WB to back Indian firms in emerging economies
The Financial Express, December 5, 2009, Page 1
fe Bureaus, New Delhi
World Bank Group president Robert Zoellick on Friday said it is willing to help Indian companies operating in developing countries. He projected the South-South trade to rise, while forecasting India would return to 8-9% growth rate in two years. “There may be an opportunity for us to help Indian companies operating in other developing countries,” he said. “We are going to see much of the South-South business and trade.”
Zoellick said he was committed to get additional resources for India. “I had the opportunity this morning to speak to the Prime Minister how fully committed I am in trying to get India more financial resources from the World Bank Group,” he said, concluding his four-day trip to India.
The World Bank is currently working on projects of more than $22 billion in the country, including a $3.6-billion loan from its arm International Finance Corporation, which funds private projects.
Monday, December 7, 2009
WB to back Indian firms in emerging economies
FDI violations by Emaar
FDI violations by Emaar
The Financial Express, December 5, 2009, Page 4
The Enforcement Directorate(ED) on Friday claimed to have found evidence of "large-scale" violations of Foreign Direct Investment(FDI) guidelines by real-estate major Emaar MGF in purchase of land.
During its searches carried out at 13 premises of the group on Thursday, ED also claimed to have recovered about Rs nine crore in cash, two kg of gold and foreign currency worth Rs 5 lakh.
Stating that Emaar MGF has availed more than Rs 6,000 crore of FDI in the last four years, the ED said in a press statement that the seized documents indicated "large-scale violations of FDI guidelines."
"The company has about 12,800 acres of land bank out of which 8,700 acres of land is agriculture land. Most of this agriculture land have been acquired out of FDI which is a violation," the statement said. The ED claimed that the MD of the group "admitted that the FDI funds were used for purchasing agricultural land."
About the search operation, the group said it was
"routine." An EMAAR MGF statement on Thursday said, "There was a routine search operation... we have fully cooperated with the investigation."
The ED statement said the real estate group, a joint venture between Dubai-based EMAAR Properties and India's MGF Development, had floated more than 350 companies including a large number of them in Cyprus, Caymon Islands, Mauritius and Singapore.
Huge amount of money was found to have been routed and re-routed through these companies, it said.
Emaar MGF violated FDI norms: ED
Emaar MGF violated FDI norms: ED
The Hindu Business Line, December 5, 2009, Page 15
New Delhi
A day after it conducted search operations at 13 offices of Emaar MGF, the Enforcement Directorate today said that the documents seized indicate “large scale violation of FDI guidelines”. “The company has about 12,800 acres of land bank of which 8,700 acres is agricultural land. Most of the agricultural land has been acquired out of FDI, which is a violation of FDI”, the ED said in a statement here. The ED also claimed to have found Rs 9 crore of Indian currency, two kilos of gold during the search and seizure operations on Thursday. “A number of incriminating documents showing large scale FEMA violations by the Group was found and seized. The Group has floated more than 350 companies including a large number of companies registered in Cyprus, Cayman Islands, Mauritius and Singapore”, the statement said. The search operations on Thursday came at a time when the company is gearing up for a Rs 3,850-crore initial public Offering. — Our Bureau
Sustained strong growth could see withdrawal of stimulus next year
Sustained strong growth could see withdrawal of stimulus next year
The Hindu Business Line, December 5, 2009, Page 15
Our Bureau, New Delhi
Stimulus packages may be withdrawn as early as the next fiscal if the current GDP growth trends continue.
The impressive second quarter GDP growth rate of 7.9 per cent has given the Government enough confidence to consider withdrawing the stimulus packages next year.
Speaking on the sidelines of the International Chamber of Commerce's Regional CEO Forum, Dr C. Rangarajan, Chairman of the Prime Minister's Economic Advisory Council, said: “We have had a strong growth in Q2 and if this trend continues and we have a strong growth of around 7 per cent for 2009-10, then the Government can consider withdrawing the stimulus packages.” Dr Rangarajan said: “Some steps need to be taken to bring down the fiscal deficit. Some of the expenditures could be withdrawn and there may not be any need for some of the expenditures incurred in the current year.
“Revisions in excise duties and taxes are also not ruled out. But these are all issues that need to be discussed at the time of the formulation of the Budget. Right now it is necessary to put the process of fiscal consolidation in place.”
