How many thousands of crores have been paid to the politicians and babu's for this scam to go unnoticed for 23 years. It will be naive to think, Hirananadani is going to accept these acccusations without bringing down the house. These same allegations should be levied on the Raheja's for selling Jodi flats in the Malad(w) link road area where they have destoryed all the mangroves. These scams are part of the Indian scenario and nothing will be learnt. The Satyam case provides enough evidence that whistle blowing on these scams are just lip service to further personal agendas. The Indian legal and political system is of the rich, for the rich and by the rich. All the common man can do is to be vigilant and aware and not get caught up in this cesspool of corruption. In the past some reports have suggested Hiranandani was given the Powai land at 40 paisa per sq ft. The government officials who approved this paperwork should be prosecuted before Hiranandani. If someone approves such a deal, any moron with an iota of grey matter will take it. Why blame Hirananandani for a ultra ineffecient corrupt system ?
By ugesh sarkar, Section Real Estate
Posted on Thu Feb 05, 2009 at 09:38:36 PM EST
In what could be the highest penalty imposed on a builder for alleged gross violation of land misuse, the Mumbai Metropolitan Region Development Authority (MMRDA) has recommended to the state urban development department that developer Hiranandani Group be made to pay a penalty of Rs 2,000 crore. Though the developer is yet to receive a notice of levy for the amount, Niranjan Hiranandani, MD, Hiranandani Group, has denied the charge in totality, stating that the state agency was unaware that no development in the area had been done without obtaining the necessary permissions and sanctions of government departments.
Meanwhile, the metro authority has charged the builder with constructing large apartments instead of the 40 sq m and 80 sq m flats, for which permission was accorded. The second charge is for building commercial complexes in violation of the original agreement and the third, an add-on penalty component, for utilisation of transfer of development rights.
Hiranandani said development rules and notifications, since the 23-year-old Powai Area Development Scheme, comprising 92.2 hectares, was signed, had undergone changes and consequently implemented after sanctions during different periods. The MMRDA has used the current ready reckoner rates to compute the alleged violations to arrive at the penal sum of Rs 1,993 crore.
The Powai Area Development Scheme was not classified under any scheme for weaker section / lower income group of the society, he said adding that a Bombay High Court decision in 2005 stated that the development at Powai was not for any weaker section / lower income group of the society and the same does not apply to the said lands.
On increase in the size of tenements, Hiranandani said the scheme came after a tripartite agreement was signed on November 19, 1986. Under the agreement, there was a condition restricting sizes of the tenements. However, the MMRDA permitted the amalgamation of tenements as per its order dated August 18, 1989.
The larger premises were constructed utilising transfer of development rights subsequently, when the TDR concept was introduced in 1991. During the period when the tripartite agreement was executed, the development by TDR was not available.
The Bombay High Court is hearing public interest litigation petitions pertaining to the project development.
The MMRDA has also recommended that all concessions extended to the builder be withdrawn, to which Hiranandani said he had not availed himself of any concessions thus far.
Posted on Thu Feb 05, 2009 at 09:38:36 PM EST
In what could be the highest penalty imposed on a builder for alleged gross violation of land misuse, the Mumbai Metropolitan Region Development Authority (MMRDA) has recommended to the state urban development department that developer Hiranandani Group be made to pay a penalty of Rs 2,000 crore. Though the developer is yet to receive a notice of levy for the amount, Niranjan Hiranandani, MD, Hiranandani Group, has denied the charge in totality, stating that the state agency was unaware that no development in the area had been done without obtaining the necessary permissions and sanctions of government departments.
Meanwhile, the metro authority has charged the builder with constructing large apartments instead of the 40 sq m and 80 sq m flats, for which permission was accorded. The second charge is for building commercial complexes in violation of the original agreement and the third, an add-on penalty component, for utilisation of transfer of development rights.
