Indian Real Properties

Real estate players expect to be back by 2015

2015-08-30T10:26:00.000+05:30

The S&P BSE Realty index rose 16% this year till December 10. Much of it was due to rise in stock markets as a whole as there was no improvement in fundamentals of real estate companies in this period.

The debt of the 29 listed real estate companies whose results were available till March 31 was Rs 35,979 crore in March-end compared to Rs 34,906 crore in March 2013. Their operating profit in the first half of the current financial year rose slightly to Rs 3,655 crore from Rs 3,402 crore in the same period last year.

Real estate investments also gave poor returns as prices remain subdued in most markets, especially in the residential space. The table, Counting Gains, shows 0-6% rise in prices in 10 markets (Ahmedabad, Bengaluru, Chennai, Hyderabad, Kolkata, Pune, Noida, Gurgaon, Bhiwadi and Mumbai) in the one year to September-end. The real returns were negative considering 6-9% consumer price inflation. For those who took loans, which cost 10-10.5% a year, to buy a house, the returns were worse.

Counting gains

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However, there are some positive signals as well. Inflation has been falling for the past one-two months and the Reserve Bank of India has hinted at cutting interest rates if the trend continues. The economy is showing signs of recovery. The government, too, has taken steps to support the real estate industry.

SITUATION GRIM

As far as returns are concerned, 2014 was not the best of years. Sales were poor and dragged down prices. "The key issue is low demand. Even though the sentiment is up, enquiries are not converting into sales. Builders are holding on from launching new projects," says Prashan Agarwal, co-founder, proptiger.com.

High inventories and low absorption rate (it tells how many months it will take for the inventory to be cleared given current monthly sales) indicate it will take time for things to pick up. As per data by Liases Foras, a Mumbai-based research firm, as on September, the number of months needed to clear the inventory in six major markets is 50. These markets are Bengaluru, Chennai, Hyderabad, Mumbai Metropolitan Region or MMR and Delhi-National Capital Region or Delhi-NCR. The situation is worst in Delhi-NCR, where the period is 83 months or seven years. The figure is 50 for MMR and Chennai. For Pune, it is 23.

Inventory pile-up

Even the festive season failed to push sales. Developers' schemes also do not seem to be working. These include those where buyers do not have to pay pre-EMI and construction-linked plans. For instance, Lodha Meridian in Hyderabad offered buyers gold vouchers up to Rs 4.5 lakh. Orris offered a Rs 500 per sq foot discount in its projects in New Gurgaon while Bestech offered a Rs 400 per sq foot discount in its Spa Next project on Golf Course Extension Road in Gurgaon. Four out of the six cities mentioned above saw sales fall year-on-year (y-o-y) in the July-September quarter, as per Liases Foras. Chennai saw the highest drop of 50%. The next was NCR, where sales fell 45%. The exception was MMR, where sales rose 30%, and Pune (65% rise). This is reflected in new launches, which fell 61% during the quarter. Another issue that has dampened buyer sentiment is project delays. As per Liases Foras, 60% projects that are marketable in Delhi-NCR have been delayed by at least one year.

POSITIVE DEVELOPMENTS

Owners of commercial properties were slightly better off in 2014 as fall in capital values increased rental yields. Experts say commercial properties are an attractive investment at this moment. Read Business Sense to know what is in store for the commercial sector in 2015.

POSITIVE DEVELOPMENTS

There were some positive developments in 2014 that would most likely bode well for the sector in the coming year. One, the election of a stable government boosted investor sentiment. Also, the government announced steps to bring relief to the sector. Here is what the sector can look forward to in 2015.

REITs become real: The government has notified the regulations for real estate investments trusts or REITs. These trusts will not only provide liquidity to developers but also enable easier exits. REITs work like mutual funds and invest in property. The income earned from these investments is distributed among unit holders.

The minimum investment for buying a unit of REIT will be Rs 2 lakh. They will not only ensure regular income to unit holders but also protect their rights with stringent regulations.

"REITs can make funding of real estate projects transparent. Some of the stringent measures proposed in the earlier version of REIT guidelines have been relaxed to make these instruments competitive globally," says Anuj Puri, chairman & country head, JLL India.

FDI rule relaxation: The government has reduced the minimum floor area required for foreign direct investment (FDI) in projects from 50,000 square metres (sq m) to 20,000 sq m. It has also reduced the minimum capital required from $10 million to $5 million, making more projects eligible for FDI. It has also done away with the three-year lock-in period for FDI.

"The elimination of the lock-in is the most notable modification. Annual private equity inflows, $1-1.5 billion per annum over the last few years, could double in the next two years due to this," says Ramesh Nair, COO, Business & International Director, JLL India.

Boost to affordable housing: High prices have made it difficult for most people to buy a house. To tackle this, the finance minister announced a "housing for all by 2022" plan in the 2014 Budget. To achieve this, he allocated Rs 4,000 crore to the National Housing Bank for increasing the flow of credit for affordable housing.

The government has also notified some changes in rules for affordable housing. Now, a project with 40% floor area ratio or floor space index for dwelling units with floor area of not more than 140 sq m will be considered an affordable housing project as against the earlier norm of 60% floor area ratio for dwelling units with floor area of not more than 60 sq m.

WHAT THE INDUSTRY DEMANDS

Although the government has shown an inclination to support the sector, a lot has to be done to bring growth back, say experts. "Two things must happen-new fuel must be injected by way of incentives and stimulus packages and hurdles to speed removed. While the new government has already shown willingness to support growth, the environment in which the sector continues to operate is still far from ideal," says Puri of JLL India.

"The sector needs big decisions related to interest rates, transparent approvals and a regulatory body to safeguard the interests of customers," says Ajay Aggarwal, managing director, Microtek Infrastructures.

Real Estate Regulation Bill: A house is usually a person's biggest investment. But buying it can be a nightmare as absence of regulations means the buyer is at the mercy of the developer. In case the developer does anything wrong, it is next to impossible for the buyer to seek redress. This has become worse as absence of a regulator and low entry barriers have led to a sharp increase in the number of developers.

"The sector continues its metamorphosis from unorganised to organised like its peers in developed economies," says RK Arora, chairman, Supertech Ltd.

The real estate regulation Bill seeks to change this by having provisions for strict punishments and penalties, which can go up to 5% cost of the project. It also has a provision for putting wrongdoers behind bars if they fail to abide by certain laws. The Bill also addresses issues such disclosure of the flat's exact area rather than the super area (built-up area plus common areas such as lobby, lifts shaft, stairs, etc). It also has provisions to ensure that the money raised for a project is not used for any other project. Also, the developer will be able to launch a project only after taking all clearances.

