UP farmers want land sold to Reliance’s Dadri project back
Financial Express, January 14, 2010, Page 12
Press Trust of India, Ghaziabad
Over 500 farmers on Wednesday approached the district authorities seeking return of land sold to Anil Ambani-controlled Reliance Power, but expressed inability to repay the compensation at one-go, a government official said.
The farmers’ claim follows the high court order that quashed a portion of the UP government’s 2004 notification for purchase of land for Reliance Power’s Dadri power plant. “As many as 566 farmers have applied today... we are yet to calculate the quantum of land claimed by them, but it could be around 600-700 acres... the process will continue till January 18,” additional district magistrate (finance) Sarvajeet Ram said.
The farmers wanted to repay the compensation amount in installments, saying they had spent the money, Ram said, but added there was no specific direction in the December four Allahabad High Court order about installments and a view would have to be taken by the administration. Reliance Power has since filed a special leave petition in the Supreme Court, appealing against the high court order.
A Reliance Power spokesperson said the matter is before Supreme Court and is sub-judice and declined to comment.
The Anil Ambani group company had acquired 2,200 acre of land for the Rs 10,000 crore project. Appearing for the farmers, advocate Ashish Pratap Singh claimed that he filed the objections on behalf of 1,500 farmers before additional district magistrate Sarvajeet Ram and requested him for time for return of the compensation amount. As per the court decision, the administration had invited objections vide an advertisement on December 19, last year and have followed up all other necessary formalities, Ram said.
Farmers began an agitation seeking compensation for the land on par with amount offered by the state government for land in Noida.
The high court partially quashed the land acquisition on the grounds that the government side-stepped a formality of inviting objections from land owners. Although Reliance Power acquired the land, it had not started work on the 7,450 mw power project citing lack of gas — for which it had an agreement with Mukesh Ambani-led RIL.
Thursday, January 14, 2010
UP farmers want land sold to Reliance’s Dadri project back
Malaysia woos India to invest in realty sector
Malaysia woos India to invest in realty sector
Financial Express, January 14, 2010, Page 12
fe Bureaus, Chennai
In order to attract more foreign direct investments (FDI) into its real estate sector, Malaysia is making all efforts to garner major investments from countries like Singapore, UK, Korea and India. The Malaysian government’s Foreign Investment Committee (FIC) has recently announced a comprehensive deregulation of investment guidelines to facilitate smooth inflow of investments into the country. As part of its India investments initiative, the Malaysian government, for the first time, is holding property expo in Chennai from January 22-24. The expo will be inaugurated by Malaysian Prime Minister Mohd Najib Tun Razak, said Kumar Tharmalingam, member, board of governors, Malaysia Property Incorporated (MPI).
“The most important aspect in purchasing Malaysian real estate is the land law system that allows for transparency and enforceability of ownership. Foreigners also have no impediment to buying freehold Malaysian real estate and to sell when the need arises without restriction,” Tharmalingam said.
In 2008, Indian investors were the fourth largest in residential property investments in Malaysia after Singapore, UK and Korea. The locations of choice were Kuala Lumpur, Penang and Johor with a price range of $150,000-$300,000.
Tharmalingam further said the seminars will also be conducted over the 3 days at the expo. Speakers will include the Malaysian Investment and Development Authority, ministry of tourism and Malaysia Property Incorporated on investing in the country’s real estate.
The expo is organised in conjunction with the Confederation of Indian Industry’s Partnership Summit 2010. It will be showcasing some of Malaysia’s award winning developers and their latest projects. Participating firms include IJM Berhad, Glomac Berhad, IOI Properties Berhad, Metro Kajang Holdings Berhad, the Eastern Corridor Economic Regional Development, the ministry of tourism, Matrix Concept Holdings Berhad and Zerin Properties.
Construction sector must adopt risk management strategies for growth
Construction sector must adopt risk management strategies for growth
Financial Express, January 14, 2010, Page 12
R Ravichandran, Chennai
The construction industry in India is estimated to be around $55 billion and accounts for more than 8% of the GDP. It is also the largest employer after agriculture as it provides employment to more than 3% of the country’s population. The industry has been on a high-growth trajectory, growing at more than 12% per annum in the last four years, i.e. almost 1.5 times the country’s overall growth.
