Firemen in Mumbai cannot go beyond 20th floor

How is the BMC approving building plans with more then 20 floors ? Every new building coming up has more then 20 floors. Expecting the builders to comply with fire-safety requirements is asking for the fox to guard the chicken. Is there anyone who believes this will happen ? I guess with the 100% water cut in future, one can only hazard a guess in the event of an unfortunate fire in the upper floors of a high-rise. Like all things in India, politicians won't face the music unless there is a catastrophic incident. Buyer beware is all one can advise.

DNA India reports.
Mumbai: The growing number of skyscrapers in Mumbai has given the city's skyline a facelift, but it will prove to be a headache for the Brihanmumbai Municipal Corporation (BMC). The civic body is ill-equipped to handle fire threats to most skyscrapers in the city.

The BMC has told buildings with more than 20 floors to arrange for their own fire safety.The civic body has made it clear that it is not in a position to help high-rises in case of a fire, particularly if the fire is on the 20th floor or above. The Mumbai fire brigade is not equipped to douse fire above 20 floors as the tallest snorkel available with it is 60 feet high. Using the snorkel, firemen can climb up to 20 to 22 floors (i.e. 68 meters).

The city, approximately, has 186 tall buildings - which have more than 20 floors - and about 59 under-construction buildings that are expected to be more than 20 storeys. Two of the under-construction skyscrapers are expected to be more than 100 floors.

The BMC is now changing its policy to make sure that all buildings are safe in case of a fire. "BMC will allow the new high-rises to come up only if they are equipped with modern fire fighting equipment - especially on the top floors," Manisha Mhaiskar, additional municipal commissioner, said.

Mhaiskar added that the occupants of the building will also have to be equipped with the fire fighting installations. "It is very difficult to douse a fire which breaks out on the upper floors. There will be another change in the policy, which will hold the residents responsible for any mishap in the skyscraper," she said.

Vastu junk in the Times of India

Here is another junk article in the Times of India, property times segment, only meant to fill up space as the advertisements have dropped drastically. The Vastu quack talks about Indian being under economic distress as it is surrounded by water on the east, south east and west and southwest. There is another country which has similar geographical boundaries and has enjoyed great economic progress in the past 50 years - USA

Water makes a difference

Water in East, Southeast, South, Southwest and West. India is surrounded by water in five directions. It is one of the largest peninsulas in the world. Out of eight directions five directions are surrounded with water.
As per the principles of Vastushastra water element in North, Northeast and East is considered as the best for prosperity.
In the case of our country, it is only the East direction which matches with this.
Water element in the rest of the five directions is bad, out of which South, Southwest and West is extremely negative.
Water in the Southeast leads to delay or lot of obstacles in every work. At the same time, water in the Southeast is also responsible for unproductive expenses, malpractices as well as corruption. Increased cost of the projects due to malpractices or corruption is a major obstruction in our progress.
Water in South, Southwest and West hampers the stability of the nation. Repeated aggressions on this nation caused instability and foreigners ruled this country for a long period.
It also leads to financial losses on large scale almost leading to bankruptcy.
If we look at the progress of Indian economy it was always under the pressure of foreign borrowings.
Dr.Raviraj Ahirrao (Ph.D), Pune 020 – 30266435 Website: www.vasturaviraj.co.in, Sms: VASTURAVIRAJ at 56767

Learning From the West/ Why does India suck ??

In a speech to students at a management institute NR Naryaran Murthy delivered a scathing attack on the Indian culture and its supposedly superiority. I've been critical on NRN on a few issues however here I tend to agree with him. All his points are extremely valid given the current context of business and political nexus in India. However I find it hard to believe that Infosys has acquired thousands of acres of land in Bangalore and Hyderbad without any special favors to the powers at hand. These speeches would be more useful if they were directed towards government beaurocrats and ministers as these folks are responsible for more damage to Indian society then anyone else in modern India. It is interesting he brings up the Milan subway example in Mumbai. I've travelled by that sub-way thousands of times and each time the traffic is more horrible then before.

To surmise Indians according to NR Narayana Murthy are

1. Irresponsible towards community

2. Corrupt

3. Tax evaders

4. Cheaters

5. Bribers

6. Apathetic in attitude

7. Arrogant about own intellect

8. Poor listeners

9. Responsibilty dodgers

10. Unaccountable for actions

11. Unprofessional

12. Thin-skinned

13. Feudal thinkers

14. Not independent

15. Dishonor contractual obligations

16. Intellectually dishonest

17. Lack of commitment.

18. Hypocrites

19. Prejudiced

20. Unpunctual

Learning From the West - N R Narayana Murthy

Download pdf file: web.iitd.ac.in/~mamidala/HTMLobj-142/LearningFromTheWest.pdf

Ladies and gentlemen:
It is a pleasure to be here at the Lal Bahadur Shastri Institute of Management.
Lal Bahadur Shastri was a man of strong values and he epitomized simple
living. He was a freedom fighter and innovative administrator who contributed
to nation building in full measure. It is indeed a matter of pride for me to be
chosen for the Lal Bahadur Shastri Award for Public Administration and
Management Sciences. I thank the jury for this honor.

When I got the invitation to speak here, I decided to speak on an important
topic on which I have pondered for years - the role of Western values in
contemporary Indian society. Coming from a company that is built on strong
values, the topic is close to my heart. Moreover, an organization is
representative of society, and some of the lessons that I have learnt are
applicable in the national context. In fact, values drive progress and define
quality of life in society.

The word community joins two Latin words com ("together" or "with") and unus
("one"). A community, then, is both one and many. It is a unified multitude and
not a mere group of people. As it is said in the Vedas: Man can live individually,
but can survive only collectively. Hence, the challenge is to form a progressive
community by balancing the interests of the individual and that of the society.
To meet this, we need to develop a value system where people accept modest
sacrifices for the common good.

What is a value system? It is the protocol for behavior that enhances the trust,
confidence and commitment of members of the community. It goes beyond the
domain of legality - it is about decent and desirable behavior. Further, it
includes putting the community interests ahead of your own. Thus, our
collective survival and progress is predicated on sound values.

There are two pillars of the cultural value system - loyalty to family and loyalty
to community. One should not be in isolation to the other, because, successful
societies are those which combine both harmoniously. It is in this context that I
will discuss the role of Western values in contemporary Indian society.

Some of you here might say that most of what I am going to discuss are actually
Indian values in old ages, and not Western values. I live in the present, not in
the bygone era. Therefore, I have seen these values practiced primarily in the
West and not in India. Hence, the title of the topic.

I am happy as long as we practice these values - whether we call it Western or
old Indian values. As an Indian, I am proud to be part of a culture, which has
deep-rooted family values. We have tremendous loyalty to the family. For
instance, parents make enormous sacrifices for their children. They support
them until they can stand on their own feet. On the other side, children
consider it their duty to take care of aged parents.
We believe: Mathru devo bhava - mother is God, and pithru devo bhava - father
is God. Further, brothers and sisters sacrifice for each other. In fact, the eldest
brother or sister is respected by all the other siblings. As for marriage, it is held
to be a sacred union - husband and wife are bonded, most often, for life. In joint
families, the entire family works towards the welfare of the family. There is so
much love and affection in our family life.

This is the essence of Indian values and one of our key strengths. Our families
act as a critical support mechanism for us. In fact, the credit to the success of
Infosys goes, as much to the founders as to their families, for supporting them
through the tough times. Unfortunately, our attitude towards family life is not
reflected in our attitude towards community behavior. From littering the streets
to corruption to breaking of contractual obligations, we are apathetic to the
common good. In the West - the US, Canada, Europe, Australia, New Zealand -
individuals understand that they have to be responsible towards their
community.

The primary difference between the West and us is that, there, people have a
much better societal orientation. They care more for the society than we do.
Further, they generally sacrifice more for the society than us. Quality of life is
enhanced because of this. This is where we need to learn from the West.
I will talk about some of the lessons that we, Indians, can learn from the West.
In the West, there is respect for the public good. For instance, parks free of
litter, clean streets, public toilets free of graffiti - all these are instances of care
for the public good. On the contrary, in India, we keep our houses clean and
water our gardens everyday - but, when we go to a park, we do not think twice
before littering the place.

Corruption, as we see in India, is another example of putting the interest of
oneself, and at best that of one's family, above that of the society. Society is
relatively corruption free in the West. For instance, it is very difficult to bribe a
police officer into avoiding a speeding ticket.

This is because of the individual's responsible behavior towards the community
as a whole On the contrary, in India, corruption, tax evasion, cheating and
bribery have eaten into our vitals. For instance, contractors bribe officials, and
construct low-quality roads and bridges. The result is that society loses in the
form of substandard defence equipment and infrastructure, and low-quality
recruitment, just to name a few impediments. Unfortunately, this behavior is
condoned by almost everyone.

