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30-Sept-2019
CREDAI Bengal Daily News Update | 30.09.19
Media Coverage on Press Conference held for www.credaibengalhomes.com
on 25-09-19
OTHER NEWS
Recession in real estate, high tax rate & poor consumer sentiment cripple
Rajasthan's marble industry
The prevailing negative sentiment in the economy along with a number of other reasons,
including recession in real estate and high tax rate, has put hordes of marble traders and
workers out of work or on the verge of quitting the industry.
Some of the most well known architectural marvels in India, including the Taj Mahal, are
known to have used marble obtained from Rajasthan.
However, in this period of economic uncertainty, the once thriving marble industry of
Rajasthan, known for its high quality finished product, has been facing the heat.
The prevailing negative sentiment in the economy along with a number of other reasons,
including recession in real estate and high tax rate, has put hordes of marble traders and workers
out of work or on the verge of quitting the industry.
Chainaram Choudhary, a factory worker, started as a helper or assistant and gradually rose
through the ranks but today, he is finding it extremely tough to keep his job. He has worked in
the marble industry for nearly two decades.
"Yes, it is bad. Is 100 per cent bad. I had told you that earlier 60 labourers used to work and
now, it is in front of you, 50 or around that many work. Yes (used to work on this machine)
earlier and now as well. It is shut for the time being because product is not there. Earlier, it used
to yield 100 pieces. Now, it yields 30 or 40 pieces," Chainaram Choudhary told India Today.
Chainaram claimed he has witnessed several workers lose their jobs because of to the prevailing
condition in the marble sector. He fears that one day, he too may lose his source of income. He
has to manage the expenses for a family of five and has been finding the going extremely tough.
Given the current state of marble industry, he finds it hard to manage the expenses within his
paltry income of Rs 10,000 to 12,000 per month.
Chainaram said, "Are facing (a lot of difficulties) right now. Recession period is on, the owner
can throw us out any time. What is to be done?"
India Today visited Vishwakarma Industrial (VKI) area in Jaipur to gauge the condition of
marble industry- once a flourishing sector of the economy in the desert state.
Newspaper/Online India Today (online)
Date September 30, 2019
Link https://www.indiatoday.in/business/story/recession-in-real-estate-high-tax-rate-poor-consumer-sentiment-cripple-rajasthan-marble-industry-1604612-2019-09-30
The industry has been reeling under the weight of high tax rate after the imposition of GST.
However, it was later brought down to 18 per cent, which is still considered quite high by
marble traders.
"The condition of marble industry is very bad since the time this GST pattern of government
has come. When there was VAT on marble, then the taxation was 5 per cent. Since GST resume
came, then 28 per cent was imposed, the tax was very heavy. After that, the government
reduced it a bit to bring it to 18 per cent," Mukesh Khetan, director of Khetan Tiles, told India
Today.
"Even now, the government taxation is so much that it is getting difficult for us to survive. All
our money is stuck in taxation. Whatever export, import we do, in that as per 18 per cent GST,
more than 25 per cent of working capital is stuck in this. Government does not make refund on
time. Whatever we get in export, all of that stuff goes without tax. So, we do not get tax
recovery," he added.
Some of the reasons behind the current state of the marble industry include:
> High rate of taxation: It was brought down to 18 per cent from 28 per cent but is still
considered quite high by marble traders.
> Recession in real estate market: The fate of marble industry is considered directly linked with
that of the real estate market.
> Prevailing negative sentiment in the economy which has been adversely affecting buying.
"Demand has drastically gone down as compared to before. It has gone down by 60 per cent
because the real estate market is really down. Because our final consumer is from the real
estate. So, till the time property market does not pick up, our market will also not function,"
Mukesh Khetan said.
Several traders hold the government and bureaucracy responsible for the current state of affairs
in the marble industry. They want the government to ensure measure to help revive the industry
sooner rather than later.
