Thursday, 18 January 2018

JSW highest bidder for Binani Cement

While the bids were revealed to the committee of creditors two days ago, banks will take a final call on the winner in the coming days



MUMBAI: Sajjan Jindal’s JSW Group has emerged as the highest bidder for Binani Cement, exceeding submissions from billionaire Rakesh Jhunjhunwala and UltraTech, said three people familiar with the development. JSW’s bid is worth about Rs 5,900 crore, they said.

While the bids were revealed to the committee of creditors two days ago, banks will take a final call on the winner in the coming days. The lenders have appointed consulting firm Alvarez & Marsal to evaluate bids. Bankers are confident Binani is one asset that they won’t lose money on.

ET reported on January 16 that cement makers such as UltraTech, Heidelberg, JSW Group, Dalmia Bharat and Ramco Cements besides Jhunjhunwala had made proposals to acquire assets of the debtridden company. Dalmia Bharat partnered billionaire Ajay Piramal to bid, while JSW submitted its proposal jointly with a private equity firm and Ramco Cement tied up with PE fund True North.
‘No Haircut’

“We have received several bids ranging from Rs 4,500 to a little less than Rs 6,000 crore, which is enthusing,” said a bank official. “I always maintained that we won’t have to take a haircut on this transaction. We will have to study these proposals very carefully to see which the best fit is.”

JSW declined to comment on the matter.

Parth Jindal, JSW Cement managing director, told ET earlier this week that the group would “aggressively bid for stressed assets in cement, steel, and power that are undergoing bankruptcy proceedings”.

Lenders have made a claim of Rs 3,884 crore on the company. This includes loans acquired by Edelweiss Asset Reconstruction Co from banks and dues to State Bank of India, Canara Bank and Bank of Baroda. Apart from this, the company also faces claims of Rs 2,429 crore from IDBI Bank and SBI in the form of corporate guarantees.

JSW Cement is looking to increase production capacity in West Bengal to 3.6 million tonnes (mt) per year, up from the current 2.4 mt at an estimated investment of Rs 300 crore. The company has already invested close to Rs 800 crore in a 2.4 mt grinding plant at Salboni in West Bengal. It will also invest close to Rs Rs 100 crore for setting up an 18 MW captive power plant. Binani Cement has a production capacity of close to 11mt, of which nearly 6 mt is in India. It has a grinding unit in Dubai and a plant in China.

Bank of Baroda had referred Binani Cement to the National Company Law Tribunal (NCLT) in July, after the unlisted subsidiary of Binani Industries failed to repay a Rs 97-crore loan to the lender. Bank of Baroda then appointed Vijaykumar V Iyer as the resolution professional. Originally, the resolution professional set December 22 as the last day for submitting a binding bid for the company, but this was extended to January 15 following requests from companies that had shown interest in the assets. In November, as many as 15 companies, including some international players like France’s Lafarge and Dublin-based CRH, had submitted expressions of interest for Binani.



Friday, 12 January 2018

SC stays ban on sand mining in Rajasthan; housing projects remain in limbo

The ban has not only impacted the private housing sector but also delayed the deadline of several of state government’s ambitious projects



JAIPUR: Infrastructure and private housing projects in the state worth approximately Rs 10,000 crore would continue to remain stalled for nearly one-and-half months more after Supreme Court did not provide relief to the state government.

The ban has not only impacted the private housing sector but also delayed the deadline of several of state government’s ambitious projects.This situation is expected to be grimmer due to interrupted supply of sand (bajri) for minimum of two months.

Uptight over the situation to complete projects on stipulated time after coming in the Real Estate (Regulation and Development) Act ambit, the developers have already approached tothe urban development and housing (UDH) minister Srichand Kriplani. However, continuous delay is affecting the project cost.

“Bajri is most essential requirement for construction. In absence of availability, construction of projects are on hold. Though we have apprised the UDH minister about the situation and demanded time relaxation, our project cost is increasing due to delay,” said Shaleen Singh, a private developer.

Other than developers, unavailability of bajri for construction is also posing serious problems for thousands of labourers, workers and consumers. Some developers added that nearly 5 lakh labourers, including migrant labourers depend on construction and allied industries. “There is no demand for labourers coming from villages for the past two months,” said Ratan Singh, a small businessman associated with construction industry.

The dramatic drop in construction activities after the ban is also having a cascading effect on other related businesses. “Just after the ban, business has gone down by 85% as there are few buyers for bricks, cement and other material required for construction,” said Abhishek Sharma, associated with the construction business.

The ban has also raised concern for civic body officials as many development projects in the city are being choked and are racing against time to meet the deadline. Currently, projects like Metro Phase I(B), affordable housing scheme, elevated road (Ambedkar Circle to Sodala) and rejuvenation of Dravyawati River are underway.

A senior JDA engineer said, “As there is no supply of sand, construction work cannot be taken up further. Approximately 1,200 cubic metres of sand is required every day for infrastructure projects,” he said.

