Monthly Archives: October 2009

Real estate key for equity markets

Real estate could be the lynchpin for the equity markets and a failure of a large IPO could start a correction in the market.

Mr Deepak Parekh, Chairman-HDFC Bank, said, “If a large real estate IPO fails, it could have a serious repercussion on the market”.

Mr Parekh stated that many of the recent IPOs have been overpriced and the markets are looking expensive.

Further he added, “Companies raising money need to leave money on the table for investors”.

Indian realtors recently made a trend to raise money through IPOs, with at least five major real estate companies like Emaar MGF Land, Lodha Developers, Sahara Prime City, Ambience Ltd and DB Realty are looking to raise over tweleve thousand five hundred crore rupees.

Indiabulls Power price band

Indiabulls Power is likely to fix a price band of Rs 42-45 per share for its proposed IPO, which is expected to start on 12th of October.
The price band of the Indiabulls Power IPO is likely to be Rs 42-45. Calculated on the upper end on the price band, the company would collect around seventeen hundred crore rupees through this IPO.
The IPO is expected to open on twelve of October and would close on mid of October.
Indiabulls Power had filed the draft prospectus with market regulator Sebi in July this year and on 1st of October; it filed the red herring prospectus with the Registrar in this regard.
The company is planning to knock the capital markets to raise funds to part finance the construction and development works at its power projects and other corporate purposes.

RBI may hike interest rates

The RBI is planning to hike interest rates marginally in the fourth quarter of this fiscal to give a signal to the market.
“To give a signal that the government is concerned about inflationary pressures, there is a chance of a marginal hike in interest rates in the January-March 2010 quarter,” HDFC Chairman Deepak Parekh said at the PE International India Forum.
The hike in interest rates could be by at least 0.5%, he said, adding, however, that any hike in rates was unlikely to happen in the current quarter.
On liquidity, Parekh said that presently it was sufficient.
With a revival in the economy and pick-up in construction activities, banks could witness a growth in their wholesale loans going forward, he said.
However, any pick-up in loans to the commercial real estate sector is unlikely, he said.
he said, “I don’t see commercial real estate loans picking-up…There are a large number of commercial real estate properties that are ready to occupied”.
Parekh said, Banks have seen an increase in their housing loans portfolio in recent months.
Parekh observed that housing prices have started inching up in the recent months.
He said, HDFC has seen a sequential growth of 30% in its loan approvals in the July-September quarter of this fiscal and expects growth to pick-up further in the coming months.
Parekh said companies have to be cautious while pricing their IPOs as failure of large IPOs could dent investors’ confidence.
he said, “We must learn to leave money on the table. Investors are there to make money. If large IPOs fail, then there is a huge repercussion in the market”.

NGO to build thousand houses in flood-hit areas

The south karnataka based NGO Shree Kshethra Dharmasthala Rural Development Project (SKDRDP) has come forward to construct one thousand houses in flood-affected districts of the State.
Dr L.H. Manjunath, Executive Director-SKDRDP, said that the thousand houses will be built at a cost of ten crore rupees. Asked about the location of the houses, he said the area will depend on the request from the Karnataka Government.
Further he said, Based on the reports from the ground-level workers of SKDRDP in the flood-affected areas, the President of SKDRDP, Dr D. Veerendra Heggade, has ordered for the release of ten crore rupees for the construction of thousand houses.
It may be mentioned here that the State Government has requested the heads of religious institutions, business and industry establishments and others to help take up relief measures in the flood-affected areas in many districts of Karnataka. The Government has sought their help to construct around two lakh houses in the flood-affected areas.
Dr Manjunath said that SKDRDP has also made arrangements for the distribution of 5 lakh rotis in flood affected areas.
The self-help group (SHG) members affiliated to the SKDRDP in Dharwad, Haveri and Gadag districts have come forward to prepare rotis for distribution in flood-affected areas. He said, “The first lot of two lakh rotis has already left for areas such as Raichur, Koppla and Navalgunda”.
Further he added, As the floods have damaged crops in many districts, the SKDRDP President is planning to disburse seeds for replanting in those areas.

Tata BlueScope and Arshiya Intl tie-up

Tata BlueScope Building Solutions, a division of Tata BlueScope Steel Ltd, has tied-up with Arshiya International Ltd to provide Butler Building Systems for Arshiya’s upcoming warehousing projects in India. TBBS has started work, and is currently executing six Butler Buildings at Panvel. Arshiya plans to erect 19 warehouses and chillers units at Panvel and, subsequently, intends to erect 40-50 warehouses at Nagpur and Noida besides the UAE in the next three y ears. Mr H.G. Chandrashekhar, VP-TBBS, said, “Despite the volatile market conditions, infrastructure sector, especially the warehouse segment holds a tremendous growth potential. We are well-poised to successfully meet the evolving demands of the emerging warehouse markets.”

