1. law, govt and politics
2. government

For private circulation only
Real Estate News Letter
6th April – 12th April 2015
CONTENTS
1. Snapshot
2. Interest Rates
3. Infrastructure
4. Industry News
5. Private Equity News
6. Regulatory Buzz
7. Public Markets
8. Land
9. Residential
10. Commercial/ Retail
11. Township
12. SEZ
13. Hospitality
14. Input Cost
Snapshot
WPI-inflation data (primary articles)
8.0%
6.8%
Per cent
6.0%
3.7%
3.3%
4.0%
2.2%
2.0%
2.0%
1.4%
0.8%
0.0%
-1.0%
-2.0%
Jul/14
Aug/14 Sep/14 Oct/14 Nov/14 Dec/14 Jan/15
Feb/15
Note : Data indicates inflation over previous year’s month
Source : Ministry of Commerce and Industry
Trends of FII in equity markets
Rs billion
96
100
85
75
56
47
44
50
38
34
50
53
35
25
06/Apr
07/Apr
08/Apr
09/Apr
Buy
10/Apr
sell
Source : NSE
7.0
Trends in Nifty and CNX realty index
per cent
6.72
6.0
5.0
4.0
3.0
2.0
1.13
1.0
0.0
0.7
0.63
0.9
-1.0
-1.7
-0.8
0.62
0.02
-2.0
06/Apr
07/Apr
Nifty
Source : NSE
08/Apr
09/Apr
CNX REALTY
10/Apr
Interest Rates
Banks heed RBI call to cut interest
rates
State Bank of India (SBI), ICICI Bank Ltd and HDFC
Bank Ltd lowered borrowing costs on Tuesday and
more banks looked set to follow suit, heeding a call by
Reserve Bank of India (RBI) governor Raghuram
Rajan. SBI, the country’s largest lender, and HDFC
Bank cut their base lending rate 15 basis points, or
bps, (or 0.15 percentage points) each and ICICI Bank
lowered it by 25 basis points.
Earlier on Tuesday, RBI, in its monetary policy
review, kept the policy rate unchanged at 7.5%, but
mentioned that it was still waiting for its two interest
rate cuts this year, by 0.25 percentage points each in
January and March, to be passed on by banks to their
clients. The tone of RBI’s policy was dovish and
accommodative, but by forecasting 5.8% inflation in
January 2016, the central bank may have effectively
signalled the limits of its monetary easing drive.
Adding a 1.5% real interest rate to the inflation, the
central bank can cut the policy rate by a maximum of
0.25 percentage points more. Economists and bond
markets seem to concur.
The bond markets sensed the limited room for further
rate action. Yields on 10-year bonds rose to 7.79%
from 7.726% before the policy. The Sensex, the
benchmark equity index of the BSE, barely budged at
28,516.59 points. The BSE Bankex, a sub-index of
bank shares, lost 0.71% to close at 21,206.19 points.
Transmitting cuts
To push banks into reducing their lending rates soon
after a policy rate cut, the central bank proposed
changing the way they calculate their minimum
lending rate, or base rate. Earlier, banks used to
calculate base rate on the average cost of deposit
basis but banks are now being encouraged to
calculate the base rate taking into account the
marginal cost of funds.
With every policy rate action, bonds and money
market rates move. Banks also lower deposit rates in
the shorter tenure and thus the incremental cost of
deposits for banks falls. However, the same fall in
cost gets nullified when averaged out with longer
tenure and older deposits.
“Credit growth is tepid, banks are sitting on money
and their marginal cost of funding has fallen. The
notion it hasn’t fallen is nonsense. It has fallen, they
can borrow at the margin today at 7.5%. There is
plenty of liquidity in the markets,” said Rajan,
lambasting banks for saying that their cost of funds
has not dropped enough for them to reduce lending
rates.
“The methodology doesn’t seem to stand in the way
of banks raising base rate when interest rates (policy
rates) are raised. It only seems to come in the way
when interest rates are cut,” Rajan added. Bankers
remained non-committal in an interaction with the
media at RBI headquarters in the afternoon and
repeated reasons behind their decision not to cut
rates so far. By the evening though, things had
changed and three top lenders—SBI, ICICI Bank and
HDFC Bank—cut rates.
SBI’s and ICICI Bank’s rate reduction is effective from
10 April, while the cut by HDFC Bank comes into
effect from 13 April. “Basically, we saw it as a rate
easing cycle and we wanted to give a fillip to the
recovery and boost the credit growth a bit. So we
thought it was appropriate to cut our lending rates,”
said Arundhati Bhattacharya, SBI chairperson.
With three of the largest lenders reducing rates,
others will most likely follow, bringing relief to
borrowers. Depositors, however, will get lower
interest on their deposits as banks have matched the
cut in lending rates with a cut in deposit rates as a
way to maintain their margins.
Live Mint,08 April ‘2015,Mumbai
Infrastructure
Mumbai Metro III work will start by
2016: Ashwini Bhide
Political parties and NGOs are up in arms against the
implementation of the Mumbai Metro Phase-III
corridor, fearing it will destroy the green cover and
make some residents homeless. In an interview with
Sanjay Jog, Mumbai Metro Rail Corporation MD
Ashwini Bhide spoke on the challenges facing the
project. Edited excerpts:
Mounting opposition has cast a shadow over the
proposed Colaba-Bandra-SEEPZ corridor. Will it delay
the project?
Although there has been a big debate on a couple of
issues concerning the project over the past few weeks,
I do not see any uncertainty. The project is a must for
the city of Mumbai and we are committed to execute it
in time. The tendering process for the civil works is in
progress. We are pretty sure that all the issues will be
satisfactorily addressed before the contractors are in
place and the actual work starts in early 2016.
Now the government has announced to form a
committee to look for an alternative site for a car depot
due to opposition for Aarey colony. Do you expect
realignment of the route or a new site?
The scope of the committee appointed by the state
government includes reassessment of alternative sites
suggested for the car depot. It does not necessarily
entail change of alignment of the entire corridor. I must
mention here that locating the car depot at Aarey was
a conscious decision by the state government after
assessing the merits and demerits of various options.
When do you think would the Metro-III project start, as
the government has projected its completion by 201920? Will it go the Metro-II way?
In case of Metro-II, there were legal hurdles in
conducting car depot operations at the land within the
ambit of coastal zone regulation (CRZ) notification. In
the current case, we are well within the legal
framework. The land at Aery is neither in CRZ nor
forest land. Tree cutting is legally permitted within the
framework of the Protection of Trees Act.
The 30-hectare land needed for the depot accounts
for only 2.33 per cent of the land belonging to the
Aery colony and 0.25 per cent of the total green cover
in that area known as the green lungs of Mumbai.
Nevertheless, the concerns of environmentalists will
be seriously looked into by the committee. I expect
the actual construction to start early next calendar
year. The proposed corridor is underground. Is it
feasible in a city like Mumbai? Do you think the
project can be completed in a time-bound manner?
Underground Metro in the city like Mumbai is
absolutely feasible. Mumbai is located in the Deccan
trap with very good quality basalt rock. Tunnelling at
20 to 25 m below the ground in a rock like this with
tunnel boring machines is very safe. The technology
is tried and tested across the globe as well as in
India. The stations will be done by using cut-andcover method as well as the new Australian tunnelling
method. Experienced contractors and general
consultants are being deployed for the project. Safety
and disciplined construction activities will be given the
top priority.
