36L families to benefit from med aid scheme

Mumbai: Nearly 36 lakh families in the city won't have to worry about their medical expenses from Monday, when the state's project, the Rajiv Gandhi Jeevandayee Arogya Yojana (RGJAY), will be kicked off for Mumbaikars with an annual income less than Rs 1 lakh.      Under the scheme, the state will bear medical expenditure up to Rs 1.5 lakh (Rs 2.5 lakh in case of kidney transplants) for families holding above and below poverty line ration cards.      The scheme covers expenses incurred on 972 medical procedures, like cardiac and cancer related surgeries, and will be implemented in Amravati,Gadchiroli, Solapur, Nanded, Dhule and Raigad districts apart from Mumbai. In December 2011, chief minister Prithviraj Chavan had launched the scheme in Mumbai by distributing RGJAY cards.      "Within three months, this scheme will be launched in the rest of Maharashtra as well," public health minister Suresh Shetty said.

Rating Change to Hurt India Inc & Banks: RBI

Act Now! Central bank underscores the big risks facing Indian economy even as PM's statements in past two days spur action on policy front

Dollar-borrowing costs for Indian companies and banks could soar, straining their already-fragile finances, if rating companies downgrade India's sovereign rating that is just a notch above junk. 
"A rating change could have some 'cliff effects'," the Reserve Bank of India (RBI) said in its Fifth Financial Stability Report, referring to the consequences of a possible rating cut. "This could affect both availability and cost of foreign currency credit lines for Indian corporates further. The impact is also being felt by Indian banks as they are the primary source of foreign currency-denominated funding for Indian firms like buyer's credit." 
Standard & Poor's has said India could be the first among the so-called BRIC nations to get downgraded to junk status and become a 'fallen angel' if it does not set its fiscal house in order. Fitch and Moody's have also expressed their concerns about deteriorating macroeconomic fundamentals. 
The worsening economic climate could bloat the banking sector's bad loans, though available capital buffers could help them withstand a shock, the RBI said. Bad loans may rise to 4.6% of total loans in March 2013 in the most severe risk scenario, up from 2.9% at the end of March 2012. Under normal scenario, it could range between 3.3% and 3.5%. Banks' increasing reliance on mutual funds and insurance companies for funds is an indication of rising risk in the system, which could amplify the instability of the financial system during times of stress, the half-yearly report said. 
"Banks with higher credit deposit ratio are running short of resources," said JP Dua, chairman and managing director of Allahabad Bank. "Sectors like steel, realty and infrastructure are the most vulnerable now as the economy's growth is slowing. Credit risk can be higher in these sectors, but it all depends on how one manages the portfolio. There are banks with high exposure to the infrastructure sector, but without any issues over asset quality." The central bank also called for an overhaul of regulations across the financial spectrum consisting of banks, insurance companies and mutual funds since trouble for one could spell trouble for the entire system. Credit Risk Bigger Worry 
"A complete macro-mapping of all kinds of credit intermediation activities would be warranted in the light of international reforms in this area," the report said. "There are concerns posed by the degree of interconnectedness of these entities with the banking system, which could pose credit and liquidity risks. The disproportionate slowdown in deposit growth vis-à-vis credit growth led to increased reliance of banks on borrowed funds, which may translate into liquidity risks." Credit risk will remain a bigger worry for banks than interest rate risk as bad loans grew nearly three times faster than credit in the last fiscal, it said. Bad loans have to be monitored closely since a combination of declared bad loans and restructured loans provides an ugly picture, given that 15% of the latter category of loans may also turn bad. "The muted economic backdrop and global headwinds could lead to further deterioration in asset quality," the report said. "The position is not alarming at the current juncture and some comfort is provided by the strong capital adequacy of banks, which ensures that the banking system remains resilient." 
In the past year, the potential loss to banks' capital from the failure of the 'most connected' banks has risen to 16% of the total capital, from 12% in March 2011, the report said. 
The rising short-term borrowings of banks at 27% of the total and the sector's reliance on mutual funds and insurance worry the RBI. "The largest net lenders in the system were insurance and asset management companies while banks were the largest borrowers," it said. "This renders the lenders vulnerable to the risk of contagion from the banking system."

Mumbai beware: Noise raises heart attack risk

Mumbai: Loud noise is not only an irritant, it can also kill. Latest research from the western world says that for every 10 decibel increase in noise level, the risk of heart attack went up by 12%. The implication for Mumbai, which is known as one of the noisiest cities in the world, can only be imagined, said anti-noise pollution activist Sumaira Abdulali from NGO Awaaz. "It is time Indians recognized noise pollution as a health problem instead of an environmental issue," she  said, adding that despite the World Health Organization linking noise pollution to health in 1985, the realization has been slow.      The latest study linking heart and noise comes from Denmark, where over 55,000 people between 50 and 64 years of age were studied from 1993 for over a decade. The analysis, which was published in PLOS ONE journal on June 20, showed that residential exposure to road traffic noise was significantly associated with myocardial infarction or heart attack.      While there are no similar studies in India, activists like Abdulali give out instances where noise has been a major health irritant. "I know a family where the woman suffered a heart attack immediately after a cracker burst loudly nearby," she said.      Heart surgeon Pawan Kumar from Nanavati Hospital, Juhu, said previous studies have estimated that noise pollution causes 4% of all heart attacks. Noise literally disrupts the body's rhythm, thereby directly affecting the heart. DEATH BY DECIBEL  • Risk of heart attack went up by 12% for every 10 decibel rise in noise level  • Mumbai is one of the world's noisiest cities, with pollution reaching 132 decibels  • Previous studies estimate noise pollution causes 4% of all heart attacks  • Noise pollution disturbs sleep patterns, affecting the heart  • Loud noise releases stress hormones, causing heart to beat faster  • Constant exposure to noise induces continuous stress Loud noise induces release of stress hormones ADanish study has brought home the deadly effects of noise pollution, particularly in a cacophonous city like Mumbai. Cardiologist Ganesh Kumar from Hiranandani Hospital, Powai, said that noise pollution disturbs sleep patterns, which, in turn, affects the heart.      IIT-Bombay put up sound barriers along its campus wall in Powai immediately after a part of its land was taken over for a road-widening project. "This underlines the fact that traffic sounds are a menace to health," Dr Kumar said.      Dr Pawan Kumar of Nanavati hospital said loud noise causes release of stress hormones such as cortisol and adrenaline. "These hormones cause the heart to beat faster," he said. Among people who suffer from irregular heart beat or arrhythmia, loud noise of over 80 decibel can lead to loss of beats and a sudden cardiac arrest. "In some people, loud noise can cause the coronary artery to go into aspasm and induce a heart attack," said Dr Pawan Kumar, adding that traffic policemen would at the highest risk here.      "Any increase in stress hormones is good only for a small period. The problem arises when this stress is continuous," said Dr Ramakanta Panda of Asian Heart Institute in BKC. Constant exposure to noise induces continuous stress, which is bad for the heart, he said. The PLOS One study said that "noise is known to affect the hypothalamus-pituitary-adrenal axis, leading to increased levels of cortisol". In addition, exposure to noise during the night at normal urban levels has been associated with sleep disturbances, which might affect metabolic and endocrine function and impair the immune system, the study added.