"For condition of marble industry, to a certain extent, the government is responsible. The
marble mines, for taking environmental clearance, has been put in red category. Marble, mines,
granite mines are all in jungles. At the most, one or two machines are used... It has been forcibly
been put in red (category)... Yes, government policies on marble, tax earlier used to be not more
than 5 per cent, that today, even after reduction is 18 per cent," Jagdish Prasad Khetan, a marble
businessman, said.
Rajasthan, considered rich in minerals and stones, has several small, medium and large units of
marble factories. However, the recession in the real estate market coupled with tax and the
negative sentiment in the economy has hit the marble industry extremely hard.
Experts believe that if the current scenario prevails in the long term, then it can really sound the
death knell for the marble industry in Rajasthan.
________________________________________________________________
Realtors slash ad spends by over 50% as sales plunge
Today, most developers are struggling with financial constraints mainly because of
plunging demand.
The real estate sector, one of the biggest ad spenders during festival season, has slashed its ad
budget by over 50 per cent as the sector is facing slowdown in demand due to various reasons
including tight liquidity situation.
According to advertising industry experts, the real estate sector which is grappling with
liquidity issues and large inventories since demonetisation in November 2016, has massively
reduced their ad spends on TV and print media, and have moved a potion of their ad spend to
the digital space to cut cost.
"Realty sector has been sluggish since the last two years and deepening general slowdown has
only exasperated it," media and digital marketing communications company Dentsu Aegis
Network chief executive for Asia Pacific Ashish Bhasin told PTI.
Today, most developers are struggling with financial constraints mainly because of plunging
demand.
"Due to this, they have either delayed or defaulted their payments to media agencies, which are
now wary to work with such developers," he said.
Bhasin further said real estate companies will be spending more on performance, marketing and
sales related efforts than building brand and accordingly have cut their ad spends by almost 50
per cent.
Havas Media Group chief executive for India and Southeast Asia Anita Nayyar said, pre-
Navratri is the time when developers spend hugely on advertising. But this time around it has
just crashed.
"Since liquidity is an issue, developers are resorting to barter private treaties by entering into
brand capital deals with leading news dailies. These treaties could be in the form of publisher
picking up some stake for the ad money value by or developers offering space a project to the
publication. But neither that is happening this year," she said.
Unsold homes have increased 7 per cent to 1.3 million units at the end of June 2019, according
to an independent real estate research firm Liases Foras.
Newspaper/Online ET Realty (online)
Date September 30 , 2019
Link https://realty.economictimes.indiatimes.com/news/industry/realtors-slash-ad-spends-by-over-50-as-sales-plunge/71367251
Mani Rangarajan, group chief financial office at Elara Technologies that also owns
Proptiger.com, Makaan.com and Housing.com said advertising spends, not just in the real estate
sector but overall, have become lean.
"Real estate has been hit very hard since the last couple of years which has impacted their
advertising spends and also the media mix. The most telltale signs of this are the drastic
reduction in the number of pages in real estate supplements and front page jackets, full page
ads, etc, in the print versions of various publications," he said.
Digital media on the other hand is increasingly eating into the profit margins of the print media,
he added.
A city-based realty player requesting anonymity said his company has already brought down its
marketing and ad spends by over 75 per cent over the last two years.
"We would prefer to offer certain discounts to our customers rather than spending on ads," the
developer says.
Transcon Triumph vice-president for sales and marketing Sarojini Ahuja said her company has
increased its digital media spends from 35 per cent last year to almost 50 percent this year and
have reduced the marketing budget from 15 per cent to 10 per cent.
________________________________________________________________
PPP model for infrastructure development: Why there’s need to
avoid pitfalls of past
The setting up of a nodal Credit Guarantee Enhancement Corporation would help individual
projects improve their risk rating
Consolidation of guidelines, provision for reworking of contracts and dispute resolution ought
to be prioritised
With Budget 2019-20 indicating a staggering Rs 100 trn as India’s infrastructure investment ask
if it is to become a $5-trn economy over the next 5 years, at a time the government has resolved
to maintain strong fiscal discipline, the need for PPPs in infrastructure assumes even greater
significance. However, the actual performance of infrastructure sector PPPs has been mixed.