After the Supreme Court ban, officials are a concerned lot as there is no reliable and tested alternative.




Monday, 8 January 2018

No possession date, no RERA relief, rules MahaRERA

Home buyer Prem Chand had booked flat 203 in SD-1one of the 16 eight- storeyed buildings in Indiabulls Savoli Golf City project located off Khalapur toll naka on the Mumbai-Pune Expressway



Maharashtra Real EstateRegulatory Authority (MahaRERA) has dismissed a complaint from a home buyer against India Bull Real Estate Ltd for delayed possession ruling that since no possession date was given by the developer, RERA provisions do not come into play to provide any relief.

Home buyer Prem Chand had booked flat 203 in SD-1one of the 16 eight- storeyed buildings in Indiabulls Savoli Golf City project located off Khalapur toll naka on the Mumbai-Pune Expressway. In his complaint to MahaRERA, he said he had paid the booking amount of Rs two lakh on September 26, 2012, and paid another tranche of Rs 2.5 lakh to complete 15 per cent of the flat cost as agreed, while the rest of the 80 per cent finance for the flat was to come in the form of a home loan from Indiabulls Housing Finance Ltd. Since the developer had failed to give possession five years later, Prem Chand had sought refund of his investment with interest and compensation which works out to Rs 1.20 lakh.

During the hearing, the developer’s say was also recorded, and an opportunity was given to the home buyer to present any official document that showed the agreed date of possession. However, Chand could not produce either an agreement with the developer or any other document which indicated the agreed date of possession. Indiabulls, however, has mentioned July 1, 2017 as the original date of possession and revised it to February 28, 2019 while registering the project with MahaRERA.

“Section 18 of RERA Act comes into picture only when the promoter fails to complete or he is unable to give possession of the apartment in accordance with the terms of agreement for sale or duly completed by the date specified in the agreement. Here in this case, there is no document or any contention of the complaint showing the agreed date of possession…Therefore, in this circumstance, Section 18 is not applicable,” Kapadnis said in his order.

In a separate case concerning Shree Siddhivinayak Platinum Park project in Undri, Pune, Kapadnis asked the developer Ranjeet Developers to refund Rs 15.87 lakh and Rs 15.73 lakh to two home buyers with 10.15 per cent interest from the date of their payments for delayed possession. Home buyers Atul Deshpande, and Ravindra Patankar had booked flats E-6 and E-01respectively in Shree Siddhinayak Platinum Park project phase I with the promise that they would be given possession before September 30, 2015, but the developer had failed to give possession. The developer contended that the project was delayed because the mandatory environmental clearance certificate was delayed.

The developer also argued that the delay was beyond his control.

Upholding the right of the home buyers to get a refund of their investment, adjudicating officer Kapadnis observed that from the facts of the case, it is clear that the developer had agreed to deliver possession on or before September 30, 2015, and had failed to do so. He said till May 2012, the developer had only Non Agricultural land order from the Assistant Director of Town planning but the developer went on to collect money from the home buyers.

“When they did not have the approvals of the competent authority for making the construction or when they did not have the environmental clearance certificate, they were not entitled to recover any money from the allottee (home buyer) They were running their own risk and therefore only because some delay is caused for one reason or other for getting approvals, they cannot blame the system as such to seek exemption from the payment of interest,” his order said.





Wednesday, 3 January 2018

NHB pitches for lowering GST rate for affordable housing

The regulator is likely to push for lower GST rates for affordable housing category especially although the general category is also under consideration at an effective rate of 6%



MUMBAI: The housing finance companies’ regulator National Housing Bank is in talks with the authorities to lower the effective Goods & Services Tax (GST) rate from current 12% after factoring the lowering of land prices that could ease the tax burden and help in prop up residential sales, two persons familiar with the development said.

The regulator is likely to push for lower GST rates for affordable housing category especially although the general category is also under consideration at an effective rate of 6%. It is said to have written to finance ministry on the issue.

Realtors have also recently met finance and housing ministry officials to suggest a similar change in the current GST rate. At present, under-construction properties attract 18% GST and allow abatement of one-third of the apartment value towards land cost taking the effective tax rate to 12%.

“While several stakeholders have been requesting for lower GST rate for under-construction properties, NHB is of view that at least low-cost and affordable housing need to be given the benefit of lower rates,” said one of the persons cited above.

An email query to NHB seeking comments for the article remained unanswered until the publication of this report.

“Lowering GST would lead to improvement in demand for under-construction homes. However, the government will consider and review its revenue implications before any final call. It may also be possible that lowering of tax burden may result in excess credit in builder’s hand which would become a cost for them and ultimately homebuyers will have to bear it,” said Abhishek Jain, tax partner, EY India.

Realty developers said the reduction in GST would help in incentivizing end users to buy under construction properties. Most homebuyers are now giving preference to ready-to-move-in apartments to duck the tax.