Madhucon Gets $3.9 Million Nepal order

Madhucon Projects Ltd, a Hyderabad-based infrastructure company, has secured a $3.9 million order for a road project from the Government of Nepal.
According to a company statement, the mandate involves upgradation of Sanfebagar-Martadi road under the road improvement project of the Exim Bank of India, Mumbai.
It had commissioned its first BOT project on NH 11 on the Bharatpur-Mahua section in Rajasthan, for which toll collection started from May. . National Highways Authority of India has recommended starting toll collection for the company’s second BOT project between Karur and Dindigul.
Meanwhile, Madhucon, which is establishing a 540 MW thermal power project in Krishnapatnam, proposes to increase the capacity to 1920 MW.

Property cards to regulate realty

Property cards are the new concept to regulate realty sector in Karnataka. When the Karnataka Land Grabbers Act comes into force, it’ll bring in clearness by cleaning up land records. These had always been messed with, resulting in dubious property transactions and disputes. These cards, to be issued to property owners, will serve as authentic documents.

According to Revenue department registration of sale deeds would be replaced with registration of titles. This will be done by introducing the progressive system of property titles. The newly formed task force for eviction of encroachers on government land is also part of it.

During talks with stakeholders on irregularities in account transfer and building construction, it was felt there is no reliable system of land and property title records in Bangalore Urban. Records of rights are written casually, leading to endless disputes. The present system of registration of documents can be misused easily.

Indian Hotel Industry Plans to Add 55 thousand Rooms in 4 years

The Indian hotel industry will almost double the number of rooms from the current levels in 3-4 years by adding an estimated fifty-five thousand rooms, as per a study by consulting firm HVS India. The development of new rooms is going to be led by regional real estate players and hospitality firms as most large real estate developers have abandoned or scaled down their expansion plans. The study revealed that fewer new rooms were announced last year but developers started work on a higher proportion compared to 2007-08.
Of the 94,115 rooms announced by various hotels and real estate developers for the year ended March 2009, 60% of the rooms saw some active development. Compared to this, in the previous financial year companies announced plans to build over 1.14 lakh rooms of which 58% saw actual development. “Despite the economic downturn, Indian hospitality will see the maximum development of rooms in the next 3-4 years. The rate of development of rooms would be much higher, something that we have not seen in the past ten years,” said Manav Thadani managing director at HVS India.
He added that even as big real estate developers have shrunk their hotel plans, regional real estate developers as well as Indian hotel companies are continuing with their own expansion plans. Mumbai, Delhi NCR, Bangalore, Hyderabad and Pune were among the top five cities in terms of active development of new projects announced last year. With revival in corporate activity, business travel is expected to bounce back sooner compared to the leisure travel market which is one reason why hotel construction is being pursued aggressively in Mumbai, believe hotel consultants.
On the other hand the five year tax holiday granted by government for hospitality projects in Delhi and NCR region to increase supply of rooms for the forthcoming Commonwealth Games is driving hotel construction in this region. But the HVS report points out that only 5,700 rooms of the 8,776 rooms being actively built are expected to open for the games next year.
Raymond Bickson, managing director of the IHCL, who is also the chairman of World Travel and Tourism Council, India Initiative (WTTCII) said that the Indian hospitality sector will witness improvement in the future. “Thanks to the huge domestic market, the Indian hospitality sector is expected to continue to grow even as other markets like US and UK are witnessing a de-growth,” he said.
Vivek Nair vice chairman and MD of luxury hotel operator Leela Hotels and Resorts, said, “Occupancies in Gurgaon and Bangalore have already witnessed an improvement and I believe the winter season would result in better times for the industry.” Mr Nair added that the recent RBI notification which has de-linked hotels from the “high risk category” of real estate business will provide hospitality firms with easy access to funds for hotel development.

Property deals to be scanned by FIU

Financial Intelligence Unit wants to cross check every real estate deal. It has asked the states to submit monthly data on registration of properties. FIU is a central agency responsible for receiving, processing and analyzing information relating to suspect financial transactions.

Often the real estate deals in the country involve unaccounted cash transactions. This may result into illegal fund transaction.

At present, all property registrars have to send data to income tax authorities on property transactions above thirty lakh rupees as part of the Annual Information Return. The FIU demands data for all property transactions.

The complete data is required for the agency also for co-coordinating efforts of international intelligence in checking money laundering and related crimes. If timely data are available, any intelligence generated by it could be acted upon promptly.

Hind Construction ties up with AMEC

Hindustan Construction Company announced a tie-up for its nuclear business with Britain-based firm AMEC.
The two companies would provide consulting and EPC services for the establishment of nuclear power plants in India.
The tie-up will also enable HCC to execute services in the field of mechanical and electrical components of nuclear power plants by sourcing the latest global technologies through AMEC.
The Chairman and Managing Director of HCC, Mr Ajit Gulabchand, said he expects Hindustan Construction to win 30-50% of the contracts to build nuclear power plants in India.
Mr Gulabchand said he expects revenues in the range of Rs 2000 crore to Rs 6,000 crore after all nuclear agreements are finalized by India.
HCC’s announcement comes a day after competitor Larsen & Toubro announced plans for its nuclear business. It had tied up with four of the five certified nuclear technology vendors.
Mr Gulabchand said, “We are preparing to become turnkey implementers of nuclear power plant. There will be competition from L&T, but the amount of power that needs to be generated in India through nuclear energy provides enough space for more players.”