"Once appointed, the regulator will help the industry in two ways - it will instil confidence in buyers worried about malpractices as well as remove complexity in the approval process," says Agarwal of proptiger.com.

NCR market is the worst-hit

Single window clearances: The list of clearances required varies from state to state but the average number is 40. These delays cost developers as they pay 20-30%interest on loans taken to buy land. Even if a developer buys land from his own money, he can't start the project or market it properly without clearances. These delays add to the project cost. This is ultimately passed on to buyers. "Faster approvals will beef up supply, bring down prices," says Puri of JLL India.

SHOULD ONE BUY OR WAIT?

The improving economic conditions and measures introduced by the government give hope of recovery, say experts. But price cuts will be difficult as margins are already low, says Aggarwal of Microtek Infrastructures.

"The increase in input costs such as land, labour, cement, etc, means prices will definitely rise in the coming years and there is no possibility of a price correction in the years to come," says Arora of Supertech Ltd.

However, others believe that the price trend will depend upon the dynamics of individual cities. "Each city has own market drivers and not all locations perform uniformly. Basically, if a given city is seeing a lot of employment generation and, hence, demand for homes or offices, prices will rise. Some of the cities where this is being witnessed are Bengaluru, Pune, Hyderabad and Chennai," says Puri of JLL India.

Prices will also depend on inventory levels and sales.

Top investment destinations

Property bubble bursts as prices crash 20% in investor-driven markets

2015-08-29T16:15:00.001+05:30

Real estate prices in investor-driven markets such as UP's Noida, Navi Mumbai, Ludhiana, Chandigarh andGurgaon's Dwarka Manesar Expressway have seen more than 10 percent pricecorrection due to all-around liquidity squeeze, dearth of buyers and erosion of investor faith in the property market.

In areas like Ulwe outside Mumbai where massive housing projects are coming up or already constructed, prices have remained flat as apartments here are unsold or have been bought by investors hoping to flip it for easy profit. The same is true for highly speculative markets such as Noida and Ludhiana too where there is a dearth of genuine buyers and investors are looking to exit from projects.

Today's Economic Times notes that the first signs of a bubble bursting in this investor market are finally here as a 1,100 sq ft apartment in Noida Extension that cost around Rs 42 lakh a few months ago can today be bought for around Rs 37 lakh, while a 1,200 sq ft apartment can be had for Rs 77 lakh compared with Rs 86 lakh six months ago near Gurgaon's Dwarka Manesar Express.

Quoting property agents in Gurgaon and Delhi, the report saysbuilders today are willing to throw in 10 percent discount. With a little bit of push, they are even offering get 5-6% worth of freebies such as free furniture or ACs, free parking or top-notch flooring etc in these investor-driven markets.

Reuters

Apart from investor markets, property prices have plunged across 22 major cities, including Mumbai, Delhi, Bangalore, Chennai and Pune during the April-June quarter as developers battle with low sales and high inventory.

The National Housing Bank's Residex tracks movement in prices of residential properties on a quarterly basis. According to the index, during the period between April and June 2013 not only the tier I cities, but also the tier II cities witnessed a fall in prices.

" Investor-driven markets, especially in North India, are seeing a 20 percent correction in secondary sales as there is complete panic here since these apartments are not habitable. Developed areas, on the other hand, are seeing a price correction of around 10 percent in terms of discounts and freebies,"said Pankaj Kapoor, MD at real estate research firm Liasas Foras.

As Firstpost noted earlier, residential property in Kochi declined by 3.37%, Patna-3.29%, Coimbatore 3.26%, Ahmedabad 3.13%, Faridabad 2.42%, Chennai 2.26%, Jaipur 1.79%, Delhi 1.49% and Bhopal 1.30% during the June quarter.

And if you were to look at the sales figures, the reality is even more grim.

Data from property research firm Liasas Foras shows Mumbai saw the maximum inventory of unsold homes at 155.27 million square feet or 48 months of unsold inventory during the first quarter of FY14.For NCR, the inventory has more than doubled to 31 months in the first quarter of FY14, while for Mumbai it has risen from 17 months to 40 months.

Inventory denotes the number of months required to clear the stock at the existing absorption rate.

An ideal scenario implies inventory should be in the range of eight to 10 months. But Mumbai would take four years to sell these homes despite a slew of discount schemes, new launches and back-room negotiations.

Even Cushman & Wakefield suggests that more than 30% of houses under construction in Mumbai are priced at more than Rs 1 crore.

"The quarter April-June was subuded for the real estate market and possibly one of the worst quarters in terms of sales across cities. A combination of discounts and flexible pricing is keeping up the sales in the past few months," noted Pankaj Kapoor of Liases Foras.

Clearly an artificial price rise has been created to accommodate investors at each stage of construction, which is no longer sustainable. Oversupply and overpricing have reached a point that has made it inevitable for the prices to soften.

"More than 40 percent of the buyers in Mumbai's property market are investors. Noida is even worse and akin to a ghost town. Today, all investors are are looking to cash out as more appreciation is just not possible. But their money is stuck since there are no genuine buyers at this price point and the rupee has tanked to 65 against the dollar from 43-45 when these investments were made," an industry veteran told Firstpost on condition of anonymity.

In other words, with a depreciating rupee and high inflation,the cost of money has gone up and the chances of making money in the short-term are not very bright, which is why investors are no longer ready to pump in money.

And with 2013 marking the exit of private equity, a distress sale in the real estate industry cannot be ruled out.

Expecting an endgame to speculative real estate prices, Manish Bhandari of Vallum Capital in a recent report titled 'Valuenomics" says a 'large increase in asset price is followed by a higher demand, as investors think that further increases in prices will follow. This "super-exponential" acceleration in prices due to a positive feedback (or "pro-cyclicality") leads to formation and then maturation of a bubble, which has happened in case of the Real Estate prices in India.'

He expectsa price correction of more than 40% and thereafter time correction for another four to five years as during this period banks are likely to deleverage their balance sheet, stomped by losses, while investors will shy away from further investments and genuine buyers would emerge to clear excess inventory.

"The previous deleveraging cycle in 1997-2003 saw real estate prices correct by 50 per cent in Mumbai Metro Region. Add to that the likely exit of PE players. ..Unless government deflates the housing bubble in orderly manner; the aftermath and reverberating effect of collapse by market mechanism will surprise a generations on how a nation was making its way to prosperity by speculating on a piece of land and eventually lost a fortune," adds Bhandari.