Can you provide details with regard to the
rehabilitation of project-affected families, especially
from Girgaon and Kalbadevi, and also other
hutments? Political parties and residents are not yet
convinced. Do you hope to bring them on board?
Doubts being raised at this moment largely pertain to
rehabilitation, open spaces and the car depot
location. We have already started communicating
directly with the people, with correct information and
with a view to clearing their doubts. They are being
assured that their concerns have already been
factored in while designing the project. Our
rehabilitation policy has been publicly announced.
Detailed planning will be undertaken to ensure that
the legal occupants of private lands are rehabilitated
in the same area.
We need to rehabilitate approximately 1,750 slum
structures by giving alternative accommodation at
nearby colonies as per the Mumbai Urban Transport
Infrastructure
Policy. We also need to rehabilitate about 777 legal
occupants of private buildings. About 650 families from
26 buildings in Girgaon and Kalabadevi area also form
part of this requirement. We intend to rehabilitate these
families in the same area after fulfilling the
requirements for the stations. We are in the process of
appointing a consultant under the guidance of the state
government. We assure that unless we work out a
systematic plan for residents’ in situ rehabilitation with
necessary approvals, no building will be demolished
and no family will be evicted.
Business Standard,06 April ‘2015,Mumbai
CCEA approves highway projects
worth Rs 9,500 crore
The government today approved three highway
projects worth Rs 9,500 crore in Tamil Nadu and Uttar
Pradesh, including those connecting Varanasi -- the
Lok Sabha constituency of Prime Minister Narendra
Modi. In total..the CCEA today approved the
strengthening and widening of 455 kms of National
Highways with a total capital cost of about Rs 9,500
crore," an official statement said.
The Cabinet Committee on Economic Affairs (CCEA)
approved the four-laning of the Sultanpur-Varanasi
section of National Highway-56 in Uttar Pradesh with a
total cost of around Rs 3,800 crore, it said. "This will
substantially upgrade Varanasi's connectivity to
Lucknow and other parts of Central Uttar Pradesh," it
said. The second project relates to four-laning of the
Varanasi to Ghazipur, Gorakhpur and further to Nepal
section of National Highway-29 in UP.
This is likely to improve regional connectivity and
facilitate improved movement of people and goods in
the region and across the border. "The four laning of
this 200 kms will have a total capital cost of
approximately Rs 4,400 crore," it said. The third project
relates to four laning/two laning of the MaduraiRamanathapuram section of National Highway-49 in
Tamil Nadu. "This work will be under the National
Highways Development Project (NHDP) Phase-III for a
total length of 115 kms with a total capital cost of about
Rs 1,400 crore," it said.
The project is likely to be completed in two and half
years from the date of award. The pro-active steps
will also strengthen the national highways network
across the country, especially in regions where there
has been a chronic shortfall.
The Economic Times,08 April ‘2015,New Delhi
Industry News
Uber-rich buying luxury apartments
in Bandra-Kurla Complex
Bandra-Kurla Complex (BKC), one of Mumbai's
leading commercial business districts, is now also an
enclave where industrialists, high-net worth individuals
and some of the biggest names in the corporate world
have booked luxury apartments.Property market
sources said they have paid between Rs 30 crore to
Rs 55 crore for uber-luxury apartments in the BKC.
Some of the high-end residential projects here
command as much as Rs 55,000 a sq ft.
Among those who have booked duplexes here are
industrialist Gautam Adani, former Citigroup head
Vikram Pandit, Deutsche Bank co-chief executive
officer of Asia/Pacific, Gunit Chadha, chairman of JM
Financial Nimesh Kampani, Harsh Mariwala of Marico,
Jalaj Dani of Asian Paints, Kishore Lulla of Eros
International and Ashok Wadhwa of Ambit Holdings.
It is also learned that the family of Hitesh Patel, the
Surat-based diamond merchant who was the highest
bidder for PM Narendra Modi's suit for Rs 4.31 crore,
booked an apartment in BKC. Pramit Jhaveri, CEO of
Citi India, and Mickey Doshi, MD and country head at
Credit Suisse, are among those who have duplexes
here.
"Most of these ultra high-net worth individuals have
bought these luxury pads, not as an investment, but to
stay here because of the BKC's strategic location,''
said sources. These are all duplexes in Signature
Island, among the three residential projects built by
developer Sunteck Realty in the BKC's G Block. These
apartments come in two sizes, the bigger ones are
11,000 sq ft while the smaller ones are about 7,000 sq
ft. BKC currently has just three residential projects
adding up to 220 units.
"Most people who work in BKC commute from far-flung
suburban areas or central and south Mumbai. In terms
of time taken to travel, it can easily mean one to two
hours of commute during rush hour. The need to
develop high-end homes in BKC and also develop it as
a residential destination is imperative. Developers
have currently not tapped the full residential demand of
the area,'' it said. The report said BKC, once
developed as a formidable residential address, can
also serve as an alternative to sub-markets such as
Worli and Bandra. ``Its central location and proximity
to both north and south of Mumbai can draw in
crowds and hence help ease urbanization pressure
on the mentioned sub-markets.''
The Economic Times,06 April ‘2015,Mumbai
Cabinet nod for smart cities soon,
roll-out next month: Venkaiah
Naidu
Urban development minister M. Venkaiah Naidu on
Monday said the Cabinet is likely to clear the
government’s flagship smart city project soon and it
will be rolled out from next month. “The Expenditure
Finance Committee has cleared it. It is likely to go to
the Cabinet any time this month,” Naidu said at an
event organised by CII. “This thing will be approved
and it will be rolled from the next month onwards and
then the competition, race will start ... cities must
qualify themselves (by standards, sanitation, revenue,
infrastructure) and once that is done then I will be
coming to you (industry) and you will be coming to me
and then we have a system, we have open offer,” he
said.
The Centre will be a facilitator with regard to smart
cities and government will do the hand holding, he
told the industry promising all support in
implementation of projects they identify. Lot of
companies are showing interest because now the
government has allowed foreign direct investment
(FDI), he added. As far as housing for all is
concerned, Naidu said the Cabinet has approved it
earlier but there was a need for comprehensive
housing policy for both urban and rural segments.
‘Housing for All’ scheme targets construction of
houses for all by 2022. “Both ministers (urban
development and rural development) sat together and
then gave inputs to finance ministry and now finance
ministry is considering it,” he said.
Live Mint,07 April ‘2015,New Delhi
Industry News
PM Narendra Modi govt amends bill
to stamp out ‘black money’ in real
estate
PM Narendra Modi led union cabinet widened the
reach of a bill on Tuesday to regulate the real estate
sector and curb undeclared “black money” in property
markets that costs the exchequer billions of dollars in
lost taxable income. The decision by Prime Minister
Narendra Modi’s government to amend the bill, which
was submitted by the previous government in 2013 but
not passed by the Rajya Sabha, aims to boost investor
confidence and stamp out illegal practices in the real
estate sector.
“The bill seeks to ensure accountability and
transparency, which will in turn enable the real estate
sector to access capital and financial markets essential
for its long-term growth,” the government said in a
statement. The amendments approved by the cabinet
will bring tougher regulation to consumer protection
rules to commercial as well as residential real estate.
Vendors in India’s real estate market often demand
part payment in illicit cash, making many ordinary
people party to corruption and excluding some of the
emerging middle class from the market. The new set of
laws will allow buyers to approach consumer forums in
case of disputes with real estate developers, who will
have to disclose all information about the project and
comply with funding rules, an official said after the
cabinet meeting.