Apathy in solving community matters has held us back from making progress,
which is otherwise within our reach. We see serious problems around us but do
not try to solve them. We behave as if the problems do not exist or is somebody
else's. On the other hand, in the West, people solve societal problems
proactively. There are several examples of our apathetic attitude. For instance,
all of us are aware of the problem of drought in India.
More than 40 years ago, Dr. K. L. Rao - an irrigation expert, suggested creation
of a water grid connecting all the rivers in North and South India, to solve this
problem. Unfortunately, nothing has been done about this. The story of power
shortage in Bangalore is another instance. In 1983, it was decided to build a
thermal power plant to meet Bangalore's power requirements. Unfortunately,
we have still not started it. Further, the Milan subway in Bombay is in a
deplorable state for the last 40 years, and no action has been taken.
To quote another example, considering the constant travel required in the
software industry; five years ago, I had suggested a 240-page passport. This
would eliminate frequent visits to the passport office. In fact, we are ready to
pay for it. However, I am yet to hear from the Ministry of External Affairs on
this.

We, Indians, would do well to remember Thomas Hunter's words: Idleness
travels very slowly, and poverty soon overtakes it. What could be the reason for
all this? We were ruled by foreigners for over thousand years. Thus, we have
always believed that public issues belonged to some foreign ruler and that we
have no role in solving them.

Moreover, we have lost the will to proactively solve our own problems. Thus, we
have got used to just executing someone else's orders. Borrowing Aristotle's
words: We are what we repeatedly do. Thus, having done this over the years,
the decision-makers in our society are not trained for solving problems. Our
decision-makers look to somebody else to take decisions. Unfortunately, there
is nobody to look up to, and this is the tragedy.

Our intellectual arrogance has also not helped our society. I have traveled
extensively, and in my experience, have not come across another society where
people are as contemptuous of better societies as we are, with as little progress
as we have achieved. Remember that arrogance breeds hypocrisy. No other
society gloats so much about the past as we do, with as little current
accomplishment.

Friends, this is not a new phenomenon, but at least a thousand years old. For
instance, Al Barouni, the famous Arabic logician and traveler of the 10th
century, who spent about 30 years in India from 997 AD to around 1027 AD,
referred to this trait of Indians. According to him, during his visit, most Indian
pundits considered it below their dignity even to hold arguments with him. In
fact, on a few occasions when a pundit was willing to listen to him, and found
his arguments to be very sound, he invariably asked Barouni: which Indian
pundit taught these smart things!

The most important attribute of a progressive society is respect for others who
have accomplished more than they themselves have, and learn from them.
Contrary to this, our leaders make us believe that other societies do not know
anything! At the same time, everyday, in the newspapers, you will find
numerous claims from our leaders that ours is the greatest nation. These
people would do well to remember Thomas Carlyle's words: The greatest of
faults is to be conscious of none.

If we have to progress, we have to change this attitude, listen to people who
have performed better than us, learn from them and perform better than them.
Infosys is a good example of such an attitude. We continue to rationalize our
failures. No other society has mastered this part as well as we have. Obviously,
this is an excuse to justify our incompetence, corruption, and apathy. This
attitude has to change. As Sir Josiah Stamp has said: It is easy to dodge our
responsibilities, but we cannot dodge the consequences of dodging our
responsibilities.

Another interesting attribute, which we Indians can learn from the West, is
their accountability. Irrespective of your position, in the West, you are held
accountable for what you do. However, in India, the more 'important' you are,
the less answerable you are. For instance, a senior politician once declared that
he 'forgot' to file his tax returns for 10 consecutive years - and he got away with
it. To quote another instance, there are over 100 loss making public sector
units (central) in India. Nevertheless, I have not seen action taken for bad
performance against top managers in these organizations.

Dignity of labor is an integral part of the Western value system. In the West,
each person is proud about his or her labor that raises honest sweat. On the
other hand, in India, we tend to overlook the significance of those who are not
in professional jobs. We have a mind set that reveres only supposedly
intellectual work.
For instance, I have seen many engineers, fresh from college, who only want to
do cutting-edge work and not work that is of relevance to business and the
country. However, be it an organization or society, there are different people
performing different roles. For success, all these people are required to
discharge their duties. This includes everyone from the CEO to the person who
serves tea - every role is important. Hence, we need a mind set that reveres
everyone who puts in honest work.

Indians become intimate even without being friendly. They ask favors of
strangers without any hesitation. For instance, the other day, while I was
traveling from Bangalore to Mantralaya, I met a fellow traveler on the train.
Hardly 5 minutes into the conversation he requested me to speak to his MD
about removing him from the bottom 10% list in his company, earmarked for
disciplinary action. I was reminded of what Rudyard Kipling once said: A
westerner can be friendly without being intimate while an easterner tends to be
intimate without being friendly.

Yet another lesson to be learnt from the West is about their professionalism in
dealings. The common good being more important than personal equations,
people do not let personal relations interfere with their professional dealings.
For instance, they don't hesitate to chastise a colleague, even if he is a personal
friend, for incompetent work.

In India, I have seen that we tend to view even work interactions from a
personal perspective. Further, we are the most 'thin-skinned' society in the
world - we see insults where none is meant. This may be because we were not
free for most of the last thousand years. Further, we seem to extend this lack of
professionalism to our sense of punctuality. We do not seem to respect the
other person's time.

The Indian Standard Time somehow seems to be always running late. Moreover,
deadlines are typically not met. How many public projects are completed on
time? The disheartening aspect is that we have accepted this as the norm
rather than the exception. In the West, they show professionalism by embracing
meritocracy. Meritocracy by definition means that we cannot let personal
prejudices affect our evaluation of an individual's performance. As we
increasingly start to benchmark ourselves with global standards, we have to
embrace meritocracy.

In the West, right from a very young age, parents teach their children to be
independent in thinking. Thus, they grow up to be strong, confident
individuals. In India, we still suffer from feudal thinking. I have seen people,
who are otherwise bright, refusing to show independence and preferring to be
told what to do by their boss. We need to overcome this attitude if we have to
succeed globally.

The Western value system teaches respect to contractual obligation. In the
West, contractual obligations are seldom dishonored. This is important -
enforceability of legal rights and contracts is the most important factor in the
enhancement of credibility of our people and nation.

In India, we consider our marriage vows as sacred. We are willing to sacrifice in
order to respect our marriage vows. However, we do not extend this to the
public domain. For instance, India had an unfavorable contract with Enron.
Instead of punishing the people responsible for negotiating this, we reneged on
the contract - this was much before we came to know about the illegal activities
at Enron.

To quote another instance, I had given recommendations to several students for
the national scholarship for higher studies in US universities. Most of them did
not return to India even though contractually they were obliged to spend five
years after their degree in India.

In fact, according to a professor at a reputed US university, the maximum
default rate for student loans is among Indians - all of these students pass out
in flying colors and land lucrative jobs, yet they refuse to pay back their loans.
Thus, their action has made it difficult for the students after them, from India,
to obtain loans. We have to change this attitude.

Further, we Indians do not display intellectual honesty. For example, our
political leaders use mobile phones to tell journalists on the other side that they
do not believe in technology! If we want our youngsters to progress, such
hypocrisy must be stopped. We are all aware of our rights as citizens.
Nevertheless, we often fail to acknowledge the duty that accompanies every
right. To borrow Dwight Eisenhower's words: People that value its privileges
above its principles soon loses both. Our duty is towards the community as a
whole, as much as it is towards our families.

We have to remember that fundamental social problems grow out of a lack of
commitment to the common good. To quote Henry Beecher: Culture is that
which helps us to work for the betterment of all. Hence, friends, I do believe
that we can make our society even better by assimilating these Western values
into our own culture - we will be stronger for it.

Most of our behavior comes from greed, lack of self-confidence, lack of
confidence in the nation, and lack of respect for the society. To borrow Gandhi's
words: There is enough in this world for everyone's need, but not enough for
everyone's greed. Let us work towards a society where we would do unto others
what we would have others do unto us. Let us all be responsible citizens who
make our country a great place to live. In the words of Churchill: Responsibility
is the price of greatness. We have to extend our family values beyond the
boundaries of our home.

Finally, let us work towards maximum welfare of the maximum people -
Samasta janaanaam sukhino bhavantu. Thus, let us - people of this generation,
conduct ourselves as great citizens rather than just good people so that we can
serve as good examples for our younger generation.
Speaker : N R Narayana Murthy

Editors Guild plans to check paid news

One of my pet peeves is finally getting noticed by the media. The Times of India Property Times supplement is a prime example of planted 'paid' news stories. Lets see if this Editors guild directives makes any difference. Indian Express reports

The Editors Guild of India, an industry body representing senior media editors across the country, has declared the issue of “paid news” as its focal agenda for 2010. Expressing shock and serious concern over the news reports on the increasing menace of “paid news” in media, the guild, in its annual general meeting held Tuesday in Delhi, announced the setting up of an “ethics committee” that will draft a code of conduct on the issue.

“To begin with we will send out letters to editors across the country to mobilise consent on the steps to be taken to check this menace,” said Rajdeep Sardesai, president of the guild and editor-in-chief of IBN Network. The code of conduct will list the do’s and don’ts on the issue, said Sardesai.