As many as 55,000 home buyers will benefit from the central government's move on Tuesday to reduce the area of the eco-sensitive zone (ESZ) around the Okhla Bird Sanctuary

2015-08-29T16:10:00.003+05:30

As many as 55,000 home buyers will benefit from the central government's move on Tuesday to reduce the area of the eco-sensitive zone (ESZ) around the Okhla Bird Sanctuary, leading real estate developers said.

Source - http://www.businesstoday.in/

The Union environment ministry's notification in 2014 that has now been cleared says that the ESZ will be the area up to 100 metres from the eastern, western and southern boundary and up to 1.27 kilometres from the northern boundary of the Okhla Bird Sanctuary. The ministry will come out with a final notification within a week, thus giving relief to home buyers in and around the area.

Once the notification is issued, the government will allow the home buyers outside the ESZ to get occupancy certificates of their flats. This had been pending for quite some time as the National Green Tribunal (NGT) had passed an order barring development of any infrastructure within 10-km radius from the sanctuary's boundary. "It's very good news for 55,000 buyers whose homes were ready but they could not occupy it," CREDAI President Getamber Anand said when asked about his reaction on the government's decision.

He said about one lakh homes are currently being developed in this region. The development would send a positive signal to Noida-Greater Noida property market and boost housing demand. Commenting on the same, Supertech Ltd Chairman RK Arora said, "The MoEF decision to notify certain areas as eco-sensitive zone around Okhla Bird Sanctuary is a welcome move. The decision will enable the allottees of flats in completed projects to get possession and developers to complete the projects."

The notification will also boost the sentiments of buyers which will "ultimately help the real estate market to boom", he added. The announcement by Union Environment Minister Prakash Javadekar came on a day the NGT directed the Ministry of Environment and Forests (MoEF) to issue within three weeks the final notification on ESZ around the sanctuary.

Javadekar, after chairing the meeting of the National Board of Wildlife (NBWL), said, "We (ministry) had to come up with a justifiable demarcation (after the NGT order). After completing all those exercises, a draft notification was issued. Within 60 days, there was no major objection...so it was ready. But the final notification was not done because NGT had said it specifically needed the consultation of NBWL for this case. We did the consultation today. The ESZ whose draft notification was done (earlier) after due diligence has been found to be correct..."

2012-12-18T21:01:00.001+05:30

Good new to all people in coorg Taj Group opens its 1st hill station hotel in Coorg

Taj Hotels & Resorts' Monday announced opening of its first hill station hotel in Coorg, about 247 km from here.

This is the 25th property of the Taj group to be opened under the new brand launched in 2010, it said, adding it's situated at an altitude of 4,000 ft within 180 acres of sub-tropical rainforest.

Raymond N Bickson, MD & CEO, Indian Hotels Company Ltd, said: "Vivanta by Taj” Madikeri, Coorg is Taj Group's first hill station hotel.

"The hotel offers unique experiences like earth craft, adventure trails and survival training, a Coorg conservatory and destination cued dining and cultural motifs."

DLF reachs

2012-12-17T22:42:00.001+05:30

The office rental income of DLF reachs to Rs 2,500 cr by FY15

NEW DELHI: Real estate major DLF today said it expects 20 per cent annual growth in office rental income that would touch Rs 2,500 crore by 2014-15 fiscal with likely appreciation in rent value and new leasing.

DLF earned an office rental income of about Rs 1,500 crore in 2011-12 fiscal. It currently has Grade 'A' office leasing portfolio of 27 million sq ft, of which 15 million sq ft is in Gurgaon and rest is in the National Capital, Chennai, Hyderabad, Kolkata, Pune and Chandigarh.

"Our office leasing business is growing by 20 per cent year-on-year. We expect that our rental income will reach Rs 2,500 crore by the end of 2014-15 fiscal," DLF National Director (Office Business) Amit Grover told PTI.

The growth would come from expected rise in rental value and increase in size of office leasing portfolio to 33 million sq ft over the next three years from the current 27 million sq ft, he added.

The country's largest realty firm has a debt of Rs 21,200 crore and the company has recently said that it targeting to reduce it to Rs 18,000 crore by the end of this fiscal from sale of two big non-core businesses -- luxury hospitality chain Amanresorts and wind energy.

Going forward, the company has plans to cut debt to below Rs 15,000 crore level so that the finance cost gets covered by its rental income.

Elaborating more on the office leasing business, Grover noted that rents of DLF office space has increased despite slowdown in commercial real estate business. He cited example of Gurgaon where the rentals of its office spaces have risen by 15 per cent in the last one year.

"We provide Grade 'A' office space with value-added services like safety and infrastructure. Therefore, we have an advantage," he explained.

DLF has been adding about 2 million sq ft of office stock every year. It expects that demand for its office space would largely come from MNCs and big domestic companies.

"There is growth coming from large sets of existing corporate clients, which are roughly 750 in number and include Accenture, IBM, Google, Cognizant, TCS, Barclays, Citi and GE," Grover said, adding that the company is adding to this client list with the growth in outsourcing business.

DLF has developed 128 acre integrated business district like DLF Cybercity in Gurgaon. The company is putting lot of focus on developing infrastructure in Gurgaon, which is a key market for the company.

"We are developing 16-lane toll free road, multi-level car parking, fire station and captive power plant in Gurgaon," Grover said. From The Economics Times

NBCC is planning

2012-12-17T22:38:00.000+05:30

NBCC is planning to undertake the Union urban development ministry

Since its inception in 1960, the National Buildings Construction Corporation (NBCC) Limited, a government undertaking under the Union urban development ministry has been providing project management consultancy services for construction projects, civil infrastructure for power sector and real estate development. Vishnu P Das, chairman-cum-managing director talks to Moushumi Das

Gupta on NBCC's future plans:

NBCC launched its first initial public offering (IPO) in March this year. What has the response been like? Do they have plans to launch follow-on public offer (FPO)?
Consequent upon the decision taken by the government to disinvest 10% of its equity, NBCC launched its initial public offering (IPO) in the month of March, 2012.
Bid opened for public on March 22, 2012 and closed on March 27, 2012. The price band decided was Rs.90.00 to Rs.106. Offer price fixed was Rs.106 per equity share.

The issue was over-subscribed by 4.93 times.

