Some of India's biggest tycoons pushed the government to resolve the country's worsening electricity crunch by freeing access to fuel for power plants, adding pressure on Prime Minister Manmohan Singh, blamed for failing to push bold reforms.Tata group Chairman Ratan Tata, Reliance Power Chairman Anil Ambani, and Adani Power Chairman Gautam Adani met with Singh on a long day of meetings in the capital between top power industry executives and senior government officials."We pushed for all issues, mainly augmenting domestic coal production," Ashok Khurana, director general of the Association of Power Producers said after the group met B.K. Chaturvedi, the member of India's Planning Commission responsible for energy.India does not produce enough power to meet the demands of a fast-growing economy and increasingly affluent population of 1.2 billion people. Outages in big cities, including the capital, are commonplace, and industrial users and office buildings must frequently rely on self-generated power.Coal and natural gas shortages and delays in acquiring land, have crimped the rollout of new plants by big producers such as Adani and left many existing units running below capacity."The government needs to coordinate all its arms if it aims to improve the situation in the power sector," said V. Srinivasan, an analyst with Angel Broking.India has installed capacity of 187,000 megawatts (MW), about a fifth of what China has, and has a peak-hour deficit of about 12 percent. India's power output rose 8 percent to 72.7 billion kilowatt-hours in December from a year earlier.But halfway through a second five-year term, Singh's government has made little headway in pushing reforms in power and other areas, crimping investment and contributing to slowing growth.Coal And FundingStagnant domestic output by state-run Coal India, the world's largest coal miner, and lower-than-expected gas production coupled with the high cost of imports has thrown the business plans of generators into disarray.In addition, the inability to pass along the full cost of fuel price increases makes many units unprofitable.But as pressure builds on the government, India has raised its coal import target by over a third to about 114 million tonnes in the fiscal year ending in March, though further increases are unlikely because of a lack of rail capacity from key ports to end-users.Coal accounts for more than half of India's power generation and will be required for about 85 percent of the target of adding 75,000 MW of capacity by 2017, a government draft report said in late 2011.India has about 10 percent of the world's coal reserves but struggles to provide private players more access to coal blocks and swifter environmental clearances and land acquisition.Coal Minister Sriprakash Jaiswal said on Wednesday that private sector power companies should do their part to address the shortage by lifting production at their own mines."We can't increase coal production quickly," he said after meeting the delegation, which was ferried between meetings in luxury cars and trailed by a about two-dozen journalists."We have asked them to resolve issues and increase output at captive mines."Not Enough GasGas does not provide an easy answer. India is the world's eighth-largest importer of LNG and the gap between demand and supply is growing as domestic output slows, though India has allowed active drilling in coal-methane blocks and is building more capacity to receive imports.Gas demand is likely to rise to around 410 million standard cubic metres per day (MMSCMD) by 2019-20 from consumption of around 177 MMSCMD in 2010-11, according to ratings agency ICRA.Much of the new gas demand is expected to be met by imports that are more expensive than domestic supplies.Power companies have been lobbying the federal government in vain to free them from power sales contracts to pass on rising fuel costs to consumers. But power tariff agreements are set by state governments reluctant to raise prices.Losses for distribution firms were estimated at 400 billion rupees ($8 billion) in the year that ended in March 2011.Lower than expected gas output from Reliance Industries-operated D6 block in the Krishna-Godavari (KG) basin, off India's east coast, has also dashed hopes for a quick spike in domestic supplies.Banks, already burdened with loans to loss-making state-run electricity distribution firms, are reluctant to lend to proposed power projects that do not have assured fuel supplies, especially gas eyed for new combined-cycle units.(Reuters)
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Strongly rejecting the findings of a US-based think tank which poorly rated India on nuclear safety index, New Delhi on Tuesday said the findings were based on "faulty methodology" and it used "unreliable information"."We have seen the report but we do not share its conclusions as we believe it is based upon faulty methodology especially on issues relating to India," Foreign Secretary Ranjan Mathai said.The index, compiled by think-tank Nuclear Threat Initiative (NTI) had ranked India very low, just above Iran, Pakistan and North Korea.Mathai said all nuclear materials in India were subject to strict oversight controls and that New Delhi has an unblemished record.He said the index was based on "unreliable information".While India scored good in keeping with international commitments, on-site physical protection, response capabilities and accounting procedures, it fell behind when it came to political stability and because of the lack of domestic legislation.(PTI)