The Financial Express,09 April ‘2015,New Delhi
Smart cities are the future: Venkaiah
Naidu
Smart cities are not showpieces but the future of the
country as growing urbanisation is a fact of life,
according to Urban Development Minister M. Venkaiah
Naidu. He was speaking here on Wednesday at a
seminar on the future of Visakhapatnam as a smart
city, organised by the Vizagpatanam Chamber of
Commerce and Industry and the Visakha Smart City
Forum.
He said smart city had become a buzz word, but it
should be understood in its proper perspective.
"Smart (efficient) governance, sanitation, a pollutionfree environment, an efficient public transport system
and quality civic amenities make life in smart cities
comfortable. But building such cities is easier said
than done. Political will, admistrative skill, and
participation of citizens were required to build such
cities. Funds can be found," he said.
He said Visakhapatnam would be developed as a
smart city along with Ajmer and Allahabad with the
technical assistance of the US. He said the Centre
was also committed to helping Andhra Pradesh in
offering assistance in building the new capital at
Amaravati. "The DPR for Vijayawada metro rail is
ready and the one for Vizag metro is getting ready.
We will give assistance for the projects," he said.
He said while the NDA Government was giving all
help to the State in its reconstruction efforts after the
bifurcation, Congressmen like Jairam Ramesh were
making funny statements regarding special status to
the State. "He is accusing us of betraying the State.
One wonders why the Congress Government did not
deem it fit to include special status for AP in the
bifurcation bill if they were so concerned about the
welfare of the Andhra people," he remarked.
The Hindu Business Line,09 April ‘2015
Government aims to make Gurgaon
a smart city in six months
The government aims to turn Gurgaon into a socalled smart city by the end of this year and wants it
to be a model for other such projects in the rest of the
country, energy minister Piyush Goyal said on
Wednesday. Personally I would love to see it happen
in six months,” Goyal told in an international
conference, Gridtech 2015, on wedensday organized
by Power Grid Corporation of India Limited (PGCIL).
It will certainly be achieved by the end of the year, the
minister averred.
The conference was accompanied by an exhibition of
various power projects with participants across India
Industry News
and 40 other countries. It showcased a model smart
city, which was lauded by Goyal as he urged the
company and private investors to chalk out a plan to
convert Gurgaon into a “pilot showcase” for the
government’s smart city initiative.
The National Democratic Alliance (NDA) government
had last year declared its mission to create 100 smart
cities with better technology, superior management
and modern governance. The project is likely to be
rolled out this month after extensive consultations with
stakeholders. Goyal stressed the need to improve the
distribution and transmission of power with the
objective of last mile connectivity to homes. He asked
PGCIL to create an “ambitious grid programme” by
2019 which would take care of the demand for the next
10-15 years.
Out of the $50 billion that the government plans to
invest in grids, $18 billion is expected to be generated
from two schemes in this sector. “We are looking at at
least $18 billion support through Deen Dayal
Upadhyaya Gram Jyoti Yojna for rural India and
Integrated Power Development Scheme for urban
India,” said Goyal. While India has an installed power
generation capacity of 255,012.79 megawatts (MW),
its national grid has an inter-regional power transfer
capacity of about 46,450MW, which the government
plans to increase to 72,250MW by 2017.
Live Mint,09 April ‘2015,New Delhi
Can GIFT City be India’s Hong
Kong?
This Friday, all roads will lead to Gujarat International
Finance Tec-City Co. Ltd, also known as GIFT City.
Finance minister Arun Jaitley will unveil rules for
international financial services centres (IFSCs) at
Gandhinagar on 10 April. He will be accompanied by
financial regulators and top bureaucrats. The show of
strength reflects the government’s support for the
project. It appears provisions of the Foreign Exchange
management Act (Fema) will not apply to firms
residing in the new city. Some expect Jaitley to back
this up by announcing tax concessions that will apply
only to firms that operate within it.
This sounds similar to the one country, two systems
of China and Hong Kong, and it is. Can GIFT City be
India’s Hong Kong?
The financial industry in Hong Kong has been
boosted in the past few weeks after China further
opened up the Shanghai-Hong Kong Stock Connect
that allows investors in each of these markets to trade
on the other. Inflows into Hong Kong have ballooned
after mutual funds were also allowed to use the
channel. If firms in India are allowed to move capital
easily to and from GIFT City, the new project will get
a great boost. After all, which Indian financial firm
wouldn’t want to take advantage of the tax and other
concessions on offer?
However, the government doesn’t seem to take this
approach. Based on the guidelines the Securities and
Exchange Board of India (Sebi) and the Reserve
Bank of India (RBI) have released, the same Fema
restrictions will apply on Indian residents with regards
to their transactions in GIFT City as in any other
overseas jurisdiction.
All financial transactions in GIFT City will be in nonrupee denominated securities.
Why even raise the question then? This is because
Indian firms will be the most natural participants in the
GIFT City story, although the idea was mooted
originally to attract overseas participants. If financial
services in the new city don’t pick up, there will
always be the temptation to ease restrictions to attract
participants, which could perhaps result in a window
opening for Indian firms and individuals to participate
more freely than they are currently permitted.
But as pointed out earlier in these pages (Why not
promote international finance at Mumbai?), such an
approach will hurt India’s existing financial markets in
Mumbai. As things stand, building a robust market
mainly from participation by global firms looks like an
uphill task. Take for instance the dollar-rupee futures
market. Officials from GIFT City have often said
India’s loss of market share in this product can be
won back with its launch of a dollar-settled version of
it. The central bank has been wary of the
development of exchange-traded currency markets.
Indian firms who were using overseas exchangetraded currency markets are known to have been told
Industry News
off by the central bank, and Financial Technologies
(India) Ltd had been forced to reduce its stake in a
Dubai exchange offering a dollar-rupee futures
contract. Given the central bank’s unease, global firms
may prefer to take their orders to overseas
destinations, including the fairly liquid non-deliverable
forwards market.
Likewise, one of the main reasons global investors
love using participatory notes is that it allows them to
enter into customised over-the-counter (OTC)
derivatives contracts with overseas brokerages. Sebi’s
IFSC guidelines are silent on whether OTC derivatives
will be permitted. It’s presumed that provisions of the
Securities Contracts (Regulation) Act will apply, unless
there are specific exemptions for IFSCs, thereby
meaning that financial firms may still be unable to offer
products they can’t offer in the main shore markets.
In order to attract financial market professionals to set
up base in the new city, the government will need to
provide not only concessions, but also freedom in
areas such as product innovations, just as they are
used to in international markets. Besides, the new
jurisdiction must also have a robust legal system. This
is not to dismiss the potential of a well-managed IFSC.
However, creating a Hong Kong or Singapore will
involve some pragmatic choices and, in the worst
case, may involve sacrificing existing markets in
Mumbai.
Live Mint,10 April ‘2015
Farmers move SC against Land Bill
The Government's urgency to re-promulgate the Land
Acquisition Ordinance has been called in question by a
group of farmers and rural land holders in the Supreme
Court on Thursday.In a petition filed by four
organisations claiming to be farmer fronts, questions
have been raised over the manner in which the law
relating to acquisition of farmer lands was deliberately
introduced through the Ordinance route by disallowing
a debate on the Bill in this regard pending with Rajya
Sabha, where the Government does not enjoy a
majority.Interestingly, the petition attacks the
Ordinance only on the manner of its introduction and
reserved rights to challenge it on merits at a
subsequent stage. The Right to Fair Compensation
and Transparency in Land Acquisition, Rehabilitation
and Resettlement (Amendment) Ordinance 2015 was
first promulgated on December 31 and again on April
3 recently.