Hiranandani said development rules and notifications, since the 23-year-old Powai Area Development Scheme, comprising 92.2 hectares, was signed, had undergone changes and consequently implemented after sanctions during different periods. The MMRDA has used the current ready reckoner rates to compute the alleged violations to arrive at the penal sum of Rs 1,993 crore.
The Powai Area Development Scheme was not classified under any scheme for weaker section / lower income group of the society, he said adding that a Bombay High Court decision in 2005 stated that the development at Powai was not for any weaker section / lower income group of the society and the same does not apply to the said lands.
On increase in the size of tenements, Hiranandani said the scheme came after a tripartite agreement was signed on November 19, 1986. Under the agreement, there was a condition restricting sizes of the tenements. However, the MMRDA permitted the amalgamation of tenements as per its order dated August 18, 1989.
The larger premises were constructed utilising transfer of development rights subsequently, when the TDR concept was introduced in 1991. During the period when the tripartite agreement was executed, the development by TDR was not available.
The Bombay High Court is hearing public interest litigation petitions pertaining to the project development.
The MMRDA has also recommended that all concessions extended to the builder be withdrawn, to which Hiranandani said he had not availed himself of any concessions thus far.
13 comments:
A well written article in Business-Standard.
Gadadhari_Bhim
Thanks Gadadhari_Bhim for the article
Key points:
- Most companies are over-leveraged. They started scaling up between 2004-08, and expected overseas capital inflows (now unavailable) to help complete ambitious projects. Most have murky balance-sheets since that is innate to the business.
Ref On DLF Ltd, the report said the company has had significant intangible asset/goodwill on its balance sheet, there are significant departures from conservative accounting practices, there have been material related-party transactions and the company does not disclose detailed accounts of key subsidiaries on a regular basis.
Besides, there is “no transparency in the land acquisition process. Promoters have privately controlled entities from which DLF buys land. Also, its landbank disclosure in annual reports is inadequate.”
- The BSE Realty Index has corrected by about 85-90 per cent from its all-time highs. Not surprising since majors like DLF and Unitech have seen profits erode 70-95 per cent in October-December 2008.
Ref New Delhi: India’s largest property developer by market value, DLF Ltd, has reshuffled a part of its growing debt by replacing short-term loans with borrowings that mature later and carry a lower rate of interest.
It had borrowed Rs1,000 crore from Punjab National Bank and Rs750 crore from Life Insurance Corp. of India in December at 13-14% and repaid up to Rs1,100 crore of short-term debt.
“We have taken long-term debt from within India to replace our short-term foreign debt, which we had taken at a higher rate of interest,” group executive director Rajiv Talwar said on Monday.
- Prices have eased by 30-40 per cent. But to put it bluntly, prices may need to revert to 2004-2005 levels and mortgage rates may also need to drop back to 2004-05 levels before there is strong demand revival. That means about 300 basis point cuts in home loan rates and another 30-40 per cent reduction in real estate prices.
Even if the prices are to go down to 2001-03 level, people will be more cautious before making any decision. The past reckless decisions of indulging in the massive loans were backed by the confidence to repay the loans (include car loans) and the basis for the very confidence e.g. job security, steady monthly salary, onsite assignments has shaken. Most of the loans were taken by the techies with the experience of hardly 2-3 yrs of experience.
With the emergence of horrific cocktail of 9-10k Rs monthly salary for freshers,experienced battling with monthly reduced salary , lending institutions asking for 30-40 of down payment (to hedge against the diminishing real estate prices) and realty companies clinging to astronomical prices ( since they have borrowed at heavy interest rates 20-25% from black market,real estate funds promising the returns of 50-70%) it is very unlikely that there will be at all any revival soon.