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State-run Oil & Natural Gas Corp posted a 5 per cent drop in quarterly net profit, falling short of market expectations, as a sharp rise in provisions for subsidy payments offset higher selling prices for oil and gas.The profit would have been lower but for royalty payments of Rs 3,142 crore from Cairn India Ltd that began in the quarter.ONGC has a 30 per cent holding in an oil and gas block in Rajasthan that is operated by Cairn India.Vedanta Resources bought a majority stake in Cairn India last year and as part of the deal Cairn India is required to share the burden of royalty payments earlier paid by ONGC to the government.ONGC, India's second-most valuable company, reported a net profit of Rs 6,741 crore for its fiscal third quarter ended December 31, down from Rs 7,083 crore a year earlier.Analysts, on average, had expected a net profit of Rs 7,260 crore, according to a Reuters poll of 10 brokerages.ONGC said its discounts to state-run refiners nearly tripled to Rs 7,172 crore in the quarter from Rs 2,404 crore a year earlier.India allows state-run refiners to set retail prices for petrol, but the government controls the prices of diesel, cooking gas and kerosene. This means producers such as ONGC must share the shortfall by selling crude to refiners at a discount.New Delhi has said it wants to loosen control of fuel prices, but has found this difficult with global crude prices staying well above $100 a barrel most of 2011.Because of the subsidies, the total revenue losses of India's state-run oil companies are expected to rise to $28.5 billion in the fiscal year ending March, nearly double the amount in the previous year.Earlier this week, the government asked upstream oil companies to share 37.91 per cent of revenue losses during April-December, up from a third in the first two quarters of the fiscal year. India is the world's fourth-largest oil importer, importing about 80 percent of its crude needs. It is scouting for oil and gas assets abroad to meet demand in a rapidly growing economy, and to feed its expanding refining capacity.ONGC, which has been investing heavily to maintain output from its old fields, has outlined capital expenditure of 310 billion rupees in the financial year starting April 1.The company has said it aims to raise crude oil production by 15 percent to 28 million tonnes, or 560,000 barrels per day (bpd), by March 2014.ONGC shares ended down 1.1 percent at 283.20 rupees, while the overall market rose 0.5 percent. The stock, valued at nearly $50 billion, fell by a fifth in 2011, compared with a 25 percent decline in the main stock index.(Reuters)
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Top executives from India's major power companies will meet Prime Minister Manmohan Singh on Wednesday to push for swifter action to improve access to coal and make it easier to get funding, acquire land and get environmental clearances.Lack of progress on such issues has held up projects and threatens India's economic growth.Tata group Chairman Ratan Tata, his deputy Cyrus Mistry, Reliance Power Chairman Anil Ambani, Adani Power Chairman Gautam Adani and top executives from other private power firms will be part of the delegation, organised by the Association of Power Producers.The executives will also meet ministers in charge of finance, coal, petroleum and environment on the same day."The basic issues in the power sector are not being resolved and are impacting generation programmes. The companies will seek quick redressal," Ashok Khurana, director general at the Association of Power Producers, told Reuters.Policy gridlock in India, which has resulted in little economic reforms in the past few years, has crimped investment and contributed to a slowing of the economy.Late last year, Singh met top executives from the telecommunications sector to hear their concerns about regulatory issues.A shortage of coal and gas and uncertainty over supply have thrown the business plans of the generators into disarray and made lenders reluctant to lend, delaying projects.Tata Power and Reliance Power, developers of 4-gigawatt plus power plants, are lobbying the government to free them from loss-making power sales contracts and want to be allowed to pass on rising fuel costs to consumers.Plants that can produce about 20,000 megawatts thermal power are working at sub-optimal capacity, and another 30,000 MW of plants under construction are likely to be affected by fuel shortages, Khurana said.India has an installed capacity of 187,000 MW, about a fifth of China's capacity, and a peak-hour deficit of about 12 per cent.A shortage of coal could prevent India from reaching its target of raising capacity by 75,000 MW in the five years to March 2017, a government draft report said late last year.In its 12th five-year plan ending March 2012, India will add only 52,063 MW, falling short of the targeted 62,374 MW, continuing a trend of missing power output targets.Coal accounts for more than half of India's power generation and will be required for about 85 per cent of the target capacity addition in 2012-2017, the draft said.India has about 10 per cent of the world's coal reserves, but has struggled to provide enough of the fuel to power sector because of challenges in land acquisition and environmental clearances for mining.A shortage of domestic supply is likely to push up coal imports by four times to 213 million tonnes in 2016/17 from 54 million tonnes this fiscal year, the draft said.Costly imports, which may seem the only way to meet the country's coal demand, make power more expensive, forcing distribution firms, which sell at subsidised tariffs, to slow procurement.(Reuters)