While a few sectors like roads & highways and airports have been able to attract significant
Newspaper/Online Financial Express (online)
Date September 24 , 2019
Link https://www.financialexpress.com/infrastructure/ppp-model-for-infrastructure-development-why-theres-need-to-avoid-pitfalls-of-past/1714156/
private investments, most others like ports, water treatment & recycling, health and education
have seen limited traction.
Over the last few years, a number of important steps have been initiated by the government to
provide a boost to infrastructure PPPs. One of the most significant has been the setting up of the
National Investment and Infrastructure Fund (NIIF), an alternate investment fund for
infrastructure projects, with the government contributing around Rs 20,000 crore. A number of
policy-related measures aimed at improving liquidity in infrastructure investments have also
been taken, including the announcement of Infrastructure Investment Trust guidelines by SEBI
in September 2015, promulgation of the Insolvency & Bankruptcy Code, 2016 and the
November, 2018 directive by SEBI to large corporates to fund at least 25% of their borrowings
through the corporate bond market with effect from FY19-20.
Budget 2019-20 has added to this list by announcing the setting up of a nodal Credit Guarantee
Enhancement Corporation for infrastructure projects, with an authorised capital of Rs 20,000
crore. The guarantees extended by the Corporation would help individual projects improve their
risk rating and meet the threshold requirements of long-term investors like pension funds and
insurance companies. While these initiatives are steps in the right direction, there are a few
other areas which need to be addressed on a priority basis given the global experience in public
private partnerships.
Firstly, there is a need to consolidate and update the existing PPP guidelines based on the
experience gained across individual sectors over the last few years as well as best practices in
other countries. The consolidated policy, parts of which may also be in the form of a binding
legislation, should clearly specify the sectors wherein PPPs are being considered, the various
types of PPP arrangements which can be used, the steps to be followed for selecting the private
partner, timelines for decision-making, guidelines for risk-sharing, etc. The policy should
clearly specify the institutional eco-system for PPPs. It would be important to have a designated
nodal agency to provide technical and implementation support, with the body being the single-
point repository for all PPP-related process guidelines as well as contract templates across
individual sectors.
Formulating an enabling framework to renegotiate concession agreements is the second area
which merits attention. Most concession arrangements extend over 20-25 years and face
significant uncertainties around interest rates, traffic volumes, potential changes in technology-
impacting costs, and larger macro-economic and policy-related issues. Such issues can impact
project cash flows both positively and negatively. For example, a scenario of decreasing interest
rates may represent a potential opportunity to refinance a project at lower cost, thereby enabling
higher returns for investors. Similarly, a shortfall in traffic volumes vis-a-vis originally
estimated levels may result in a shortage in cash flows for servicing existing borrowings in
certain years. Both these situations can be addressed only if the concession can be renegotiated.
Most of the countries with relatively mature PPP ecosystems like South Korea, the UK, and
Australia have well-defined guidelines for such renegotiation. To maximise benefits and build
confidence with private partners, the provision for renegotiation should apply to both existing as
well as upcoming concessions.
Finally, there is an urgent need for a dispute-resolution process for PPP arrangements, as long-
pending disputes have significantly adverse financial impact and act as a deterrent for private
partners. Any such dispute-resolution mechanism would need to factor in issues like the current
load on the judicial system and its proposed role in PPP dispute resolution; use of non-judicial
dispute resolution options like high-level negotiations, mediation, expert determination &
arbitration; and issues around the jurisdiction and sovereign impunity of the public partner, etc.
It is expected that the aforementioned measures, together with the initiatives already rolled out,
would help increase its attractiveness and position India as one of the largest and most mature
PPP markets.
__________________________________________________________________
Brick kiln units can mine soil up to 75 feet: Tamil Nadu's
environment minister
“The units have given them permission to mine soil up to 75feet. They have been carrying
out mining for long. We would streamline it soon,” said K C Karuppannan.
The government has given permission to brick kiln units in Thadagam and surrounding areas to
mine soil up to 75feet, minister for environment and pollution control K C Karuppannan said
here on Saturday.