Regarding the role of monetary policy in curbing the food inflation, Dr Rangarajan said, “In a period of scarcity, if the money supply growth is very strong, it will fuel inflation. The Reserve Bank of India could take action on reducing liquidity after observing the prices in December.”
Earlier, in his address at the event, the Economic Advisory Council's Chairman said that India's GDP growth this year is expected to be around 7 per cent and should be between 7 and 8 per cent for the 2011-12 fiscal. “If the world economy and world trade recovers, then India can be back at the 9 per cent growth rate in another two years,” said Dr Rangarajan.
Infrastructure holds potential for banks
Infrastructure holds potential for banks
The Hindu Business Line, December 7, 2009, Page 10
Anjana Chandramouly, Bangalore
Many large-sized banks have grown their exposure to infrastructure lending in the past few months, and if the recent push for infrastructure by the Government is any indication, the pie could only get bigger for them.
“The infrastructure sector holds a lot of potential for banks, with lending opportunities of $130-140 billion,” Mr H.S. Upendra Kamath, Executive Director, Canara Bank, told Business Line.
Several factors can work in favour of banks in this regard. Commercial banks are being allowed to take exposure in infrastructure projects where India Infrastructure Finance Company Ltd (IIFCL) or Infrastructure Development Finance Company (IDFC) are leading financers. The Reserve Bank of India has also taken a liberal view on the risk weightage of those projects where take-out financing has been organised.
The Government's decision to open up development of toll roads, airports, ports etc. to the private sector, “is driving up investment,” said Mr Albert Tauro, Chairman and Managing Director, Vijaya Bank.
Canara Bank recorded a 59-per cent year-on-year growth in infrastructure lending during the second quarter of this fiscal, while Vijaya Bank saw about 21 per cent year-on-year growth in infrastructure credit during the second quarter this year. “There will be a 15-20 per cent growth on a sustained basis in this space going forward,” said Mr Tauro.
The increased focus on infrastructure will continue for the next six months to a year, said Mr Ashvin Parekh, Partner and National Leader – Global Financial Services, Ernst & Young.
“While larger banks such as State Bank of India, Punjab National Bank, Bank of India and Canara Bank have grown their exposure in infrastructure lending, smaller banks are still keeping away,” he added. Larger banks are willing to participate in projects where the regulatory risks are lower, said Mr Parekh.
However, banks may face some difficulties, especially in long-tenored funding in the infrastructure space. For instance, projects such as roads are not preferred because their tenor is long, while funding for ports is preferred as the turnaround time is much less, he added.
Refinance rates
There is an absolute need to create an alternative source of funding by the government, said Mr Kamath of Canara Bank, adding that for commercial banks to play a bigger role, “there is a need to have a refinance window for infrastructural lending and an efficient mechanism of take-out financing.” Refinance at affordable rates should be made available to banks, he said.
“With more and more take-out finance partners coming in, the ability on the part of the banking companies to invest in infrastructure projects is extended. Banks have indicated that they can hold out an investment for a period of about five years in projects where take-out finance has been organised,” said Mr Parekh.
Value buying in realty is back
Value buying in realty is back
The Economic Times, December 06, 2009, Page 1
2BHK preferred format, sub Rs 40 lakh segment attracting home buyers
Anand Rawani and Neha Dewan NEW DELHI
VALUE buying is back in business. Realty buyers are primarily looking at the sub-40 lakh category to fulfill their dream home aspirations and it is the 2BHK which has emerged as the preferred format for buyers in these times.
SundayET spoke to a cross section of real estate developers, brokers and bankers to assess the ground situation on the kind of housing format and home loan size that is now gaining maximum flavour.
Most developers agree that the current hotselling flavour of the market is apartments ranging between Rs 25 to 40 lakh. According to Rajeev Talwar, group executive director, DLF, it is primarily the 2 and 3 BHKs which are finding buyers. “As far as prices are concerned, the sub-40 lakh is selling well in Bangalore. We have sold 1,200 units in Bangalore since the beginning of February this year. Similarly in Delhi we have sold 2,500 units since the beginning of the Financial Year. We will be coming up with more affordable housing projects across locations over the next three years.”
