Real Estate Intelligence Service, Tuesday, January 12, 2010

Unitech sells Rs 5,550-cr properties in Apr-Dec

Unitech sells Rs 5,550-cr properties in Apr-Dec
Business Standard, January 12, 2010, Page 4

BS Reporter / Mumbai

Unitech, the country’s second-largest developer, sold over 13 million sq ft in the April-December period. This is more than a four-fold increase over the 3 million sq ft it sold in the whole of 2008-09.

The value of sales booked during the nine-month period is about Rs 5,550 crore, the company said in a corporate presentation. Over 80 per cent of the sales are in the residential category.

“The financial year 2009 was one of the slowest periods for property sales and we booked very limited number of properties. But property sales have certainly picked up (since then), and this is reflected in our numbers,”’ a Unitech spokesperson said.

The company’s average realisation per square foot was Rs 4,225. In the case of residential properties, the realisation was Rs 3,733, while it was Rs 6,401 in the case of commercial. Last year, the average realisation was Rs 4,000 per sq ft, which yielded sales of Rs 1,200 crore for the company.

In the December quarter alone, the company said it had booked properties of around 3 million square feet. An executive said Unitech would now easily reach its annual sales target of Rs 6,000 crore.

Unitech’s net profit had halved during September quarter of the current financial year at Rs 177.6 crore, compared with Rs 358.92 crore in the corresponding quarter of the previous financial year.

Developers such as Unitech, DLF and others faced slower sales since the second half of 2008, as buyers deferred home buys to save cash during the economic slowdown.

However, developers are seeing a revival in the property sales as the economy picks up.

Rs 5,500-cr sales in Apr-Dec: Unitech

Rs 5,500-cr sales in Apr-Dec: Unitech
Hindustan Times, January 12, 2010, Page 23

Mumbai: Property developer Unitech said on Monday it had booked sales worth Rs. 5,550 crore between March 25 and the end of 2009. The company said it had booked saleable area of 13.14 million sq ft since the last week of March 2009, of which about 3 million sq ft was booked in the December quarter in the December quarter, indicating rising demand.
- REUTERS

Single FDI document by end of the year, says Anand Sharma

Single FDI document by end of the year, says Anand Sharma
Business Standard, January 12, 2010, Page 6

Press Trust Of India / Mumbai

The government planned to introduce a single foreign direct investment (FDI) document by the end of the financial year to simplify the process, and was currently discussing the various modalities, Commerce and Industry minister Anand Sharma said today.

“We have put this document for discussions with all stakeholders to invite their comment, which is expected to close by January 31. By March 31, we will have a single FDI document to ensure simplification, easy comprehension and predictability,” Sharma told reporters at the Bancon conference here.

This would make the entire process for FDI more investor-friendly. The new format would subsume all 177 press notes. At present, the document was under discussion among all stakeholders, which was expected to close by the end of this month, he said.

The new policy would come in the form of a single consolidated press note, which would not only specify the sectoral caps, but also the way foreign investments would be treated. The consolidation of the FDI policy framework is expected to make it more comprehensible to all investors and stakeholders. Besides, the government also plans to review FDI rules every six months.

PM calls for creation of 'Solar Valleys' to combat climate change

PM calls for creation of 'Solar Valleys' to combat climate change
Business Standard, January 12, 2010, Page 7

BS Reporter / New Delhi

In a bid to accelerate India’s efforts to meet its emission reduction targets and combat climate change, Prime Minister Manmohan Singh has called for the creation of “solar valleys” across the country and asked private investors to view the National Solar Mission as a business opportunity.

“If the ambitious rollout of the mission is to become a reality, we will have to create many solar valleys, on the lines of silicon valleys, which are spurring our information technology (IT) industry across the four corners of the country,” Singh said.

He added that these solar valleys would become hubs for solar science, engineering and research, fabrication and manufacturing.

National Solar Mission is one of the eight missions under the National Action Plan on Climate Change and aims at setting up over 20,000-Mw solar power generation capacity in three stages by 2022, the end of the 13th Five-year Plan.