- Loans are generally up to 70-80 per cent of the value of secured assets. Hence, loans disbursed in 2007 and 2008 against real estate at valuations prevailing then, may need review if prices fall by 50 per cent or more. There would be "negative equity" if asset values drop below the value of disbursed loans.
yes the lending institutions have already started to ask for 30-40% down payment
- India is better-protected because ironically, it has a relatively larger black economy. The actual value of most land is more than that shown on lenders' books.
black will money invested in the real estates will be sucked out during the oncoming elections
- All this means that, horrifying as it may sound, real estate companies are perhaps not decent value even at 90 per cent price declines. There could be much more pain in store for the sector over the next year or two. This is why rumours of insider selling in DLF have caused panic in the recent past.
- Whatever happens, the Indian real estate industry will never be the same again. It was hit with this drastic crisis at a point when it was over-extended.
India is sitting on a time bomb. Fools can think that the country is doing good and housing will never go down.
No matter who says what, the RE prices will go down definitely by 70-80%. By this June, there will be major job losses. No one is buying RE. Banks are not giving loans. Major problems are coming. This is what US saw in 2007. Still 2008/9 is coming for India next year.
All the party time for Indians is over. Just taking a 4 week course in SAP/Peoplesoft/Orace and get a 100K job. Get back to realty. Land od losers.
Bindaas Bhai
I think there is one more Bindas Bhai in this forum.
Hiranandani’s are not the best guys to do business with. Niranjan Hiranandani will only talk about Housing for poor and seek incentives from the Govt but I have never seen any of his projects for poor.
I sincerely hope that the Govt goes after him and makes him accountable.
Last Saturday i was with a very reputed builder for almost 2 hrs. I could get a feeling that he may reduce the rates although at the face of it he does not want to make it obvious.
He has huge inventory of commercial property and finding it difficult to handle. I don’t know how long he can hold but I feel he may crack. He is really a big fish and if he cracks i am sure other builders will have to reduce.
All the best to you all actual buyers.
I will keep you posted guys if there is any further development.
Bindas Bhai
This story is about a man who once upon a time was selling Hotdogs by the roadside. He was illiterate, so he never read newspapers. He was hard of hearing, so he never listened to the radio. His eyes were weak, so he never watched television. But enthusiastically, he sold lots of hotdogs.
He was smart enough to offer some attractive schemes to increase his sales. His sales and profit went up. He ordered more a more raw material and buns and sold more. He recruited more supporting staff to serve more customers. He started offering home deliveries. Eventually he got himself a bigger and better stove. As his business was growing, the son, who had recently graduated from college, joined his father.
Then something strange happened.
The son asked, "Dad, aren't you aware of the great recession that is coming our way?" The father replied, "No, but tell me about it." The son said, "The international situation is terrible. The domestic situation is even worse. We should be prepared for the coming bad times."
The man thought that since his son had been to college, read the papers, listened to the radio and watched TV. He ought to know and his advice should not be taken lightly. So the next day onwards, the father cut down the his raw material order and buns, took down the colourful signboard, removed all the special schemes he was offering to the customers and was no longer as enthusiastic. He reduced his staff strength by giving layoffs. Very soon, fewer and fewer people bothered to stop at his Hotdog stand. And his sales started coming down rapidly and so did the profit. The father said to his son, "Son, you were right". "We are in the middle of a recession and crisis. I am glad you warned me ahead of time."
as we see kaluratnams & gangadins fall from their 4 yr old reverie due to global easy money down to the the realiity of indian gutter, there is fierce compeition out there as foreign employed indian workers are rapidly returning home.. some 50,000 IT coolies work in foeign lands, not to speak of construction coolies in middle east.
But the munugerilal indian govt it wetting itself w/ 7% GDP grwoth dream.
Dream on, mungerilal nation
http://economictimes.indiatimes.com/articleshow/4096332.cms
Raju land may be twice estimates
While the property documents seized during various search operations are still being put together, rough estimates show the land bank to be in excess of 15,000 acres.
"It looks like the Rajus caught property mania. They have land everywhere and it is difficult for anyone to come to a clear understanding on the resources the family had deployed to acquire these properties," said a source.
