Finance & Taxes

'The HSIIDC will invest over Rs.1,200 crore in 2010-11 in Haryana. A multi-modal logistic hub, an exhibition-cum-convention centre and a mass rapid transport system from Gurgaon to Bawal had been identified as the early bird projects which will be developed during 2010-11,' a HSIIDC spokesman said.

He added: 'Under the economic stimulus package, special dispensation is being made for creation of housing stock for industrial workers. Haryana has emerged as a favourite investment destination for industry, and scored amongst the top states in India on per capita investment performance.'

The HSIIDC is also planning to expand Industrial Model Township (IMT), Manesar, besides the development of IMTs at Faridabad and Ambala is under consideration.

The spokesman said to equip the people to reap the advantages of industrialisation, the state government is establishing a number of skill development facilities in the state.

These included the National Institute of Food Technology, Entrepreneurship and Management (NIFTEM), footwear development and design institute, central institute for plastic engineering and technology and Indian institute of corporate affairs at various places in Haryana.

District magistrate Deepak Agarwal has reportedly approved this decision in a meeting with officials of the department concerned. It will hike circle rates in Noida and Greater Noida by 20%. Besides, there is a possibility of a hike in circle rates for villages and rural areas.

To date, there are more than 9,000 properties which have not so far been registered in Greater Noida. These include 3,760 (agricultural sector), 2,806 (individual houses), 1,250 (group housing), 224 (industrial), 66 (institutional) 450 (builders) categories.

At present, circle rate in Noida ranges from Rs 18,000 to Rs 40,000. In Greater Noida, circle rates vary from Rs 14,000 to Rs 17,000. From April 1, the minimum circle rates in Noida will be Rs 20,000 while the maximum will be Rs 46,000.

In villages, circle rate at present are from Rs 8,000 to Rs 9,000. After the hike, it will be between Rs 9,000 and Rs 10,500

The district magistrate said a meeting in this connection has been held with the stamp and registry department. A decision to hike circle rate up to 20 per cent has been taken. The registry of property will be done as per the revised circle rates from April 1, the district magistrate said.

Titled as "Achieving Double-Digit Growth in Haryana", it states there were 635 live investment projects worth around Rs 3.5 lakh crore in Haryana till 2009 end. Real estate industry has got the lion's share of 55% in the total live investment. Services and electricity are the next two important destinations of investment. Manufacturing attracted 8% of the investment while the share of investments in irrigation were mere 0.17 %.

Assocham secretary-general DS Rawat said, "The present status of these investment projects reveals that about 70% of investments are seeing implementation. About 29% of the live investments are in the announcement stage. During the three months period to September 2009, seven projects worth Rs 3,840 crore were completed."

However, he said, power availability and the quality of power has been a major determinant for economic growth. As per the available information, power is a major growth hurdle in Haryana. The state experienced about 8.5% of power deficit in 2008-09. The peak hour deficit was recorded at 13% during the same year. This is considered to be one of alarming scenarios in India.

This turns out to be a major weakness of the state and affects the growth potential of the state economy.

Visit the  http:www.mcg.gov.in  website for more details on House Tax Assessment by Municipal Corporation of Gurgaon.

"Requests for de-notification by the developers have been received from 13 SEZs located in the states/Union territories of Delhi, Orissa, Gujarat etc, of which 12 have been approved by the Board of Approval," Minister of State for Commerce and Industry Jyotiraditya Scindia said in a written reply.

Board of Approval (BoA), a 19-member inter-ministerial group headed by Commerce Secretary Rahul Khullar, approves the SEZ projects.

Scindia said that the final de-notification is allowed only on refund of duties or benefits, "if any, availed by the developer."

The SEZs, which have been denotified by the BoA includes four IT-ITeS zones of realty major DLF in Haryana, Gujarat, and Orissa.

On the de-notification of three SEZs in Goa, the minister said that the state government "may have compensate the developers". However, he said that the developers have approached the judiciary and the matter is sub-judice.

"The Goa government had recommended 15 proposals for setting up of SEZs. Out of these, 7 proposals were accorded formal approval by the BoA and notifications were issued in respect of three cases," he said.

According to official sources, software exports from the state during financial year 2008-09 showed a growth of about 17 per cent.

A Nasscom-Mckinsey report has projected a growth of 11-12 per cent in IT and ITES exports from Haryana in the current fiscal (2009-10) and the exact figures are expected by June.