Unitech official pegs it a little lower. As per a Unitech spokesperson, the sub-30 lakh category is faring well in these times. “We have sold flats in Noida, Gurgaon, Chennai, Mohali, Kolkata and Hyderabad in this range. It’s mainly the 2 and 3 BHK with sizes between 800-1,000 sq ft respectively. In fact, in the first six months of this year, we have sold over 8 million sq ft of apartments, out of which 40% is in the price range of sub-30 lakh,” he said.
Others feel that a combination offered with a study space is working out as an appealing factor. Says Rita Dixit, executive director, Jaypee Greens, “Options in the range of Rs 25-Rs 40 lakh are gathering momentum. Apartments which offer 2 and 3BHK with study space work out well. These typically range between 1,050-1,400 sq ft. Our projects offering such options, such as Classic and Kosmos, are bringing good business.”
Not merely the property developers but even realty brokers echoed similar sentiments. Pankaj Jain, executive director of Realistic Realtors, a Delhi-based real estate brokerage firm said, “The 35 to 50 lakh segment is seeing bulk demand across locations. Demand for 2BHK with size ranging from 1,200 to 1,500 sq ft is high as it is an ideal size for a nuclear family.”
The home loan enquiries coming to banks bear testimony to the market trend. According to Renu Sud Karnad, Jt MD, HDFC, “The segment where we are seeing a huge demand is in the price range of Rs 30-50 lakh in metros and bigger towns and around Rs 20-25 lakh in smaller towns.”
Similarly, in the case of Bank of Rajasthan, where a predominant number of customers are from rural, semi-urban and urban centres, the average ticket size is below Rs 20 lakh. As per the loan portfolio of home loan of Bank of Rajasthan, the sub-Rs 20 lakh loans category constitute almost 95% of the total home loan portfolio.
BULK DEMAND
The current hotselling flavour of the market is apartments ranging between Rs 25 to 40 lakh
Demand for 2BHK with sizes ranging from 1,200 to 1,500 sq ft is high
Banks seeing home loan disbursement in the range of Rs 30-50 lakh in metros and around Rs 20-25 lakh in smaller towns.
Ansal API sells 600 units in hi-tech city
The Hindu Business Line, December 7, 2009, Page 13
New Delhi, Dec 6 (PTI)
Realty firm Ansal Properties and Infrastructure (Ansal API) has sold 600 flats worth around Rs 250 crore in its first-group housing project at hi-tech city near Greater Noida. The 2,500-acre hi-tech city ''Megapolis'', located at Dadri adjoining Greater Noida, will be developed in various phases with the first phase spread over 500 acres.
"We had launched the first group housing project in the hi-tech city in July this year. Since then, we have sold 600 apartments with a sales value of about Rs 250 crore," Ansal Hi-Tech Township Chief Operating Operation Rakesh Kaul said.
"Demand has been very robust and so we have increased the number of units to 1,100 from the initial 700 flats," he said.
Property demand, which slumped last year due to global economic slowdown, has started to pick up, especially for housing units falling in a range of Rs 10-30 lakh.
The company will invest Rs 120-130 crore on construction, Kaul said, adding that the total realisation from 1,100 flats will be about Rs 400 crore. The flats would be offered at Rs 11-42 lakh depending upon the sizes that vary between 750 sq ft and 2,200 sq ft. Ansal Hi-Tech Township is a special purpose vehicle (SPV) formed to build the hi-tech city. The company had bagged the hi-tech city project from the UP government last year. "The project will have a sale value of Rs 26,000 crore and the total investment will be Rs 13,000 crore," Ansal API Chairman Sushil Ansal had said in July last year.
Residential sector back on track
Residential sector back on track
The Hindu Business Line, December 6, 2009, Page 15
--------------------------------------------------------------------------------
We expect demand for commercial and retail space to pick up in six months.
--------------------------------------------------------------------------------
MR PRANAV ANSAL, VICE-CHAIRMAN AND MD, ANSAL PROPERTIES.
Moumita Bakshi
Fresh out of a fund-raising exercise in September when it garnered over Rs 200 crore, Ansal Properties and Infrastructure Ltd has used the funds to speed up its projects and retire debt. The company is on the verge of unveiling a new township in Gurgaon, which is being billed as the first green township of Asia. It is also gearing up to launch an industrial SEZ in Murthal (Sonepat district) for which it is in the process of getting the required approvals.