The ethics committee that will draft the code will be headed by T N Ninan, editor of financial daily Business Standard. The other members of the committee include noted columnist B G Varghese, Sumit Chakravarty, editor of Mainstream, and Madhu Kishwar, editor of Manushi.

Hyderabad Sinks - Riding the elephant.

I've never read a more scathing article on the vile nature of Indian politics and its overt and covert nexus between Andhra politicians and their business cronies. Instead of granting contracts to reputed firms, these guys have floated their own business entities to swindle the wealth of the India and AP. No wonder Sonia and others were finding that they were getting too powerful to handle and could rock the politican landscape in the years to come.

The Hyderabad housing bubble is now officially popped. Buyers can now breathe in peace.

John Elliot reports

India’s southern city of Hyderabad is becoming one of India’s most potent symbols of the greed and corruption that link politicians and businessmen. For the third time in a year, the state has been rocked by a crisis that exposes those linkages – this time over whether Andhra Pradesh should be split in two with the creation of a new state of Telangana based around Hyderabad (white area in map below).
This is a far cry from the glory and international fame of the past 15 or so years when this prosperous capital of the state of Andhra Pradesh became an international symbol of India’s dramatic growth in software, second only to Bangalore as a thriving location for information technology investment. Companies located there include Google and Microsoft, and Bill Clinton visited as US president.

The first of the state’s crises came a year ago with the collapse of Satyam, a leading Hyderabad-based software company that was owned by the family of its then chairman, Ramalinga Raju. The Rajus were closely linked with various politicians, including the state’s Congress chief minister, Y S Rajasekhar Reddy (YSR), who died in a helicopter crash in September, as well as his predecessor, Chandrababu Naidu. ..

Here is Bharat Bhusan's article in the Mail Today.

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Money backs ‘ Son- rise’ in Andhra
by Bharat Bhushan
IT HAS been a month since the former Andhra Chief Minister Y S Rajasekhar Reddy ( YSR) died in a helicopter crash.
The Congress high command has allowed his son, Y S Jaganmohan Reddy and his supporters to run riot in this period.
They paid people whose next of kin died of old age, chronic illness or other causes to say that they had died of shock after learning of YSR’s untimely and tragic death. This number was totted up to nearly 600 with talk of nearly half a dozen “ suicides”. Surprisingly, if the Jaganmohan Reddy run Sakshi TV and newspaper of the same name are to be believed, many of those who died of shock gave a dying declaration that after YSR only his son could continue his propoor policies as chief minister. India has not witnessed such a farce since Independence.
Today, in Andhra Pradesh, it would seem that there is no other Congress leader than Jaganmohan Reddy, no administration, no governance and a chief minister whose writ does not run over his own council of ministers.
Ironically, by allowing Jaganmohan Reddy to continue his unseemly blackmail, the Congress high command is transforming the political novice into the political leader that he never was.
But more of that later. One must first ask how such a political greenhorn enjoys, according to his claims, the support of three- fourths of Andhra MLAs. The answer lies in the changing pattern of political patronage in Andhra Pradesh.
Time was when Congressmen like others in public life accumulated political capital not only by their propeople initiatives but also through fostering intricate patron- client relationships.
This entailed appointing supporters to non- elected positions in the party and the government, helping them build their own patronage networks by giving them clear advantages such as access to the state machinery, and funding their election to local bodies, workplace unions, etc. In short, the attempt was to demonstrate to them that there were political advantages to be had by aligning with the party in power.
Patronage
Andhra Pradesh seems to be changing that structure of patronage.
Instead of giving partymen a share in one’s political capital — the more one shared it, the more it grew — the Congress supporters are given a stake in the state’s economic enterprises.
YSR ushered in this revolution.
He converted his key supporters into businessmen, industrialists, contractors and realtors. Their loyalty to the party or the leader was based on pure economic interest.
YSR rewarded them with contracts in state sponsored irrigation projects ( the much- publicised Rs. 130,000 crore “ Jalyagnam” projects), highway projects, real estate activities, development of Special Economic Zones ( SEZs), land grants and housing schemes in urban as well as rural areas. The loyalty of a majority of the 156 Congress MLAs who got tickets in the last assembly elections was secured through such largesse. Some others have benefitted with smooth and quick approvals of their business ventures.
Those Congressmen who got irrigation project contracts during the YSR regime include MPs T Subbirami Reddy, Kavuri Sambasiva Rao and Rayapati Sambasiva Rao; state ministers Komatireddy Venkat Reddy and P Ramachandra Reddy; and MLA Adala Prabhakar Reddy.
And these are only the big fish — many other party MLAs like Adinarayana Reddy, Srikanth Reddy, Gurunath Reddy, and A Indrakaran Reddy ( former MLA) are believed to have got smaller irrigation and associated road works contracts.
Andhra Congress MLAs whose real estate business thrived during YSR’s chief ministerial tenure include ministers Shilpa Mohan Reddy and Jupalli Krishna Rao, who defaulted on payment of crores of rupees to an urban co- operative bank and Lagadapati Rajagopal ( Congress MP from Vijayawada who is building Lanco Hills — the country’s biggest real estate project). Many other Congress leaders like D Sudheer Reddy ( MLA) and Malreddy Ranga Reddy
( former MLA) have benefitted from the Rs. 3,000 crore Outer Ring Road project of Hyderabad.
Nellore MP Mekapati Rajamohan Reddy and his brother Chandramohan Reddy, MLA, have won contracts for roads and building works. K Pratap Reddy, the Treasurer of the Congress, has stakes in the cement industry and is believed to have business links with the YSR family.
Vijayawada Congress MP Lagapati Rajagopal is believed by many to be the biggest beneficiary of the YSR regime and is involved in businesses ranging from power, iron castings, real estate and infrastructure.
In short, it is difficult to find a Congressman of any consequence in Andhra who has not benefitted from the largesse of the state government.
Several businessmen, industrialists, realtors and contractors who are not directly in politics — some cutting across political lines like the Karnataka BJP minister and mine lord G Janardhan Reddy of Bellary who was given 10,700 acres of land in Anantapur — are all worried about their projects in various stages of development. They have a right to be worried.
Family
Businesses which are underwritten and steered by someone at the helm of the state are less likely to fail. They were failsafe investments. Now their future is suddenly uncertain.
It has taken decades for Indian entrepreneurs like the Tatas, Birlas, Ambanis and Bajajs to convert family businesses into billion dollar corporations.
The Congress party under YSR in Andhra showed us that this could be done in barely five years.
The YSR family’s market capitalisation is estimated to be nearly three- fourths of the annual budget of Andhra Pradesh which is around Rs 1,00,000 crore. The family enterprises and business interests spread across real estate ( Silicon Builders, Classic Realty, Bhagvath Sannidhi Estates), infrastructure ( Silicon Infrastructure, Shalom Infrastructure, Marvel Infrastructure, Janani Infrastructure, Athena Infra, Viz Projects), cement ( Bharathi Cement), chemicals ( Pulivendula Polymers), plantations ( Forest Plantations India Ltd), power generation ( Athena Energy, Athena Kakinada Power, Sainz Hydro), newspapers ( Jagati Publications) and television ( Indira Television) besides owning Carmel Asia Holdings Pvt. Ltd.
The formidable business empire that YSR and his son set up has stakeholders among those who are in politics and business in Andhra today. The future of their investments depends on having a constant gardener from the YSR family to tend their interests. They cannot afford to let Jaganmohan Reddy lose out in the chief ministerial sweepstakes.
Indulgence
It is difficult to understand on the other hand why the Congress high command is so indulgent towards Jaganmohan’s shenanigans. Does the party have good reason to allow the mess that Jaganmohan Reddy’s supporters are creating in Andhra Pradesh? YSR was very close to Rajiv Gandhi who appointed him the state Congress chief at the relatively young age of 35 years. Sonia Gandhi has always valued loyalty to her late husband.
More importantly, YSR also delivered politically — not once but in two consecutive assembly and Lok Sabha elections. There would have been no UPA I or II without the electoral outcome of Andhra adding muscle to the Congress.
Another speculation doing the rounds is that the Congress high command is reluctant to act quickly against Jaganmohan Reddy because YSR was also believed to be one of the largest funders of the party.
Those sources of funds are now controlled by his son. So instead of cutting him to size, the party is being indulgent. Why else would the party allow speculation about Jaganmohan Reddy being offered Deputy Chief Ministership or a place in the central council of ministers? Could it be on the other hand that Jaganmohan Reddy is being allowed to demonstrate the support he enjoys in order to nurse his image as a mass leader? There could well be a strategy to allow the demonstration of support and soon people will forget that YSR’s son is a political novice. The blatant hooliganism of his supporters seems to have scuttled his chances to fill YSR’s shoes immediately. However, this will not prevent his well- wishers from claiming that YSR Junior has come into his own as a political leader with a mass base. This would pave the way for his accommodation in the party or the government.
bharat.bhushan@ mailtoday.in

Over Rs 25,000-crore Mumbai realty in limbo

There is no land within Mumbai at 3000 rupees per sq/ft. Average prices for these high rises are more then 8,000 to 20000 per sq/ft. At these prices, devolopers can hire tankers. If this ban is enforced, projects will be delayed for more then 3 years. Investors who have borrowed are going to lose out big time on interest payments. This is going to make life miserable for everyone except the builders. They can invoke the 'act of god' provision in their agreements and pass the buck to the investors without incurring any losses. Investment in under construction apts in 2010 seem to the worst decision anyone can make.