New Launches Take a Backseat as Realty Cos Look to Clear Inventory

Cos feel new projects could put pressure on pricing in a market already saddled with a lot of inventory

Real estate developers have cut back sharply on new project launches, preferring instead to first try and sell pricier unsold inventory and, in the process, also prevent prices from collapsing in a sagging market. 
Analysts tracking the property market say developers across India have realised that launching new projects could put pressure on pricing in a market already saddled with inventory. "If they launch at a lower price today, their existing unsold inventory will get hit," says Vineet Chandak, real estate analyst with IDFC Securities. Property prices rose sharply in the last one year even though sales volumes fell more than 50%, hit by double-digit interest rates, high property prices and an overall economic slowdown. 
Research firm PropEquity estimates that residential project launches in key centers such as Delhi-NCR, Mumbai and Bangalore have dropped by 30-50% in a year. The firm estimates that new residential project launches fell 49% y-o-y in the Delhi NCR region in the January-March quarter, outpacing a 31% drop in the Mumbai Metropolitan Region. The numbers for Bangalore, Chennai, Pune and Hyderabad stood at 45%, 42%, 44% and 77% respectively. "Developers across the country are delaying project launches to maintain pricing and clearing their unsold inventory that was launched at higher prices," says Samir Jasuja, CEO at PropEquity. Developers, many of whom managed to increase prices in the last year to pass on increased costs of steel, cement and labour, also concede that new launches are being delayed. 
"Slow sales are forcing developers to go slow on launches. Unfortunately, because of high costs, developers do not want to drop prices, which will be the cases with some new launches," says Shakti Nath, managing director of Logix Group. Lalit Kumar Jain, president of the Confederation of Real Estate Developers' Association of India (Credai), the apex body for private real estate developers, also blames delays in getting project approvals for the drop in new project launches. Developers are also having to grapple with delays in the construction of projects already underway because of liquidity issues and these are also affecting new launches. 
Experts say developers have managed to hold on to pricing levels so far, but that could change. "Lesser project launches will keep future supply of homes in check and reduce pressure on prices. But if the market situation continues in the same way, it will surely have an impact on pricing," says Anshuman Magazine, chairman and managing director of property advisory firm CBRE South Asia. "Nobody wants prices to come down as recovering those prices quickly is difficult." 
ravi.sharma4@timesgroup.com 

‘India Inc’s Q1 revenue growth to hit 6-qtr low’

May Drop To 14% From 17.5% A Yr Ago: Crisil Mumbai: India Inc is expected to see a sharp slowdown in revenue growth during the current quarter, growing at 14%, the slowest in the last six quarters, compared to 17.5% during April-June 2011. The main reasons for the slowdown are the moderation in demand during the current quarter, the general slowdown in the economic activity and also in gross fixed investments, a report by Crisil Research noted.      "EBITDA (earnings before interest, taxes, depreciation, and amortization) margins are projected to decline by 100-150 basis points (bps) on a yearon-year basis to around 19-20%, but remain flat compared to Jan-Mar 2012 (Q4 FY12)," the report pointed out.      The revenue outlook for the full year 2012-13 (FY13) is also not so good as there are indications that it would grow at a pace slower than what was witnessed in FY12, that is lower than 16.7%, unless investments pick up. On the margin front, however, export-driven sectors like pharmaceuticals and IT companies would see some margin expansion, along with the telecom sector, which is purely domestic market focused.      Crisil Research also noted that there is a sharp deceleration in investment cycle, as investments in fixed assets are currently at the lowest level in the last five years. "At about 13%, growth in capex is the lowest in the last five years, reflecting investment slowdown. Deceleration in investment has lowered depreciation charges to a 10-year low," the report pointed out. Crisil analysts also are not expecting the investment cycle to pick up soon because of three reasons. These are the current economic uncertainty and the flux inthe Eurozone, continued policy logjam, delays in approvals and clearances, land acquisition related issues etc, and some likely delay in moderation of interest rates due to high fiscal deficit and inflation.      India Inc's interest coverage, the ratio of EBIDTA to interest expenses, is also at the lowest level in the last three years, because of high interest rates and margin pressures.  E-voting must for resolutions: Sebi  Mumbai: Market regulator Sebi on Tuesday said that e-voting should be mandatory for top 500 companies by market capitalization on the BSE and the NSE, making it cost effective for these companies and easier for their shareholders to participate in some of the decisions which were earlier done through postal ballot. The decision came as a follow-up to the Budget proposal to make e-voting mandatory for listed entities. Sebi said that the decision to move to e-voting would be implemented in a phased manner, and listed companies may choose any one of the agency which is currently providing the e-voting platform. TNN