Regarding the launch of follow-on public offer (FPOs, the decision is to be taken by the government since it involves further disinvestment of its equity in the company.
NBCC is slowly but steadily increasing its presence in the real estate sector. Is it part of a conscious policy shift?

NBCC's business model includes Project Management Consultancy, competitive participation in infrastructure works and
real estate. Project Management Consultancy constitutes 90% of our business turnover. Thus, it is important that NBCC continues to strengthen its presence in the PMC sector.

However, NBCC has exposure in real estate sector as well. And, we continue to work in this particular segment. There is no shift in policy as such that NBCC shall become a major player in real estate.

Can you elaborate on some of the recent as well as upcoming real estate projects that NBCC has undertaken/plans to undertake?

We have a residential project going on in Gurgaon Sectors 89 and 37-D; here the construction is in progress and sale has already been launched.

We have also put our commercial projects at Okhla and Kolkata's Hemanta Basu Sarani area, for sale.

The other upcoming projects of NBCC are in Alwar (Rajasthan), Lucknow (UP) and Patna (Bihar). Besides, NBCC continues to participate in auctions undertaken by the Government.In fact, recently, we have procured 3 acres land in Meerut (UP) and 4 acres in Ghaziabad (UP).

As on date, what is NBCC's total land bank?

We have a total land bank of around 130 acres and at least more than 50% of land is in developing stage.

NBCC has undertaken over a dozen infrastructure projects in the overseas market. Are some new overseas projects on the anvil?NBCC has earlier completed its overseas projects in countries like Iraq, Libya, Nepal, Yemen, Maldives, Mauritius, Turkey and Botswana.At present, we are working for the Maldivian government where we are constructing a hotel and a police academy.

What is the status of the redevelopment project of government houses in Delhi undertaken by NBCC?

We are strongly following up the projects of Kidwai Nagar (East) which accommodates a total number of 4700 dwelling units.

The project is at approval stage with various statutory authorities.Also, there are various re-development projects which are at the "consideration stage" by the government and the same is being followed up from our end as well.

Billionaires like Adani, Tata essential for country's success

2011-07-29T08:42:00.000+05:30

MUNDRA: On a recent wind-whipped morning, a steel-hulled behemoth arrived at a desolate stretch of India's western coast groaning with enough coal to power a city of 1 million people for more than two weeks.

The ship, the Vanshi, was carrying coal from Indonesia, a two-week trip across the Indian Ocean. India has its own abundant reserves of coal, which raises a question: Why did India need to go so far to get something it already had?

For Gautam Adani, the power mogul, the answer was simple: The easiest and most profitable way to meet India's rising demand for electricity is to avoid the hassles, divisive political confrontations and practical inefficiencies of India. In the spirit of the workaround ethos typical of India's private sector, Adani is working around the subcontinent itself.

He owns the Indonesian coal mine, the Korean-made cargo ship (named for his niece Vanshi), the Indian power plant and, most important, the private Mundra port. He owns coal mines and a major port in Australia, and has built his own private railroad spur in India. His business plan is to do as much as possible without relying on the creaky infrastructure of the Indian state.

"He is able to do so well partly because he is very entrepreneurial and has found the right opportunity," said Eswar Prasad, an economic adviser to India's finance minister. "But it's a symptom of a dysfunctional state. He is able to deliver something more effectively than the state."

Today, India is increasingly turning to the private sector to deliver the electricity needed to maintain rapid economic growth into the future. India's economy is growing at more than 8 percent annually, but is badly constrained by an inadequate power supply after years in which the government dominated the power sector and failed to keep up with growing demand.

The rise of Adani attests to a broader shift, as the private sector is playing a greater role in areas once controlled by the state such as telecommunications, ports, airports, banks and infrastructure. At a global level, this contrasts sharply with China, where huge state-owned enterprises dominate strategic industries and lead the country's global expansion. Adani recently had to outbid the Chinese for his Australian port.

Within India, though, the success of private tycoons has created a paradox: India's moguls are essential to the country's success and admired for their ability to get results. Yet their staggering wealth is made possible in part by their coziness with powerful politicians who help arrange environmental clearances, land use rights and other thorny issues. That raises accusations of crony capitalism.

India in the 21st century is now often compared to the United States during the Gilded Age of the late 19th century, when robber barons dominated the U.S. economy. The country has 55 billionaires whose aggregate wealth of $250 billion is equivalent to almost a sixthof the nation's annual economic output.

"No question, there is an oligarchy developing that has an enormous amount of influence," said Arvind Subramanian, an economic adviser to the government of India. "That is a matter of great concern. But in India, these are also the guys who are performing. In some cases, they may be gaming the system, but they are also performing despite how bad the system is."

Alarm bells ring over gaping holes in airport security at IGI airport (Indira Gandhi International)

2011-07-29T08:28:00.000+05:30

NEW DELHI: In light of the several security threats aimed atIGI Airport,Delhi Police has revealed that it carried out a security audit of the airport cityside and submitted a report to both bureau of civil aviation security and airport managementDelhi International Airport (P) Ltd (DIAL). But several months after the audit, most of the problems highlighted in the report have not been addressed.

Officials have raised concerns about the role ofDIAL in issuing airport entry passes. "DIAL is a private agency and while it is developing and running the airport, its role in security-related issues is highly questionable. Earlier, only BCAS or Delhi Police issued temporary passes and in case of an untoward incident responsibilities need to be fixed," said an official.

On the issue of the multi-level car park, police have pointed out that all vehicles entering the building are not being manually checked and electronic equipment needs to be in place to ensure checking of all vehicles. "Advance scanning systems, along with monitors, should be installed at the car parking. Till such time that the equipment is in place, manual checking should be made stringent," said officials.

Police have also highlighted the cargo terminal as an important grey area from the point of view of security. The letter said that arrival and departure of cargo must be scanned using mobile X-ray inspection system.

To secure the tunnel road that runs under the main runway, police suggested that two small porta-cabins be set up at either end of the tunnel forCISF personnel. "The 400-m long tunnel already has CCTVs but because of the location of the main runway, it is important that the area is not just monitored but also secured. For this, it would be advisable for CISF guards to be stationed there," said an official. Police have also asked for a helpdesk at the waiting halls inside terminals, claiming that several thefts are reported in the media but very few are reported to it.

Several proposals to enhance security coverage through CCTVs have also been submitted. Pointing out that positioning of CCTVs on the cityside is not conducive to monitoring vehicular movement in and around the airport, it has asked for coverage on all approach roads to the terminals. This is the one proposal where DIAL has taken action and is in the process of finalizing a proposal. Police also said that contrary to international standards, DIAL stores CCTV footage for only a week. The cops said it should be retained for at least a month to help solve cases.