Mr Pranav Ansal, Vice-Chairman and Managing Director of Ansal Properties and Infrastructure Ltd, speaks to Business Line on buyer sentiments, the company's plans and the response to the affordable housing projects announced earlier this year.
Excerpts from the interview:
In January, the company set itself a target of selling 10,000 dwelling units in the affordable housing segment during 2009. What is the position in terms of actual sales of those units?
We have already sold 8,500 units and we should be able to reach the full target by January 2010. In fact, we are handing over possession of some of the projects in December, including the Jodhpur project.
Is buyer interest back in the residential market?
The residential demand is back to normal and people have started buying property as earlier. The investor is out of the market and so the buyers are actual users who opt for bank financing. In that sense, it is a better situation for developers now.
Although the residential sector is totally back on track, the commercial and the retail realty side are still under pressure. Now that business operations have started to stabilise, in the next six months or so, I expect commercial office and retail real-estate sector also to pick up.
In my view, given another three to four months, companies will start looking at growth.
That is when they will also look for office and commercial space. Also, remember that over the last 12-18 months new development on the commercial side has been limited, so there will be a demand spill-over effect.
On the residential side, of course, the demand is largely in affordable housing. From a company's point of view, a large portion of our business is in that category. But even for high-end development in Delhi NCR, at least the ready projects are finding takers.
Since you say the market is stabilising, are you lining up new projects?
We are going to announce a new township in Gurgaon very soon. It is spread over 120 acres and once we get licence and approvals sometime in January, we will launch it. It will be unique in the sense that it is the first residential green township of Asia.
As things stand today, there is a concept of green buildings. But we are looking at a horizontal township. This will be certified by LEED. We are working towards a gold certification, where all the materials used will be environment-friendly, and the township will utilise solar power. We have already invested Rs 350 crore for the land, and are now waiting for clearances.
The company had put on hold its plans for hotels. Will you revisit those plans now?
We have not yet applied our mind to the issue. In fact, we have a meeting in December (on this) and so we will probably take a call.
And the SEZ projects?
The industrial SEZ is a big project for us and it is coming up in Murthal (in Sonepat district). We are in the process of getting approvals now.
I think we will launch it in December. We are convinced about the viability, given the huge demand. See Karnal, Panipat and Ludhiana are huge industrial belts, but pollution norms have become very stringent. So a lot of factories running in those locations are closing down. However, the IT SEZs are still on hold because there is still not much of demand.
After the recent fund raising, which saw IPRO, a Mauritius-registered fund, picking up nearly 10 per cent stake, are there any more plans to raise money from the market?
We raised close to Rs 200 crore in September this year. That money has already come in; it has been used for projects, expansion and retiring debt. We are not looking at any other fund-raising plan at this time.
The company retired some debt from the funds that were raised. Our debt position earlier was about Rs 1,100 crore and we would have retired roughly Rs 50-100 crore. Most of our debt is long-term and our projects are comfortably paying for it. So there is no problem.
Bangalore commercial realty perks up
Bangalore commercial realty perks up
The Hindu Business Line, December 6, 2009, Page 15
--------------------------------------------------------------------------------
Demand grows for space as companies restart expansion plans put on hold due to the slowdown.
-------------------------------------------------------------------------------
Anjana Chandramouly
The office space realty is looking up in Bangalore with the growing numbers of enquiries , say realty experts.
Corporates are re-evaluating their expansion plans that were put on hold. The early signs of this revival are being felt in the real-estate marketespecially in the Bangalore market, primarily driven by the IT and ITeS sectors with much of this demand comes from large corporates and multinationals.
According to Mr Anshuman Magazine, Chairman and Managing Director, CB Richard Ellis (CBRE), real-estate services firm, says, “Corporates have now started to seriously evaluate growth/expansion opportunities and are actively seeking out good deals in the market.”
Though some significant transactions have happened in the last few quarters; in general, “closure seems to be slow, with corporate clients choosing to deliberate and sometimes wait till they can negotiate the best possible commercial and non-commercial terms,” he adds.