Singh was speaking at the launch of Jawaharlal Nehru National Solar Mission — Solar India. Agriculture Minister Sharad Pawar, New and Renewable Energy Minister Farooq Abdullah, Environment and Forests Minister Jairam Ramesh and Planning Commission Deputy Chairman Montek Singh Ahluwalia, among others, were also present on the occasion.

Calling the mission a priority national endeavour, and its target “ambitious yet doable”, the prime minister urged the Indian industry to see the mission as a “huge business opportunity”.

He also expressed hope that the solar mission, when achieved, would improve the country’s energy prospects and contribute to efforts aimed at combating the climate change threat. “This mission is one of the major priorities of our government in its second term,” he said.

Noting India’s scientific and technological capabilities, Singh said: “I am convinced that solar energy can be the next scientific and industrial frontier in India after atomic energy, space and IT.”

While India’s solar power generation potential, with 300 clear sunny days every year, is one of the highest in the world, its capacity to generate solar power stands at as low as 3 Mw at present, in spite of an overall 150,000 Mw of installed power generation capacity. This is primarily owing to high cost — over Rs 12 crore per Mw — of setting up solar power plants, in contrast to the Rs 5-6 crore per Mw cost of setting up thermal power capacity.

“We aim to bring down the cost as quickly as possible,” said Farooq Abdullah. The renewable energy ministry’s plan is to announce a long-term policy to purchase power and support research and development to reduce material consumption.

The ministry has identified NTPC Vidyut Vyapar Nigam Ltd (NVVN), the power trading arm of NTPC Ltd, as the nodal agency for sale and purchase of costly solar power after bundling it with cheaper thermal power, to bring down consumer tariff to around Rs 5 per unit.

Environment clearance as patronage

Environment clearance as patronage
The Economic Times, January 12, 2010, Page 21

STATES RESIST THE FORMATION OF NATIONAL ENVIRONMENT PROTECTION AUTHORITY

M RAJSHEKHAR

THE ENVIRONMENT MINISTRY WILL, IN THE coming monsoon session, place a Bill for creating the National Environment Protection Authority (Nepa), an authority modelled on the lines of the US Environmental Protection Agency. What is less clear is whether this body will be a powerful watchdog, or a toothless old hound.

Today, the ministry of environment and forests (MoEF) creates most of our environmental policies and implements some of them — it grants industrial clearances to large projects, for instance. The pollution control boards, at the Centre and at the states, enforce laws pertaining to some aspects of environmental management — they grant clearances for smaller projects, and tracking air and water quality.

For the most part, these roles have not been essayed very well: environmental laws are being diluted, their implementation has been weak, corruption is endemic, the MoEF and the pollution control boards are understaffed, and worse, it is unclear if this institutional arrangement is capable of adequately responding to emerging environmental challenges: climate change, polluted rivers, management of wastes, urbanisation.

In the new regime, the MoEF will move away from regulatory functions to focus on policymaking. Regulation, monitoring and enforcement of policies will be handled by the Nepa, and disputes will be resolved by the proposed National Green Tribunal.

There are advantages to such an overhaul. As K P Nyati, principal adviser to the Federation of Indian Mineral Industries, says, “There has to be a distinction between those who make laws and those who enforce laws.” Second, having separate institutions in charge of law-making and implementation creates better oversight. The implementing agency has an incentive to flag whenever laws are unimplementable, and the law-making agency can shout whenever implementation is poor. Today, as creator and implementer, the MoEF has no incentive to identify flaws.

For all that, it is hard to say what the Nepa will eventually look like. It may be recalled that the MoEF had uploaded a concept note on the Nepa on its website in September 2009. This note said the Nepa will be a statutory autonomous body, but was sketchy on the source of its autonomy, the relationship between the Nepa and the statelevel bodies, its funding, etc. Since then, the ministry has received inputs from industry bodies, environmental NGOs/thinktanks and others. Last November, it held a workshop with states’ environment secretaries and pollution control boards. And these three stakeholders have divergent views on the Nepa.

Industry bodies, for instance, insist that statelevel bodies like state pollution control boards (SPCB), state environment impact assessment authorities, state expert appraisal committees, coastal zone management authorities, etc, should report directly (and exclusively) to the Nepa. Not doing so, says Nyati, will result in companies still needing to visit multiple agencies for clearances.

