Saturday, June 13, 2009

Story of Bennett, Coleman & Co (TOI Group) and Real Estate Companies

This is about how one media group can manipulate the "news" and its content to make money and control the public opinion for its profitability. This is about Bennett, Coleman & Co (TOI Group) which owns media assets like ToI,ET(across all cities),regional newspapaers and TimesNow TV.They have something called "Times Private Treaty" which invests in emerging enterprises and small & midcap companies just like a VC. But its slightly different with Times Private Treaty(TPT) where in TPT will get equity for its media coverage (whatever TPT pays, gets back for media treatment).Investee companies will get special coverage,increased exposure and mouth piece service. We dont know much about the very details of the agreement between TPT and investee companies.


India’s largest new company, Bennet, Coleman & Co. Ltd., (BCCL) has signed Times Private Treaties with over 200 companies in the past 3 years.

What is TPT?

TPT identifies growth rich but Advertisement shy comapnies (???!!) and gives them media space in BCCL platforms. In return, they get a share in Equity. Expected value of these TPT’s - Rs.1,700 Cr- Rs.3,000 Cr.

Why TPT?
BCCL believes that Indian market is commodity driven, not Brand driven. Only 14,000 brands are actively advertising in India. But in US there are 8 lakh active brands. Hence there is a future for brands.

Who is following?
HT Media, NDTV, Dainik Bhaskar, Dainik Jagran, Mid Day.

Conflict: Editorial lenience to TPT companies.

We could see the list (portfolio) of compnaies earlier in their website( which has been removed. I list the companies later from my memory. I noticed about these investments in 2003 and impressed by the idea(didn't know details) of Jain family but what happened latter is big let down for the indian public. There are no goverment controls at present but we expect a little ethics, social values, moral control and culture for media group with such long tradition.

List of companies from Mint

I remember the list of companies as Sobha Builders, Rajesh Exports,Pyramid Saimira, JetKing, Peninsula and many more realty players.I guess we should stop reading newspapers like these which actually doesn't add any knowledge but only noise.

Here are the links for more understanding;

You can find many more links in Ajay's Blog.

I would like to get the views of our readers. I am sure many of you already knew but its good for those who still believe whatever newspapers say is truth and newspapers are run by the people who care very much about this poor country and its people.

Thursday, June 11, 2009

Realtors Seek Share Sales To Repay Debt, Await Sales

From VCCircle.

Since the start of 2009, almost $ 2 bn has been called for by realtors via share sales.

India's real estate firms are seeking share sales to settle debt and meet working capital needs as valuations improve, but the funds won't be enough to salvage them if sales don't pick up, say industry watchers.

Since the start of 2009, almost $1.7 billion has been raised by home builders, according to Thomson Reuters data, while up to $2 billion more has been called for by realtors via share sales, especially qualified institutional placements (QIPs).
"It is an over-leveraged market...the overall market is too huge. This (money) is nothing. It's small peanuts. It won't suffice," Pankaj Kapoor, founder of Liases Foras Real Estate Rating & Research, said.
Realty firms piled up debt as they rushed to launch projects amidst a three-year bull run in the sector. But, sales began slumping in 2008 amid a global meltdown and reluctance among buyers at higher prices, leading to a severe cash crunch.
Sentiment improved with the successful share sales by Indiabulls Real Estate, Unitech and India's largest listed real estate firm DLF, prompting more builders to seek board approval to raise money via share placements.
"They don't have an option," Shobhit Agarwal, Joint Managing Director, Capital Markets, Jones Lang LaSalle Meghraj, said, referring to QIPs. "If you go to private equity, which is the other extreme, this kind of size is not available."
"They have no further capacity to raise debt... or to service that debt," he added.
Outstanding bank loans to real estate firms rose to 623 billion rupees in FY08, up about 38 percent from a year earlier, the latest central bank data shows. Confederation of Real Estate Developer's Association of India (CREDAI) estimates that listed companies account for over half of those loans.
Sales are trickling back as realtors focus on medium to low-priced houses, redesigning projects and cutting prices by as much as 40 percent in some markets, but most buyers appear to be flighty investors, suggesting that recovery may be months away.
Residences account for the bulk of real estate up for sale and select projects across India are seeing a revival of demand, developers say.
Equity analysts remain sceptical even about firms that were successful in raising money.
Indiabulls Real Estate's share issue brought down promoter holding to about 16.7 percent said a Motilal Oswal June report, "however, till date no concrete plans on the usage of the QIP proceeds have been shared."
Stock investors have pushed up the industry's market value but analysts don't think the rise can be sustained. India's realty index is up almost threefold from March.
With most stocks trading at NAV (net asset value) premiums and equity dilution a likely overhang, we view risk/reward as unfavorable, Karishma Solanki, analyst at Citi said in a June report.
India's property market pick-up is typically seen starting from Mumbai, then Delhi, followed by the southern markets, Jones Lang's Agarwal said.
But, the future still rests on revival of demand and a further price correction to bring back fundamentals.
The only thing that will bring back efficiencies into the (realty) market is sales," said Liases Foras' Kapoor. "For that prices have to come down, because until they come down, the buyer will not be motivated to come and purchase."

Monday, June 08, 2009

Time for a realty check

If you thought buy-one-get-one free offers were limited to trousers, shoes and other small-ticket items, think again. You could get houses too for free, thanks to Orange Properties, which came out with a ‘buy-one-flat-get-one-free’ offer recently for its Orange Resorts in Devanahalli, in Bangalore.

Sales didn’t quite skyrocket and the advertising campaign across print and outdoor met with mixed response, but given the current market conditions perhaps that’s understandable.

With real estate being struck badly in the slowdown, real estate developers, who were once riding a high, have now tightened advertising and marketing expenses. They have also had to think out of the box even while operating on leaner budgets. They have been forced to rework their marketing strategies to woo consumers at a time when the propensity to buy is not very high. Marketing initiatives may be fewer but they are becoming more focussed, specific and project-based, using direct and candid communication. And pricing is obviously the key premise around which the initiatives revolve.