India shouldn’t worry about Re fall: Mr Yen

ONE-ON-ONE Mumbai: Eisuke Sakakibara, a former Japanese minister of finance and economist, known as 'Mr Yen' because of his ability to move currency markets during the '90s, advises the Indian government to take advantage of the falling rupee by boosting exports and not to fret about it. The currency depreciation is a worldwide phenomenon caused by "simultaneous recession" in global economy, he tells TOI on a visit after becoming a board member at investment bank Avendus Capital.  You are here in the midst of what some people call an Indian currency crisis. What are your views on rupee's  steepest fall ever in recent months?  What is happening right now is repatriation. Funds are now returning from emerging economies to US because of simultaneous recession worldwide. There's a flow from equities to bonds. It's a worldwide phenomenon triggered by the euro crisis. India is running a current account deficit and capital inflows supported the currency so far. So as long as capital continues to flow out, this depreciation will continue. How long...is uncertain. If I were the Indian government, I would tell the Indian people, 'Don't worry because it is to do with repatriation and not because of any weakness in the Indian economy' and try to take advantage of the situation by increasing exports.  Do you think the euro will  survive as a single currency? How do you see the future of the Eurozone?  Germany and France forged European integration in the post-War era. But it's beginning to disintegrate because of the Greek crisis and the US crisis. I think the problem is structure. The Greek crisis has been temporarily suspended but it's spreading to Spain and perhaps Italy. So the integration is at risk and this is a structural problem and I don't see any immediate way out of the European crisis. The crisis will continue and eventually hit European banks. Because bonds of south European countries are plummeting, the balance sheet of banks are deteriorating. I think it is a possibility that some French, German or Italian banks may have a problem and the fiscal crisis may eventually become a financial crisis. I would not be surprised if a major financial institution in Europe goes bankrupt.  A lot has been said about Japan's debt that's running at about 200% of its GDP…  It's true that debt is high but Japan is not in a financial crisis. While the debt is 180% of the GDP, the accumulated assets of the Japanese households is almost 240% of the GDP, which more than covers up the debt. And most of that debt is owned by Japanese institutions unlike in the case of US, where more than 70% of its debts are in the hands of foreigners.  There's rising interest of  Japanese corporates in  India. How do you see the  Indo-Japanese deal corridor shaping up?  Yen has been strong and I see it that way for a while, giving the Japanese companies enough comfort to pursue international acquisitions. They have gone into China in a big way, but are now talking about China Plus One strategy. That's bringing lot of focus on the Indian market where they see better longer-term growth. India's younger population will sustain longer growth, possibly even 20 or 30 years after China peaks off. Japanese conglomerates, aided by low cost of capital, normally look at the long horizon. Eisuke Sakakibara ECONOMIST & EX-JAPANESE FM

Mill workers to get nearly 7k houses in Mhada lottery

Mhada will allot 6,925 houses to mill workers through a lottery on Thursday. Each tenement costs Rs 7.5 lakh and will be handed over to the workers during Diwali. TNN

Moody’s retains stable rating outlook for India

Slowdown Has Been Factored In Baa3 Status New Delhi: Moody's Investors Service said on Monday it was maintaining its stable outlook on India's rating despite slowing growth, high inflation and an uncertain investment policy environment. Moody's said these challenges have already been factored in their Baa3 rating and slowing growth, investment and poor business sentiment are unlikely to be permanent or medium term features of the Indian economy.      The announcement should come as a relief for policymakers, who have been battling severe criticism after two global ratings agencies Standard & Poor's and Fitch revised their outlook on India's rating to negative from stable, citing slowdown in growth, weak public finances, lack of economic reforms and stalled policies.      In fact S&P had cautioned that India could be the first country among the BRIC (Brazil, Russia, India and Chi na) group to lose its invest ment grade rating.      "Moody's Investor Service says it is maintaining its stable outlook on India's rating as various credit chal lenges — such as weak fiscal performance, tendency to wards inflation and an uncer tain investment policyenvironment — have charac terized the Indian economy for decades, and are already incorporated into the current Baa3 rating," the ratings agency said in a statement.      But Moody's said global and domestic factors, includ ing potential shocks in agri culture, could keep India's growth below trend for the next few quarters. Growth in the January-March quarter of 2012 slowed to a nine-year low of 5.3%, while overall growth in 2011-12 slowed to 6.5%, below the initial esti mate of 6.9%, raising alarm bells and prompting calls for urgent action to revive growth. "Moody's notes that its ratings express a view on medium-term sovereign creditworthiness and do not generally change with fluc tuations in growth related to the direction of the business cycle at a particular point, if Moody's believes growth will recover and sustain over time," the ratings agency said. It said the impact of lower growth and still-highinflation will deteriorate credit metrics in the near term, but not to the extent that they will become incom patible with India's current rating. Inflation is running well above the central bank's comfort level and in May stood at 7.55%, while retail inflation has been in double digits for three consecutive months. Food inflation is al so running in double-digits and the stubborn inflation ary pressures have prompt ed RBI to leave interest rates unchanged in its latest poli cy review earlier this month Moody's said the Indian gov ernment's debt and fiscal deficit ratios have always been worse than those of similarly rated peers.      On the issue of rupee's depreciation, Moody's said as the government's foreign currency debt comprises only 5.3% of its total debt and is equivalent to 3.8% of GDP, the rupee's decline does not raise the govern ment's own debt service bur den significantly.

Mhada gets only 2 bidders for Dharavi pilot project

Mumbai:A year after it was given the mandate to redevelop Sector V,Mhada has got bids from only two firms in response to its advertisement inviting contractors to build 344 flats as part of a pilot project in Dharavi. The two bidders are Shirke Constructions and Neptune Group.      However, even before the bids are finalized, Congress MP Eknath Gaikwad has warned against opening them. "Three years ago, the state government cancelled bids saying there was inadequate competition despite seven companies showing interest. If the government found seven bids insufficient, then on what grounds can Mhada claim good competition and open the bids when it has received only two responses?'' he argued.      Gaikwad further said: "When the government asked Mhada to redevelop one sector, we were reassured that slumdwellers would be rehabilitated in buildings constructed by bigger developers. None of these contractors has bid and it appears that the conditions have been framed to favour one bidder. We will not allow this to happen. The government will have to call for fresh bids."     If the poor response was not enough, a group of housing societies led by Gaikwad and his legislator daughter, Varsha, sat on a one-day hunger strike recently to protest against the delay in implementation of the Dharavi redevelopment project.      Sachin Ahir, minister of state for housing, said though they have received only two bids, the government would ensure quality work by the successful bidder. "This is just a pilot project. Our aim is to counter claims that the Dharavi project will not take off. We are confident that once the pilot project takes off, we will see reputable companies participate in the bid for the balance area in Sector V. I will try to explain this to Gaikwad,'' said Ahir.

