to 22.4 million tonnes in 2009 and stood at 2.07 million tonnes in December from 1.43 million tonnes in November. The customs agency didn’t give coal import figures.
Services drive growth in poor states
Services drive growth in poor states
The Financial Express, January 11, 2010, Page 1
KG Narendranath, Gireesh Chandra Prasad, New Delhi
Service sectors are proving to be the principal growth drivers in India’s conventionally backward states like Bihar, Madhya Pradesh, Orissa and Rajasthan. Construction, telecommunications, banking and insurance, tourism and real estate have led the growth in these states in the five years up to 2008-09, helping them to come out of the morass.
What’s even more heartening is that the spectacular growth in these sectors has been propelled by extensive inputs from low-skill labour. This explodes the myth that service sectors have limited ability to generate such jobs, crucial for greater inclusive growth of the country.
An analysis of the Central Statistical Organisation data by FE shows that construction growth in Bihar between 2004-05 and 2008-09 was 38.1% while it was 14.2% between 2000-01 and 2004-05. Contrast this with the real overall state domestic product (SDP) growth of 11% in the later period and 6% in the earlier.
In Orissa too, there was a jump in construction growth from 1.6% to 13.8%, while the real state domestic product growth rates for the periods were 6.5% and 8.7%, respectively. Similarly, communication services in Jharkhand grew at a robust 24.2% in the later period as against the earlier 14.5%. The real state domestic product growth rates were 8.7% and 6.5%, respectively. Similar trends are apparent in case of other economically backward states as well (see graph).
But for the presence of construction, the biggest user of unskilled service jobs, the growth of industry SDP of these states would have looked less rosy. Besides construction, industry SDP comprises manufacturing and mining, among others.
Of course, the difference in manufacturing and service SDP growth rates between the two periods is not stark. But analysts reckon that high-end manufacturing had contributed in more to the relevant SDP growth in the five years up to 2008-09 than in the previous period, and therefore, the employment-intensity of manufacturing could be on the decline. This confirms that service sectors are already a destination for most of the estimated 2.8 million people entering the country’s labour market every year.
Says JP Morgan India chief economist Jahangir Aziz, “The notion that manufacturing is more employment-intensive is being proven wrong. Formal manufacturing increasingly uses high-end robotised machines. Service industries, on the other hand, do use a lot of unskilled and semi-skilled labour. The boom in construction, communication and tourism industries in Bimaru states has led to the growth of several employment-generating services — security, travel and catering services for example.” Illustrative of this is the fact that Bihar’s per capita net SDP clocked 9.6% growth between 2004-05 and 2008-09, as against 3.6% between 2000-01 and 2004-05, while the corresponding figures for Gujarat, where a large number of new manufacturing units have come up in the later period, were 9.2% and 4.6%.
As per the CSO data, there was a healthy 17.3% growth between 2004-05 and 2008-09 of the trade, hotels & restaurants segment in Bihar, while the growth between 2000-01 and 2004-05 was just 13.2%. The corresponding figures were 10.1% and 6.4% for banking and insurance, and 17.3% and 10.8% for communication services.
According to an analysis by the National Council of Applied Economic Research, communication services — mobile connections, which contributed under 6% to the country’s GDP till 2007-8 — will grow its share to 15.4% by 2014-15 to become the largest contributor to the GDP, ahead of even trade and registered manufacturing.
Says Rajesh Shukla, senior fellow, NCAER, “The services sector, especially communications, has been a big economic growth driver in the last 10 years. Explosion in telecommunications infrastructure has given a huge growth fillip to related service sectors such as IT, BPO and other IT-enables services.” The share of communications services in total employment is also expected to leapfrog, from just over 0.5% in early 2000s to over 3.5% in the next five years, according to NCAER.
Aziz also believes service sectors will continue to lead the country’s growth rate for some time to come. “You cannot expect the manufacturing sector to suddenly become a big player in India as we lack the services that are necessary for its competitiveness, such as infrastructure, banking and government services,” he says. According to HDFC chief economist Abheek Barua, the pick-up in GDP growth in states like Bihar (where growth is higher than the national GDP) could be attributed to a large extent to increased construction activity led by government programmes like Bharat Nirman, which have seen an improved standard of implementation in the recent years. Barua, however, cautions that although this strategy has helped generate jobs in the backward states, it would hardly be a permanent solution as the government cannot continue to bridge the gap between demand and supply for labour. “If the demographic dividend that we talk about has to be really an asset rather than a liability, we should work hard for more permanent solution to the distress in the heartland. Radical changes in the sphere of education and industrial planning are necessary. New industrial corridors being planned ought to be closer to backward regions,” he says. There are, in fact, concerns over the quality of employment — in terms of remuneration and job security — in many of the emerging service sectors. The organised sector, which is believed to be providing decent employment, account for less than 15% of the total workforce in the country.