Despite the high growth potential, the industry is subjected to more risk and uncertainty than many other industries. The process of taking a project from conception to completion is complex and entails time-consuming design and production processes. It requires a multitude of people with different skills and competing interests and the co-ordination of a wide range of disparate, yet interrelated activities. Such complexity is further compounded by many uncontrollable external factors.
Unfortunately, in a highly competitive and complex climate that is fraught with risk, unfavorable outcomes can often plague these projects and their participants. Many of the risks emerge over time. Projects that appeared progressing at one time suddenly becomes unmanageable. Risks combine and interact to create turbulence. Many risks are linked to the life cycle of the project. That’s why effective identification and analysis of risk sources is extremely important.
The extent to which these construction risks can be successfully identified and managed largely determines whether a project meets its schedule, budget and quality assurance targets. To succeed, organisations must commit to addressing risk management throughout the project lifecycle.
Projects that face technical risks reflect their engineering difficulties and novelty. Some of these risks are inherent in the designs or technologies employed. Incomplete designs are a widely recognised problem on construction sites.
Resource risks refer to the timely availability of resources — particularly raw material, construction equipment, spare parts, fuel and labour. It also includes the risk that the raw material prices might move adversely. Rising material costs affect profitability and competitiveness, particularly in cases of lump-sum turnkey contracts without any price-escalation clause.
In recent years, India’s liberalised regime has created opportunities and also increased competition in the construction business, which has seen significant interest of foreign players. The competitive environment varies depending upon size, nature & complexity of the project as well as the geographical region where it is to be executed. New competitors entering the market and the current competitors pricing more aggressively intensifies the highly competitive condition that already exists.
A construction company relies on innumerable third parties for timely supply of specified raw materials, components, equipment and services. Some events could result in the complete or partial failure of supplies or in supplies not being delivered on time. Supply disruptions may also be the result of excessive dependence on a single supplier, strikes, lockouts, natural calamities, supplier insolvency or unexpected logistics challenges.
Recovery eases concern over restructured loans
Financial Express, January 14, 2010, Page 13
fe Bureaus, Mumbai
The asset quality concerns, stemming from the surge in restructured loans of Indian banks in 2008 and 2009, have eased as economic activity continues to improve, according to Fitch Ratings.
Of the Rs 1.2-lakh-crore non-performing loans (NPLs), restructured loan portfolio is estimated at 15-25%, which could lead to a moderate one percentage point increase in the gross NPL ratio of the Indian banking system, up from 2.4% registered at the end of September 2009.
Fitch estimates that these NPLs will peak in the next fiscal ending March 2011, by when close to 75% of restructured loans are expected to mature, and the resulting increased credit cost could impact return on assets (ROA) on an average by a modest 13bps.
Four industries—textile, infrastructure, commercial real estate and steel—account for nearly half of the total restructured loans. Since the larger private banks have relatively lower exposure to these industries, the extent of restructuring among private banks (2% of loans) is markedly less than that of government banks (5%).
The increase in loan loss provisions on the new NPLs will impact banks, not only because of the low level of existing provisions on the restructured loans (2%) but also due to the new regulatory requirement on Indian banks to maintain a minimum specific loan loss reserve of 70% of gross NPLs.
Fitch has therefore applied the enhanced 70% specific loan loss provisions on all incremental NPLs to calculate the impact on bank profitability.
The reduction in FY11 ROA varies from one bp to 34 bps (FY09 ROA: 1.02%) depending on the respective bank's extent of restructured loans.
The corresponding effect on tier 1 ratio (both from reduction in earnings and increased risk weights on NPLs) varies from one bp to 54 bps, and is not expected to impact the credit profile of the banks given the system's adequate tier 1 ratio of 8.9% at FY09.
In December 2008, the Reserve Bank of India relaxed loan restructuring guidelines to help corporates with long-term viability to weather the economic slowdown and liquidity crunch. During FY09 and Q10, Indian banks on average restructured 4.4% of loans, up from 0.71% in FY08.
Equity funds top performer in 2009, finds Crisil
Financial Express, January 14, 2010, Page 13
fe Bureaus, Chennai
Equity funds were the strongest performers among all fund categories in 2009, registering a one-year return of over 80%. The performance was driven by sharp uptick in the equity markets with mid-and small-cap investments outperforming the larger ones.
The year also witnessed a near doubling in the assets under management (AUM) of the mutual fund industry. However, December was a dampener when the industry suffered the highest-ever monthly net outflows due to corporate and bank withdrawals.