The petition, settled by senior advocate Indira Jaising,
highlighted how the case presented a gross abuse of
Article 123 which provides President power to
promulgate Ordinance when Parliament is in recess.
The Ordinance was to lapse on April 5. The
Government was aware that the law must get cleared
in the present Parliament Session extending from
February 23 to May 8 with a recess of one month in
between.
After the Lok Sabha cleared the Bill on March 10, the
Bill was to come up for discussion in Rajya Sabha.
But before this could be done, the Rajya Sabha was
prorogued on March 28. On April 8, the Parliamentary
Bulletin for the remaining Session curtailed the length
of Rajya Sabha Session by three days by making it to
begin from April 23.
The petitioners - Delhi Grameen Samaj, Bhartiya
Kisan Union, Gram Sewa Samiti, and Chogama Vikas
Kalyan Samiti - suggested that such "Ordinance Raj"
is impermissible and an affront to the purpose
intended under Article 123. The action by executive to
re-promulgate an Ordinance with Parliament in
session amounted to usurping the law making power
of the Parliament.
Hinting at a possible political design, the petition said
"Merely because it (Government) does not have
numbers in the Rajya Sabha, the executive cannot be
permitted to continue the law making exercise by way
of an Ordinance."
The Pioneer,10 April ‘2015,New Delhi
Private Equity News
Realty PE firms to double
investments this fiscal
The improving economy and business sentiment seem
to be whetting the appetite of private equity players for
a larger role play. Realty-focused PE firms are looking
to double their investments this financial year.
For instance, real estate-focused private equity firm
ASK Property Investment Advisors has committed to
invest about ₹1,000 crore this financial year. This is
exactly double of the ₹500 crore, the firm had
earmarked for last year. “We didn’t commit too much
money last financial year, while most of our
commitments came during the last quarter of the year,
as the direction of the market went from bad to worse.
We were waiting for the markets to show more distress
and give us money for money deals,” said Amit
Bhagat, CEO and Managing Director, ASK Property.
In this financial year, the company will continue to
invest in residential projects with focus on Bengaluru,
Pune, Chennai, Mumbai and National Capital Region
(NCR). Milestone Capital Advisors, which invested
about ₹500 crore in FY15 across commercial and
residential, intends to deploy about ₹800-1,000 crore
this year.
“The real estate sector is definitely looking up this year,
and deployments would depend on the apetite in the
market. Both residential and commercial sectors would
continue to post growth in this year and there is a lot of
interest among high networth individuals to invest in
the sector,” said Rubi Arya, Vice-Chairman and
Director, Milestone Capital Advisors. For the real
estate sector, the high demand continues to flood from
the metros, while growth is also coming in from tier-I
and -II cities, she added.
“Some markets are very interesting such as NCR and
Mumbai, and funds are optimistic, even though pricing
is still not attractive. In the last 12 months, investors
were looking at fresh asset creation rather than
refinancing, which was the norm till now,” Ashish
Singh, Managing Director (real estate investment),
Standard Chartered Private Equity Advisory.
“This year, a lot of fund creation is also expected to
happen, and with many preferring equity rather than
debt structures,” Standard Chartered’s Singh said.
ASK Property, which launched a ₹1,500-crore fund
last year, will also look at raising funds from offshore
markets, Bhagat said, declining to disclose the details
of the funds. On its part, Milestone Capital will also
do more funds, while many exits are also expected
this year.
The Hindu Business Line,06 April ‘2015,Mumbai
Century Real Estate raises Rs165
crore
Century Real Estate has borrowed Rs.165 crore by
selling non-convertible debentures (NCDs) and
deferred its plans to raise Rs.1,000 crore through an
initial public offering (IPO), two people familiar with
the development said. Bengaluru-based Century,
which has one of the largest land banks in south
India, will use the money to develop two projects in
the city—Century Ethos, a residential development at
Bellary Road, and Century Eden, a plotted
development at Doddaballapur. Ethos homes cost
Rs.2.5 crore onwards, while Eden plots are priced at
Rs.17 lakh onwards.
A spokesman for Edelweiss Financial Services Ltd,
whose non-banking financial company ECL Finance
lent the money, said the money was given as working
capital for a couple of projects. “Given the current
scenario, when property sales are low, developers
are looking to raise cheaper debt or quasi debt
through such structured transactions,” said Chintan
Patel, partner, transactions and restructuring, real
estate and hospitality, KPMG India. NCDs, which
offer flexibility and freedom, are a preferred route for
developers to raise money, Patel added.
Last year, Century had spoken of plans to raise
Rs.1,000 crore through an IPO, of which Rs.500
crore would be used to retire debt, while the rest
would be used for growth. The company had started
the process of appointing bankers, but did not finalise
any. This would be the second time Century is
postponing its IPO plan, after the initial attempt in
Private Equity News
2007, when many developers went public. Century
executive director (finance and accounts) Mahesh
Prabhu had said in an interview in July last year that
the time wasn’t right for the company in 2007, and that
there was a lot of consolidation that remained to be
done.
That seems to be the problem this time around as well.
“Century has decided to postpone the plan to go for an
IPO plan at least by a year, after discussions with
bankers and advisers. Meanwhile, the company will
raise money through NCDs,” said one of the people
mentioned above who didn’t wish to be named. Unlike
the IPOs of 2007, when bankers attached much value
to land banks, this isn’t the case any more. “Bankers’
view is to not give much value to land assets but to
project cash flows instead. Projects that will bring
cashflows within a five-year horizon are considered
valuable in terms of IPO valuation, but not beyond that
timeframe,” the person cited above said. “Century has
decided to focus on project launches over the next
year so that good sales come in and then the company
is ready for an IPO.”
Live Mint,06 April ‘2015,New Delhi
Amplus Realty exits Assetz's
Bangalore project Lumos with 2x
Real estate-focused private equity firm Amplus Capital
Advisors has exited its over two-year-old investment in
a residential project of Singapore-headquartered real
estate developer Assetz Property for an undisclosed
amount, the company said in a statement.The
investment had gone in a residential project called
Lumos back in November, 2012. The project is located
at West Bangalore and offers 138 units across 3BHK
and duplex apartments. It is slated for completion in
2016. The firm did not share the investment or exit
value but said it has clocked an internal rate of return
(IRR) of over 35 per cent and a multiple of 2x on its
investment.
Anuranjan Mohnot, chief executive officer, Amplus
Capital Advisors, said, “Bengaluru continues to be a
key market for our investments. Since inception, the
fund has committed investment in five projects across
Bengaluru.” Recently, the PE firm invested Rs 36.8
crore to back an upcoming residential project of
another Bangalore-based developer Jain Heights.
The investment went to a special purpose vehicle
(SPV) to purchase land.
Assetz Property has given back-to-back exits to its
investors in the recent past. Segregated Funds
Group, the private equity arm of real estate
consultancy firm JLL, recently partly exited its first
investment through its maiden in a residential project
of the developer. It had clocked an IRR of 30 per
cent. Another real estate private equity firm Avenue
Venture Partners recently exited its two-year-old
investment in a project of the developer clocking an
IRR of 33 per cent in a span of two years. Assetz has
so far completed seven private equity exits/part-exits
including the exit given to Amplus Realty.