When asked about the indiscriminate soil mining in areas such as Chinna Thadagam,
Veerapandi and Nanjundapuram, causing damage to the ecology, the minister, who attended a
Teachers’ Day programme at a private engineering college here, told reporters that the
government had issued notices to such units. “The units have given them permission to mine
soil up to 75feet. They have been carrying out mining for long. We would streamline it soon,”
he said.
However, environmental activists and residents from the area raised concerns over the
minister’s claim by citing a memorandum of the union ministry of environment and forests
issued in 2013 that said excavation activities should not exceed 2m (6.5ft) from the ground-
level.
S Ganesh, a resident of the area, who has been fighting against unauthorised soil mining, said
Thadagam, Nanjundapuram, Veerapandi and Somayampalayam panchayats come under the Hill
Area Conservation Authority (HACA). “Soil mining is not permitted in the areas that come
under HACA. Norms also say no big construction can be carried out here,” he told TOI.
On Tuesday, officials of the departments of revenue, mines and minerals, police, pollution
control board and forests had held a review meeting with brick kiln owners in the region. The
officials said they had directed the owners to abide by mining rules and norms laid down by the
state and had warned them of fines if they do not comply.
An official had also said they would soon slap fines on those, who had mined soil
indiscriminately and send notices to them.
________________________________________________________________
Newspaper/Online ET Realty (online)
Date September 29 , 2019
Link https://realty.economictimes.indiatimes.com/news/allied-industries/brick-kiln-units-can-mine-soil-up-to-75-feet-tamil-nadus-environment-minister/71358694
Building plans in Ghaziabad will now be approved online
The decision was taken to avoid delays in sanctioning building plans, on directions of the
state government at the board meeting of the Ghaziabad Development Authority (GDA),
its chairperson Anita Meshram told reporters.
Building plans in Ghaziabad will now be approved online, officials said on Saturday. Building
plans on land measuring 300 metre or less will be approved within 24 hours without any manual
interface, while those in bigger plots will be sanctioned within a month, they said.
The decision was taken to avoid delays in sanctioning building plans, on directions of the state
government at the board meeting of the Ghaziabad Development Authority (GDA), its
chairperson Anita Meshram told reporters.
The move will be implemented from Monday, she added.
After receiving application online, the software will scrutinize the plan according to the
building bylaws of the GDA. Information furnished by the applicant will be verified by a junior
engineer instantly.
For building on a plot of over 300 metre, the junior engineer will submit his report within seven
days. If he fails to do so, the plan will be sanctioned automatically.
Total 19 proposals were tabled in the Saturday's board meeting, officials said.
_______________________________________________________________
Newspaper/Online ET Realty (online)
Date September 29 , 2019
Link https://realty.economictimes.indiatimes.com/news/technology/building-plans-in-ghaziabad-will-now-be-approved-online/71358569
Visakhapatnam civic body aims to collect Rs 350 crore property tax
This means that the GVMC may have to intensify its tax collections in the second half of
this financial year to meet its target.
The Greater Visakhapatnam Municipal Corporation (GVMC) has realised about Rs 145 crore
in property tax so far this year, including vacant land tax, which is almost equivalent to the
collection from the corresponding period in the 2018-19 financial year.
The corporation has set a target of collecting about Rs 350 crore in property tax this year,
against last year’s collectible demand of Rs 300 crore, by adding new assessments this year.
This means that the GVMC may have to intensify its tax collections in the second half of this
financial year to meet its target. It is for this reason that the GVMC will want to make the most
of its regular tax collection process rather than pressing its machinery into special tax collection
drives at the end of the September and March quarters.
Speaking to TOI, GVMC deputy commissioner (revenue), MVD Phani Ram, said that the civic
body has already added about 5,000 new assessments to its tax net this financial year.
“We have renewed our focus on strengthening the tax collection system and made the collection
process a continuous, rigorous exercise rather than limiting it to a few months. We have
achieved about 46 per cent of the total targeted tax collection,” said Phani Ram.
Phani Ram added that the corporation also been issuing notices and warrants to tax defaulters in
order to reach the target. “Once they get a notice from the civic body, the public will get alerted
and pay the tax without any default,” said Phani Ram.