Watch Out Walmart, India’s Got LanMark

The retail chain, which brought together 160 small dealers of white goods under a single brand in Kerala, debuts in Tamil Nadu, to now expand footprint in south India     A novel experiment in retail that began in Kerala is catching on in Tamil Nadu, holding out hope that this hybrid model could be just what small traders require to compete effectively against Big Retail.  LanMark, which has brought together 160 small dealers of white goods in Kerala under a common brand, has quietly made its debut in Tamil Nadu with 12 stores under its fold. It is now ready to expand to the rest of south India.  LanMark was started seven years ago when a group of retail professionals saw an answer to the problems of scale-challenged small retailers. In Chennai, learning that some small stores were on the verge of closing down, the brand studied the city market and found their problems were the same as in Kerala: absence of proper accounting, poor staff attitudes and a lack of professionalism.  "We sensed early that retail hinges not only on scale of operations, but also on financial discipline and a professional approach. And we could impress these on individual store-owners over the past seven years," said Jerry Mathew, MD of LanMark.  Jerry Mathew owns 53% stake in Kochi-based LanMark. The combined turnover of LanMark stores is now . 108 crore, surely just a fraction of that of the big boys of retail. But then it has 160 stores, almost as many as Tata Croma and Reliance Digital put together.  The model is kept simple: retail outlets can join the brand by branding their shops LanMark, but retaining their individual status for accounting purposes, including sales tax registration. Lan-Mark takes care of bulk sourcing of products, their transportation to individual stores, and more importantly, the publicity. "Individual shops hardly had any publicity budgets, but over these years we have spent . 10 crore in print advertising alone," said Mathew, who cites pan-European Euronics network to be the only comparable model of independent retailers. "This is a good development, an exciting thing to do, and perhaps the first of its kind in the country," said Shubhranshu Pani, managing director (retail), Jones Lang LaSalle in India.  Pani said group buying is key in retail and that it is a "phenomenal thought for a group of retailers to come together in co-branding, in contrast to the regular franchisee model.  LanMark has invested in setting up accounting and transportation logisticspractices that are now leveraged for the 160 stores in the group, complete with SAP-based operations for the brand and Tally systems for individual stores. Products are transported to stores in GPS-enabled trucks that can even provide information on the time spent on unloading at a particular store.  The brand also cleared a seemingly insurmountable obstacle in retail trade: getting paid for deliveries on time. Member stores have to strictly abide by the cash-and-carry norm. "If any store delays payment or fails in accounting discipline, we show them the door," said KA Felix, a consultant for the brand. LanMark also takes care of professionalising staff behaviour, providing a formal, syllabus-oriented training module for staff drawn from different stores in batches of 40, and is mulling the option of organising training programmes in association with IIM-Ahmedabad.  Those who have joined the brand have no regrets, having found a new way to compete with bigger chains.  "In the early years, it was alright being a one-store business, but when larger showrooms came along, and manufacturers gave incentives and foreign jaunts only to the bigger players, business started flagging," said Mathew Maliekal, a store owner at Kaduthuruthy in Kottayam district, who started 26 years ago and joined LanMark when it came into being.  "Since joining the LanMark network, my business has grown two-and-a-half times, and the training and advice I get is a bonus." Mathew said getting stores on board was not easy. "But what we discovered was that a number of proprietors did not even know whether they were making profits or losses, owing to loose accounting practices. Once store owners realised that dealer profitability was our abiding concern, they signed up."  Twist in Retail  LANMARK HELPS  scale-challenged small traders overcome disadvantages  IT BRINGS  together white goods dealers under a common brand  MORE STORES  under umbrella than Croma, Reliance Digital  LANMARK IS  in charge of sourcing, logistics & publicity for all dealers  POPULAR IN  Kerala, it has just entered Chennai. Rest of South India on horizon