The developer has a project portfolio of 3 million sq ft
under construction, 1.2 million sq ft to be completed
in the next 12 months and completed and delivered
projects covering 3.5 million sq ft. It recently raised
Rs 720 crore from Asia-focused investment firm
Equis Funds Group for infrastructure developments
of mid-income housing projects.Amplus is currently
deploying funds from its maiden fund and is giving
the finishing touches to its plan to raise an offshore
fund. The PE fund focuses on city centric high-end or
mid-market residential development projects across
cities in India.
VCCircle April 6,2015
Piramal in talks to raise $300-m
offshore fund
Piramal Fund Management (PFM), part of the Ajay
Piramal-owned Piramal Group, is in early talks with
sovereign and pension funds to raise a $300-350
million (up to Rs 2,200 crore) offshore fund on the
private equity (PE) platform. This is separate from the
$150 million that Piramal is in the process of raising
from overseas limited partners (LP) as part of its
offshore fund-raising. Of the $150 million, the
company has already raised $50 million from LPs.
Private Equity News
Khushru Jijina, managing director, Piramal Fund
Management, told Fe that the strategy will ensure
capital availability for a longer duration as he was
expecting a revival in demand for equity investments
by realty developers. “We are looking at this mainly for
having long term 8-10 year money,” Jijina said. In
February 2014, Piramal signed a joint venture for $500
million with Canada Pension Plan Investment Board
(CPPIB) to offer rupee debt funding to residential
projects in Mumbai, Delhi, the National Capital Region,
Chennai, Pune and Bangalore. Both the entities made
an initial commitment of $250 million each.
In FY15, 85% of PFM’s loan book was committed as
debt and equity investments were in the range of 1015%. PFM closed FY15 with a loan book of Rs 4,400
crore, which grew more than two-fold from Rs 1,900
crore in FY14. However, Jijina said the firm expects
the portion of equity investments to rise up to 40% in
FY16.Originally, Indiareit, as the PE platform of
Piramal was called, had a target of raising $500 million
through an offshore fund. The target was later pruned
to $350 million and thereafter to $250 million in the
early part of 2014.
It was again cut to $150 million in the latter half of last
year.Foreign investors’s apathy towards India has
seen little overseas money getting raised by Indiafocused real estate funds in the last few
years.Economic uncertainties, policy paralysis, few
exits and a weakening rupee kept overseas investors
at bay.
Meanwhile, during the year, Piramal plans to raise its
second redevelopment fund worth Rs 500 crore,
Mumbai Redevelopment Fund II, from domestic
investors, as it did in its first redevelopment fund raised
in 2013. PFM is the integrated entity formed last year
after Piramal Enterprises’ financial services arm,
Piramal Capital, combined Indiareit and its real estate
and allied sectors’ focused NBFC under a single
vertical. This entity is now mandated to invest in real
estate across the capital spectrum through private
equity, structured/mezzanine equity, structured debt,
senior secured debt and construction finance.
The Financial Express,07 April ‘2015,Mumbai
Motilal Oswal AMC launches
offshore hedge fund, to raise
$100M by December
Motilal Oswal Asset Management Company Ltd
(MOAMC) has launched an offshore hedge fund
christened India Zen Fund through its Mauritius
domiciled investment management company Motilal
Oswal Asset Management (Mauritius) Pvt Ltd,
according to a press release. It aims to raise $100
million by December 2015. India Zen Fund, a longonly-bottoms-up approach equity fund, would
specialise in investing in Indian mid-cap securities
with a private equity style diligence approach, it said.
“Currently we are selectively looking only to raise the
initial seed monies from certain large global asset
allocators based out of US and Europe and are
already in discussions with a few investor groups.
The fund is targeted towards global institutional
investors like pension funds, endowments, family
offices that are looking for steady returns over a
longer period of time,” said Ankit Bengani, head –
international business, Motilal Oswal Asset
Management Ltd.
The fund will invest in companies having a market
capitalisation between $100 million and $3.5 billion
and would seek to build a concentrated portfolio of
maximum 20 stocks with a buy-and-hold strategy, the
company said in the release. MOAMC, the
investment manager to Motilal Oswal Mutual Fund,
was incorporated on November 14, 2008. It is a fullyowned subsidiary of Motilal Oswal Securities Ltd. Its
total assets under management (AUM) are a little
over $900 million across different products as on
March 31, 2015.
VCCircle, 09 April ‘2015,New Delhi
Regulatory Buzz
No circle rate hike in Gurgaon, govt
hopes for realty revival
The Haryana government has decided not to
increase circle rates in Gurgaon for 2015-16,
hoping it will help revive activity in the realty market
that has been flat for a while. It's the first time in six
years, since the 2009-10 fiscal, that circle rates the
minimum registration price of a property has not
been hiked. District revenue officer Ajit Singh said,
"Circle rates are already quite high in urban areas.
It was decided to keep the rate unchanged to invite
more homebuyers to the city." A committee
comprising revenue department officials and
headed by the deputy commissioner had
recommended to the state government that circle
rates in Gurgaon should not be increased. Usually,
circle rates appreciate 10-15% every year. Realty
watchers said this would encourage people to
invest in Gurgaon. Developers, too, welcomed the
decision. Rajesh K Gouri, vice-president (marketing
and sales), Homestead, said, "The real estate
market is going through a sluggish phase. If circle
rates were to be hiked, it would have further
affected activity in this sector. This move will help
the market recover. Increasing rates would have
resulted in revenue gains but transactions would
have come down. It would also result in buyers
avoiding registrations." The circle rate for
agricultural land in some villages have been
increased, the revenue officer said.
Times of India , 05 April 2015
Govt approves regulator for realty
sector
The Union government has finally approved the
setting up of a regulator to protect homebuyers and
improve the credibility of the real estate sector in a
move towards ridding India of the tag of being one
of the world’s least transparent property markets.
The cabinet on Tuesday approved the amendments
to the Real Estate (Regulation and Development)
bill, 2013, to create a uniform
mechanism across the country.
regulatory
“On becoming an Act, the Real Estate (Regulation
and Development) legislation is expected to give a
boost to the ‘Housing for All by 2022’ mission by
enabling increased flow of investments through
enhanced transparency, accountability and
standardization,” the ministry of housing and urban
poverty alleviation said in a statement.
The cabinet has extended the applicability of the
bill to commercial real estate as well. In order to
ensure that customer advances are used only for
project construction, promoters will also be
required to deposit 50% of the amount collected
from homebuyers in a separate account with a
scheduled bank within a period of 15 days.
Ongoing projects that have not received
completion certificates have been brought under
the purview of the bill, and such projects will need
to be registered with the regulator within three
months.
Promoters will not be allowed to change plans and
structural designs of a project without the consent
of two-thirds of consumers. This will also curb the
practice of setting unrealistic targets by developers
and make them more reasonable in terms of
project execution and delivery. Among the other
new stipulations approved by the cabinet, states
have to make rules within one year and put in
place a web-based online system for submitting
applications for registration of projects, and the
regulator has to decide cases within 60 days.
Real estate developers, both in the residential and
commercial sectors, will be required to register
their projects with the regulatory authority.
Promoters will have to disclose all information
regarding ownership, project plan and layout,
development schedule, land status, status of
statutory approvals, proforma agreements, names
and addresses of real estate agents, contractors,
architects, structural engineers and so on.
Regulatory Buzz
Penal provisions include payment of 10% of project
cost for non-registration and payment of another
10% of project cost or three years of imprisonment
or both if still not complied with. For wrong
disclosure of information or for failing to comply with
the disclosure norms and requirements, a penalty
equal to 5% of the project cost will be imposed.