The Maharashtra government's decision not to provide water connection to high-rise buildings (above seven floors) in Mumbai till 2012 has dealt a body blow to the city's real estate developers.

Developers and independent observers said investments of over Rs 25,000 crore (Rs 250 billion) in the construction of around 1,400 high-rise buildings in the city are now in jeopardy.

The decision was announced by Chief Minister Ashok Chavan in the state legislature yesterday in view of the prevailing water scarcity in Mumbai. Stung by the decision, real estate developers have requested the state government to reconsider its decision on the ground that this will worsen the shortage of houses in the metropolis.

A Mumbai-based analyst, who did not want to be quoted, said the decision can be challenged in a court of law because it has made the real estate developers the sacrificial goat for its own failure to provide basic amenities like water.

A senior government official said the damage of Rs 25,000 crore is based on a minimum sale price of Rs 3,000 per sq ft for 1,400 projects. The loss to the real estate developers could be still higher if the sale price of Rs 7,000 per sq ft is considered.

He, however, defended the government's decision in view of the 15 per cent water cut already in place in the city.

This would in fact go up to 30 per cent if Mumbai did not have adequate rainfall by July next year. Water availability will be possible only after three reservoirs are built by 2012. Hence the ban, he said.

The official said builders and developers should also take the responsibility and avoid rampant wastage of water by going in for water recycling and treatment of saline water.

Very few developers have adopted these measures and want the government to carry the can.

Niranjan Hiranandani, the managing director of Hiranandani Construction, wondered why the government ban was only for the private sector and not on the projects set up by the state-run Maharashtra Housing and Area Development Authority.

"While every effort is needed to curb leakages and theft of water, the government should not do injustice to those who won't get water despite paying the required development charges and fees," he said, adding that his company has recycled water at its projects for the last 20 years.

Dharmesh Jain and Rajan Bandelkar, vice-presidents of the Maharashtra Chamber of Housing Industry, said a representation would be made shortly to Chief Minister Chavan in this regard. Bandelkar said any such decision should have been only on a case by case basis, and a blanket ban didn't serve any logic.

Ranjit Naiknavare, executive committee member of the Confederation of Real Estate Developers Association of India [ Images ], termed the government's move irrational.

"The government cannot simply stop giving commencement and completion approvals. Instead, the government can ask builders and developers to organise water supply on their own if the proposed reservoir projects are not complete within the stipulated time," he added.

It would also be a long wait for consumers who have already paid a part of the booking amount in these projects.

Hyderbad real estate set for steep fall

As speculators abandon their bets, end-users will finally get a chance to realize their dream of owing their own house. Investors with multiple properties better bail out now, else risk a steep erosion in prices. Times of India articles normally try to spin any story towards a bullish angle, however this time they are helpless.

Hyderabad's real estate sector was in a state of shock on Thursday, just hours after the Centre conceded to the demand for a separate

Telangana state. Speculating that the move would further dampen the already crippled industry, realtors were seen making their own calculations about the future of their business in the city. Apart from a few optimistic voices, most realtors opined that the T decision would spell doom for real estate in Hyderabad and result in a steep fall in the property value.

"We will go back at least by five years in terms of growth," said Khaja Asif Ahmed of Stellar Project Management Consultant, adding, "It will take at least two to three years for the political unrest to settle and till then no investor from outside would put his money here." According to his prediction, the industry, which is still battling the recession ghost, is set to hit a new low over the next few months.

City realtors say that Hyderabad, as part of Telangana, would also disrupt the flow of sentiment-driven investments. "So far people from all over the state invested in Hyderabad because of its status as the capital of Andhra Pradesh. But if it becomes part of Telangana, people would think twice before picking up property here," said a Kukatpally-based realtor Madhusudan admitting that it would indeed be a long haul before the sector gains momentum. "Until a clear separation takes place, there will be no new investments," Madhusudan said.

A common sentiment that seemed to be riding high among most players from the sector was that of ‘protecting Hyderabad' from the turmoil by declaring it as the joint capital of two states. "Our fear of stagnation in transactions (purchases) can be best addressed through this move. That way the value of properties in the city would remain unaffected and investors too would feel secure," said Ashwin Rao, director, Primus Developers. Though Rao is one among the few optimistic builders who feel that the industry would be back on track, only after an initial glitch of a few months, he says that the common capital stand would be ideal to arrest the slump in the realty business.

No new skyscrapers in Mumbai till water project is completed

The Mumbai real estate market, which is just about getting back on track after the economic slowdown, is now headed for a bigger crisis.

With the city facing acute water scarcity, the Maharashtra Chief Minister, Mr Ashok Chavan, told the winter session of the Assembly at Nagpur that no new skyscrapers will be permitted in Mumbai till the Middle Vaitarna Project is completed in 2012.

This is the largest water supply project being built to meet the city's ever-increasing demand for drinking water. However, real estate projects that have been accorded permission would be given water. The city gets about 2,900 million litres a day against a demand for 3,500 MLD.

The Government move would mean that revenues from stamp duty and development charges would take a hit. Besides, the move would also hurt the finances of developers who had invested considerable sums to acquire land and begin construction. It would also adversely impact home-buyers who had got loans to purchase property. And, in an already skewed demand-supply scenario, the Government action could further fuel demand and raise property prices as well.

Mr Sunil Mantri, President-elect, Maharashtra Chamber of Housing Industry, said it would be utter chaos if such an order were implemented. Apart from the commercial and residential projects, there were slum redevelopment projects as well. Development should not be halted and in case there was no option, one should consider total dependence on water tankers and borewells.

As it stands, 25-30 per cent of the city depended on tanker supplies. Mr Mantri said the chamber would appeal to the chief Minister to rescind the order in the larger public interest.

“We have to learn how to manage the crisis. Recycling and water harvesting could help at such times,” said Mr Abhisheck Lodha, Director, Lodha Group.

Mr Lodha said since the Government intention was to curb new constructions, residents might not require more than six-nine months' supply from alternative sources, given the construction period of around two years for projects. “In any case, a good monsoon next year could change the entire scenario,” he added.

Mr Mayur Shah, Managing Director, Marathon Group, said there was hope as the Government was working on a lot of water projects. Any impact of the proposal would be temporary and a good monsoon could change the tide.

Water storage and distribution are key issues that needed to be managed better, said Mr Anand Gupta, General Secretary, Builders' Association of India.

Mr Gupta said since the 15 per cent water cut came into force construction work in Mumbai was being done with tanker supply and borewells. However, the Government stood to lose revenue in terms of development charges and allied income associated with construction activity. It could also create financial tangles as both developer and home buyer would have availed bank loans. Moreover, it could leave thousands of construction labourers jobless after the existing projects got over.

Charging that storage and distribution were major bottlenecks in the current water supply system, Mr Gupta said the Government should look to entrust the job to private players if it is unable to manage it effectively on its own.

Telangana effect on Hyderbad real estate

After the Satyam/Maytas fiasco, the crisis surrounding the bifurcation of AP and the creation of the state of Telanagana could be nail in the coffin for speculators in the Hyderabad real estate market. It is interesting that speculators will now swing towards Vizag, Vijayawada and Warangal as they exit the bubbling Hyderbad market. Land prices in Hyderbad have quadupled over the past 4 years but it appears that the T-factor has pricked the balloon faster then expected. Investment is never without risk and this has been proven yet again by the surprise events which can bankrupt even the savviest investor.

Here is a Times of India article which reports 20000 crores been invested in Hyderbad real estate by Rayalseema/Coastal Andhra politicians. I wonder where do they get these numbers from. Is there a survey carried out by Times which queries each politician and then adds up the figures ? So from the looks of this article it appears that politicians only care about real estate in Hyderbad, Telangana or AP doesn't matter.