The Curious Case of Indian Realty

Home prices stay stubbornly high even as demand slumps Gautam Belwal is not much of a movie buff. But these days, he spends most Sundays at his rented home catching some action flick or the other. His weekly searches for a twobedroom house in Noida (in Delhi NCR) have come to an end due to soaring realty prices. And as if to add insult to injury, the youngster suffered a double whammy some weeks ago. The multinational IT company he works for doled out a below-par increment, dashing his hopes of buying a permanent home.  Sumit Joshi, director of Noida-based Real Credit Consultancy, a small firm that helps home buyers get loans from the big banks, reminisces about the days he would be flooded with calls from customers and bankers. Now, he is the one doing the chasing as buyers stay away and a banker client refuses payment due to unfulfilled targets.  Joshi and Belwal have little in common apart from being members of India's increasingly harried middle-class striving to either buy a home or make a living in the fractious, disorderly real estate market. But as prices rise, thanks to inflation and attempts at cartelisation by real estate barons in some parts of the country, and banks turn stingy and overcautious, people like Joshi and Belwal are finding their carefully laid out plans being blown away by this perfect storm.  "Our payments from banks are linked to certain disbursement targets we are struggling to meet because of very slow home sales. Where is the business today?" asks Joshi. Home Loan Growth Slows to 12%  Joshi has seen a 40% crash in business in the past eight months.  But he is not the only one. Across the country, home loan bankers are seeing a sharp drop in business as buyers rebel against high prices by staying away. According to a recent Knight Frank report, Indian real estate prices rose 12% in the past year, the third highest in the world. Reserve Bank data shows housing loan growth slowed to 12.1% for the year ended March 2012 from 16% in the previous year. Also, before real estate prices peaked in 2008, big lenders were managing to grow their home loan portfolio at an annual average of 25%.  "Demand in metros has slowed down in April-May. This is mainly due to high interest rates, which have made buyers hesitant to buy property. There are also very few new projects being announced as builders' communities have been affected by high interest rates too," said VK Sharma, CEO of LIC Housing Finance, the country's third-largest housing finance company.  Loan growth at LIC Housing Finance slipped to 17% in 2011-12 from 28% a year ago, forcing the company to set a lower target of 20% for the current fiscal.  State Bank of India's housing loan disbursement grew 15% in 2011-12 against its target of 20%. The country's largest lender sanctioned Rs 28,000-crore of housing loans last fiscal.  "During January-March, there were hopes of business picking up, but April-May has been slack. Typically, this period is slower, but this time around it was slacker than last year. FY2013 has been quite disappointing due to both local and macro-level issues," said a senior official of SBI.  He also highlighted that there are markets like Mumbai, NCR and Bangalore that have unabsorbed supply, and in some cases, it is close to two years' oversupply.  But what is surprising in all this is that prices are showing no signs of coming down. Though consumers are shying away and there is enough evidence of this and volumes have dipped, debttrapped developers are still not ready to reduce prices of apartments.  For the quarter-ended March, prices in the National Capital Region rose 33% while Mumbai and Bangalore posted 17% and 8% jump, a recent report from Liases Foras Real Estate Rating & Research showed.  "Demand has slowed down, number of transactions is falling. In the top 10 cities, sales volume has dropped 10% in the last one year. Mumbai is the worst-affected market with a 40% decline in transactions, but prices have remained more or less stable across these regions," said Binaifer Jehani, director, CRISIL Research.  Some Mumbai-based developers such as Kalpataru Group, Oberoi Realty, Lodha Developers, Wadhwa Group and Nirmal Lifestyle have actually raised prices in the last few months by more than 10% in Mumbai's central and western suburbs as well as in south Mumbai.  Although the hottest property market has an inventory level of over 120 million sq ft, equivalent to 40 months' average sales volume here, not much of this is available for immediate possession. This is helping developers with projects that are close to delivery and resale flat owners seek premium for their units.  The NCR, being the largest residential market, faces challenges at unsold inventory levels. However, the market has shown stability and there has been no drastic dip in the sales velocity in 2011-12.  In the most stable property market of Bangalore, too, buyers are either deferring their decisions or looking at suburbs to buy properties.  "There's a demand-supply mismatch. Only 20-25% of the properties in Bangalore are in the price range of Rs 35-70 lakh category while the current demand is driven by this segment. Around 70% of the buyers are looking to purchase properties in this bracket," said BM Poonacha, head-land and special projects, LJ Hooker Project Marketing India.  While apartment sales in the price range of Rs 35-70 lakh have grown 20-25% in Bangalore, there's a drop in demand for property priced over Rs 1 crore, he said.  Builders are blaming the civic and urban development authorities for delay in approvals. "Most of the launches are not taking place as there are no approvals coming from the civic authority. Once approvals gain momentum, we can expect project launches to increase, and that can lead to some softening in housing prices. There's no possibility of any cartelisation among developers as each one is incurring huge interest cost for any delay in project launch," said Paras Gundecha, president of Maharashtra Chamber of Housing Industry.  Others agree, but what Gundehca is not saying here is that builders are also unwilling to bring down prices and are either delaying launches or selling noncore businesses in order to raise cash and build a cushion for themselves.  "Reducing prices might not help in reviving the demand beyond a point, as buyers would expect further drop in prices and defer their buying decisions. Rather, developers are going slowly with their launches," Jehani said.  According to her, developers prefer to ease their debt burden by selling land parcels or non-core assets rather than directly reduce prices of their projects. They also feel there's no scope for any price reduction in the first place.  By going slow with their launches, builders might open themselves to charges of cartelisation. But so far, very little has been proved and the Competition Commission of India (CCI) did not respond to an ET query on whether a probe was underway on alleged cartelisation by builders.  "All input costs have gone up, including government taxes like property tax and development charges. Labour cost has shot up nearly 60%; cement and steel prices have also increased over 30% in the last one year. There's a limit up to which developers can take the hit," said Lalit Kumar Jain, national president of the Confederation of Real Estate Developers Association of India (CREDAI).  "It's impossible to expect prices to soften hereon, but at the first opportunity, prices should move up 10-15% to compensate developers against the input cost rise," said Jain.  "Developers' margins are clearly under pressure due to rising costs. Operating margins are now around 30-35%. This is a reasonable number to be in the business, but if we remove the rental income some of the developers are earning from their commercial properties, it would move a lot lower," said Aashiesh Agarwaal of Edelweiss Securities.

Property tax plan passed, oppn upset over ‘haste’

Mumbai: The civic House has passed a proposal to change the property tax calculation system from ratable to one based on capital value, citing it as urgent business. However, some corporators said there was no urgency to clear the plan.      Congress corporator Asif Zakaria said, "The administration sneaked in the proposal by claiming it was urgent business. Most corporators did not even know that it was on the agenda for discussion. When I told the mayor that it was an important issue and needed discussion, he rebuffed me saying he had to rush because of the fire at Mantralaya."      Defending the administration, standing committee chairman Rahul Shewale said, "The property tax proposal had already been passed in the standing committee, indicating that there wasn't any opposition to it. We had to pass the proposal as it was high time we started collecting the taxes."      According to the BMC, 3.87 lakh properties would benefit from tax reduction, whereas 2.75 lakh would face a higher rate of taxation.

