Ansals Ready with Rs 200 Crore for BuyOuts

In Feburary-2007, we had predicted a shakeout in the real estate sector. Just a while ago, India's Second Largest properties Developer, Ansal Properties and Infrastructures [APIL] has announced that it is sitting with Rs 200 crore cash to BUY-OUT weaker players who are about to default.

Mr. Anil Kumar, CEO of APIL said,

The market is slowing down and funds from banks are not easily available.Some of them would like to exit. The acquisitions are likely to be in the same places where the company operates: Rajasthan, Punjab, Uttar Pradesh and National Capital Region. The company might also consider other financial arrangements with distressed companies. Ansals, for example, could build a project on a company’s land, and then return a portion of it to the company.

Sujit Jain, a real estate analyst at PINC Research in Mumbai, said

Many smaller companies paid high prices in land auctions and were unable to make projects viable. Now it makes sense for large developers to sweep in and acquire the distressed companies’ land banks. Instead of going out and buying plots at high prices, why not go and buy companies who have already built up land banks. These people (promoters of smaller firms) will look to liquidate and take out as much money as possible.

Big Bull, Rakesh Jhunjunwala laughed off when Niranjan Hiranandani said that Real Estate was an attractive investment option. Rakesh pointed out how he bought his Nariman Point office from a distressed seller at Rs 10,000 / SFT the latter having bought at Rs 14,000 / SFT during the boom, a decade ago.

Naryana Murthy's Hypocrisy

Infosys Technologies, Chief Mentor, N. R. Naryana Murthy is an honourable man. Unlike his Redmond counterpart, BillG, Murthy was never the Chief Software Architect of Infosys. However, looking at various Infosys' campus in Pune and Mysore, I doubt if Murthy is a civil architect. J/K. The Mysore campus is a MasterPiece :-) Is it Murthy's creation ?

Lately, Naryan Murthy commented on the Kill*ngs @ Nandigram. Murthy said,

I agree that we cannot take land from farmers. The earlier policy where individual companies were building their own campuses was a good one.

Wait a Minute. Is Murthy saying this ? But Infosys under murthy had acquired wet farm lands in Bellandur. Modus Operandi, Infosys used the Karntaka Government's, KIADB to acquire land from farmers at mere Rs 900,000 when the ruling prices were between
Rs 4,000,000 and Rs 15,000,000 at Bellandur. The Rediff article has an in depth study about Murthy's Hunger for Land :-)

Tags: Infosys,Naryana Murthy,Real Estate India, Scam

Life for Land - Bengal's Way of Industrialization

The communist ruled state of West Bengal witnessed violence and blood shed in Nandigram - Site for the proposed Salim Group SEZ.

Farm land owners had opposed handing over their land to the SEZ project because the government doesn't have any alternative rehabilitation program nor does it care to compensate them with enough money. Adding to their woes is the rampant corruption.

Angry farmers protested the forcible entry of State Police in Nandigram when the Di*K Head state CM, Buddhadeb Bhattacharjee ordered firing at protesting farmers. 30 innocent lives have been claimed so far [State's Official media is not accepting this fact and is only claiming 19, everybody knows how it is in India] and 100s battling for life in poorly equipped village hospitals. The video @ Nandigram remind me of the Jallianwala Bagh Massacre when Son of a Bit*h, Headless General Reginald Dyre ordered firing on the gathered mass and within 10 minutes 1,000 people were de*d.

The Governor of Bengal is a mere spectator and all the human rights and other activists are gone with the wind. The Land and Natural Resources of the State belong to its people. You can't kick them out just because they can't protect themselves. Are we really in Democratic India ? The President of India should immediately suspend the Communist government and take the State affairs in his hands. Communists, are a THREAT to Democracy in India.