In the 2018-19 fiscal, the corporation collected Rs 50 crore more in property tax that in the
previous fiscal, a result of its aggressive tax collection drive. GVMC realised nearly Rs 300
crore in 2018-19, which was the highest till date. This year, the corporation wants to continue
the momentum and reach its target of Rs 350 crore.
In recent times, the civic body has been exploring other options to increase its revenue
collection instead of opting for tax hikes. It has also initiated the process of generating
Geographic Information System (GIS)-based maps of urban properties and settlements in
Visakhapatnam city, which amounts to around 4.8 lakh assessments.
The exercise will also include geocoding property linked to each assessment, with details of
property, water, trade and advertisement taxes, unassigned properties, vacant lands and
government properties.
Newspaper/Online ET Realty (online)
Date September 29 , 2019
Link https://realty.economictimes.indiatimes.com/news/regulatory/visakhapatnam-civic-body-aims-to-collect-rs-350-crore-property-tax/71357234
_______________________________________________________________
MahaRERA moots self-regulatory organisations to ensure greater
efficiency
MahaRera chief Gautam Chatterjee said, "The objective was to bring in transparency,
building trust among stakeholders as well as to ensure timely completion of projects"
State real estate regulator MahaRera plans to have in place self-regulatory organisations (SROs)
to ensure greater professionalism among all stakeholders and to bring in consistency in
practices.
As a part of the strategy, industry associations like National Real Estate Development Council
(NAREDCO), Confederation of Real Estate Developers Association of India (CREDAI)
and Maharashtra Chamber of Housing Industry (MCHI) will have to register as SROs who will
take charge of all the members registering on regulator's portal, MahaRera chief Gautam
Chatterjee said without offering a time line for the implementation.
"In this new initiative, we are planning to have these associations registered with MahaRera as
SROs who will take charge of all the members from a prospective date. This will ensure that no
developer will be able to file for registration unless he is an SRO member," Chatterjee said at
the World Hindu Economic Forum on Sunday.
He said the objective was to bring in transparency, building trust among stakeholders as well as
to ensure timely completion of projects.
"At present over 22 lakh homes are getting constructed in Maharashtra and investments worth
Rs 8 lakh crore are being tracked by MahaRera. Also, over 22,000 projects along with more
than 21,000 agents are registered on the portal," Chatterjee said.
He further said the state regulator is also working towards working with the registration
department of the revenue department to bring in further transparency.
"Under this, we intent to put a hyperlink on our portal along with the details of the projects and
the customers, and when they click on a particular project, they can also go to the registrar's
website through the link and can see in whose name the particular property is registered ," he
said.
Chatterjee underlined that the intent is to bring in technology and to leverage it.
________________________________________________________________
Newspaper/Online ET Realty (online)
Date September 30 , 2019
Link https://realty.economictimes.indiatimes.com/news/regulatory/maharera-moots-self-regulatory-organisations-to-ensure-greater-efficiency/71367181
Property rates in three Noida sectors to increase by upto 7.5%
It has been proposed that rates of residential plots near Metro would be increased by 5%
and for those near the expressway, the rates would be hiked by 7.5%. The proposal has
been forwarded for approval, officials said.
The Noida Authority has upgraded some residential sectors in Noida, which will now cost
more, because of their proximity to the Metro line and Noida expressway.
Property rates in these sectors – sectors 14-A, 15-A and 44 – will increase by 5 to 7.5% ,
officials said after a board meeting on Friday.
Rates of plots for group housing societies, as well as those marked in the institutional category,
will be increased by 7%, even as rates for commercial plots under the 2 floor area ratio (FAR)
category have been reduced by 15 % recently.
Parts of sectors 14-A, 15-A and 44 are close to both the Metro corridor and the expressway. It
has been proposed that rates of residential plots near Metro would be increased by 5% and for
those near the expressway, the rates would be hiked by 7.5%. The proposal has been forwarded
for approval, officials said.
This is the first time since 2006-07 that the land rates have been revised.