During 2009, the Bangalore commercial office market adopted a cautious approach with relatively limited infusion of new space, says Mr Sumit Rakshit, Executive Director, Occupier Services at Cushman & Wakefield India. The supply forecast for the year was approximately 8 million sq.ft but only about 60 per cent – 4.8 million sq.ft was delivered up to September. The last quarter is expected to see new supply of approximately 2 million sq.ft.
Late start
The first two-and-a-half quarters of this year were bad for the commercial real-estate market. However, enquiries indicate there is demand for more than 2 million sq.ft in the Bangalore market, which is a very positive sign for the industry, says Mr Goutam Chakraborty, Regional Director, Office Leasing, Colliers International, global commercial real-estate consultants.
The year is expected to close at approximately 5 million sq.ft, thereby recording a 52 per cent drop from the absorption witnessed in 2008. “Further, most of the absorption was observed in the older vacant stock and second-generation buildings indicating sufficient available supply in the market,” says Mr Rakshit. The Bangalore commercial real-estate market also noticed various other sectorssuch as telecom and BFSIcontributing to the demand this year.
Mr M. Murali, MD, Shriram Properties says his company has been able to deliver one million sq.ft space out of the 4 million sq.ft planned in its Chennai project. Buoyed by the Chennai experience, the company now plans to “duplicate the Chennai commercial project in Bangalore, Hyderabad and Kolkata,” he says. In fact, “we plan to start work on the Kolkata project soon, and we are looking for land in Bangalore and Hyderabad,” says Mr Murali. Shriram Propertiesplans to develop about five million sq.ft of office space in Kolkata. The company might need Rs 800-900 crore for these two ventures, even if “we develop two million sq.ft in each location,” says Mr Murali.
Lease, rental values
Lease/rental values have softened by about 10-20 per cent. Most of the markets in Bangalore peaked in the second half of 2008 with the exception of the International Tech Park Bangalore in Whitefield that peaked in 2005.
According to Mr Chakraborty of Colliers International, though lease/rental rates took a beating during the peak recession time, “things have started getting better for the developers now” since there is a revival of demand for office space. “There is a stabilisation of rental values with an indication that it could head north in the near future,” he adds.
For instance, in good times, the market has seen monthly rental values of about Rs 200 per sq.ft for a few premium buildings in the central business district (CBD) and around Rs 50 per sq.ft for the peripheral business district.
In fact, there has been a stabilisation of rental values towards the latter half of 2009, says Mr Magazine “However, rentals still remain under pressure in specific micro markets of Electronic City and Whitefield due to excess supply and inadequate demand.”
More small and medium-sized transactions are expected, particularly in the CBD/Off CBD locations. Pre-commitments are likely to be less on account of significant ready supply, says Mr Rakshit, adding that Bangalore might see relatively increased activity from other sectors in the times to come. He feels the first two quarters of 2010 are likely to see reduced infusion of new supply. According to him, demand is expected to gain momentum by the third quarter of 2010, while existing projects are also likely to see accelerated pace of construction activities hereon.
Green code must for buildings in 8 States
Business Standard, December 5, 2009, Page 16
BS Reporters / New Delhi/mumbai
The green building code, termed energy conservation building code (ECBC), is likely to be mandatory for commercial buildings coming up in eight fast growing states in the next two years.
“In the eight major states where commercial buildings are being built — Delhi, Haryana, Maharashtra, Andhra Pradesh, Tamil Nadu, West Bengal, Gujarat and Uttar Pradesh — our goal is to have the law on their books within two years,” said Ajay Mathur, Director General of Bureau of Energy Efficiency (BEE).
BEE finalised the code two years ago and is currently voluntary. Each state will have to amend the legislation to make ECBC mandatory. “We are providing assistance and tools to the states for this,” Mathur added.
Though ECBC-compliant buildings would add 10-15 per cent to the overall cost of construction, it would be more than neutralised by the savings from lesser consumption of energy.
“We already have one green building. We are implementing six such projects without any legal compulsion. Though cost is high... it will result in value addition to the users,” said Vimal Shah, Managing Director of Ackruti City.
Making the code mandatory would require a lot of preparatory work in terms of monitoring and auditing mechanisms.
Delhi was the first to make mandatory for all new government buildings to be ECBC-compliant. “Haryana and Uttarakhand are close to doing it,” said Mathur.
Posts