State governments, on the other hand, bristle at the prospect of greater centralisation, questioning the need for creating a new institution. This will result in either duplication of responsibilities or in the transfer of responsibilities from the states to the Nepa which, apart from running counter to the larger trend of devolution of power to the states, will also result in opposition from political parties (environment clearances, etc, are a large source of rent for parties ruling at the state level). Instead, the states have suggested that the CPCB should be merged into the Nepa, that the Environmental Protection Act should be strengthened to permit SPCBs to impose penalties, and that the SPCBs should be left under the state governments.

A third set of reservations has been raised by civil society. The concept note describes the Nepa as a statutory autonomous body. One question, as environmental lawyer Ritwick Dutta says, is how this autonomy is guaranteed? Should the Nepa be a constitutional body? What should be its source of funding? How will its governing body be set up? The other question is whether such autonomous bodies even deliver. At this time, India has several autonomous bodies in environment alone — such as the National Tiger Conservation Authority and the National Environmental Appellate Authority — and none of them has delivered very good results. And so, whether we would not be better off investing in India’s understaffed, underfunded SPCBs?

In all, it is hard to say what form the Bill will acquire. That will be the outcome of hectic negotiations. For now, an MoEF team is slated to leave soon for the US to study the nuts and bolts of the Environment Protection Agency. Also, the ministry is in the process of identifying a consultant to develop an organisational design for the Nepa. Separately, it is working out the legal provisions within the government.

In all, the ministry expects to have a draft Cabinet note ready by April. The Bill itself should reach Parliament by August.

Eviction can be sought if land required for personal use: SC

Eviction can be sought if land required for personal use: SC
The Economic Times, January 12, 2010, Page 27

Our Bureau MUMBAI

A LANDLORD can seek eviction of his tenant from a commercial premises if he requires the premises for his own use. This was the sum and substance of a recent Supreme Court ruling which drew on previous judgements in related cases though contested under different rent acts.

The SC ruling is significant as the appeal was filed under Section 13 of the Haryana Urban (Control of Rent and Eviction) Act, 1973, which provides for the eviction of a tenant only from a residential, and not commercial, premises if the landlord requires it (the premises) for his own occupation.

The appeal in the SC was filed by a Gurgaonbased shop tenant after the High Court of Punjab and Haryana dismissed a revision petition filed by him that challenged an eviction order passed by the Rent Controller, Gurgaon, which was also upheld by the Appellate authority.

The SC noted that similar provisions—of a landlord not being able to seek eviction of a tenant from commercial premises—in the East Punjab Rent Restriction (Amendment) Act 1956 and Delhi Rent Act, 1958 were found to be unconstitutional by the court in earlier cases. It also held that a recent decision in favour of the landlord delivered by the court under the Haryana Urban (Control of Rent and Eviction) Act, 1973 was not a bad law as contended by the tenant’s counsel, who added in the same vein that the matter should be referred to a larger bench.

The judgement observed that the SC had earlier found a similar provision in the Delhi Rent Act unconstitutional as it was “violative of the doctrine of equality embodied in Article 14 of the Constitution of India.”

PE investments nosedive 64% to $3.8 bn in 2009

PE investments nosedive 64% to $3.8 bn in 2009
The Financial Express, January 12, 2010, Page 7

fe Bureau, Mumbai

Private equity firms invested $1.39 billion (around Rs 6,255 crore) in 84 deals in India during the December quarter, taking the annual investment to $3.8 billion (around Rs 17,100 crore) in 232 deals in 2009. This is around 64% less than 2008, during which PE firms had invested $10.4 billion in 443 deals.

The amount invested during the Q4 2009 was higher than that during the same period in 2008 ($1.2 billion invested across 72 deals) as well as the immediate previous quarter ($807 million across 53 deals), a study by Venture Intelligence, a research service focused on PE and M&A transactions, said. These figures include venture capital investments, but do not include PE investments in real estate.

With 56 investments worth about $617 million, information technology and IT-enabled Services (IT & ITeS) topped in both value and volume during 2009. While banking, financial services and insurance (BFSI) came next on the volume front with 32 deals, energy was the second highest in value terms at almost $500 million. The largest investment reported during 2009 was KKR increasing its stake in telecom software firm Aricent to 79% for a reported $255 million. The Aricent investment was followed by the $180 million investment by existing investors IDFC PE and Oman Investments into independent tower infrastructure firm Quippo Telecom. The third largest deal was Goldman Sachs' $115 million investment in publicly-listed healthcare firm Max India for a 9.4% stake.