GOVT GUTTED Key Mantralaya records turn to ash

Theories Abound Whether Blaze Was Started To Destroy Files Of Important Cases And Projects     The inferno at the state secretariat on Thursday gutted the offices of many vital government departments, left at least four floors structurally weak, and incinerated scores of computers as well as thousands of important files. Speculation was rife through the day whether the fire was an accident or an act of sabotage carried out to destroy documents relating to crucial cases and projects.      Senior officials refrained from putting a figure on the damage but admitted that the disaster had "set the government back by at least a year". With heaps and heaps of documents that lined the corridors and rooms of Mantralaya getting lost, the state will have to start from scratch again in many cases. Files will have to be somehow recovered, passed around departments for perusal as well as approval, and budgets allocated.      The biggest brunt may be borne by the departments that were hit the worst on Thursday. The blaze destroyed the offices of the urban development department, revenue department, education department, home department, transport department, the chief minister, deputy chief minister and several ministers. This meant that files relating to cases such as Adarsh and Lavasa besides scores of other construction and development projects could be lost forever.      Officials stressed that Adarsh records can be recovered from the CBI or the two-member judicial commission; CBI officers too maintained that they have all the "requisite documents necessary to file a chargesheet".      Still, conspiracy theories raged over the cause of the inferno. Many wondered if the secretariat was sabotaged to rid of records maintained by the urban development department of real estate proposals and projects. The theory  was fed by the fact that the fire reportedly began near the department. Another conjecture that did the rounds was that the blaze was started to fast-track the redevelopment of Mantralaya. A controversial proposal for the building's makeover using an FSI of 4 as part of a slum redevelopment scheme had earlier been withdrawn. Leader of opposition in the legislative council Vinod Tawde reportedly said the incident could be an accident, a conspiracy, or even an act of terror. He demanded the government set up a committee of national and international forensic experts to probe the matter. Tawde's party colleague Eknath Khadse, who is the leader of the opposition in the state assembly, also demanded an independent investigation.      With a number of theories floating around, the state government ordered a probe by Mumbai police's crime branch into the disaster. Also, chief minister Prithviraj Chavan pointed out that 27,000 government files had been digitised as part of a drive.      The crime branch, meanwhile, claimed there is little possibility of "any mala fide intention behind the fire". "At this point it is difficult to say anything, but we are probing all possible angles," said a senior police officer.  GOVT IN THE HOT SEAT  Thursday's fire raged through floors 4 to 7 of Mantralaya. Here are the important offices on those floors: 4TH Urban development dept, secretary and deputy secretary of energy, secretaries of revenue and forest, sports minister, education minister, education department 5TH Chief secretary, water conservation dept, additional chief secretary (home), principal secretary (home), emergency operations centre (disaster management control room), transport dept, cooperatives minister, principal secretary (culture & excise), higher and technical education minister, protocol office 6TH Chief minister, chief minister's secretariat, deputy chief minister, deputy chief minister's secretariat, general administration department, minister of state for education 7TH Home department, information technology dept, Aadhar office, cultural dept  WHO WAS IN BUILDING On floors where fire was: Ajit Pawar, Babanrao Pachpute, Prakash Solankhe, Nitin Raut, Satej Patil, Jayant Banthia  On floors without fire: Home minister R R Patil, rural development minister Jayant Patil, water conservation minister Laxman Dhoble, woman and child development minister Varsha Gaikwad, forest and relief rehabilitation minister Patangrao Kadam  HOW THEY ESCAPED  Initially, fire was on 4th floor of main building. Most people then escaped through staircases As the fire progressed, many people went to windows and parapets Some people slid down water pipes Around 65 people were rescued through snorkels (fire brigade ladders) REMAINS OF THE DAY: A firefighter watches the gutted interiors of a Mantralaya room after the flames have been doused

India: Two dozen FCCB issuers set to default, says S&P

Mumbai: Rating agency Standard & Poor's has said that around two dozen companies whose foreign currency convertible bonds (FCCBs) are set to mature in 2012 are likely to default because of their inability to raise funds to refinance these instruments. These companies had issued bonds in the past assuming that investors would choose to convert them into equity and had not made any provisions for their redemption. With the current market price of these companies at a fraction of the redemption price there is no way the bonds are likely to be traded for equity.      "With India's stock market still in a slump, investors don't want to convert the $5 billion in FCCBs that will mature in the rest of 2012 into stock that's worth 20%-90% less than the conversion price. Instead, they want their money. The steep 30% drop in the value of the Indian rupee against the US dollar over past two years is exacerbating the problem. The result is that many FCCB issuers may have trouble finding funds to repay bondholders – and that those that cannot will face payment default," said S&P in a report.      According to S&P, if issuers were to pay off their FCCBs, about one-third of them would be left with operating cash flows barely enough to meet interest liabilities. Because of limited access to loans and high cost of borrowing, S&P expects that most of the 48 companies would try to raise funds through external commercial borrowings or through qualified institutional placements (ie seeking funds from institutional investors) to pay off their FCCB debt. RBI allows companies to raise ECBs to repay convertible bonds if they are able to raise funds at Libor plus five percentage points.      "Orchid Chemicals & Pharmaceuticals, Hotel Leela Venture and The India Cements have in the past redeemed FCCBs in this manner. We believe JSW Steel will do the same, probably in June 2012. However, this option is available only to companies with strong credit profiles," S&P said.      Overseas branches of Indian banks provide most of such loans and but they would be constrained by their limited access to dollars. "We estimate that interest expenses will rise by 25%, on average, for companies that can find funding to pay off FCCBs. That's because about 80% of companies with FCCBs maturing in the rest of 2012 pay less than 2% interest on the bonds, and about 60% have a zero coupon. However, the cost of borrowing to pay off FCCBs would be much higher—about 6% for external commercial borrowings and 10%-12% for loans from domestic commercial banks," the report said.

Fire sweeps Mantralaya, 2 die

Govt And Fire Brigade Caught Unprepared Important Records Destroyed 

• 15 Injured

Mumbai: Two people died and 15 were injured in a fire that raged through the top four floors of the eight-storey Mantralaya, Maharashtra's seat of power, through most of Thursday. The blaze, which started at 2.35pm, was still on at the time of going to press and it had reportedly destroyed thousands of sensitive documents, computer files and records, many pertaining to land use, de-reservation and the crucial Adarsh society scam. 