Crisil Fund~eX (which tracks diversified equity funds) was up by 81% in 2009, reflecting the highest growth among all mutual fund categories. This was higher than S&P CNX Nifty's growth of 76%. The performance of the diversified equity funds was supported by the strong performance of the mid- and small-cap stocks with the respective indices, showing growth in excess of 100% in 2009.
Balanced funds also performed well in 2009 with Crisil Fund~eX (which tracks balanced funds) returning 70% in 2009. Most debt categories gave single digit returns with gilt funds giving negative returns on account of the increasing interest rate scenario, especially in the second half of the year.
On an overall basis, year 2009 was positive for the mutual fund industry on the AUM front, with average AUM almost doubling to Rs 7,96,000 crore in December from the year-ago Rs 4,21,000 crore. Month-end AUM, on the other hand, saw a 60% growth on a year-on-year basis.
According to Krishnan Sitaraman, director of Crisil FundServices, "This growth was primarily due to high liquidity in the system which saw large inflows into liquid and ultra short-term debt schemes. The buoyant equity market, which grew sharply in 2009, gave a similar boost to equity fund AUM. While AUM of debt-oriented funds saw a 55% growth over the year, equity fund AUM saw a much higher 77% growth mainly due to mark to market gains."
The monthly net oulflow in December stood at Rs 1,57,000 crore. Majority of the outflow was from ultra short-debt schemes and liquid funds. Accordingly, average AUM fell 1.6%, or Rs 13,000 crore, to Rs 7,96,000 crore in December.
Month-end AUM witnessed a steeper fall of 19% to Rs 6,70,000 crore. A similar trend was also seen in March and September. Corporates withdrew their investments to meet their advance tax payments while banks pruned mutual fund investments to meet their quarter end balance sheet requirements on capital adequacy. However, equity-oriented funds witnessed a rise in AUM of Rs 5,600 crore on mark to market gains.
Sunil Mantri Group launches project in Bangalore
Business Line, January 14, 2010, Page 3
500 units in Rs 35-70 lakh range to be developed.
Our Bureau, Bangalore
With IT sector showing signs of revival, real estate developer Sunil Mantri Group launched a project in Bangalore mainly targeting the IT employee.
The location was chosen because of its proximity to the IT corridor, “we have been marketing our project among IT employees,” said Mr Sunil Mantri, Chairman, Sunil Mantri Group.
“The response from our target group has been very good, due to the pent-up demand which is a clear sign of revival,” he added.
The project, which would develop 500 units in the Rs 35 lakh to Rs 70 lakh price range, would be located on Sarjapur Road. In fact, Bangalore has come back on the radar of this company as it has plans to invest Rs 500 crore in this city.
Another project, Mantri Megapolis, would also be located on Sarjapur Road, which would see development of about 2,000 units in the mid-market segment. The company plans to launch another project in Bangalore at Kanakpura Road, Mantri Aquanox, which would develop 300 units.
The company would fund about 50 per cent of these projects through internal accruals, while the rest would be raised from private equity through SPV-level dilution.
Sunil Mantri Group also wants to increase its land bank in Bangalore by about 200 acres.
“We are aggressively looking at land acquisitions of about 200 acres, and are negotiating with a few developers in the city,” said Mr Mantri, adding that the company would focus on joint development on these land parcels.
Hospitality is another segment that the company wants to enter into, with plans to create 1,000 rooms by 2013.
“About 25 per cent of this would be in Mumbai, while the rest would be across India,” he said. “About 80 per cent of these would be in the three-star category, under the brand Mantree,” added Mr Mantri.
Wednesday, January 13, 2010
Industrial production surges by 11.7%, rate worries loom
Industrial production surges by 11.7%, rate worries loom
Hindustan Times, January 13, 2010, Page 21
Industrial output grew by 11.7 per cent in August, the highest in two years, raising prospects of a sustained revival in the broader economy in the coming months.
Manufacturing accounts for 80 per cent of overall industrial output, and grew 12.7 per cent. But the real story lay in the consumer durables sector that grew by a record 37.3 per cent, implying that private consumer demand is reviving growth in the broader industrial horizon.
The data shone out as a beacon of hope for government as it prepares to present the budget for 2010-11 next month.