Gurgaon has the lion's share in software exports as more than 90 per cent of IT and ITES units of the state are located in the district. As of now, there are around 400 IT and ITES companies operating in the district.

"The IT and ITES industry is providing employment to nearly 2 lakh persons and indirectly benefiting many others," said Gurgaon deputy commissioner Rajender Kataria, adding that to boost the IT industry, a regional IT industry promotion office had been set up in Gurgaon.

Market observers point out that the volume of software exports from Haryana has shown a steady rise during the past several years.

Source: The Tribune By Sunit Dhawan IT exports from Haryana touch Rs 21,000 cr

"Currently, we are developing 12 residential and three commercial projects across various locations in North India. We have planned to invest Rs 4,000 crore to develop these properties over the next three years," Supertech Chairman and Managing Director R K Arora told PTI.

The residential projects are located across Noida, Meerut, Haridwar and Rudrapur, while the commercial properties will be developed at Haridwar, Rudrapur and Meerut, he added.

When asked if the company would consider raising fund via an initial public offer (IPO), Arora said: "We have started to prepare for an IPO, but the market has not completely come out (from the fall during downturn)."

The company would consider launching the IPO in the next one and half years, he added.

Source: Business-standardSupertech to invest Rs 4,000 cr in 15 projects; plans IPO

"We have applied to Sebi for approval. We hope to launch our IPO of Rs 1,500 crore early next-fiscal," BPTP's Managing Director, Kabul Chawla, said here today.

The company, which presently has a networth of Rs 1,600 crore, is hoping to clock a topline of Rs 1,000 crore and PAT of Rs 200 crore in FY10.

From the issue proceeds, the company plans to pre-pay Rs 325 crore of its debt while Rs 500 crore has been earmarked for government use, he said.

The realty major, presently, has a consolidated debt of Rs 900 crore.

In 2011, Rs 150 crore will come up for repayment and in 2012, Rs 600 crore, Chawla said, adding that "though we are not stressed in terms of debt, we plan to pre-pay Rs 325 crore out of the issue proceeds."

JP Morgan and SSKI are the Book-Running Lead Managers (BRLMs) to the issue.

Source: Business-standardRealty major BPTP plans Rs 1,500 cr IPO in early FY11

And now, many firms are unsure if they should hit the market right away, even though they have got the `green signal' from the regulator. While key indices have recouped their losses suffered in January, investors remain wary of realty firms. The poor performance of the recent offerings in the sector is the main reason, while liquidity concerns because of the year-end factor is also keeping IPO-bound companies in check, say market watchers.

"We have received the required clearances from Sebi and are looking forward to coming out with our IPO in the near future," said Abhishek Lodha, MD, Lodha Developers, without specifying a deadline.

Lodha Developers, Ambience, Emaar MGF and Nitesh Estates are the leading companies that are yet to open their books for subscription despite getting the blessings of Sebi. Together, these four companies are looking to mop up around Rs 8,000 crore through their IPOs.

"Primarily, the market sentiment towards realty has not been very encouraging. Hence, a lot of players are waiting," said S Subramanian, head of investment banking, Enam Securities.

Source: Economic Times By Supriya Verma Mishra IPO-Bound Realtors Sitting On Fence Despite Sebi Nod

Despite an improvement in India's private equity (PE) market, overseas realty funds are finding the going tough as investors pull back money to cover trading losses in their home markets. Real estate-focused PE funds of banks such as Credit Suisse Group AG, Morgan Stanley  and Citigroup Inc. have either shut down or put their Indian and Asian operations on sale. US-based PE firms Oxif Capital Management  and Angelo Gordon and Co. have shut operations in India. Many other PE investors have also put their plans on hold.

"In 2005-06, there were 400-odd foreign investors targeting real estate, of which 250 had managed to register, 150 had applied for registration, of which today 40-odd exist," said Amit Goenka, national director, capital transactions, at property advisory Knight Frank (India) Pvt. Ltd.

Fund infusion is down from an estimated $20 billion (Rs90,800 crore) to just $2 billion, an erosion of 90%, he added. Goenka blamed the shrinking market on foreign limited partners (LPs), on whom PE funds depend for money, trying to make up for trading losses at home.

PE investment, excluding real estate, declined from 453 deals worth $10.29 billion in 2008 to 263 deals worth $4.02 billion in 2009, while PE investments in real estate declined from 90 deals worth $6.64 billion in 2008 to 26 deals worth $950 million in 2009, according to Venture Intelligence, a Chennai-based research service that focuses on private equity and mergers and acquisitions.