Venture capital deals accounted for 37% in volume terms in 2009. Late stage investments accounted for 28% of the PE deals in volume terms and 38% in value terms during 2009. "The volatility in the public markets and continued uncertainty around the ability to raise new funds caused investment activity to be muted in 2009," said Arun Natarajan, founder & CEO of Venture Intelligence. "With just six investments above $100 million in size in 2009 (compared to 22 such deals in 2008 and 27 in 2007), the year witnessed a clear decline in the appetite for large ticket investments," Natarajan noted.

With 11 investments during the year, IFC was the most active PE investor in India during the year. IFC was active across a range of industries - including BFSI and energy. Sequoia Capital India, with nine investments, was the second most active investor during 2009, followed by StanChart PE and Aavishkaar with 8 investments each.

Private equity firms obtained exit routes for their investments in 66 Indian companies during 2009, including seven through IPOs. (2008 had witnessed 36 liquidity events including 10 via IPOs.) PE-backed companies raised about $1.31 billion through IPOs during 2009. The $604 million raised by Adani Power via its July IPO was the largest by a PE-backed firm in 2009.

The total value of M&A transactions providing exits to PE-investors during 2009 was around $1.05 billion. These included 38 sales via public markets, 13 strategic sales, 4 secondary transactions (involving sale of shares by one PE firm to another) and 4 buybacks. Firms that exploited the continued rally in the public markets to execute multiple exits via public market sales during the year included ChrysCapital, Citi, IIML, Clearwater and Spinnaker.

The largest M&A deal providing an exit during 2009 was ChrysCapital's realising of over $176 million during the year via public market sales of the shares of truck finance firm Shriram Transport Finance.

Tapping the diaspora productively

Tapping the diaspora productively
The Financial Express, January 12, 2010, Page 8

Amitendu Palit

Following the PM’s assurance at the Pravasi Bharatiya Divas to grant voting rights to Indians living abroad before the end of the current government’s term, the diaspora’s contribution to the Indian economy is back in focus. At a size of almost 25 million people spread over 110 countries, the diaspora has a sizeable global presence. The bigger group in this club is comprised of PIOs followed by NRIs. The latter include Indian emigrants as well as those who have travelled abroad for shorter durations.

The economic might of the diaspora has been responsible for its growing strategic clout. Migration of skilled Indian professionals to high-income countries has helped the latter make significant productivity gains. The West has benefited the most from such migration with the US, the UK, Canada and Europe drawing large numbers of Indian professionals. In more recent years, high-income Asian economies such as Hong Kong and Singapore have become attractive destinations for Indian professionals. The professionals have contributed handsomely to the growth of these various economies in an era of high demand for skills in knowledge-intensive occupations. In the process, the professionals themselves have climbed rungs at a rapid pace. Success stories such as Lakshmi Mittal, Indra Nooyi, Vikram Pandit, Padmasree Warrior, Arun Sarin et al are well known. There are several less-celebrated stories, all of which have contributed to the diaspora emerging as a powerful economic force in terms of financial resources, managerial expertise and entrepreneurial capacities.

Remittances have been the diaspora’s biggest contributions to the Indian economy. India is one of the major recipients of migrant remittances among developing countries. In the year 2008, India topped the chart with $52 billion of remittances, followed by $49 billion in China and $26 billion in Mexico. Assuming an Indian GDP of $1.2 trillion in 2008, the remittances amount to roughly 4% of GDP. These flows have been functionally related to migration of skilled professionals from India as well as their earning capacities. The rise in both volumes of migration as well as earning capacities of migrants has positively influenced remittances. The latter have been a major source of stability for India’s balance of payments. So have been the non-resident deposits in Indian banks, though many argue that high deposit inflows are merely for taking advantage of high interest rates offered by Indian banks.