Hyderabad Blues
A question of a Telangana without Hyderabad, those from Andhra and Rayalaseema declared the current state capital was common property and should be declared an Union Territory. The demands are based on a complex mix of political, emotional and material logic. Many politicians from the other two regions have invested heavily in property in and around Hyderabad including the ritzy Jubilee Hills, Hi-tec City and Shamshabad, areas where the outer Ring Road and new international airport
have come up and jacked up realty. Of the 23 AP districts, 10 are in Telangana, nine in Andhra and four in Rayalaseema. For the Telangana supporters, Hyderabad is the heart of the region and can never be given UT status. "By right, Hyderabad deserves to be the capital of the new Telangana state. Historically, all the Telangana districts have actually been part of the erstwhile Nizam-ruled state of Hyderabad of which the current city was the epicentre. If Hyderabad is shared with people of the other region, then the heart of Telangana is will be taken away," said one Congress leader from the region. Another reason for the Telanganites' opposition to Hyderabad being made a UT is lack of contiguity with other regions. "The state capital is surrounded completely by the Telangana districts. Therefore, for the people of Andhra and Rayalaseema regions, Hyderabad can never function as an administrative capital," said the leader. Those clamouring for UT status for Hyderabad base it on the cosmopolitan nature of the city. "To preserve its cosmopolitan character and accelerate its growth as an hub of IT, biotech, pharma and other emerging technologies, it has to be made union territory....The demographic profile of the city has changed tremendously over the years and today the native inhabitants constitute only a modest percentage with those from the other two regions, different states of India and abroad forming the majority," said BC welfare minister M Mukesh Goud in a letter to Congress president Sonia Gandhi on Wednesday, in which he urged her to declare Hyderabad as UT. But there are more material reasons for seeking UT status. Goud, who wrote the letter, is from Hyderabad. Health minister Danam Nagender, who also is an advocate of Hyderabad as Union Territory, is also from Hyderabad. According to sources, several ministers from the Andhra and Rayalaseema regions have invested in property worth crores of rupees over the last decade or so in and around Hyderabad. "They stand to lose heavily in case Hyderabad is retained with Telangana as property values are bound to fall," said an observer. Interestingly, when the Telangana issue was raging three years ago after TRS president K Chandrasekhar Rao parted ways with the Congress and launched an agitation, there was not much of a demand for Hyderabad as Union Territory. "That was because the real estate business was booming in the state and efforts were on to build a new capital for the divided Andhra state in the Mangalagiri-Guntur-Vijayawada region. Therefore, leaders of these regions had no objection to Hyderabad remaining part of Telangana. But after the real estate bust, the Andhra and Rayalaseema leaders re-invested heavily in and around Hyderabad. Their total investments here would be more than Rs 20,000 crore," said one politician in the know. As a result, the fight for Hyderabad is set to be fiercely contested. But with the Andhra regions up in arms a day after the Congress gave the green signal for Telangana, the Rosaiah regime tottering and the possibility of the assembly passing the resolution on Telangana becoming difficult, the fight for Hyderabad may just recede into the background for the time being. But it is sure to be raked up when Telangana inches towards becoming a reality.

Hindu reports

IT professionals worried over Telangana developments

Hyderabad, Dec. 10
The Chidambaram statement on the formation of Telangana State on Wednesday night created ripples in the IT industry in Andhra Pradesh.
The subject turned into intense discussion in most IT companies, with the employees discussing the pros and cons of division of the State. The industry employs about 2.5 lakh people, mostly from outside of Telangana region.
“It (the Telangana factor) would have a very bad impact on the IT industry. We won't get new companies here and the existing companies might cut down their operations here,” Mr K. Kunal, a HR consultant for a leading IT company, told Business Line.
A Managing Director of another IT company echoes this view. “I am neither pro- nor anti-Telangana. But what I would like to have is serenity which is the hallmark of the city. Customers are postponing their visits on hearing the news of violence,” he pointed out.
"The issue is not whether Telangana happens or not. The real concern is the loss of productive time in the last few weeks. We need to restore normalcy," Mr J. A .Chowdhary, Chairman of The Indus Entrepreneurs (TiE), said.
Mr C. Bhaskar, working for a telcom services company, has a different view. “This is just a temporary phase. Companies invest in places where they find the right eco system. The city could establish an eco system with good IT infrastructure and skilled manpower,” he argued.
“Now that there is clarity (on the issue), there will be no trouble for work and logistics. The worst is over,” he observed.
Mr T. Navin, working for a multi-national firm, said that some people were not bothered at all. “We have bought houses here and the status of the city is not going to change. Why should we bother?”
Exports
The IT exports from State were put at Rs 12,000 crore in the first half ended September, 2009, reflecting a flat growth rate as a result of the economic slowdown. It expected to reach Rs 35,000 crore in 2009-10 as against Rs 32,500 crore in the last fiscal.
There, however, is a silver lining for the IT industry. A real-estate developer admitted that the costs of properties would come down drastically. “For those, who wanted to expand their facilities, it is a good time as prices of realty have already crashed in the IT investment triangle being planned by the Government,” he said.

Emaar shares plunge as UAE markets tumble

Looks like all the High net investors (HNI's) investors are going to soon be HNS (High net suckers). Emaar tried hard to raise funds in early 2008 but due to the US market crash, the Indian market went soft. Now the sand shifted under their own feet. I wonder how Indian regulators like SEBI and all the Indian stock brokering underwriters didn't flinch a bit examining the Emaar books. It goes to show rigged the Indian stock market is. The Reliance power script is still trading at 145, far from the peak it reached from the IPO. Investors in India have to be super careful. Trust no one should be the Ekam Sat when it comes to Indian markets. As far as Shah Rukh goes, he can entertain the Sheiks this new year and make up for his losses in the Dubai market. What happens to the poor suckers who lost their shirt and cannot shake a leg ?


Emaar shares plunge as UAE markets tumble AFP/File – A view of Dubai's Marina area shows high-rise buildings being built by Emaar. Shares in Dubai's …


by W.G. Dunlop W.g. Dunlop – 2 hrs 33 mins ago

DUBAI (AFP) – Shares in Dubai's giant property developer Emaar dropped the maximum-allowed 10 percent on Monday as stocks in the United Arab Emirates took a fresh tumble over Dubai's debt woes.

The Dubai exchange slumped 5.84 percent and Abu Dhabi's market dropped 1.68 percent, after both on Sunday had recovered some of the heavy losses they sustained last week.

Emaar, developer of the world's tallest building, Burj Dubai, led the downward charge on the Dubai Financial Market. Emaar shares dropped the maximum 10 percent.

The company's shares had closed 3.55 percent up on Sunday, following heavy losses last week.

By its close the DFM had settled at 1,744.83 points, a day after a rise of 1.18 percent, to 1,853.13 points.

The Abu Dhabi Securities Exchange dropped to 2,628.24 points at the close of trading on Monday, a day after having closed up a hefty 3.89 percent at 2,673.12 points.

Wadah Taha, chief investment officer at the Dubai-based Zarooni Group, attributed the continued troubles in the two exchanges to the lack of information on developments regarding the debt-laden Dubai World conglomerate.

"I think the fear is still there, the fear which affects the market sentiment and investor psychology," Taha said.

"The main fear today is due to the meeting between Nakheel and its creditors," he said. Nakheel, which is part of Dubai World, is reportedly to meet with its creditors this week to discuss rescheduling its debts.

There is also a lack of clarity regarding which banks and companies are exposed to Dubai World, Taha said.

"The picture needs to be more clear, more transparency is required," he said. "The volatility of both markets will remain high unless we deal with the issue of transparency."

Meanwhile, Saudi Arabia's exchange fell slightly on Monday, closing down 0.99 percent. Its TASI index closed 0.33 percent up on Sunday at 6,309.05 points, but fell to 6,246.50 points by its close on Monday.

The Kuwaiti stock market was likewise down, closing 0.79-percent lower, at 6,678.9 points, while Bahrain's small exchange dropped slightly, closing at minus 0.07 percent.

Bucking the trend, Qatar and Oman's stock markets were up on Monday.

Qatar's exchange rose 1.06 percent, closing at 7,132.26 points, while Oman's market went up 0.32 percent, to close at 6,302.170 points.

Both the Dubai and Abu Dhabi markets suffered heavy losses last week over Dubai's debt troubles. The Dubai index plunged 12.5 percent over a two-day trading period, while Abu Dhabi's slumped 11.6 percent.

The sharp falls came after Dubai on November 25 requested a freeze of payments on the debt of its largest conglomerate, Dubai World, which is liable for 59 billion dollars.

The request raised fears of a debt default by Dubai and sent jitters through global financial markets. The emirate's debts are estimated to total at least 80 billion dollars, with some estimates as high as 120 billion dollars.

On Monday, Dubai department of finance head Abdulrahman al-Saleh said Dubai World could sell some of its assets in the United Arab Emirates and abroad to strengthen its financial situation.

"The sale of assets is a normal measure to strengthen the group's financial situation in these circumstances," Saleh said in an interview with Al-Jazeera television.

He also reiterated the Dubai government does not guarantee Dubai World's debts, but said the "Dubai Financial Support Fund," which he chairs, "has helped companies affected by the financial crisis, including Dubai World."

Dubai links with Indian real estate developers are closer then they appear

It appears that some Indian real estate developers are funded by black money from India which is illegally taken out of India through hawala channels and then subsequently bought back into the country thru legal FDI investments.

This process of whitewashing leaves no stains and by that virtue seems to be the model method of black money conversion. If Koda as the enforecment directorate claims funnelled 700 crores back, how many smaller transactions are waiting to be uncovered, only if the ED has time and funds to investigate. India is plagued by a gazillion scams and this one is just beginning to unfold. Its no surprise that Dubai which houses the infamous Don is at the epicenter of this investigation.