Regulatory authorities can also cancel registration
in case of persistent violations. Real estate agents
will also be punished for non-compliance of the
orders of the regulatory authority and appellate
tribunals to be set under the proposed law. For fasttrack dispute settlement, one or more adjudicating
officers will be appointed to settle disputes and
impose compensation and interest.
Live Mint,08 April ‘2015,Bangalore
Vacate flats, court tells 21 housing
society residents opposing redevpt
The Bombay HC has ordered 21 flat owners of a
housing society in Oshiwara to vacate their
apartments in 60 days to make way for the
redevelopment of the building. Justice S C Gupte
said that if the families refusing to vacate within the
stipulated time, a court receiver would be appointed
to take possession of the flats and even seek police
assistance if needed.
The court was hearing an application filed by
Supreme Mega Constructions, which had been
appointed by Symphony housing society in
Oshiwara to carry out redevelopment of its property.
The court rejected the plea of the 21 residents who
had refused to move out, citing some clauses in the
development agreement.
"The balance of convenience is in favour of the
(developer), the society and its overwhelming
majority of members who want the building to be
reconstructed," said the judge. The HC pointed out
that the builder had spent substantial sums to start
the project—it had paid Rs 1 crore towards
conveyance of the land and existing building, Rs 50
lakh to the society towards security deposit and
over Rs.5.31 crore to the society members
towards various compensations and spent various
sums for preparing and having the plans of the
new building approved. "The (opposing flat
owners) do not oppose the redevelopment, but
merely have reservations about certain clauses of
the development agreement and the permanent
alternative accommodation agreements," added
the court.
Symphony society is spread over 2,997 square
metres and its 68 residents own the 72 flats and
19 garages in the building. Society members had
agreed to redevelop its property and appointed the
developer in 2011. Around 64 members signed
and approved the development agreement. The
builder moved the HC after the 21 members
refused to comply. The opposing residents
disputed that the agreements had been approved
in the special general meeting and produced video
recordings claiming that the records of the meeting
were fabricated. They alleged that the
development agreement was not in accordance
with the tender conditions and that conditions had
been violated. "Merely on the basis of a purported
video CD of the proceedings of SGM, the recorded
minutes of the meeting, which the society stands
by,0 cannot be disregarded at this interim stage,"
said the judge.
The Times of India,08 April ‘2015,Mumbai
Public Markets
DLF to cut debt by Rs 2,800 crore
by March next year: Crisil
Realty major DLF will reduce its net debt to about Rs
17,500 crore by March 2016, from Rs 20,300 crore at
the end of 2014, as company plans to raise funds
through various routes to cut borrowings, rating
agency Crisil has said. The rating agency removed its
'negative watch' from DLF's bank facilities and debt
instruments, following the Securities Appellate
Tribunal (SAT) order last month quashing the 3 year
market ban imposed on DLF by markets regulator
Sebi.
Crisil had placed its DLF ratings on "watch with
negative implications" in October 2014 following the
Sebi order. However, the rating outlook on the long
term facilities remains 'Negative'," Crisil said in a note
filed by DLF to the stock exchanges.The 'negative'
outlook is because of high debt level, weak operating
cash flow and residual uncertainty over regulatory
issues, the rating agency added.
Crisil, however, said that SAT's favourable order
would enable DLF access capital markets and would
support its financial flexibility. "DLF plans to raise
over Rs 2,500 crore through fresh issue of equity
shares and real estate investment trusts (REITs) over
the medium term," Crisil said. The agency believes
that "DLF will reduce its debt (net of liquidity) to
around Rs 175 billion as on March 31, 2016 from Rs
203 billion as on December 31, 2014".
DLF had a net debt of Rs 20,336 crore at the end of
third quarter of 2014-15 fiscal.Crisil said it would
continue to monitor progress of DLF's debt reduction
plan, improvement in operating cash flows and
outcome of regulatory issues.DLF is the country's
largest real estate firm with a land bank of about 300
million sq ft, of which about 50 million sq ft is under
construction. The company has a rental income of
over Rs 2,000 crore annually.
The Economic Times,10 April ‘2015,New Delhi
Land
Ascendas Close to Buying Nerolac's
Chennai Land
Rane Group sells Chennai land
parcel
Indian property trust of S'pore fund emerges frontrunner for deal that is valued at Rs 440 cr; other
bidders include RMZ & a Chennai developer
.Ascendas India Trust (a-iTrust), an Indian property
trust managed by Singapore-based Ascendas Property
Fund Trustee, is close to buying 15.86 acres of land
from Kansai Nerolac Paints in Chennai in a deal
valued at Rs. 440 crores. The Nerolac had used the
land in Perungudi on the Old Mahabalipuram Road to
house its manufacturing operations at one of total five
such factories across the country, people familiar with
the development said. The company had shifted its
manufacturing base to Hosur near Bengaluru after the
unit closed down over a decade ago.
Auto components maker Rane Group has sold a sixacre land parcel in Chennai for ₹75-80 crore,
according to sources. Casa Grande, a city-based
developer, recently acquired the land parcel located in
the southern part of the city on the Grand Southern
Trunk Road. The price at about ₹12.5 crore an acre is
an attractive value under the current slow market
conditions in the predominantly middle-income
residential area, according to experts. Casa Grande is
looking at residential development along with some
commercial space, say sources in the know. The
components maker has also put a four-acre plot in
Velachery in south Chennai on the block. It had called
for bids through an international property consultant
last year, but the bidders had not matched its price
expectations.
“The land falls under industrial zone.Ascendas is the
highest bidder as the base Rs. 430 crore,“ said one of
the persons, who did not wish to be identified.
“Ascendas continuous ly reviews and assesses
potential new acquisi tions in line with its stated growth
strategy in India. We do not com ment on market
specula tion and will, at the ap propriate juncture,
announce any material an Ascendas spokesper
development,“ an Ascendas spokesperson said in an
email response.
Other builders, who were in the race for his deal,
include RMZ and a Chennaibased local developer.
“The highest bid der is expected to submit the money
by Friday . The property is likely to be bought by
Ascendas unless another bidder submits a higher bid,“
said another person. Ascendas is planning to build a
mixed development project, including IT and residential
components on this plot.
Sources say Casa Grande is in advanced stage of
talks with a large infrastructure company for buying a
six-acre property at Manapakkam, another southern
suburb of the city. There has been a spate of land
deals in the city with the corporate sector cashing in on
the high land valuations. Recently, two companies in
the Murugappa Group sold residential property in
Kotturpuram for about ₹147 crore.
On the Old Mahabalipuram Road, popularly referred to
as an IT corridor, a 20-acre plot was sold in three
separate deals at ₹12 crore to ₹18 crore an acre.
Towards the end of last year, Binny Ltd announced
plans for joint development of 70 acres in North
Chennai, while the company’s promoters sold 12 acres
for over ₹266 crore in a western suburb.
The Hindu Business Line,09 April ‘2015,Chennai
Nerolac Paints is a subsidiary of Japanbased Kansai
Paint which is engaged in industrial, powder and
automotive
coating
business.
The
Mumbaiheadquartered company is the largest industrial paint
company and second-largest decorative paint
company in the country.