“The government will earn more tax revenue if the rates are dropped to 6%. In this case, more buyers will come forward to buy under-construction properties than waiting for completed apartments that do not attract GST,” said Niranjan Hiranandani, CMD, Hiranandani Group.

Industry experts say the gap between tax rates for a ready property and an under-construction property has led to drop in demand for the latter. The GST rate for under construction properties is 12% while ready properties with completion certificate or occupation certificate do not attract GST.



Saturday, 23 December 2017

Retail realty investment share in tier II & III cities surpass metros

Apart from Mumbai, investment largely took place in cities such as Pune, Bangalore, Amritsar, Indore, Ahmedabad and Chandigarh, the firm said.



KOLKATA: Investments into retail real estate has gained momentum in tier II and tier III cities and accounts more than metros, according to property consultant firm JLL India.

"With retail assets becoming more lucrative, thanks to the impending launch of real estate investment trusts(REITs), the period between 2015 and Q3 2017 saw an astonishing 54 per cent of over USD 1.57 billion investments in retail real estate happening in tier II and III cities, well exceeding those in the metros," JLL India MD, retail services, Pankaj Renjhen said in a statement.

This includes entity-level deals, platform deals and acquisition of stakes in malls.

Some of the global private equity funds have been investing in the retail real estate sector to diversify their investment portfolios in India, Renjhen said.

Apart from Mumbai, investment largely took place in cities such as Pune, Bangalore, Amritsar, Indore, Ahmedabad and Chandigarh, the firm said.

Investment by PE funds in retail real estate assets will also bring a structured approach to leasing, leading to a more regular performance evaluation of brands within malls, it said.

As retail assets can become a part of the REIT portfolio, options for exits open up, which enhances the liquidity of such retail assets, JLL said.







Wednesday, 20 December 2017

CREDAI seeks government intervention to set up RERA tribunals

CREDAI further highlighted the necessity for the setting up of the tribunal to decrease the need and participation of the higher courts to facilitate matters between different parties



MUMBAI: Realty developers’ body Confederation of Real Estate Developers' Associations of India (CREDAI), through a letter to Hardeep Singh Puri, Minister for Housing and Urban Affairs, has sought the government’s intervention for setting up tribunals in all states across the country.

In the letter, CREDAI has underlined the disparity between states with regards to the implementation of the act with regions such as Maharashtra, albeit still lacking a tribunal, setting the benchmark while many states namely West Bengal still struggling with the process, CREDAI said in a release.

“We at CREDAI have extended our complete support in the implementation of the Real Estate Regulation and Development Act (RERA). However, to be able to further fulfil the purpose of the act, it is imperative that appropriate guidelines be established for the concerned authorities to set up the Real Estate Appellate Tribunal at the earliest,” said Jaxay Shah, President, CREDAI National.

CREDAI further highlighted the necessity for the setting up of the tribunal to decrease the need and participation of the higher courts to facilitate matters between different parties. Over 235 judgements have been delivered by the MahaRERA authority till date. Many of these cases are expected to reach the high court for a resolution which only goes to show the dire need of the mechanism of a RERA tribunal, the release said.



Thursday, 14 December 2017

Maharashtra govt officials to speed up realty projects

According to a circular, officials concerned will issue orders for commencement of building in less than 30 days, plinth certificates in seven days, occupation certificates in eight days, tree-felling permission in 45 days.



PUNE: State government officials will be held accountable for not clearing approvals of construction projects within the stipulated time frame.

The state urban development department (UDD), in a circular issued last week under the Right to Services Act for ease of doing business in the state, has the made government officials accountable for issuing approvals for construction projects as per the timeline set by the department in August circular.

According to the circular, officials concerned will issue orders for commencement of building in less than 30 days, plinth certificates in seven days, occupation certificates in eight days, tree-felling permission in 45 days. Permission for tree felling is issued under section 8 (4) of Maharashtra (urban areas) Protection and Preservation of Trees Act. Earlier, there was no deadline for issuing permission.

The UDD is one of the last remaining departments to set deadlines and designate officers responsible for meeting them under the Maharashtra Right to Public Services Act, 2015. Similar directives were issued under the Central government’s ease of doing business initiative, but state government officers were not held guilty for missing deadlines.

With the UDD issuing new rules to hasten approvals for construction, the realty sector is all set to benefit as earlier there was no time line for approvals. "It is a good initiative. But there is also a fear that officials might find small faults and delay the process,” stated Maharashtra CREDAI president Shantilal Kataria.

Consumer forums have been up in arms against developers for not meeting deadlines. Recently, a Pune-based consumer forum had even pointed out that while consumers had raised the issue with the Maharashtra Real Estate Regulatory Authority, it was issuing fresh deadlines.

However, CREDAI president Kataria said that the existing projects, which were stuck at various levels, will gain momentum due to these rules .