Tata Looking Forward to Construct the World’s Most Cheapest Home

2011-07-29T08:22:00.000+05:30

Tata is all set to try its hand in constructing the world’s cheapest house worth 500 Euros, named as ‘Euro 500 Home’. After launching the world’s cheapest car Nano, the company is looking forward to build a house in 20 square meters which will cost only 32,000 rupees.

The project being examined in West Bengal, is an idea pioneered by a group of 15 people from Tata Steel's Indian and European units. The project is claimed to be less expensive than Tata’s own project of ‘Nano Homes’, worth $7800, was specially being designed to provide shelter to the people who had shifted to the urban areas leaving behind their rural areas.

As per Sumitesh Das, Head of Tata Steel's Global Research Programme, "We have already prepared 2-3 different designs based on discussions with users and are gathering more feedback. Hopefully, in the next 6-8 months we should be able to roll it out in the market nationally”.

The company aimed to produce a plan of house which amounted less than 40,000 rupees per house, so that people from rural areas were capable to pay out the cost of the house. Along with the 20 square meter house, the company was also designing another 30 square meter housings, which will cost up to 700 Euros.

Rise and Fall in Indian Property prices

2011-07-29T08:19:00.000+05:30

According to the latest data released by the National Housing Bank (NHB), during the first quarter of 2011, in all over India, the prices for property have been dropped from 20.63% to 17.6%.

During the same period, five more cities have shown a marginal change inproperty prices. Among these, three have shown an increase in property rates; this has increased to 5% from 2.6%.

NHB’s residential housing price index data, which is also known as Residex for the first quarterof the calendar is always considered as a comparative study with the previous year’s quarter.According to this NHB Residex, upon analyzing year-on-year data, it has been found that in last one year, the property prices in all 15 cities that counts under NHB Residex have increased to a great extent.

According to the reports of NHB Residex, when property prices of July to September 2010 were compared to those prevailing during October to December 2010, then out of 15 cities 13 had increased property prices. In the remaining two cities, prices were either almost same else they were dropped marginally.

Property market has always been uncertain and therefore when NHB chairman was asked about the possible range of property price correction in the coming months, then he refused to provide a figure and said, “We can’t hazard any guess on property price correction as it may impact the market. There are blips in the property market”.

Real Estate Companies will soon Reconsider Capital Raising Plans

2010-12-01T12:11:00.000+05:30

With real estate and financial services stocks battered on Dalal Street, several companies have been forced to review their capital-raising plans. At least one public sector bank, which was working on sale of shares to institutional investors, has put its plans on hold till sentiment improves.

But the worst hit would be real estate players, several of whom had lined up initial public offers (IPOs). The list included Emaar MGF, which had deferred its issue earlier, Embassy Projects and Lavasa Corp that has also received a showcase notice from the environment ministry. Raheja Universal, BPTP, Ambience, Lodha Developers and Kumar Universal were also planning share sales.

“The current controversy has adversely affected investor sentiment for certain sectors and until things settle down, investors are likely to be cautious,” said Pratik Gupta, head of equities at Deutsche Bank. JP Morgan India investment banking head Rohit Chatterjee said in the short term, investors are likely to stay away from finance and realty stocks. Drugmaker Claris Lifesciences, which was in the market to raise Rs 300 crore, had to lower the price band to Rs 228-235 from the earlier Rs 278-293 in view of the choppy markets. Poor response also forced the company to extend the issue closing date, originally scheduled to end on Friday, to December 2.

Investor worry was in evidence on Friday with the BSE Sensex closing 184 points down at 19,136, led by a 4.68% decline in real estate stocks. This is the lowest closing level in 11 weeks. During the day, the Sensex dropped below the 19,000-mark as investors were worried about the future of the sector and tightening of lending to realty companies.

The fall was led by Unitech, which is also under the lens in the 2G telecom scam, declining by 4.8%, while DLF, the country’s largest real estate developer, recouped most of the losses and closed 1.7% down. Shares of Hindustan Construction, the promoter of Lavasa, crashed 19%.

In the afternoon, financial services secretary R Gopalan tried to play down the fears saying there was no directive to cut down lending. During the week, the Sensex declined by 2.3% with the loan probe by CBI affecting sentiment since Wednesday. Among the financial services companies under the CBI scanner, LIC Housing Finance closed 12% lower at Rs 931.15, while Central Bank dropped 10% to close at Rs 188.40. Investment bankers said the overall India story remained intact but appetite for real estate and banking stocks had taken a hit. This was apparent in the widening of spreads on credit default swaps for Indian stocks seeing the biggest jump since June. An increase in the spreads indicates that global investors are worried about the prospects of Indian stocks.

“Overseas institutional investors are very worried. There main fear is about the possibility of more murkiness in the real estate sector,” a senior executive at a leading foreign bank said. Bankers said the inability of developers to tap the stock market could affect them severely as banks are expected to tighten flow of loans to the sector. Even before the scandal broke out, RBI had tightened norms for lending to the sector fearing that a bubble was building up. “There may be some cash flow problems for some of the companies in the short term given that IPOs are tough and banks are tightening lending norms,” said a banker.

CREDAI (Confederation of Real Estate Developers' Associations of India) fears Drastic Reduction in Credit because of Housing Scam

2010-12-01T12:07:00.000+05:30

The Confederation of Real Estate Developers’ Association of India has said that “painting” the ‘loan-for-bribe’ as a scam, would lead to drastic reduction in credit for real estate companies. Bankers would become extremely wary and hesitant to lend to realtors and given the shortage of housing, it would be detrimental to both customers and homebuyers, said Mr Lalit Kumar Jain, Vice-President, CREDAI.

Mr Jain said the association is writing to the Reserve Bank of India asking it to direct banks to accept or reject developer applications within a certain timeframe — a month or so — and whether their loan applications are acceptable or not. On the scam, he said stray incidents should not be generalized. Advances made to real estate sector were secure as banks insisted on the personal guarantee of the developer, besides collateral security which was invariably 1.5 to three times the loan amount.

Mr Jain said it should also be understood that availing of liaison services of merchant or investment bankers by developers was routine, while adding that association condemned “all acts of facilitation” for loans. On reports doing the rounds that Kumar Urban Development (earlier Kumar Builders) was among the names on the CBI list, Mr Jain, who is also the Chairman and Managing Director of Kumar Urban, said his company was in no way involved in the issue.

