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March 8, 2011


 

Suspecting the use of black money to finance deals in the country¶s booming real estate sector, the Income Tax Department
is keeping close tabs on the sources of funding for developers¶ lucrative projects. ³The focus of the Income Tax Department
is real estate developers as the department has received many complaints of the involvement of black money in these deals.
There is a large amount of money involved in the sale and purchase of land and huge income is generated,´ a Finance
Ministry source told PTI.
Recently, a well-known Mumbai developer admitted to undisclosed income of Rs 200 crore. In addition, Rs 100 crore was
recovered from a Surat-based real estate company in a separate case.
Besides real estate, other sectors which are under the scanner of the Income Tax Department include mining, civil
construction, education, jewellery and manufacturing, the source added. In 2009-10 and 2010-11, the I-T Department
unearthed unaccounted income of over Rs 15,000 crore in its search and seizure operations.
In addition, around Rs 8,000 crore was detected by the Income Tax Department during surveillance of firms and individuals
that suppressed their income during these two financial years. ³In January, Rs 73.8 crore cash was seized by the
department in the survey operation, the highest-ever cash seizure in any month,´ it added. The Income Tax Department is
also keeping a close eye on ponzi financial schemes, where the money from new investors is used to pay existing investors.
³This is a new area which the Income Tax Department is tracking closely. Many such schemes are under the scanner of the
department,´ the source said. Recently, the I-T Department recovered Rs 300 crore of unaccounted money raised through
such schemes from Delhi and West Bengal-based commodity traders.



 

 

 



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March 7, 2011


 

Hotel Leelaventure is expecting to get about Rs 950 crore from sales of its non-core assets and in joint company ventures to
reduce the company¶s debt. At its board meeting in Mumbai, Hotel Leelaventure made this announcement.
The board has decided to sell major portion of the commercial office space in Chennai and to enter into joint development
agreements with reputed builders on company-owned land in Hyderabad and Bangalore for residential or commercial
development. It also decided to offer up to 14.95 per cent of its enhanced capital to prospective investors by issue of fresh
equity shares.





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March 8, 2011


 

At a time when Ahmedabad is aiming for World Heritage City status, the city has made a mark on the national real estate
scenario. For the first time in the history of Confederation of Real Estate Developers¶ Association of India (CREDAI), an
apex body of realtors, the city has got representation in the executive committee.
Jaxay Shah, promoter of Ahmedabad-based Savvy Infrastructure, has been elected as vice president in the recently-held
elections for 2011-13. The growing might of Ahmedabad can be judged by the fact that the city hosted the biennial elections
of CREDAI on Saturday, held outside Delhi for the first time.
Shah is also president of CREDAI¶s Gujarat chapter. During his tenure, he was instrumental in taking the activities of the
organisation to Vadodara, Surat, Rajkot and Vapi besides Ahmedabad. He has taken a lead in generating developers¶
interest in the heritage of the city.
Pradip Jain of Delhi-based Parsvnath Developers Ltd and Lalit Jain of Pune¶s Kumar Urban Development Limited were
elected as chairman and president of CREDAI, respectively. Apart from Shah, other vice presidents of different zones are
Dharmesh Jain of Nirmal Lifestyle, C Shekhar Reddy of Hyderabad-based CSR Estate Limited, Getamber Anand of Delhi-
based ATS infrastructure limited and Jaspal Oberoi of Jabalpur¶s Oberoi builders.
CREDAI represents over 5,000 developers through 20-member associations across the country. Nearly 100 developers,
including leading names like Irfan Razack of Prestige Group, Niranjan Hirananadani of Hiranandani Group, Rajni Ajmera of
Ajmera Group, Santosh Rungta of the Rungta Group, among others, attended the biennial meeting.


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March 7, 2011


 

Private equity investments in Indian companies declined 54 per cent to USD 324 million in February, over the same month a
year-ago. ³The second month of 2011 saw USD 324 million of private equity investments in Indian companies, 54 per cent
down from the investments of USD 699 million for the same month last year,´ according to a report by financial consultant
Four-S Services. Besides, the total number of deals announced in February 2011 was lower than that in the year-ago
period.
In February this year, 22 PE deals were announced, against 23 deals in the same month last year. The year 2011 has so far
witnessed investments worth USD 755 million, compared to USD 1.15 billion for the same period (January-February) last
year. In terms of investments, banking, financial services, insurance and real estate sector attracted maximum inflows,
during the month. The biggest deal of the month was Ratnakar Bank , which raised USD 158 million equity fund from the
country¶s largest mortgage lender HDFC Ltd and a consortium of private equity investors, including Beacon India Private
Equity Fund and Faering Capital , among others.
This was followed by a USD 44 million investment by Red Fort Capital in Ansal Properties¶ joint-venture to build a residential
project. In terms of sectors, banking, financial services, insurance sector topped the chart accounting for 50 per cent of
investments with a deal value of USD 162 million. Real estate occupied the second slot with USD 44.1 million (14 per cent)
worth investments in a single deal. Besides, infrastructure and food were other sectors accounting for 8 per cent of
investments each.