Beyond remittances and non-resident deposits, the role of overseas Indians, till now, has been relatively limited as far as investments in building businesses in India are concerned. This is in sharp contrast to China. The role of the expatriate Chinese in facilitating China’s ascent to economic prosperity is well known. Most of the foreign investment flowing into China in the early years of its opening up was from the expatriate Chinese. Those from neighbouring Hong Kong and Taiwan made good use of tax benefits and other facilities offered in the special economic zones of Shenzhen and other coastal areas. By setting up new production facilities in mainland China, expatriate investors ensured that China did not lose out on the opportunities created by economic reforms and also acted as a ‘pull’ factor for multinational investors.

India, unfortunately, has not benefited similarly. Despite creating a separate channel for non-resident investment from the early 1990s that offered greater benefits, expatriate capital inflows failed to take off and continue to remain below expectations. FIIs into India have been largely dominated by multinationals rather than the expatriate variety.

Why has the Indian diaspora not invested as much in India as the Chinese diaspora has in China? There’s of course the generic discomfort of investing in a country that is a difficult place for doing business in. But a key factor is the difference in attitude between the two diasporas. The expatriate Chinese community has a strong entrepreneurial inclination and a great flair for risk-taking. This is probably because most of them migrated in the first place on entrepreneurial ‘pulls’ in contrast to Indians who move overseas to take up employment. As a result, successful new generations of NRIs show less inclination for setting up businesses. India’s efforts in drawing expatriate investment were also constrained by the fact that none of its neighbours could perform roles similar to those played by Hong Kong and Taiwan for China.

In order to play a bigger role in India’s growth, the diaspora needs to grow beyond the safer options of remittances and term deposits to riskier avenues of putting money in creation of productive assets in India. It probably needs to take a leaf out of its Chinese counterpart in this regard.

—The author is a visiting research fellow at the Institute of South Asian Studies in the National University of Singapore. These are his personal views

China could overheat with 16% growth, admits researchers...

China could overheat with 16% growth, admits researchers...
The Financial Express, January 12, 2010, Page 18

Bloomberg

China’s economy may grow as much as 16% this year with accelerating inflation and the risk of a property bubble unless policy makers reduce stimulus measures, government researchers said on Monday.

“If the government continues with the same strength of macro-economic stimulus as in 2009, there will be notable economic overheating in 2010,” Yao Zhizhong and He Fan, economists with the Chinese Academy of Social Sciences, said in an article published in the official China Securities Journal.

A stronger-than-estimated trade rebound in December may give policy makers more room to pare stimulus measures after record lending in 2009. The central bank last week guided three-month bill yields higher for the first time since August and may lift the benchmark one-year lending rate to 5.85% by year-end from 5.31%, economists forecast. China’s exports grew 17.7% last month from a year earlier, the first increase in more than a year, and imports rose to a record, customs data showed on Sunday.

Lending jumps to $88 b, fuelling the concerns

Lending jumps to $88 b, fuelling the concerns
The Financial Express, January 12, 2010, Page 18

Beijing: Chinese bank lending surged in the first week of 2010, a state newspaper reported on Monday, adding to the concerns fuelled by blockbuster trade data for December that the world's third-largest economy is overheating.

Despite the indications of gathering economic momentum, Finance Minister Xie Xuren said China would stick to its pro-growth fiscal stance, warning that withdrawing stimulus spending too early could damage the economy.

New loans amounted to about 600 billion yuan ($88 billion) in the first week of January, nearly twice as much as the monthly average in the second half of 2009, the Economic Information Daily reported.

Corporate treasurers see tighter monetary policy down the road and as a result are front-loading their funding needs. That may only make officials move quicker to normalise policy, Isaac Meng, an economist with BNP Paribas in Beijing, said.

"In terms of credit controls, our expectations for a hike in reserve requirements should be brought forward from the end of the first quarter," said Meng, who had pencilled in loan growth of 800 billion yuan for all of January.

"Inflation is heading to 3-4 percent in the next few months. It is no longer just expectations, it is becoming a reality," he said. China's consumer price index rose 0.6 percent in the year to November, which marked the first increase since January.

The lending news came a day after trade figures showed much stronger-than-expected growth in both imports and exports. The strong economic signs pushed up Asian stocks to a 17-month high on Monday and helped to lift oil prices to the highest level since October 2008.