HCC, in a statement said, “Money Matters Financial Services is associated with our companies on a fee based arrangement where they act as an agent for selling our properties. “In our companies we work with several firms for raising funds and all our transactions are completely transparent and through cheque payments. Money Matters was one of the advisors during the sale of HCC Real Estate-developed 247 Park at Mumbai. HCC Real Estate paid a fee of less than one per cent to Money Matters for coordinating the deal.

“Similarly, in the case of Lavasa, Money Matters is associated with the company on commission or brokerage basis, to the tune of 1-2 percent of the value of the transaction.” Oberoi Realty, reacting to reports of involvement in the loan scam, said it was a zero debt company. The company (including its SPVs) has no debt from any bank or financial institution for the last two years. It had not taken any loan from LIC, LIC Housing Finance, Bank of India, Central Bank of India and Punjab National Bank. Moreover, Oberoi Realty had never dealt with Money Matters for any transaction whatsoever, the company spokesperson said.

The Sigrun Group, a listed entity, also denied all reports associating it with the scam. The Sigrun Holdings, its subsidiary companies and group companies have not availed of any credit facilities from LIC or LIC Housing Finance or any other public sector bank. Further, it has no business relationship with Money Matters Financial Services, the group said.

Badarpur Flyover Changes the face of Faridabad Property Prices by 40%

2010-12-01T11:45:00.000+05:30

Over the past six months badarpur flyover changes the face of Faridabad, Faridabad has been witnessing a quiet revolution. Real estate prices, which had plummeted post 2008 and then platitude at Rs 20,000-25,000 per square yard last year, have suddenly shot up by 30-40%. Reason — the coming up of the Badarpur flyover.

Pradeep Mishra, a real estate analyst, said, ”The realty market reflects the sentiments of the investors. Over the past six-eight months, there’s been a very positive sentiment about Faridabad because of the expected opening of the flyover.” With the Metro also scheduled to come up anytime soon, realty experts say that Faridabad is looking at a booming realty scenario. Added Mishra, ”These prices will be going up by another 10-15% over the next few months.”

Residents agree. Virendra Chanda, a resident of sector 8 who also owns a business in sector 15, said, ”The fact is that the image of Faridabad is changing with the opening of the flyover. Coming here and setting up a business is no longer implausible because of the Badarpur bottleneck.” With the increased connectivity, Chanda hopes that not only will it be easier to go to Delhi, residents of the capital will also be coming down to Faridabad. Nitin Deol, a small-time entrepreneur, said, ”When big malls and cinema complexes open here, footfalls from Delhi and Noida will also be contributing to the economy.”

The feel-good realty market certainly seems to suggest so. Experts say that rates have gone up not only in the main Faridabad sectors but also in peripheral areas. Mishra added, ”The 4.4-km flyover is a boon for Faridabad as it will benefit not only nearby areas, but also Sector 37, Ashoka Enclave, Greenfield Colony, Sectors 45, 46, 21A, B, C and D, 28, 19, 30 and Sector 31 as well. In fact, after the Metro becomes operational the maximum effect will be felt here.” The impact is already visible. Rates in sectors 21A, B, C and D, which were earlier between Rs 36-38,000 per square yard, are now between Rs 50-60,000. In sectors 30 and 31, the figure is now between Rs 45-50,000 per square yard.

In sectors 21 and 19 — where most apartment complexes are located — the rates have gone up from Rs 3,500 per square feet to Rs 4,500. Realty experts say across the Canal area specially, sector 77-89 are expected to come up in a big way.

Booming Real Estate In INDIA

2010-12-01T11:38:00.000+05:30

Indian Real Estate seems to be no limit just like an open SKY. With property boom spreading in all directions, real estate in India is touching new unexpected target.

Flying high on the wings of booming real estate, property in India has become a dream for every potential investor as well as funders looking forward to dig profits out in real estate, so big Real Estate giants are playing big shots. Definitely, the first step on the way to investment is to study the current trends.

With the unaudited consolidated financial results for the Q2 FY11 (Second Quarter – Financial Year 2010-11) released for the real estate players such as DLF, Jaypee Infratech, Unitech, Ansal API, Raheja Developers, it seems real estate major DLF Group with a 62 year track record seems to have taken clear lead among all other players in this segment.

This quarter, revenues and profits of DLF group soared high in the real estate market with consolidated revenues increased to Rs 2,520 crores in Q2 from Rs 2,161 crores in the previous quarter. While, the consolidated revenues for H1 for this fiscal year was up by 32% to 4681 crores compared to the H1 in the previous year. The Earnings Per Share this quarter was Rs 2.46 and Rs 4.88 for the first half of this fiscal year. The Earnings before Interest, Taxes, Depreciation & Amortization (EBITDA) was Rs 1,080 crores for Q2 and Rs 2,192 crores for H1. Rs 418 crore was grossed as Net Profit for last quarter and Rs 829 crores for the first half of this fiscal year.

Unitech recorded Year-Over-Year growth of 41.27% in the revenues for the first half of this fiscal year amounting to Rs 1518.9 crores and Net Profit being Rs 353.80 Crores up by 5.41% compared to previous fiscal. Earnings per Share (EPS) for the half year stood at Rs 1.52.

The revenues for the quarter ending on 30th September 2010 were Rs. 674.92 crores and net profit for the same period was Rs. 173.76 crores. And, the Earning per Share (EPS) was Rs 2 along with Earnings Before Interest, Taxes, Depreciation & Amortization (EBITDA) being Rs 166.9 Crores.

Jaypee Infratech recorded growth of 2794.5 % in total revenue being Rs 711.48 crores and Net profit equal to Rs 411.67 crores with growth of 1971.8% in the second quarter of 2010-11. The Earnings Per Share this quarter was Rs 2.96 and Earnings Before Interest, Taxes, Depreciation & Amortization (EBITDA) was Rs 516.33 crores.

Realty firm ANSAL Properties and Infrastructure Ltd reported decline of 23% in its Net Profit to Rs 22.76 crores while, the revenues rose by 71% to Rs 330.05 crores compared to that of Q2 FY10. The Earnings Per Share this quarter was Rs 1.78 and Earnings Before Interest, Taxes, Depreciation & Amortization (EBITDA) was Rs 67.03 crores. The revenues also rose by 79% to 604.5 crore during the first half of this fiscal year and the net profit was Rs 61.55 crores up by 54%.