The Economic Times,07 April ‘2015,Mumbai
Residential
RPS launches ‘Plateau Greens
The RPS Group recently unveiled low-rise ‘Plateau
Greens Residencies’ for home-buyers in the Delhi/
NCR region. In a bid to cater to the needs of all
categories of buyers, particularly those currently living
in a rental accommodation, RPS has come out with a
buying scheme which allows those booking a flat in the
project to move into a rental-free accommodation in
their already developed projects namely — Savana/
Palms in RPS City (Faridabad) till they get possession.
Giving details of this unique scheme, Pradeep Seth,
Group CEO said, “Having booked their flat, buyers
often get over burdened as they have to pay EMIs over
and above their house rent. With our ‘Book a Home to
Move-in a Home’ scheme, we are easing the financial
burden of our customers by offering them a rental-free
accommodation.
RPS Plateau Greens Residencies offers a total of 140
low-rise units with lifts, 24-hour 3-tier security with
state-of-the-art surveillance systems etc. The project is
strategically located in the heart of the NCR on
National Highway-2, Mathura Road, (at the tip of South
Delhi). The apartments are priced at Rs65lakh.
The Tribune,06 April ‘2015,New Delhi
M3M launches 'beach inspired'
luxury project in Gurgaon
NCR-based real estate player M3M India on Thursday
launched a luxury project 'M3M Marina' to be built in
Gurgaon. The project, based on a nautical theme, will
have 914 housing units spread across high rise
residential towers. The total cost of the project is Rs
1,500 crore, the company said. It will be designed like
a sea-side Marina to give the buyer a feeling of living
by the bay. Pankaj Bansal, Director-M3M India, said,
“M3M Marina is developed to cater to urban upmarket
residents with a taste for the high life.“ The project also
houses recreational facilities for kids like parks, a
cricket pitch, bicycle track, tennis court, library and
banquet area, music hall and a squash court as well.
The Hindu Business Line,10 April ‘2015,New Delhi
Commercial/ Retail
No news in this section for the week
Township
Second phase of Palava City project
to commence soon
Palava City, the integrated smart city being developed
by the Lodha group, is set to complete the phase one
project by December as it plans to commence works
on the development of phase two spread over 900
acres. Shaishav Dharia, Development Director of
Lodha Group, said, “The phase one of the project,
which has thus far seen total investment of Rs. 6,000
crore (about $1 billion) is expected to completed by
December this year. The phase one spread over 250
acres with over 1,900 houses would be fully
completed. This is part of the 4,500-acre Palava City
project taken up by the Group.”
Speaking to Business Line on the sidelines of an event
hosted here on Smart Cities, Dharia said the second
phase would be completed over the next 10 years and
will have more than 60,000 housing units and about 5
million sq.ft of commercial space. It is programmed for
investments to go up Rs. 25,000 crore.
“We have been rated amongst three smart cities which
have come up and in Palava City more than 5,000
families have been already living and experiencing a
smart city environment supported by technology
solutions provided by IBM, GE among others. The land
acquired by the Lodha group in late 1990 is one of the
biggest such projects in the country and close to a
metropolitan city and proposed new international
airport,” he explained.
Mentioning about the Modi Government push to the
smart city projects, he felt that over the next year or so,
various elements and modalities for smart city projects
would come together, which would enable integrated
development of new cities. But the biggest issue is to
get a land of this size at one place to develop a smart
city, he felt.
With the smart city concept and discussions around it
gathering pace, he felt that a project like that of Palava
City could potentially serve as a template for other
projects.
The Hindu Business Line,10 April ‘2015
SEZ
SEZs see up to Rs 2,500-cr boost
from trade policy
foregone might exceed Rs 2,000 crore to Rs 2,500
crore if subsidies are calculated based on 5 per cent of
duty scrips.
The government is likely to forego revenue to the tune
of Rs 500-2,500 crore by way of incentives given under
Merchandise Exports From India Scheme (MEIS) and
Services Exports From India scheme (SEIS) to units
located inside special economic zones (SEZs) under
the new Foreign Trade Policy (FTP) 2015-2020. The
Foreign Trade Policy 2015-2020, unveiled on April 1,
gave a breather to ailing SEZ units by bringing them
under the newly introduced MEIS and SEIS incentive
programmes. However, according to experts, this will
mean an additional revenue impact on the
government, which is already reeling under resource
constraints, over and above the existing quantum of
revenue foregone. Currently, there are 199 operational
SEZs having 3,937 units located in them. The total
exports achieved by these units stood at Rs 3,48,584
crore during April-December 2014-2015, according to
latest data from the Ministry of Commerce and
Industry.
“The tax burden is going to be substantial. It is going to
be more for goods exports compared to services,” said
P C Nambiar, chairman, Export Promotion Council for
EOUs and SEZs (EPCES). However, the industry feels
that the increase in subsidy outgo will not be much of a
concern for the present government. “Increase in the
subsidy bill should not be a major concern as Indian
exporters are at a disadvantage on many fronts vis-àvis their competitors from other countries. These
incentives are to offset infrastructural inefficiencies and
other cost disadvantages,” said Ajay Shriram,
president, Confederation of Indian Industry (CII).
Under the two new schemes – MEIS and SEIS –
exporters will be allowed rewards for export of goods
given as a percentage of realised free-on-board (FOB)
value. The rate of these rewards, given in the form of
duty scrips, will be 2-5 per cent. Similarly, under the
Served From India Scheme (SFIS), the rate of rewards
will be 3-5 per cent. These sops or duty scrips were
not given to SEZ units earlier. “As a result of benefits
given under both the schemes (MEIS and SEIS), the
revenue forgone will be in the range of Rs 500-2,500
crore in a financial year,” said an official on condition of
anonymity.
The actual revenue forgone by the government on
account of tax incentives for export profits of SEZ units
in the financial year 2013-2014 stood at Rs 17,036
crore, higher than the projected revenue impact of Rs
14,992 crore. In financial year 2014-2015, it is
estimated that total revenue foregone on account of
sops given to SEZ units would reach Rs 18,393.70
crore. According to the finance ministry, the actual
impact is going to be “even higher”, said the statement
on revenue forgone. According to Amit Kumar Sarkar,
partner, Grant Thornton India LLP, the revenue
Minister of state (independent charge) for commerce
and industry Nirmala Sitharaman has said the proposal
to remove minimum alternate tax (MAT) and dividend
distribution tax (DDT) on SEZ developers and units is
still lying with the finance ministry. “It is suggested that
the rate of MAT should be reduced to its original rate of
7.5 per cent, which can be done through a notification,
so that the government gets revenue in time and the
SEZs are able to set off the advance tax MAT paid
within the stipulated period. Reduction or removal of
MAT will help in growth of SEZs. For reduction of tax
rate, no approval of Parliament is required,” Nambiar
said.
According to Sarkar, the incentives given to SEZ units
under the new FTP are not lucrative enough for
investors to stay invested in SEZs despite the fact that
SEZs are entitled to duty-free imports and income tax
benefits. Although the government has maintained that
both MEIS and SEIS benefits will be given to SEZ
units, the policy fine print states that these are eligible
for SEIS incentives, according to the ineligible
categories under section 3.09 II (e). Hence, if only the
MEIS incentives are taken into account then the total
export subsidy burden of the government is expected
to be benign.
“The MEIS burden will not be much as the petroleum
sector, which contributes to sizeable exports of SEZs,
besides IT and ITeS, will be outside the purview of
MEIS. By a rough estimate, the burden on the
SEZ
exchequer on account of MEIS benefits to SEZs is
expected to be between Rs 500 crore and Rs 600
crore,” said Ajay Sahai, CEO and director general,
Federation of Indian Export Organisations.