Tags: India, Bengal, Salim Group, India SEZ, Communist, India Real Estate

Chennai's Real Estate Hits New High

Chennai's Real Estate Market hit a new high today with HFCL owned Hindustan Teleprinters selling a 11 acre plot for a whopping Rs 298 crore. Who is the BUYER at this abnormal price ? RMZ Corp of Bangalore / Bengalooru.

RMZ Corp paid Rs 27 crore / acre for the 11 acre plot located at Guindy near Chennai's western industrial suburb.

Just last month, Kothari's backed by Ambani's had picked up Rs 175 crore property on Boat Club Road. I am sure RBI and P Chidambaram are looking into these deals.

Tags: India Real Estate, Chennai Real Estate, Realty Auction, India Properties

After Mahidras, Adani's Mundra SEZ to List on Bourse

Mahindra Gesco was the first pure play SEZ stock to be listed on the Indian stock exchanges. Now Adani's promoted Mundra Port and Special Economic Zone Ltd has filed for Draft Red Herring Prospectus with SEBI for an IPO. The IPO is expected to raise $300 Million. The proceeeds of the IPO will be utilized in further development and modernization of the SEZ.

With the recent meltdown of Property and Construction stocks, the sailing will be extremely rough for the Adanis.

Tags: Mundra SEZ, IPO India, SEZ India, Realty Stocks

Multiple Home Loans - RBI Wants you

RBI Chairman, Y V Reddy has ordered all Home Loan lending institutions in India to furnish details of Multiple Home Loan borrowers.

Why is RBI profiling your data ?
RBI fears that once the property bubble bursts, borrowers who have invested in second or third homes to earn a fat rent could default, as tenants relocate to properties with lower rentals. At that point the properties that have been pledged with the banks may not be adequate to cover loan exposure and thus lead to higher NPAs for banks. Besides, RBI also wants break-up on Salaried Borrowers, Self Employed, NRIs, BusinessMen etc

See how EMIs on home loans have increased with the increase in home loan rates. In the past one month, all the Indian Real Estate stocks have crashed off their highs by 40%.

RBI refuse Citi Investment in Ansal Infra

India's central bank, RBI and Department of Industrial Policy and Promotion - DIPP have probably not approved the Preferential allotment of equity shares of Ansal Properties and Infrastructure Ltd to Citigroup entities approved in October 2006. The issue was of Rs 175 crore. Ansal said,

In view of the required approvals of RBI/DIPP in terms of applicable FEMA Regulations for issue & allotment of Equity Shares to Citicorp Banking Corporation not forthcoming, the parties have mutually concluded that the understanding entered amongst the parties is no longer operative and enforceable. The requisite applications have been moved to RBI & FIPB for withdrawing our applications of seeking approval in the matter.

If you are a regular reader of our blog, then you probably know RBI's stand on Real Estate investment. Also in the recent budget Finance Minister has withdrawn all the benefits for VC and Private Equity funds in Real Estate sector.

On Feb-25th, RBI issued a notification to NBFCs which bars them from speculating in property and they have to file monthly report with the RBI regarding their exposure portfolio. The new norm states that no NBFC can invest more than 10% of its capital in Land or Property except for its own use.

Since Mid Feburary, Real Estate Stocks have fallen between 30% to 50%. Ansal Infra is down 45% since its yearly high in Jan-07.

Tags: India Real Estate, Real Estate Bubble, Citi, Real Estate

Budget directs IT companys to SEZs

The vested interests of the ruling government has gotten worse when it comes to SEZs. Two things that will push the Indian IT & ITeS companies to begin fresh operations in SEZs are imposition of Service Tax on Commercial Rental Properties and Non-extension of STPI and other software export benefits to IT companies beyond 2009. This will lead to a big demand for space in SEZs said, Chandra of Unitech.

Also the biased Finance Minister has gone on a Tax holiday for construction of Hotels and Convention centers in Delhi and NCR. But be careful, Indian Finance Ministers are so bad that they will impose tax in retrospective as they have done for pure construction companies.