At Friday’s meeting, 33 proposals were approved by the board, including proposals to build an
entertainment hub, a helipad, a golf course and a club.
A tourist spot like Chaukhi Dhani (along Jaipur road) has been proposed on a 120-acre plot at
Sector 151A. “It is expected to provide boost to tourism and generate more revenue for the city.
A helipad would be built on a private-public partnership model on 10 acres. For adventure
sports and tourist area, a 20-acre plot has been thought of,” said Alok Tandon, chairperson,
Noida Authority.
It has proposed an 18-hole golf course over 90 acres that would be developed at an estimated
cost of Rs 255 crores. The Noida Golf Club will prepare feasibility report regarding registration
of members and fees, among other things.
Proposals to build a Noida convention and habitat centre at Sector 94 and start-up hubs at two
places were also approved during the board meeting. TOI was the first to report that the
Authority is planning a habitat centre and start-up hub in the city.
According to the Authority’s master plan, the population of the city is expected to exceed 25
lakh by 2031. Other proposals that were discussed on Friday include posting of 30 home guards
Newspaper/Online ET Realty (online)
Date September 28 , 2019
Link https://realty.economictimes.indiatimes.com/news/industry/property-rates-in-three-noida-sectors-to-increase-by-upto-7-5/71344985
(who would be paid by the home guard department, UP government) for the city to address
shortage of police personnel.
Group housing society projects and bulk waste generators on over 5,000 sq m area will now get
approval only after the builders submit plans to set up bulk waste generating plants on their
premises.
________________________________________________________________
DHFL’s resolution plan may not appeal to lenders
DHFL has sought a valuation of Rs 54 per share for conversion of debt to equity for
lenders to get a controlling stake and a repayment timeline that stretches to 20 years for
project-linked debentures.
Distressed housing financier DHFL has prepared a resolution plan which lenders are finding
difficult to accept.
DHFL has sought a valuation of Rs 54 per share for conversion of debt to equity for lenders to
get a controlling stake and a repayment timeline that stretches to 20 years for project-linked
debentures.
This is against the current market price of Rs 42, which gives the company a valuation of Rs
1,325 crore.
One of the key revelations from the resolution plan is that the company continues to have debt
of Rs 83,873 crore on its books. Of this, Rs 26,324 crore is in the form of bank loans and Rs
41,431 crore in non-convertible debentures (NCDs).
The nature of these liabilities makes a resolution difficult as banks, which are governed by RBI
norms, can make certain concessions but bond investors (which include international ones who
have invested in masala bonds) have different considerations.
Another key worry for lenders is the quality of DHFL’s loan books, which serve as the
underlying assets for the funding from banks and bondholders.
Of the total loans of Rs 89,476 crore, only Rs 35,233 crore has been given to retail borrowers.
The rest are wholesale loans, which include Rs 18,078 crore to developers, Rs 11,967 crore to
slum rehabilitation projects and Rs 17,565 crore to other projects.
The auditors have qualified their report, raising questions on the quality of these assets. Lenders
are awaiting a final report from legal firm Alvarez & Marsal, which has been tasked with a
forensic audit of cash flows.
The company last week held a meeting to present the draft resolution plan to its institutional
creditors, including banks, financial institutions, mutual funds, insurance companies and
institutional bondholders. The company apprised them about the various steps required to be
undertaken to implement the plan.
According to lenders, conversion of debt to equity is a disguised haircut. “Lenders would be
more comfortable in taking a haircut if there is a new promoter willing to take on the liabilities.
Newspaper/Online ET Realty (online)
Date September 30 , 2019
Link
https://realty.economictimes.indiatimes.com/news/allied-industries/dhfls-resolution-plan-may-not-appeal-to-lenders/71367237
While there have been talks about private equity investors, none has been forthcoming,” said a
banker.
With uncertainty over the resolution plan, fears have shifted to the ability of DHFL to continue
its central and zonal office operations for pursuing recovery of loans and preserving quality of
assets. Banks are looking at appointing external agencies to manage loans that they have
purchased.
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