SEZs contribute almost 25 per cent of the country’s
total exports. Total exports from SEZs stood at Rs
3,48,584 crore during April-December 2014-15,
declining 7.61 per cent from the corresponding period
in 2013-14. In 2013-14, exports from SEZs stood at Rs
4,94,077 crore. After cancelling almost 67 SEZs, the
SEZs that have received formal approvals so far are
436, of which 347 are notified and will be operational
soon.
Business Standard,06 April ‘2015,New Delhi
Kandla Port Trust plans 5K-hectare
SEZ
India’s leading port authority Kandla Port Trust (KPT)
plans to develop a Port-based Multi-Product Special
Economic Zone (PBMPSEZ) in an area of 5,000
hectares in Kandla and Tuna. Of the 5,000 hectares,
3,600 hectares would be located at Kandla and 1,400
hectares at Tuna port, near Kandla.
“We seek to develop a Renewable Energy Park
covering an area of 1,000 ha. The remaining 2600 ha
land would be used by green, non-polluting
manufacturing industries. On the other hand, the Tuna
region would focus on establishing a ship-building and
repair facility along with several ancillary units to
support the activity,” KPT Chairman Ravi Parmar
stated in a press communique on Monday.
To be set up next to Kandla Port, the project has
already received Formal Approval from the Ministry of
Commerce and Industry, and is likely to be one of the
biggest port-based SEZs by public sector in the
country.
The proposed PBMPSEZ is in addition to existing 310hectare Port of Kandla Special Economic Zone
(KASEZ). KASEZ was the first special economic zone
to be established in India and Asia in 1965. Kandla is
also the first Export Processing Zone in India.
The Port of Kandla is India's hub for exporting grains
and importing oil and one of the highest-earning ports
in the country. Kandla Port has retained its top position
among the country’s Major Ports for the six
consecutive years in a row, attaining 87.005 million
tonnes mark in 2013-14, utilising 90 per cent of its
cargo handling capacity of 96.62 million tonnes. Major
imports from Kandla include petroleum, chemicals, iron
and steel, and iron machinery. It also handles salt,
textiles and grain.
On the other hand, Tuna Port is run and managed by
KPT. It is being developed as a satellite port and is
crucial for Kandla Port’s survival in wake of stiff
competition from the newly-developed privately-owned
Mundra Port, run by the Adani Group. Tuna Port is the
second port after Vadinar Port to be developed by
KPT. On the SEZ front, Kanlda Port has already
floated Global Expression of Interest for the proposed
SEZ project and received more than 25 EOIs from
leading players in renewable energy, desalination plant
and free trade warehousing zone. As per the website
of the Ministry of Commerce and Industry, India has
199 operational SEZs, of which, 17 are located in
Gujarat.
Deccan Herald,07 April ‘2015,Ahmedabad
Hospitality
Carlson Rezidor to add over 50
hotels in India in 5 years
On an ambitious expansion spree, global hospitality
major Carlson Rezidor Hotel Group plans to have over
170 hotels across the country within 5 years under its
various brands, including Radisson and Park Inn. The
company has set a target of having a hotel in every
major city in India with a landmark property in every
state capital."We plan to extend the number of our
hotels in India to over 170 within next five years. We
currently have 117 Carlson Rezidor hotels in operation
and under development across 45 cities in India,"
Carlson Rezidor Hotel Group South Asia Chief
Executive Officer Raj Rana told PTI.
The company has established a nationwide presence
that has been built upon a deep understanding of this
key market and it will further extend it's brands and
geographic presence, he added. Commenting on the
company's ambition in India, Rana said: "We intend to
have a hotel in every major city in India with landmark
hotels in every state capital."
The hospitality chain plans to continue to work with
existing strategic partners as well as forge new
partnerships to develop scalable opportunities for
growth, Carlson Rezidor said, adding that it intends to
grow its India platform by way of management,
selective franchising and conversions. For the rest of
2015, Carlson Rezidor expects to open eight to nine
hotels and sign 12-15 new hotels in cities throughout
India," it added.
The company's current brand portfolio in India
includes brands such as Radisson Blu, Radisson, Park
Plaza, Park Inn by Radisson and Country Inns &
Suites By Carlson brands. As part of its growth
strategy in India, Carlson Rezidor is broadening its
brand presence with the introduction of Radisson Red
and Quorvus Collection, the company said in a
statement. While Radisson Red is an upscale lifestyle
elect brand Quorvus Collection is a luxury brand.
Carlson Rezidor Hotel Group's current portfolio
includes more than 1,350 hotels in operation and under
development with a footprint spanning over 105
countries and territories.
It owns global brands such as Quorvus Collection,
Radisson Blu, Radisson, Radisson Red, Park Plaza,
Park Inn by Radisson and Country Inns & Suites By
Carlson.
The Economic Times,07 April ‘2015,New Delhi
Marriott set to open 52 hotels in 4-5
years
Marriott International Inc, one of the world’s largest
hotel chains, is set to add 52 properties in India over
the next five years to cater to the burgeoning demand
for quality hotel stay. Through its partners, the USbased company is adding 10,000 rooms to its existing
7,000 rooms. Arne M Sorenson, president and Chief
Executive Officer (CEO) of Marriott International,
said: “Today, 57 per cent of our guests in India are
Indians compared to 35 per cent five-to-six years ago.
Today, we have 28 properties in India, but we would
like to have a few hundred. We see many more
opportunities. The past few years have been tough,
but there is enormous potential to grow here”.
Sorenson was in the city to officially open Mumbai's
second JW Marriott. Marriott has one of the biggest
basket of brands amongst the large hotel chains.
Of the company’s 19 global brands, seven are
already present in India. To complement JW Marriott
and Ritz Carlton, there are plans to bring BVLGARI,
its most expensive brand, to the Indian market. “We
only have half-a-dozen BVLGARI properties around
the world and one is coming up in the Maldives.
These are smaller properties compared to, say, a Ritz
Carlton. There are four-five cities in India which can
support a true luxury brand such as BVLGARI,”
added Sorenson.
In the past five to six years, Marriott has added five
brands to its kitty. These brands, which include Moxy
and Autograph Collection, form a part of the Lifestyle
Collection. According to Sorenson, some of these
brands have a better prospect in India than China. “In
China, they still follow traditional luxury. That is why
India has a better position to host such lifestyle
brands,” added Sorenson.
Hospitality
One of the other brands that will get a boost is the
upmarket brand Fairfield. With one property
operational in Bengaluru, 15 more are under
development. Against the management route followed
by the company in all its brands, Marriott has invested
$30 million to set up Fairfield properties, which will be
built through a joint venture with SAMHI Hotels.
Marriott controls 26 per cent of stake in the joint
venture.
In addition, premium brand Ritz Carlton, which has
one operational property in Bengaluru, has two
properties (one each in Mumbai and Delhi) under
development. Courtyard by Marriott has 12 operational
properties and 18 are under development.
Five years ago, Marriott had declared plans to have
100 properties by 2015 with an intermediate target of
reaching 41 properties by 2013.
Sorenson agrees there has been a delay. “In a city
like Mumbai, it takes 70-100 permits to open a new
property compared to six in Singapore. This leads to
cost overruns and delays,” added Sorenson. Marriott
is not the only company which is running behind
schedule. Starwood, Hilton, Intercontinental, Jumeirah,
Four Seasons and Hyatt, to name a few, are unable to
keep pace with their earlier announcements.
Business Standard,10 April ‘2015,Mumbai
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