“The data shows that domestic demand is strong and is becoming visible,” commerce and industry minister Anand Sharma told reporters as he announced a Rs 500 crore incentive package for exporters.
Exports ended a 13-month streak of contraction, growing by 18 per cent in November and followed it up with a 9 per cent growth in December.
“We have to be cautious in our approach. The withdrawal should not be abrupt, as some sectors will still need help,” Sharma said.
All eyes are now on the Reserve Bank of India (RBI) that would announce the monetary policy later this month. Analysts were not sure whether the latest data could pave the way for a higher interest rate.
“We believe there is a high probably that growth in the next couple of years will surprise on the upside rather than downside,” said Rajeev Malik of Macquarie Securities.
Give infrastructure status to hotels
Give infrastructure status to hotels
Times of India, January 13, 2010, Page 24
NEW DELHI: Reiterating its demand for infrastructure status for hotels, the tourism ministry has sought inclusion of hotels as infrastructure under Section 80-IA of the Income Tax Act in the forthcoming Union Budget. This is likely to give new hotel projects a major boost allowing companies to reinvest their profits.
According to sources, if this incentive is given, all new hotel projects will be able to avail the benefit of 100% deductions with respect to profits and gains for a period of 10 years. The measure will bridge the shortfall of hotel accommodation in next five years and could even make India a more competitive destination in terms of room tariffs.
The tourism ministry is also considering revival of 80 HHD of Income Tax Act for the sector. This tax incentive could be useful to encourage investments in hotel sector. According to sources, other sops that are likely to make it to the tourism ministry’s wishlist for the Union Budget include deemed export status for earnings of inbound tour operators and bringing cruise operators at par with tour operators by extending 70% abatement of service tax.
In order to provide relief to tour operators hit by the global economic slowdown, the ministry may propose foreign exchange earned by inbound tour operators be considered as deemed export and full service tax exemption be provided to them so that they get reimbursement in service tax at par with other exporters.
Seeing the initiatives taken by the government to give a boost to cruise tourism in India, the ministry also hopes that cruise operators be brought at par with tour operators by extending 75% abatement of service tax. This, if accepted, will give a boost to cruise tourism which is still in a nascentstate.
SPEED MACHINES: IIP RISES 11.7% IN NOV ’09
SPEED MACHINES: IIP RISES 11.7% IN NOV ’09
The Economic Times, January 13, 2010, Page 1
Industry grows fastest in 2 yrs
Robust industrial output, amid a continuous surge in consumer goods, reaffirms hopes of 8-9% GDP growth while raising fears of a rate hike to check inflation
Our Bureau NEW DELHI
INDUSTRIAL production grew at a two-yearhigh 11.7% in November 2009, putting India on track to achieve an 8% economic growth in the current financial year and strengthening the calls for a hike in interest rates to tame rising prices.
“It (industrial growth) is very good. I expect the trend to continue,” said Kaushik Basu, chief economic adviser to the finance ministry.
The better-than-expected industrial output growth, boosted by a massive 37.3% jump in consumer durables and 12.2% increase in capital goods, however, failed to lift the market that ended in the negative territory due to selling pressure on front-line stocks.
Industrial growth in November 2008 was a lowly 2.5%, exaggerating the rate of expansion in November 2009. Output grew 10.3% in October 2009. The stellar output growth figure for November, however, is dwarfed by the 19.2% growth reported by China for the same month.
Industrial output grew at its fastest pace since October 2007 as the economy began to consume and invest more, suggesting that it may no longer need the stimulus offered in the form of low interest rates and high government spending.
Favourable economic growth and high inflation may prompt RBI to absorb excess liquidity in the system through a hike in cash reserve ratio—interest-free reserves banks keep with the central bank—and even raise interest rates when it undertakes the quarterly review of the monetary policy later this month. Bond yields rallied to a near 15-month high after industrial production data were released in anticipation of a rate hike.
The pick-up in investments highlighted by higher capital goods output has also been validated by a marginal increase in Customs collections for December 2009, suggesting higher non-oil imports.
“We will have to revise our GDP estimates for the year. It is currently at 7%, but we will revise it to 7.3-7.4%,” said Abheek Barua, chief economist at HDFC Bank.
The Indian economy grew at 7.9% in the July-September 2009 quarter, taking overall growth for first half of the current fiscal year to 7.1%, prompting the government to say it could meet or even exceed the 7.75% forecast for the year.
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