Source: Live Mint By Shraddha Nair Overseas realty funds struggle, shut shop or put plans on hold

"We are scrutinising all types of fund flows into the sector but no decision has been taken on whether to curb them or not," said R Gopalan, secretary in the financial service department of the finance ministry.

The Reserve Bank of India (RBI) has been cautioning banks against lending to the sector and asked them to continuously monitor the money going in. On their part, banks have curtailed lending to real estate firms. The total outstanding of banks to the real estate sector stood at Rs 88,581 crore as on November 21, 2009. The banks exposure to the real estate sector has gone down by a little over Rs 8,000 crore between June and November 2009. In a speech last week RBI deputy governor Usha Thorat had said that banks were expected to monitor their exposure to commercial real estate so as to limit the risk of a downturn in the sector.

"Although no regulatory limit is specified in this regard, RBI keeps a close watch on each bank's exposure to commercial real estate through offsite surveillance and initiates corrective actions where necessary."

Source: Realty Plus Real estate fund flow under watch

"We will call a meeting of the association to discuss the Budget proposals, particularly the levying of service tax on housing which will have a negative impact on realty sector," National Real Estate Development Council (Naredco) president Rohtas Goel said.

Goel, who is also the chairman and managing director of Omaxe Ltd, said the dates for meeting has not been decided yet. The country's two largest realty firms DLF and Unitech are members of Naredco.

According to the Budget paper, the construction of real estate complexes will attract service tax, unless the entire consideration for the property is paid after the completion of construction. While some developers are of the view that the service tax of 10.3 per cent would be imposed on 33 per cent of the total sales value, other feel it should be on 33 per cent of the total construction cost.

An official with leading realty firm said the levy of service tax on housing is detrimental. "Affordable housing will become non-affordable and black money would come into play due to this proposal."

Another realtor's body Credai had said that applicability of service tax to all under-construction flats and homes being booked prior to completion will increase the end cost and will significantly impact affordability of the home buyer.

A: This service tax pertains only to rental income received from leasing commercial property. If you have rented your apartment in Mumbai for residential use, then no service tax is payable. Secondly, service tax on rentals of commercial premises is not a new provision, it is applicable from 2007 onwards. However, the letter of the law was open to interpretation and hence the matter was under litigation. Now, in the Budget, the government has sought to bring further clarity. But once again, for residential rentals, no service tax is payable.

The MPs were addressing a select gathering at the annual session of the Haryana State Council of the Confederation of Indian Industry (CII), which was combined with a panel discussion - "Nurturing New Growth Centre in Haryana" - organised here yesterday.

LK Jain, Chief Managing Director, LPS, Rohtak, was today elected Chairman of the Haryana State Council of the CII. Agreeing on the development of new growth centres in Haryana, Harpal Singh, chairman of the CII (northern region), said the state government must acquire land, ensure the provision of sound infrastructure and develop these growth centres in a transparent manner.

All procedures and permission for the growth centres must be given quickly and smoothly, he maintained. Rajeev Arora, MD, HSIIDC, disclosed that the corporation was in the process of developing an industrial estate in every district of Haryana. The HSIIDC would also expedite procedures and permission for business-related ventures, he added.

Source: The Tribune By Sunit Dhawan Look beyond Gurgaon, industry told

SMALL businessmen will soon be able to get collateral-free loans for up to Rs 10 lakh from banks following an RBI-panel proposal to double the guarantee provided under a government scheme.

Finance minister Pranab Mukherjee, on Saturday released a report by Reserve Bank of India (RBI) where it was proposed that banks do not insist on collateral or guarantees for loans from small businesses up to Rs 10 lakh. In such loans, the security will be provided under a guarantee by Credit Guarantee Fund Trust for medium and small enterprises (CGTSME).

The report includes a proposal to reduce guarantee fees for women entrepreneurs and for enterprises in the North-East. The working group was set up to review the Credit Guarantee Scheme of the Credit Guarantee Fund Trust by RBI in its monetary policy in April '09. Launching the report, the finance minister said: "This constitutes an important initiative by government for MSMEs to avail bank credit without the hassle of collateral or third-party guarantee." The proposal to double the guarantee provided comes seven months after RBI told banks that they cannot ask for collateral security for loans up to Rs 5 lakh extended to micro and small enterprises in manufacturing and service sector.