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March 7, 2011


 

The government plans to widen the definition of real estate in its foreign direct investment (FDI) policy to include consultants,
advisers , valuers and brokers, a move experts say could restrict entry of foreign players in these specialized services. The
department of industrial policy and promotion, or DIPP, has circulated a draft note for comments of various ministries on the
proposal.
³The idea is to explicitly state what all services does the definition (of real estate) cover,´ a government official privy to the
discussions said. The wider definition is likely to be included in the half-yearly update of FDI policy due to be released by the
end of this month. The current FDI policy lacks clarity on several issues, including what constitutes real estate. The policy
prohibits FDI in real estate business but allows 100% foreign investment in construction and housing development. In
construction and housing, the FDI is subject to several riders including a three-year lock-in period, minimum capitalisation of
$10 million for wholly-owned subsidiaries and $5 million in case of joint ventures.
The government hopes to clear the air by defining the scope of the real estate business. According to the proposal,
consultancy or advisory services related to locational space and property issues of any kind will be included in the real
estate business. Agents, advisers, brokers and consultants dealing with any facet of residential, commercial and industrial
property will also be included if they offer certain services. To preclude any chances of misinterpretation, the policy will
mention a comprehensive list of services.
The move follows queries received by the Foreign Investment Promotion Board and DIPP from foreign investors asking if
FDI was permitted in broking services in the realty sector. Experts, however, say the changes, if accepted, could make the
FDI policy more restrictive. ³This would be a retrograde measure particularly at a time when the country needs foreign direct
investment,´ said Akash Gupt, executive director at PwC. The proposal could affect even the existing players who largely
offer advisory services.
³It will have a dampening impact on the services sector as the lot of players who are waiting to tap the booming sector will
have problems entering the country´ said Anuj Puri, chairman and country head at real estate consultancy firm Jones Lang
LaSalle India.
Some of the players said the restrictions made no sense for service providers. ³We do not control liquidity in any way, nor do
we make investments in the sector,´ said Anurag Mathur, managing director at Cushman & Wakefield. ³We just offer our
advisory services to the sector.´


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March 4, 2011


 

Real estate developer, Brigade Group, plans to increase its exposure in commercial and retail developments. The company
has already commenced construction of some of these projects, and a few more are expected to be launched in the coming
months. ³Our exposure to commercial and retail is increasing, though residential projects still make up for 60 per cent of our
development,´ Viswa Prathap Desu, vice-president ² sales, Brigade Group, told Business Line.
Once completed, while residential projects are sold out, the other segments give opportunities to create assets and
capitalise in the future, he said. Going forward, these segments could go up further. The company will soon launch µBrigade
Rubix¶, a 2.2-lakh-sq.ft. retail and small offices project near Peenya. The project, to come up at a cost of about Rs 60 crore,
will offer µmodular¶ offices ranging from 1,300 to 15,000 sq ft. Another such smaller office project ² Brigade IRV Centre ² is
expected to be launched in Whitefield. ³We see a market for small offices in Whitefield,´ said Desu.
On the bigger World Trade Centre development, he said that over 2.5 lakh sq ft space has already been leased out. The
retail component of the project, the 8-lakh-sq ft Orion Mall, will be launched in July this year. ³With retail coming up soon and
IT manpower staying at the vicinity, we see a good uptake in the future,´ he added. The World Trade Centre has 1.1 million
sq ft of commercial space. The company is also planning another retail development in Banaswadi, for which construction
has already commenced, he pointed out. The 2.5-lakh-sq ft retail project would also have a four-screen multiplex, for which
the operator has not been finalised yet, said Desu.


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March 4, 2011


 

Realty firm Supertech today will invest Rs 600 crore to develop a 255 metre tall residential tower in Noida. The company will
offer a total of 1,326 housing units with prices of up to Rs 2.25 crore in the tower that it claims will be the tallest in North
India. ³The project, North Eye, will be the tallest in entire region with 60 floors and 255 metre height. We will invest Rs 600
crore to develop the project,´ Supertech chairman and managing director RK Arora told reporters.
Asked about the source of funding, Arora said it would be largely met through internal accruals and advances from
customers. The company is in talks with private equity players to raise funds. When asked at what prices the housing units
will be sold, Arora said: ³We will offer these for Rs 7,700 per sq ft. The prices will start from Rs 35 lakh and will go up to
about Rs 2.25 crore.´ The project will house 186 large flats and 1,140 studio apartments. While the sizes of the flats will vary
between 1,650 sq ft and 3,350 sq ft, the studio apartments will be constructed with a fixed floor size of 520 sq ft.
Arora said the company is targeting young professionals for studio apartments. Supertech will hire an operator to manage
the tower and is in talks with global hospitality brands such as Radisson and Marriott for this, he added. The National Capital
Region-based company is currently developing a number of projects across various cities such as Noida, Greater Noida,
Meerut and Moradabad.