    A combing operation by the fire brigade late in the evening revealed two bodies outside deputy chief minister Ajit Pawar's chamber. "Two bodies, completely charred, were found on the sixth floor," BMC chief Sitaram Kunte confirmed. "Both the bodies were handed over to the police and will be sent to JJ Hospital for post-mortem." Unconfirmed reports said a third person, reported missing, may be dead, said PTI. 
    BMC officials said the two deceased were Umesh Potekar and Mahesh Gughale, businessmen from Baramati. Officials said Pawar had been informed that two people were trapped on the sixth floor. "The deputy CM tried to speak to them but no contact was possible after some time," a Mantralaya official said. 
    Mantralaya has 2,500 to 3,000 employees and on any given day about 3,000 visitors. Apart from Ajit Pawar, home minister R R Patil, minister of state for home Satej Patil, EGS minister Nitin Raut and chief secretary Jayantkumar Banthia were among those in the building when disaster struck. Additional chief secretary (home) Amitabh Rajan and NCP leader Vinayak Mete escaped using a fire ladder from the top floors. 
    Thursday's fire badly exposed the lack of preparedness of Mumbai's fire brigade and the poor fire safety equipment in the state's most important building. It raised awkward questions about the government's desire to build vertically in the city and allow towers when it struggled to control a blaze in a ground-plus- sevenstorey building. 
    In frightening scenes, many employees, including women on the higher floors, frantically tried to escape from the 57-year-old building. They crowded on balconies or perched on window sills and ledges. The scenes of people clambering down water pipes were reminiscent of recent highrise fires in Kolkata and Bangalore.

India:Re falls below 56 as Fitch lowers banks’ outlook

Mumbai: The rupee slipped beyond 56 level as the domestic currency slipped for the third consecutive day as rating agency Fitch lowered the outlook of Indian banks and financial institutions.      The local currency ended the day to close at 56.15 against the dollar, 18 paise lower than Tuesday's close of 55.97. Sentiment was also hit by hard-hitting comments from RBI governor D Subbarao on Monday that growth would have to be sacrificed to bring inflation under check.      The lenders affected by Fitch's rating revision include the State Bank of India, Punjab National Bank, Bank of Baroda, Canara Bank, IDBI Bank, ICICI Bank, Axis Bank, Export-Import Bank of India, Housing and Urban Development Corporation, Infrastructure Development Finance Company. Following the revision in the ratings, the BSE Bankex, which reflects the movement of bank stocks, fell almost half a percentage point on a day when the sensex closed flat.      The rupee had touched an all-time low of 56.52 against the dollar on May 31. Although there was a marginal improvement in sentiment after an election in Greece brought into power a pro-euro government, domestic issues have been keeping the currency under pressure.      On Tuesday, RBI governor D Subbarao said that it was not RBI's intention to defend the rupee through intervention and that RBI sold dollars only to smooth out volatility. The dollar gained against the rupee even as it weakened against the euro. Markets worldwide saw a minor rally on hopes that the US Federal will come with a fresh stimulus package in its meeting on Wednesday. Dealers said that if Fed disappointed markets there was a possibility that the rupee could open weaker on Thursday.  Sensex ends flat in volatile trade  Mumbai: In choppy trade, the BSE sensex on Wednesday ended 37 points higher at 16,897, led by metal, capital goods and healthcare stocks, with investors tracking firm global trends amid renewed hopes that Federal Reserve would come out with fresh steps to boost the US economy. The sensex had jumped 103 points in the intra-day trade. AGENCIES

India Inc’s FY12 defaults highest ever

Banks Sought Recast Of Record $12Bn Corporate Loans, Up 156% From FY11

Chennai: Economic slowdown coupled with pressure on profitability has pushed India Inc's default rate to a 13-year high at 6.3% for the fiscal ended March 2012. The pain continued in April when it stood at 5.2%. 
    "Indian corporates defaulted on a total of 2,969 debt instruments in 2011-12. This was the highest number of defaults in a year," economic thinktank CMIE said. The ratings-action ratio (RAR), measured as the relative frequency of upgrades to downgrades, witnessed a sharp fall in April 2012. It crashed to 0.2 from 0.5 in the preceding month. This was the lowest level of RAR since June 2009. This was also the eighth consecutive month of RAR remaining below 1. The RAR slipped below 1 in September 2011 and has remained below the critical level since. 
    For FY12, banks sought to restructure a record $12 billion in corporate loans through the Corporate Debt Restructuring Cell (CDR), an RBI-approved consortium of lenders – an increase of 156% from the year before. Corporate India's profitability was under stress during a major part of the fiscal. Consequently, profits fell 5.4% in 2011-12. 
    "Stress in operating environment, tightness in liquidity and a surge in entities in the lower rated categories were the main reasons for the high default rate. If the current tightness continues, credit quality may remain weak," Naresh Thakkar, MD of ratings agency ICRA said. 
    CMIE's Economic Intelligence Service was however bullish on corporate profitability in 2012-13. "We expect the revival in corporate India's profit performance. After growing by 13.7% in March quarter, its profits are expected to grow by 29.2% in 2012-13 after a 5.4% fall in 2011-12," CMIE said. 
    It added that sales growth at India Inc would be a modest 12.1% after growing a robust 20.2% in 2010-11 and 22.9% in 2011-12. "We expect the sales growth to come down from 18.1% in March quarter to 14.2% in the first half of 2012-13 and then to 10.2% in the second half," the bulletin said. 
SQUEEZED BY LOW PROFITS 
tCMIE says while default rate hit a 13-year high in FY12, the actual number of defaults was the highest ever at 2,969 
tIndia Inc was under stress for most of 2011-12, due to which profits fell 5.4% 
tEven April default rate remained high at 5.2% 
tThinktank's intelligence service remains bullish on FY13, projecting 29.2% growth after 13.7% surge in March

Just Go to TrueCaller if You Want to Dial Chidambaram!