On Saturday, following a meeting with Sebi, the finance minister has an interaction with the members of the board of RBI. "Various aspects of budget proposal were analysed and board members gave their comments and inputs about budgetary proposals" said Mr Mukherjee.

Later the finance minister said that the government would consider consolidation among public sector banks in consultation with RBI if the banks themselves came forward with proposals. "So far the regional rural banks have come forth and consolidation among RRBs have taken place. I have also made proposal that there should be licences for new banks and of course they should meet the criteria fixed by the RBI," the finance minster added.

Source: Economic Times RBI Panel Proposes Collateral-Free Loans    

Loans against fixed deposits, loans given by a bank to its own employees, as well as restructured loans, where borrowers get more time and pay lower rates to avert defaults, can be given at interest rates that are below the base rate -- the new benchmark rate for pricing loans. While allowing these exemptions, RBI has also deferred the date for implementation of the base rate by banks to July 1. Earlier, RBI had said the base rate system would come into effect from April 1 -- a deadline, which most banks found difficult to meet.

The regulator has, however, ruled out any lending to corporates below the base rate.

The decision was taken here on Friday following a meeting between RBI deputy governors and CEOs of select commercial banks. At the meeting, RBI also agreed to give banks more flexibility in the calculation of base rate.

For a bank, the base rate will be its minimum cost at which it can lend and the risk premium on a loan would be the mark up over the base rate. The base rate, which will replace the prime lending rate (PLR), is aimed at bringing more transparency in loan pricing. At present, around 70% of the loans are below PLR which ranges between 11.75% and 12.25%.

"A bank can take any deposit slab or even the average cost of deposits. Secondly, on profit margin, RBI has indicated that a bank can choose any parameter such as the average return on assets, return on capital, net interest income, etc.," said a banker present in the meeting.

Source: Economic Times Stress Relief :Banks Can Lend Below Base Rate, System To Come Into Effect From July 1

The government is considering exempting from tax flats booked before the notification of the expanded construction service, a finance ministry official told ET. "There is a case for giving relief to buyers who booked their houses before the service is notified... We are examining it," he said.

So, a buyer who has booked a flat but will get possession only after the notification of the new service need not worry. A clarification to this effect may be issued when the tax is notified after the passage of the finance bill, he said.

The Union Budget proposes to expand the definition of construction service and levy tax on houses under construction as well. The new rule, which will come into effect when Parliament approves the budget, says service tax would be imposed if payments were made before the completion of construction.

Realty companies typically sell property before they begin construction and fear that the move will hit the sector hard as it would lead to a rise in home prices and depress demand. "The government must reconsider its decision to impose service tax on under-construction housing as the real estate industry is already paying 14-16% as indirect taxes. The current move will make affordable housing unaffordable in the future," said the DLF spokesperson.

The government plans to include charges such as development fee, parking fee and premium location charges usually paid at the time of completion of construction in the base price. Only 33% of the base price of the flat will be chargeable to service tax levied at the rate of 10%, taking the effective tax to 3.3%.

Source: Economic Times By Deepshikha Sikarwar & Paramita Chatterjee Booking Home Before July May Let You Escape 3% Tax

Private sector lenders ICICI Bank Ltd and Kotak Mahindra Bank Ltd as well as the largest mortgage player, Housing De- velopment Finance Corp. Ltd (HDFC), withdrew special home loan schemes on Thurs- day.

Other commercial banks such as Axis Bank Ltd, Union Bank of India, Canara Bank, Punjab National Bank, Bank of India and IDBI Bank Ltd dis- continued special home loan schemes after the Reserve Bank of India (RBI) an- nounced a two-phase 75 basis
points hike in the cash reserve ratio (CRR) in its January re- view of monetary policy.

One basis point is one-hun- dredth of a percentage point.
CRR is the portion of deposits that banks are required to maintain with RBI.

HDFC Bank Ltd, IDBI Bank and Kotak Mahindra Bank have also raised interest rates on auto loans.

anita.b@livemint.com

Source: Live Mint By BY ANITA BHOIR Higher Rates : Banks Hike Home, Auto Loan Costs

Formerly, the ceiling for the private sector was Rs 3.5 lakh.

For government employees, the Centre had already earlier accepted the recommendations of the Sixth Pay Commission to raise the limit to Rs 10 lakh.

After the income tax relief in last Friday's Budget, this is yet another bonanza for the middle class.

An employee is entitled to gratuity after five years of con- tinuous service with the same employer. It is considered part of an employee's income and hence, is taxable.