The above results surely do reflect stable macroeconomic environment and growing real estate sector. With the companies developing strategies and offerings of residential products and product mix the demand for this segment of products is increasing and shall yield good returns in the future.

Embedding ethics in Indian Real Estate Market though buyer cooperatives

2010-10-10T10:26:00.002+05:30

Worst enemy to the growth of Real Estate Business in India is the conventional and unethical business model that our so called “Street Dalal’s” are nurturing. This model is not only spreading bad breadth in Real Estate environment, but also promoting more corruption in the entire industry. Every other street corner is filled with uneducated, unethical and notorious middle man with no sense professionalism. What can and should Government do to remove this hurdle and help real estate business to grow strong in India? When will the current scenario change? One solution seems to be in embedding ethics in Real Estate Business though strong buyer cooperatives (or associations, companies, committees, NGOs, etc.) which have strong and transparent Govt. backup.

In real estate the government sponsored cooperative housing concept did proliferate during the socialist years but it has since died down. In the US, buyers get together on the Internet and negotiate with manufacturers of televisions, music systems and other goods to buy nearly 40% cheaper. This concept can be applied to Indian real estate. In fact, given the state of affairs, it should be exercised by the buyer now.

The laws framed under the Indian Contract Act don't seem to apply to buying Indian real estate. The law says there has to be an offer and as a result an acceptance of the offer. Indian builders have this brochure where they print three columns.

Once home booking amount is paid to the builder then the builder will not offer you any receipt, which specifically states that the basic selling price is in so many rupees. It will be a verbal agreement between the builder and the buyer of the apartment.

The obvious idiot's question is that what is the consumer going to do if the builder accepts the cheque and later declares that the base selling price is not what was agreed upon but something quite higher. At today's arrangement, the buyer does not have anything in hand to support the reason why he / she took the decision to buy.

Further, into the agreement , the builder usually asks for the balance money of a fourth of the total cost of the apartment. That means the total cost of the apartment, divided by four and minus the booking amount. Again at this stage, no bit of paper with the builder's signature or company seal mentions that the money accepted is one fourth of the total cost of the apartment. If the builder asks for more money under the pretext of parking space charges or club membership charges then the buyer has no recourse left.

Considering the buyer only buys the apartment and is given additional benefits around it to make the deal sweeter, he is made to tolerate all kinds of nonsense when the apartment is sold to him. The first thing that he has to swallow is the concept of super area, where the total cost of the project is divided by the total covered area and the cost of the super area calculated.

For one thing, buyers in India prefer to be fleeced by the builders who do not offer them any consumer relief but weigh the entire deal towards themselves. They harbour an unconscious feeling that given a choice between uncertainties of having an apartment built by an association of poor, EMI (equal monthly installments) paying middle class people and buying an overpriced apartment from a greedy builder, they would rather be robbed.

First, combined buyer companies have to operate as profit making companies and not associations, which are easy prey to corruption and inefficiency owing to the very nature of no compensation being paid to the active players.

The members have to pay a substantial amount as membership fee, which would not be returned in totality in case of cancellation to ensure seriousness of the members regarding the project. Then the active leaders should start scouting for land and government schemes. This can also be complemented by looking for investors in the project who will get a return once the gestation period is over.

The project can house facilities such as health clubs, parks, restaurants, parking lots and cinema theatres , which will earn money and add to the revenue of the project. Each member can be treated as a shareholder and they can earn dividend as and when it is declared.

Some social networking companies and socially responsible models have already begun work in this area and are accepting memberships to fructify into long term projects on real estate. Once this movement picks up, nobody will be able to challenge the buyer's clout. He will come into his own on his own right and his own strength.

Let’s raise our concern towards unorganized Real Estate Business models in India and vow to bring Professional approach to satisfy customers at large.

Web Link:

http://economictimes.indiatimes.com/quickiearticleshow/6314327.cms

Shoppers Stop to open more outlets

2010-06-24T20:11:00.000+05:30

Shoppers Stop intends to raise Rs300-crore through a qualified institutional placement (QIP) and increase its stake in HyperCity Retail India Pvt, a super market chain.

It is also planning to invest Rs 100-120 crore to open 12 more Shoppers Stop outlets and four Hypercity stores in this fiscal.

The Hypercity stores would be coming up at Bhopal, Ahmedabad, Ludhiana and Mumbai, Nagesh said. The company plans to increase number of Hypercity stores from 7 to 25 in the next three years and expects them to break-even in FY 2013.

The BSE-listed retail chain of the K Raheja Group, holds a 19 per cent stake in Hypercity. It now intends to up its stake by 32 per cent by the end of this month.

The Board had already approved the buy-out and we will pick-up an additional 32 per cent stake to have a majority stake of 51 per cent in Hypercity by June 30. This buy-out would cost the company Rs125-crore.

Vishal Retail to sign MoU with TPG

2010-06-24T20:09:00.000+05:30

Debt-ridden Vishal Retail’s board has approved the terms of memorandum of understanding (MoU) with US-based private equity firm TPG in accordance with a debt restructuring programme approved by its lenders.

The company did not divulge the terms of the MoU or when or where the understanding was reached between it and the private equity player.

The terms of the MoU would be subject to negotiation and execution of definitive agreements or documents.

TPG has been linked with the troubled retailer for a possible stake purchase in the past as well.

The Delhi-based retailer has been undergoing a debt-restructuring exercise since November last year to make it eligible for fresh infusion of equity.

Revenue, commerce secys home in on SEZ for tax

2010-06-24T20:07:00.000+05:30

The secretaries of commerce and revenue departments discussed the long pending issues of withdrawal of tax concessions to special economic zones (SEZs) in the direct tax codes (DTC). Union commerce secretary Rahul Kullar, told the press that he and his peers had a meeting on Wednesday, but he refused to divulge any details of the outcome. "It is too early to make inferences", he said.

The proposed DTC has sought to end the tax exemptions to SEZs. The draft of the DTC proposal was put up for public debate and scrutiny. The draft clearly states that the profit-linked deductions distort and create an incentive to inflate profits as well as transfer profits from a taxable entity to a non-taxable one. The SEZs also have the incentive to evade and avoid tax, the draft explained.

The government has allowed units already operating in SEZs to avail of tax benefits for the unexpired period. Tax benefits for SEZs are usually given for 15 years. But many SEZs are still under construction even though they have got the approval from the government a long time ago.