Raju's family members are estimated to have over 5,000 acres in their names through various front companies floated by them.
Maytas Properties, a closely held company of the Rajus, is said to hold another 6,800 acres.
Anon @ 2:44am
What do you mean? The people defaulted on Mortgages because Bush/Obama/economists shouted there is a recession?
Gadadhari_bhim
Anon @5:45 pm. Good analysis :).
When can we get 5000Rs/sqft in Bandra East? :)
Gadadhari_bhim
Shaant Gadaadhaari Bhim ! Shaant ... Indian RE prices wont come down, I have bad feeling that the Rupee will collapse trying to sustain the inflated prices. RBI will try to infuse worthless cheap rupee cash into our system I just hope we don't go Zimbabwe's way into spiraling hyperinflation again ... I am kind of optimistic but IT was the hen that layed golden eggs for India, Builders murdered it and now the nation will suffer ...
IMF & majority of US Economists believe that the economic crisis will reach to
bottom in Q2 of 2009. But it will be a harsh conclusion as it depends
on the success of Obama’s stimulus plan. Also the IMF is predicting immediate
recovery, which is another blunder.
http://www.thehindubusinessline.com/2009/02/
10/stories/2009021050190900.htm
Asian economy may recover faster than developed economy, but the weak export
sector will nullify the effect of recovered sectors.
Now the real question is, about the vicious cycle?
Developed economies =>foreign investment=>developing economies=>Export to Developed economies
As the RE boom was fueled by the export sector, now the RE needs to wait long for recovery. In fact Cushman & Wakefield is predicting about the bankruptcy of RE companies. As explained earlier, it will be the sign of market bottoming.
http://economictimes.indiatimes.com/Markets/Real_Estate/
Realty_firms_to_see_more_losses_lower_unit_prices/
articleshow/4097988.cms
Now the question is, if market will take 1.75 to 2 years to bottom down, how much time will require for recovery?
So guys let it fall then only pick up, minimum 50% price cut is guarantee.
Vulture.
Reading The Fine Print
Amar, Mohali, says: I have been writing to RBI regarding attitude of Private Banks, pls see response from Mr. Ashok Joshi, DGM DBOD, RBI Mumbai. I am sure you will get answer that why private banks are looting common man.
...
...
3 Question: Private banks are offering new loans at much lower rates to attract new customers whereas existing customers continue to pay higher interest rates. This is an unfair practice. Government should take serious action against it.
Answer: Banks have the freedom to offer all categories of loans on fixed or floating rates, subject to conformity to their Asset-Liability Management (ALM) guidelines.
(the reluctance of privet banks not to lower the floating interest rate is a clear sign of ballooning of Liabilities i.e. Non Performing/Troubled assets..wave of defaults for commercial/residential home loans..the grandiose claim of prudent lending is flying high in the face )
In order to ensure transparency, banks should use only external or market-based rupee benchmark interest rates for pricing of their floating rate loan products. The methodology of computing the floating rates should be objective, transparent and mutually acceptable to counter parties. In the case of existing loans of longer / fixed tenure, banks should reset the floating rates according to the above method at the time of review or renewal of loan accounts, after obtaining the consent of the concerned borrower/s
( when did the bank consult with me before increasing the floating rate? )
4 Question: Private banks impose 2% penalty in case of one tends to switch over to Nationalised banks or prepayment. Why so?
Answer: In the context of granting greater functional autonomy to banks operational freedom has been given to banks on all matters pertaining to banking transactions. Banks have been given freedom to fix service charges for various types of services with the approval of their Board. Therefore, all matters relating to fixing of service charges are decided by the banks themselves.
Shrinivas Bhratashri,
When there is "shanti" then there is NO "Kranti"(revolution). Revolution can happen by spreading the truth when something wrong is happenning. I'm glad to see that this blog by Vic is spreading the truths on Indian realty. Kudos to Vic on that. The more people know the truth the better. "Satyamev Jayate"! :)
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