—(With inputs from Shailesh Dobhal)
Now, DLF to split into 3 organisational units
Now, DLF to split into 3 organisational units
The Financial Express, January 11, 2010, Page 1
Rajat Guha, Rishi Raj, New Delhi
After deciding to split its parent firm into functional verticals, DLF Ltd has now identified an overall new organisational structure to house them and further sharpen their functioning.
The country’s largest real estate firm will now be broadly divided into three units—Devco, Rentco and the holding firm dealing with corporate functions, according to an internal circular issued by DLF vice-chairman Rajiv Singh.
As reported by FE on December 31, the earlier identified verticals like Gurgaon, Super Metros and Rest of India will be part of Devco, which will incorporate all real estate ventures of the company, while Rentco will take charge of all its rent-yielding assets like offices and malls. Going forward, any rent-yielding asset developed by any of the verticals under Devco will be shifted to Rentco.
The corporate functions vertical will include key jobs like finance, legal, HR, corporate affairs, treasury/investor relations and V-C’s office, including risk management. A new quasi entity will be created called DLF Holdings, which will aggregate the company’s investments in areas such as hotels, clubs, convention centres, DLF Pramerica Life Insurance and asset management, DLF Metro JV, DLF Golf Resorts and PVR.
The corporate team will focus more on framing policies and providing guidance and oversight to ensure uniformity in implementation, the circular has stated. “While the last 12 months have been extremely trying for both DLF and the entire economy, the company has emerged stronger from the crisis and now well-positioned to take advantage of the revival in growth. In this context, we are simplifying our organisation to ensure sharper focus on execution with greater emphasis on robust systems, processes and risk management,” Singh has said while outlining the restructuring.
Devco, Rento and the corporation functions unit will be distinct profit centres with independent, board-managed companies with respective profit and loss accounts, balance sheet, cash flows and governance and compliance. Within Devco, the Gurgaon vertical will develop and manage properties in Gurgaon; Super Metros will manage them in Delhi, Mumbai, western and eastern India; the Rest of India will oversee South (Tamil Nadu, Andhra Pradesh, Kerala and Karnataka) and North (Punjab, Rajasthan and UP, including Noida and Goa.
The entire asset business portfolio of DLF, which now stands integrated into one company — DLF Cyber City Developers Ltd — will be under Rentco and will include offices, malls, utilities/facility management and overtime any other income-yielding business.
Rentco will own the assets on their completion by Devco and will generate further income through leasing, maintenance, signage. Rentco will also ensure financial viability of these projects and closely work with Devco for their execution.
Industry tag for hotels may bring in more funds: study
The Financial Express, January 11, 2010, Page 7
Sajan C Kumar, Chennai
With a view to give a fillip to investments in hotel infrastructure and promote the tourism sector, a study done by trade body Ficci, in association with Evalueserve, has set out a nine-point agenda. The study calls for granting the hotel industry the status of infrastructure and export industry, delinking of hotel projects from commercial real estate and 100% FDI in developing tourism infrastructure in India.
The study also endorses escalation of investment in the tourism sector, creation of land banks for budget hotels, single window clearance for new hotel projects by the state governments, identification of hotel sites to be given on long-term leases, improvement in civic amenities through the PPP model and development of one destination in each pro-active state as a model tourism destination.
According to the study, the hotel industry could not enjoy a multitude of benefits, owing to the fact that it has not been accorded industry status across the country. The status would encourage reinvestment in the hospitality sector, besides channelising investment flow in the tourims sector and help bridge the demand-supply gap. India requires investments worth Rs 60,000 crore over the next five years to meet the demand for about 1,50,000 rooms. As per World Travel & Tourism Council (WTTC) estimates, the Indian tourism industry would be generating about 31 million jobs both directly and indirectly in 2010 and would be responsible for creating 40 million jobs by 2019.
The tourism industry earned foreign exhchange worth $11.7 billion in 2008, an increase of 9.5% from the previous year. Given the quantum of earnings, the industry should be granted deduction on foreign exchange earnings, says the study. The benefits available under Section 80 HHD of Income Tax Act 1956, which was discontinued after 2005-06, should be revived. An exemption on the foreign exchange earnings of tourism industry would be beneficial for the industry’s growth.