Sanghvi Group to generate Rs1,500-crore

2010-06-24T20:01:00.002+05:30

Mumbai based developer, Sanghvi Group plans to generate returns to the tune of 1,500-crore by unveiling a mix of qualitative residential and commercial properties across the city over the next one year. The plan focusses on several key areas that include Worli, Lower Parel, Byculla, Mazgaon, Dahisar, Ghatkopar, Kalwa, Dombivili and Kalyan.

Shailesh Sanghvi, Director, Sanghvi Group of Companies said, “With the real estate market showing strong signs of growth, we are optimistic that the year 2010-11 harbors many lucrative opportunities. Within this year we plan to launch 10 new projects across the city that will comprise of both commercial and residential properties.”

As part of the group's immediate plans, over 26 lakh sq ft of land has been earmarked for the development of the ten new projects in the metropolis. The company has a land bank of 100 acres to dedicate to the various residential and commercial projects.

The Group has completed development totaling 40, 00, 000 sq. ft. of affordable real estate.

Metro reaches Gurgaon

2010-06-21T19:39:00.002+05:30

A Delhi Metro train finally chugged into Gurgaon, the millennium city today, thereby bringing the satellite city a little closer to the national capital.

The 14.47 km link connecting Qutub Minar with HUDA City Centre in Gurgaon was inaugurated for the public in the morning as revenue services commenced simultaneously at both stations.

With this, Gurgaon has become the second satellite city to get Metro connectivity after Noida, where it reached last November.

People of the Millennium City have been waiting for an effective transport system to travel to and from Delhi and the launch of Metro services is likely to ease some pressure on road traffic.

Maytas Infra’s debt restructuring gets approval

2010-06-21T19:38:00.002+05:30

The debt restructuring proposal for Maytas Infra Limited has been given the nod by the Corporate Debt Restructuring (CDR) Cell. The CDR package has been approved unanimously by the banks.

The Provisional Letter of Approval has been approved by the Board of Directors of Maytas Infra Limited in its board meeting held on June 19, 2010.

The approval permits Maytas Infra Limited to bring the overall debt in the company to a sustainable level and at a reasonable pricing. The package will support the debt striken company in its ongoing strategic and operational initiatives to strengthen the business model and cash flows of the company

The overall debt on the balance sheet of Maytas Infra would come down from over Rs1,800-crore to around Rs800-crore -- this will be through a mix of one time settlements with a few banks, conversion of debt into preference shares and restructuring the composition and structure of the debt.

Maytas Infra Limited will be working closely with the banks to finalise the Master Restructuring Agreement.

IFC to invest Rs20,000-cr in Dewan Housing arm

2010-06-21T19:37:00.000+05:30

International Finance Corporation (IFC) has agreed to invest up to Rs20,000-crore by subscribing upto 2 million shares in Aadhar Housing Finance Pvt Ltd (AHFL), said Dewan Housing Finance Corporation Ltd in a statement released today.

AHFL is a housing finance company promoted by Dewan Housing Finance and its unit DHFL Vysya Housing Finance Ltd.

This will be 20 per cent of the paid-up capital of AHFL. The companies had entered into a transaction agreement on Friday.

Initially, AHFL proposes to provide retail housing loans in the low income segment in certain states.

NTC to auction Mumbai mill land

2010-06-21T19:36:00.000+05:30

State-run National Textile Corporation will auction 8.38 acres of prime land in Mumbai in an attempt to garner Rs750-crore from sale.

National Textile Corporation (NTC) had earlier called for sealed tenders for sale of Bharat Textile Mills, located in Lower Parel, one of the prime areas in the city.

The firm had earlier planned to sell 60 acres of Mumbai mill land in phases within the current fiscal to part-finance the company's Rs 9,102 crore expansion, diversification and modernisation programme.

NTC has nine mills situated in prime locations of the country's financial capital, including Prabhadevi, Worli and Lower Parel.

While the reserve price (starting price) of the Bharat Textile Mills has been fixed at Rs 750 crore, it is expected that NTC could fetch higher going by the company's previous experience.

NTC originally had 119 mills, out of which 77 were closed under the Industrial Disputes Act. Two have been handed over to the Pondicherry government and five are being revived through joint ventures with Pantaloons, Alok Industries and Bhaskar Industries.

Unitech promoters hike stake to 46.72%

2010-06-21T19:35:00.000+05:30

Promoters of realty firm, Unitech, have hiked their stake in the company by 0.42 percentage points to 46.72 per cent by converting warrants worth Rs76.44-crore.

The committee of directors of the company in its meeting held on June 18, 2010, has allotted 2,00,00,000 equity shares of Rs2 each at a premium of Rs48.75 per share to Harsil Projects Pvt Ltd, a promoter group company. The promoters have paid Rs 76.44 crore for the conversion of two crore warrants.

The promoters' shareholding in the company after such allotment on conversion of warrants has increased to 46.72 per cent from 46.30 per cent.

Early this month, the company had announced that its promoters had increased their stake to 46.30 per cent from 45 per cent by converting warrants worth Rs224.78-crore.

In March also, the promoters had raised their stake to 45 per cent from 43.84 per cent by converting five crore warrants for Rs 190 crore.

Last year in June, the company had issued 22.75 crore warrants convertible into equal number of equity shares at Rs50.75 per share.

Early June sees easing of food, fuel inflation

2010-06-18T22:37:00.002+05:30

India's food and fuel price inflation eased in early June, reducing pressure on the Reserve Bank of India to accelerate its process of tightening monetary policy.

The country’s food price index rose 16.12 per cent in the year to June 5, snapping a two-week rise, and lower than the previous week's annual reading of 16.74 per cent, according to recently released government data. The fuel price index climbed 13.18 per cent, compared with an annual rise of 14.23 per cent in the previous week.

There has been pressure on the Reserve Bank of India (RBI) to hike rates before its July policy review after the wholesale price index rose 10.16 per cent in May, the highest in the G20 group of leading economies.

Most analysts do not see the RBI raising rates before the July 27 review, in line with the bank's earlier stated preference for "baby steps" toward normalisation.

The RBI said the federal government would buyback Rs100-billion ($2.15 billion) of bonds via a multiple price auction on June 18. The move is expected to improve liquidity with banks after an estimated outflow of over Rs1.36-trillion between late May and June towards third-generation (3G) and broadband spectrum auction and advance tax payments, which have pushed up overnight cash rates.

High inflation has proved to be severe case of worry for Prime Minister Manmohan Singh's coalition government, which has held back on major reforms such as freeing up retail fuel prices ahead of eight state elections due later in 2010 and 2011.