Pioneer reports

Koda routed loot through Emaar

Ex-CM diverted money for tribal welfare to Dubai real estate giant The money that was supposed to be used for the welfare of tribals of Jharkhand has been ‘diverted’ to the Commonwealth Games projects by former State Chief Minister Madhu Koda. The investigating agencies finally got a lead on the hawala transactions made by Koda, currently under arrest for scam of over Rs 4,000 crore.Koda aides are alleged to have siphoned huge money from the State coffers to Dubai, which has been channeled back ironically to propel a major Commonwealth Games project — the Games Village — through the Dubai-based real estate developer Emaar MGF, which started operations in India just about four years ago and has become one of the ‘leading’ real estate developers.Well-placed sources in the Enforcement Directorate told The Pioneer that the directorate has clues about monetary transactions between Koda and Emaar MGF, which is building projects for the 2010 Games also besides several other investments. Emaar MGF is developing the residential complex for the participants of the Games on the banks of Yamuna. After a protracted and not-free-from-controversy tendering process, the Delhi Development Authority (DDA) awarded the project of Games Villages behind the Akshardham Temple to the Emaar MGF last year. The ED on Thursday raided the offices of Emaar MGF and homes of several board members in and around Delhi in connection with the multi-crore money laundering scam involving the former Jharkhand Chief Minister.

Builder of IT group housing project succumbs to bullet wounds

Cross posted from Ravi Karandeekars Blog.

Nikhil Rane (42), builder of Vanshaj InSignia at Baner - Sus, group housing project of IT professionals working in Hinjewadi, who was shot at by unidentified assailants in broad daylight at his office on Jungli Maharaj Road on November 23, passed away at 10.45 am on Monday at the Sancheti Hospital due to spinal shock complications.

Insignia group in Pune tried to form a group of IT pros to build their own housing complex. Unfortunately the builder who undertook their order, was shot at by unknown assailants a while back outside his Pune JM Road office.

While the primary motive seems to be a dispute in the purchase of land, it is indeed sad that crime, politics and the construction industry are so intertwined.

http://ravikarandeekarsblog.blogspot.com/2009/12/nikhil-rane-succumbs-to-bullet-injury.html

http://epaper.dnaindia.com/newsview.aspx?eddate=12/1/2009&pageno=3&edition=40&prntid=105516&bxid=30689294&pgno=3

http://bit.ly/86QwLp

Infosys labor lawsuit over overtime pay

Dept of Labor should not find it hard to litigate against Infosys, now that Promila Awasthi has opened a can of works. Time for Infosys managers to take training in US labor laws, business ethics, cultural sensitivity and common-sense. I wonder how much will they settle for this time. The last employee to successfully sue Infosys walked away with a handsome settlement. This case is now going to cast wide aspersions on every Indian manager. If these morons do not know how to do business in the US, they need to get their asses fired. Any local Silicon Valley employees know who was Promila Awasthi's manager ?

NBCBayarea news reports.

Who says you can't celebrate Thanksgiving?

Promila Awasthi, a Silicon Valley computer consultant, says her bosses at Infosys did.

In a lawsuit filed Monday in Alameda County Superior Court, Awasthi, an India-born American citizen, says her bosses at Infosys's Fremont ,Calif. office mocked her for observing American holidays like Thanksgiving and Christmas and refused to pay her overtime according to California law.

The lawsuit is potentially explosive for Infosys, one of a host of India-based information-technology outsourcing firms which take over computing tasks from other companies.

Infosys has been pushing to expand its presence in the United States, both to blunt the political backlash from moving jobs overseas and to gain a commercial advantage by hiring local sales and marketing executives better equipped to take business from the slick sales forces of HP and IBM.

Contrast Infosys's global ambitions with the allegations in Awasthi's lawsuit. She hardly paints a culturally sensitive picture of her former company, where she worked from February to November 2008, at which point she claims "intolerable" working conditions forced her to quit. Here are highlights from the lawsuit:

Infosys management routinely disparaged Americans, including Mrs. Awasthi, as not having "family values," and stated that layoffs in America are good because the jobs will be outsourced.

Infosys management ridiculed Mrs. Awasthi for celebrating the American holiday of Thanksgiving, telling her that she should not celebrate Thanksgiving because she is Indian, and that therefore she must work on Thanksgiving Day.

Infosys management ridiculed Mrs. Awasthi’s children for celebrating Thanksgiving, and called them "ABCD" short for "American-Born Confused Desi," and "IBCD" short for "Indian-Born Confused Desi," insulting terms used to criticize people of Indian ancestry who are Americanized.

Infosys management ridiculed Mrs. Awasthi for celebrating Christmas, saying that "we" do not celebrate Christmas, and that she should not celebrate Christmas. Infosys management repeatedly discussed the quality of Mrs. Awasthi's work by explicitly commenting on their expectations for “a woman your age."

A spokesman for Infosys, Patrick McLaughlin, did not respond to an emailed request for comment on the lawsuit.

Dubai World Crisis Vs US Housing Crisis - Layman's Analysis

(Image courtesy - Wikimedia foundation )

I think this is the following layman's assessment

US Crisis Model -

1) Government Pushes Expansion of Housing as it sits on huge surplus/potential surplus. Keeps interest rates low for borrowers

2) Lenders fresh with bulk funds from investors and low interests push both consumers and constructors. (initially follow all regulations) Steady growth in prices of property

3) Once responsible borrowers have bought houses/property - Greedy Investors, Greedier Realtors push prices higher - and entice borrowers with poor credit history to buy houses. Investments Banks bet on these borrowers defaulting through Credit Default Swaps and Collateralize Debt obligations

4) At the tip of the bubble (mid 2006), the frenzy of buying starts faltering with the irresponsible borrowers (who bought in the 90s) start defaulting. As homeowner defaults increase, demand slumps due to lack of growth in economy, flood of cheap foreclosures in the market push down prices.

5) Even good houses and responsible borrowers start feeling pain as bad borrowers brought down all real estate asset prices. (with many of them also either forsaking the house or short selling for a loss)
- this results in IBs and insurance cos to forcefully pay the CDS and CDO - making them insolvent.- BAIL OUT BAIL OUT


BOTTOM LINE for US market
Borrowers (end users who bought houses) started defaulting because they owed banks more money than the value of the house.


Dubai Crisis Model -

1) Government of Dubai entity/organizations plan grandiose development for the city.
They evaluate the scope and possible returns and borrow money from investors to construct projects via contractors. The entity backs it up saying never decreasing oil prices will make Dubai a productive hub. So the valuation of property is based on increasing oil prices.
Update1 - Someone corrected me saying Dubai does not have oil, but the other emirates do! So Dubai just projected its potential based on the neighbors riches :)

2) Initially some sales of these projects pick up due to marketing etc. But once the credit crunch hits western world potential buyers start declining. Oil prices tumble to a point where Dubai can no longer fund projects with oil money (which it does not have - but was promised by neighboring emirates), so it steps up borrowing hoping for recovery.

3) With no buyers, and stagnant prices, there is no scope of paying back the borrowed investment money to the lenders by the Dubai world, etc entity. Dubai asks for 6 months moratorium on payments.
Companies are worried that even after 6 months, the huge amount of unoccupied real estate in Dubai will simply remain in present stagnant state. (Dubai govt/Dubai World cannot reduce prices as it will cause a downward spiral just like USA and cause present occupiers to forsake their places as nearby locations will become dirt cheap - at the same time, tight money supply is not bringing in new investors to buy Dubai property at current prices)

4) Renegotiation of Debt fails - and the Entity cries default ...


BOTTOMLINE - Dubai
In this type of crisis, there is no end user or home occupier/office lessee involved - the Debt of the constructing entity itself causes the default mess.

There are fears that Malaysia, Shanghai and of course Mumbai are having exact same models of construction - where some entity entices investors and promises huge returns and later finds out no one wants to buy whatever was built.

I am not an expert at all this but is my assessment correct?
Where is India's bubble position wrt these 2 scenarios - all thoughts appreciated

- Outcomes -
1. Global Commercial Real Estate crash - Ruled out - Emerging market Commercial Crash ??
2. Gulf Government Bailout on Oil Bonds - Abu Dhabi is unwilling as the UAE is not really United :P
3. Collapse in oil prices due to surplus from Russia, Nigeria, Venezuela and Iran - Keep checking oil futures
4. Definite yes - cost of insuring against default by High debt nations like Ireland, Bulgaria, Greece, skyrockets

दुबई = डूब-गई

Dubai Crisis Hitting Indian Real Estate

Dubai the much touted "financial" and "commercial" destination has become a desert bust.

MSM is trying to hide the crisis but they are not going to get away ... Will India's Housing Bubble should follow similar traits as what happened in Dubai?



http://www.youtube.com/watch?v=lfe89m8qqoI&feature=player_embedded

http://economictimes.indiatimes.com/markets/analysis/Dubai-Crisis-Caught-in-deserted-storm/articleshow/5277408.cms

http://economictimes.indiatimes.com/markets/analysis/Dalal-Street-likely-to-sail-through-the-Dubai-crisis/articleshow/5277181.cms

http://www.bloomberg.com/apps/news?pid=20601087&sid=a8RD8uqjoLCQ&pos=2

http://www.moneycontrol.com/video/udayans-comments/indian-mkts-rattleddubai-default-impact_427590.html

Increase in prices sours revival in demand for real estate

Article Link

Mumbai: The much-heralded revival in home-building could come to nothing as property developers may have raised prices too much too soon, data from realty research company Liases Foras shows.