Swedish app can access unlisted numbers of India's who's who Unlisted private mobile phone numbers of Cabinet ministers such as Kapil Sibal and P Chidambaram,top industrialistssuch asMukesh Ambani and Sunil Mittal, celebrities such as Shah Rukh Khan and Sachin Tendulkar are among millions of Indian numbers listed on the database of a Scandinavian app maker, thanks to unsuspecting smartphone users who let the app harvest their phone's contact list.  TrueCaller, a popular app built by a Swedish company, lets users look up the owner of a phone number. So if you get a missed call from a number you do not identify, you can search on the TrueCaller app or its website to see the owner of that number. However, every time a user downloads the app, and enables a function called 'Enhanced Search', it asks your permission to "securely send your phone book contacts to our servers".  Caught in Call Trap? What's the App TRUE CALLER  Function?  Reverse directory search. Put in a number, know who it belongs to.  How?  Partly public directories, partly by harvesting the phone books of millions of users who download the TrueCaller app. So even if you didn't agree, your number might be on the True Caller database because a friend downloaded the app. Has 1.6 million Indian users.  What can You Do?  Find out if your number is part of the database on Truecaller.com. Use the unlist option at the bottom of the website to remove your number. App's Database a Giant, Collective Phone Book  When the user grants permission to "securely send phone book contacts to our servers", the app harvests the phone's contact list.  What the app doesn't tell you, unless you read the detailed terms of service, is that these numbers then become part of a publicly searchable database. So every time a user downloads the app, his entire phone book becomes part of a public database without the consent of the people who own those numbers. The app's database, essentially, is a giant, collective phone book. The mobile numbers of nearly every Indian Cabinet minister, heads of intelligence agencies such as the Intelligence Bureau and Department of Revenue Intelligence, and CEOs of India's largest companies are all on the database.  According to Alan Mamedi, COO and co-founder of app-maker True Software Scandinavia AB, the app has 1.6 million Indian users. India is the app's single-largest market, accounting for nearly half of its user base. Assuming an average of 100 contacts per phone book and allowing for duplicates, the company now owns a database of 50-80 million Indian phone numbers. Because many people save contacts with names and work identities — 'Ramesh Pepsi', for instance, for someone who works at the cola company — the database has not just the corresponding name for a number, but quite often, work or business-related information as well. A breach in the database of this small Swedish firm would compromise a vast amount of private information. Telecom analyst Mahesh Uppal said the company's practice of harvesting phone books was dubious. "Mobile phone numbers are not meant to be publicly accessible. It can reach you at a place and time inconvenient to you, so it risks invading your privacy. And when it is not voluntary, like in this case, it is clearly a problem." Mamedi says the company makes all efforts to keep the database secure. "Our engineers are experienced in this field and we have our own architecture," he told ET on phone from Stockholm. However, far bigger companies with larger budgets and expertise routinely fall prey to hacking attacks. Earlier this month, business-networking site LinkedIn, which has 150 million members, fell victim to an attack when some 6 million passwords were stolen and posted online.  Mamedi says the company does not allow users to search for a name and get that person's number. But on its website, Truecaller.com, when a user types in a few digits of a phone number, the site provides a prompt — similar to an autocomplete form for email ids — with other numbers that start with those digits. These numbers, and corresponding info, can be legitimately harvested and used by telemarketers. Mamedi said a user can only search up to 10 numbers a day. This reporter was able to search a much larger number. TrueCaller was launched in 2009 and, according to Mamedi, India has always been a large market for the company. It does not disclose financial information. Mamedi said TrueCaller has never been targetted by hackers.

At G20, India's PM vows to revive growth

Says Tough Steps Will Be Taken To Attract Investors, Hints At Subsidy Cut

NewDelhi:The UPA government is determined to take tough steps, including controlling of subsidies, to revive investor sentiment, Prime Minister Manmohan Singh said on Tuesday. 
    The tough talk on reforms comes a day after global ratings agency Fitch joined Standard & Poor's to cut the outlook on India's rating to negative from stable citing slowing growth, lack of reforms and weakness in public finances. The Reserve Bank of India (RBI), which kept interest rates unchanged on Monday, had also put the ball in the government's court and had talked about easing supply bottlenecks to tame inflation. "Like other countries, we too allowed the fiscal deficit to expand after 2008 to impart a stimulus. We are now focusing on reversing the expansion," Singh said at the plenary session of the G20 meeting in Los Cabos in Mexico. 
    "This will require tough decisions, including on controlling subsidies, which we are determined to take," Singh said. The RBI on Monday said it had frontloaded the policy rate reduction in April with a cut of 50 basis points and that this decision was based on the premise that the process of fiscal consolidation critical for inflation management would get underway, along with other supply-side initiatives. It also said subsidy burden on the government was crowding out public investment at a time when reviving investment, both public and private, was a critical imperative. The Prime Minister said the government will devise transparent policies which will provide a level playing field to both domestic and foreign investors. 
    The UPA government has faced strong criticism for its policy of retrospective taxation and handling of the Vodafone tax issue. Investors have slammed the government's unpredictable policies and have stayed on the sidelines. Economists have doubted the government's ability to meet the fiscal deficit target of 5.1% of gross domestic product for 2012-13. "Investment has been affected by the adverse global climate which impacts both foreign and domestic investors. We are taking steps to revive investor sentiment," Singh said referring to the slowdown in investment. "We are determined to create an environment that would boost investor sentiment and promote an atmosphere conducive to enterprise and creativity," he added. 
    Singh said the fundamentals of the economy remained strong and the government was confident of returning to a high growth of 8-9%. "Our growth rate in 2011-12 declined to 6.5% from the level of 8.4% in the previous year. This may look like a reasonable figure, given growth rates being experienced in the rest of the world, but our public is impatient for a return to high growth and faster jobs creation," he said. Singh also outlined the steps taken by the government to shore up infrastructure investment. "We are focusing heavily on infrastructure investment and in this context we have set ambitious targets to keep infrastructure investment on track and also put in place a problem resolution mechanism to overcome implementation bottlenecks," the Prime Minister said.

PM Manmohan Singh with German chancellor Angela Merkel at Los Cabos during the G20 summit on Monday