“Average prices in Mumbai corrected 34% after the downturn until March, following which we saw the maximum sales in two-and-a-half years between March and June,” Kapoor said. “However, realtors have increased prices since then (June), pulling down sales as of the quarter ended September.”

“This market is very price sensitive and not all locations have touched a fair price level,” Kapoor said. “For example, Andheri has seen no major drop in prices. Thane has seen the largest drop from Rs5,000 per sq. ft to Rs3,000 per sq. ft in March, now prices have again increased to Rs3,800 per sq. ft, affecting demand.”

“Sales have dropped 14% till September, affecting the efficiency of these companies. In January 2005, realtors had an inventory to sales ratio of 2:1, that worsened to 12:1 in November 2008, and improved only to 5:1 lately,” Kapoor said. “This means that prices have been increased and inventory has been allowed to build up, a clear sign of an asset bubble.”

Mahindra offers premium homes in Chennai -GST

Mahindra Lifespaces has recently launched a marketing campaign to sell their new development inside Mahindra World City. Investors and end-users have to do their homework before jumping in on the Mahindra brand-name. There is no doubt that Mahindra's have the vision and they started work on MWC before anybody else and their success is a testimony to their vision and execution. There are a large number of companies and MNC's within MWC and the number will increase as time goes by.

However the pricing of Aqualiy is what should be of interest to the buyer. As per their press release a 2200 sq ft twin home si priced at 90L, a 4000 sq ft villa at 1.7cr and a 1800 sq ft apt at 45 L.

Now if one goes to look for plots around MWC, one can easily get a ground (60x40) 2400 sq ft at 600 rs per sqft, within 2-3 kms of MWC. Now given a construction cost of 1200 per sq/ ft for premium construction one can easily get a 2400 house for 1800 x 2400 = 43 L. Why should anyone spend 3 times more for land on a 99 year lease. Yes, the Mahindra World City land is on a 99 year lease from the government of Tamil Nadu.

Mahindra World City is a landmark and will continue to do so, however investors/end-users should look to land around this area rather then pay a premium to Mahindra for living in this area. Ofcourse the community aspect of Lifespaces cannot be replicated by an individual house on a plot, however does it a warrant a premium of 45L ? That is the million dollar question.

Mahindra Group, has launched a premium residential project — Aqualily — that would be developed within Mahindra World City near Chennai.

“Aqualily is being developed as a gated community spread over 55 acres and will involve construction of 1.5 million sq ft of living space, comprising around 760 residential units. The project is being implemented at a cost of Rs 400 crore,” said Anita Arjundas, managing director & chief executive officer, Mahindra Lifespace Developers. The project will have about 10 acres of green lawns.

Aqualily will offer a mix of villas, twin homes and luxury apartments, with a built-up space up to 4,000 sq ft. The company has now launched the villas and twin-homes in the first phase, apartments will be launched a couple of months later.

While twin-homes, starting with 2,200 sq ft, will cost Rs 90 lakh, 4,000 sq ft large villas could cost up to Rs 1.7 crore.

The apartments will vary from 1,200 sq ft to 1,600 sq ft and priced at Rs 45 lakh, said Rajendra Joshi, vice-president (marketing) of Mahindra Lifespace Developers.

According to Joshi, about 150 units will be villas and twin-homes, while 610 units will be apartments. While villas and twin homes are likely to be completed by the end of 2011, the apartments will be ready for occupation six-eight months thereafter. Four banks, including HDFC, ICICI Bank and Axis Bank have already approved the project for home loans.

The project offers two clubhouses equipped with all modern amenities and several play areas.

“We envisioned Mahindra World City as a complete ecosystem where work, living and learning spaces would coexist to offer an enhanced quality of life to its residents. We have achieved significant milestones in this pursuit by creating work spaces for companies like BMW, Infosys, Wipro and lifestyle amenities and facilities like Mahindra World School, Apollo Clinic, as well as enhanced bus and train facilities,” said Arun Nanda, executive director, Mahindra and Mahindra, and vice-chairman, Ma­hindra Lifespace Developers.

“Aqualily represents a significant endeavour in offering international living in a picturesque environment and will ensure a nature-friendly living environment,” Nanda added. The project is being executed by Mahindra Residential Developers, a joint venture between Mahindra Lifespace and Arch Capital, the real estate fund of the Philippines-based Ayala Group.

RIL mulls entry into low-cost housing

After successfully dabbling in organised retail in 2006, Mukesh Ambani, chairman of India’s largest private sector company, Reliance Industries (RIL), has now set his eyes on no-frills, low-cost housing.

RIL holds a land bank of 5,000 hectares in Haryana through Reliance Ventures, a subsidiary of RIL created by forming a joint venture with Haryana State Industrial Investment Development Corporation and over 4,840 hectares through the Navi Mumbai SEZ, in association with Cidco (the Maharashtra government’s industrial and township development arm).

“RIL is sitting on a huge land bank with regard to its special economic zones (SEZs) in various locations. It could be putting that to commercial use for mega housing projects in the no-frills category,” said an analyst from a Mumbai-based broking firm who tracks RIL closely.

“Entry of corporate houses like RIL will be good for the market, as it will uplift the real estate sector into an industry. Every business house that enters the sector, be it Godrej, Mahindra, Piramal, Tata and now RIL, will help in making the procedures in the sector more transparent,” said Rajeev Talwar, Group Executive Director, DLF.

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MSM is now Expert. Sharp rise in TDR prices leads to recovery in realty sector

Barclays, Bank of America, JPMorgan Vie for India Stock Sales

Bloomberg reports on government run PSU's being put on the block. MBA students should look to India for jobs as these companies should keep hiring for a while. This stock sale is going to suck the liquidity from the system, similar to what the Reliance Power IPO did in Jan 2008. Now unless you are an institutional investor, chances on getting onto the IPO bandwagon are almost zero, unless you open gazilion demat accounts under ficticious names as done in Gujarat and Rajasthan. Soon we will see real estate shrills pumping the Mumbai market that I-Bankers have returned to claim their piece of the most expensive land in the India.

By Subramaniam Sharma

Nov. 10 (Bloomberg) -- Bank of America Merrill Lynch, Barclays Plc and JPMorgan Chase & Co. are competing to sell shares for state-run companies in India as the government plans the biggest sell-off in at least five years.

Robert Morrice, Barclays Capital’s Asia-Pacific chairman, plans to double the London-based firm’s investment banking team in India as it vies to sell stock. JPMorgan hopes for a “slew of disinvestment” by state-run companies, said Kalpana Morparia, the New York-based bank’s chief executive officer in India.

Prime Minister Manmohan Singh’s government pledged last week to reduce its holdings in profitable state-owned companies to 90 percent, accelerating a fund-raising program that languished for five years. While government offers present a “big opportunity,” they typically pay lower fees than private- sector sales, according to Bank of America.

“The competition for this business is always extremely fierce,” Kevan Watts, country head for Bank of America, said in an interview. “It is prestigious business. It is not a very profitable business because the government, understandably, is not prepared to pay very high fees.”

Indian share sales will add to an IPO rebound in Asia as record-low interest rates and economic stimulus packages fuel a revival in demand for new equities. China Minsheng Banking Corp., Sands China Ltd., Malaysia’s Maxis Bhd. and India’s Emaar MGF Land Ltd. will lead more than $14 billion of sales in the region.

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Home prices up in 15 cities, shows Residex

The new index of residential price movement – Residex, released by the National Housing
Bank (NHB), shows a mixed trend among 15 major cities.

As many as nine out of 15 cities, covered by Residex across the country, have witnessed hardening of residential property prices. Prices of homes have recorded a decline in cities such as Delhi, Bangalore and Bhopal, between December last year and June, but the same went up in cities such as Mumbai, Kolkata and Chennai, among others.

Prices of residential property in Mumbai have increased by 5.98 per cent between December and June, and by 26 per cent and 13 per cent in Chennai and Kolkata respectively. Prices of residential property in Ahmedabad increased by 27 per cent in the same period and during the same time, Faridabad, the neighbouring city of Delhi, reported price hardening to the extent of a whopping 36

Article Link here

The big bank bailout?

Why property prices did not fall enough in 2008

The real estate industry may have run into fresh trouble. Having emerged fresh from a crisis that threatened to take a few companies belly up, the worst was perceived to be over for the industry. However, data that emerged from a recent Reserve Bank of India (RBI) document shows that just when the industry was in the throes of the downturn in 2008, banks stepped in to lend generously when they needed capital to survive, saving developers the trouble of cutting prices to stay afloat.

here’s the hard data: as per the RBI document, loans to the real estate industry grew as much as 41% last year even as loans to homebuyers grew about 5% in the same period, confirming the trend that demand for property was indeed down.
In fact, in the monetary policy review that the central bank came out with earlier this week, it made loans to the realty industry stricter and ordered banks to arrange for coverage should any of their loans default and get classified as non-performing assets (NPAs).

Chetan Ahya of Morgan Stanley says that the real estate industry got easy lending from banks, due to which they were able to hold back sales and not cut property prices too much. “The RBI governor, post the monetary policy, was clear the RBI would like to see more adjustment in the property sector on the pricing front and that there should not be aggressive price increases,” he said.

Developers, though, were not pleased and on the contrary said the RBI move could result in project delays and make property costlier or impact their margins.
“Property prices are a function of the market, supply and demand. Therefore it at all the hit has to be taken and the prices cannot be increased it would obviously impact the margin,” said Pujit Aggarwal, Managing Director of Orbit Developers.
With the RBI turning on the heat on real estate companies, what will the outcome be on the industry and property prices? Time will tell.

Realtors make a cautious comeback

Flush with funds raised through QIPs and PE deals, builders are eager to cash in on the return of demand


The affordable housing concept too has pushed developers out of familiar territories. Unitech, which bought land nationally in the last five-six years, has launched projects in Lucknow, Mumbai, Kolkata, Chennai, Bhopal, Rewari and Mohali in the past six months, several under its affordable housing brand Uni Homes.

Even for its recently launched premium project in Worli, south Mumbai, Unitech slashed rates by at least 30%. In a pre-launch aimed at investors, it sold nearly 150 out of about 300 apartments in the project within a month, analysts said. Unitech is focusing on developing its existing land parcels, said R. Nagaraju, general manager, corporate planning and strategy. But the risk in expanding into other cities is in setting up a large team in each region to undertake the projects with enough freedom to operate, he said.

Bangalore-based Puravankara Projects Ltd plans to go pan-India through its affordable housing subsidiary Provident Housing Ltd. Encouraged by recent project launches in Chennai and Bangalore, it’s now aiming for Kochi, Hyderabad and Coimbatore.

Murthy to be venture capitalist and I wonder why now

Economic Times reports that NRN Murthy has sold 180 crore of Infosys shares to start a VC firm in India which will invest in startups focussed on basic healthcare, education and nutrition.

The cynic in me says that this is a cooked up headline to justify the selling of Infosys shares which I believe is poised to plummet to depths not seen before.

There are two fallacies to this story propagated by NRN. Firstly the goal of VC is to generate returns in the excess of those which could be possible by the stock or bond markets, at the expense of taking a higher risk then normal. Any Silicon Valley VC will tell you that 99% of all startups fail but the 1% which succeed generate 1000% returns to compensate for all the failures. In the period 1999-2009 a VC study showed that more funds went bust then which made a profit for their investors.

Now given the risk profile for a VC, is NRN trying to become a silicon valley type VC or is he trying to become a "philanthropic venture capitalist". These three words are put together sound more ironic then "Sweet Tata Namak". The goals of each of these professions is different and do not intersect even on elliptical curve on a infinite plane.

Is NRN trying to downplay the share sales since he doesn't want investors to think that an insider is bailing out without attracting attention. As an investment decision NRN has made the right decision by slowly selling all his shares and hopefully diversifying his assets into index funds. As per the article he has now jus 0.4% shares of Infosys remaining so that speaks about the confidence he has in the company he has founded.

There was an article in Reuters the other day which spoke about how Accenture, HP and IBM consulting services have expanded in India to cut their overheads and now each employ more then three quarters of the workforce of Infosys or Wipro or TCS. Infosys trades at 20 times forward earnings versus 14 for IBM and similar disparities exist for Wipro and TCS. What more opportune time to sell the stock then when the Indian market has hit its cyclical bear market high!!

Good job NRN but sorry that you cannot pull the wool over our eyes. Full article here

BANGALORE: One of India's most successful entrepreneurs is turning into a venture capitalist (VC). Infosys Technologies' co-founder and chief mentor N R Narayana Murthy, on Thursday, sold shares worth Rs 180 crore to start a venture capital firm that would fund start-ups mainly in India. The idea is to encourage young entrepreneurs with brilliant ideas. The VC will invest in start-ups operating in the areas of basic healthcare, education and nutrition.

In a reversal of roles, in deciding to become a VC, Murthy is following in the footsteps of his daughter Akshata who was until recently a VC based out of Bay Area in Silicon Valley operating in the clean tech space. Until her marriage to Rishi Sunak in August, she was a senior associate at Siderian Ventures.

Murthy on Wednesday and Thursday sold a combined eight lakh shares of Infy to raise money to fund VC firm. The number of shares owned by him in the company now stands reduced to 23.8 lakh valued at Rs 526 crore at Thursday's closing price of Rs 2,211. The Murthy family's combined holding is around 5% with his wife Sudha owning the largest chunk. Murthy's individual holding in Infy which has been less than 1% for a while now stands reduced to 0.4%.

Happy Diwali and the bear

I hope everyone is having a Shubh Deepawali with their family and friends and may Godness Laxmi smile on everyone with wealth and prosperity in the time to come.

However if you are Rakesh Jhunjunwala the way to earning your bounty is to go short on the Indian stock market. He is on the record now saying that Indian markets will crash. So if the big bull is now a big bad bear, no points for guess whether he is long or short on the. Like they say Bulls make money, bears make money, pigs get slaughtered. If the market tanks this week, it will be fantastic time to go short on the market.

In Samvat 2066 it appears the path to Laxmi Road is via Bear Street. Here is the rediff article

Wake up Mumbai

Taking a cue from his wife Sagarika, Rajdeep seems to have woken up to the reality of the India. Im my opinion I have observed that he has sugar coated his words when speaking or intervewing policticans on televsion but here he is direct and at his eloquent best.

As the megapolis one grew up in, there is an obvious emotional attachment to Mumbai. Which is why, at a studio discussion this week, when a panelist referred to the maximum city registering minimum voting as a sign of Mumbai's "resident non-Indian" mentality, I felt a little aggrieved.

Surely, a city with the energy and enterprise of Mumbai, a city which literally never sleeps, cannot be seen through such a cynical worldview.
And yet, as voting day for the Maharashtra assembly elections wore on, it became increasingly apparent that Mumbai was struggling to pass Pappu's electoral test.


Maybe, it's the same mindset which has chosen to watch the city being reduced to a giant slum by a political class which sees slum-dwellers as one large vote bank and little else.

Perhaps, that is also why year after depressing year, the city routinely goes under water in the monsoons.

It might also explain why no one has been able to challenge the builder-babu-neta nexus which has allowed the mangroves and green areas to be concretized.

You commute for eons in a creaking railway system, flyovers don't get built on time, a sealink takes years to come up, no additional power is generated for a decade, old, dilapidated buildings remain hostage to antiquated laws: nothing seems to change, and worse, no one seems to care enough to force change.

Take a look at the morning papers in Mumbai and you get a sense of just how much the city lives in a bubble of its own.

In no other city has page three merged as effortlessly into page one as in Mumbai. Shah Rukh's trousseau, Salman's antics, Priyanka's twittering, the city seems to have magnified all things trivial and made Bollywood its ultimate temple of worship. Read more

Rich behaving poorly

Sagarika Ghose seems to have hit the nail right on the head. When we see the likes of Bindas Bhai and others gloating over their riches when the average Indian is trying to make ends meet, it reminds me of Marie Antonette who said "If you don't have bread, eat cake". The liberalization of India has attracted legitimate capital as well as shady money. It is this shady money which is fuelling all the demand for real estate. Last January, at the mere mention of the abolition of P-Notes, the market crashed 20% from 21k to 17k. The money moving in Indian stock market is highly speculative leverage capital and part of those profits are ploughed back into Mumbai real estate. Folks who make money should be careful in how they invest it. We have seen how the mighty have fallen. I know of folks working on Wall Street earing $500k + bonus and those folks cannot find a job paying them 1/5 of their salary. Indian housing bubble is a subset of the Indian money supply bubble and both will unwind viciously when it become unsustainable. Manmohan, Montek and company are doing little to curb its appeal. They act like ostriches when the wolves are out in full play. The real money has to spent in building infrastructure, agriculture and basic necessities. The Naxals are not reading Sagarika's blog before striking back. They are rising against the unfair trade practices. If the poor don't become a participant in India's growth, the rich wont be able to enjoy their riches for long. Her blog is below.

Two seemingly unconnected events point to our most urgent contemporary dilemma: how should the rich behave in a country of the poor? Just a week after Corporate Affairs minister Salman Khurshid asked CEOs not to take "vulgar" salaries, Naxals beheaded police officer Francis Induvar in Jharkhand and as many as 200 Naxals attacked a police station in Gadchiroli. Four Indian CEOs recently made it to the Forbes list of 10 wealthiest CEOs in the world, yet almost half of India lives on less than a dollar a day. Today, many rich Indians are indeed vulgar and arrogant, and the poor are no longer content in their 'god given' lowliness and have taken up the gun. India and Bharat are on a collision course as never before. The government's response of a crackdown on Naxals is only a treatment of the symptom rather than the disease. If Naxalism is defined as a violent response against perceived inequality, then its not just occurring in the Red Corridor. There are versions of it going on all over India. Read more at IBNlive.com