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Iran has agreed upon three Indian banks to accept 45 per cent of payment for its crude imports in rupees with both countries formulating mechanisms to avoid any problems in the future in the wake of western sanctions.Iranian Ambassador to India Seyed Mahdi Nabizadeh on Tuesday said both countries are determined to resolve the issue of payments for India's crude imports and has given the assurance that there will be no cut in supplies.The envoy also said that the two side had agreed on part payment in rupees as gold was "not a suitable option".He accused the US of exerting pressure on European financial institutions, through which India has been routing its payments to Iran for its purchases, not to accept them on the pretext of sanctions."Fortunately, a suitable mechanism has been found by the two countries. Officials of both countries met last week and both the Central Bank of Iran and Reserve Bank of India are happy with this arrangement. This mechanism is agreeable to both countries," he told a press conference here.Under the agreement, 45 per cent of the payments would be made in Indian rupee through three banks and Iran can use the money for buying machinery, metal products, iron, steel, minerals, clothes, fibre, sugar, tea, wood and automobiles in India, among others."We have agreed on a part payment in rupees. But, gold is not a suitable option for payment," he said, when asked whether Iran was in agreement if India pays part of its payment in gold.As part of the payment mechanism, Indian companies will also invest in projects in Iran like developing its oil and gas fields, extraction of iron ore and building roads and railways, the ambassador said. The envoy indicated that Iran may also increase its import of goods from India to settle part of the payments in the backdrop of western sanctions against it on the nuclear issue.Nabizadeh said though there was pressure from some officials in Iran to cut supplies to India due to non-payment last year, the government decided against any such decisions and engaged in discussions.On the reported one-month deadline set by Iran for a consortium of Indian oil firms to sign a contract for bringing to production a gas field in the Persian Gulf, the ambassador said the deadline could be a little more than a month."Every companies has different rules. We have different prices involved. There were no agreements between the two companies and the talks between them resumed few months back.Problems do arise when two companies talk, but they can be settled," he said.Asked whether Teheran would consider giving some concession in price for India, which is expected to continue to import oil despite sanctions, he said the price of oil is determined internationally."The oil price is determined internationally. We cannot take a decision on our own. It is based on several factors," he said.On whether he thought India would be cautious to import oil from Iran in the wake of sanctions, he said it could happen, but asserted that "the US cannot harm the relations between India and Iran." (PTI)
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Ten years ago, builders were a shadowy lot. Very few realtors were listed and the property market was a mystery. Under threat from dons, builders routinely sought police protection, and most retail transactions had large cash components.Over the past decade, the real estate sector has opened out. Many builders have raised money for their companies through public listing; incessant media coverage has lifted the veil of secrecy; land acquisition is usually conducted through open auction; and cheque payments have become the norm.In this turnaround, realty is seeing a new, go-getting pack of sons, and daughters, of big builder families driving the modern ethos. For an industry traditionally run by close-knit families, GenNext is providing continuity, but with a difference. Usually educated abroad, they have entered with a modern outlook and have been willing to experiment with greater transparency. But can they break away from the past?Cutting The Umbilical CordIn real estate, Niranjan Hiranandani is a big name. Not only was he the first builder to give Mumbai quality construction, he also emerged as a prominent spokesperson for the much-reviled industry.Earlier this decade, he succeeded in coaxing the then Union minister for urban development, Ram Jethmalani, to repeal the Urban Land Ceiling Act. A first-generation builder whose family was earlier in the textile business, Niranjan's first realty project was in 1981 — a clutch of 11 skyscrapers in Versova, Mumbai. Puravankara Projects - First Gen: Ravi Puravankara Next Gen: Ashish Puravankara Ashish brought in technology usage and consumer communication. He is also advocating using carpet area as the selling norm. (BW pic by Jagadeesh NV) But the big splash was a 250-acre Powai development — 15 million sq. ft of high class residential and commercial construction. Hiranandani Constructions is not listed, but conservative estimates peg it as a Rs 12,000-crore company today. "We were the first to look for high quality. The object was to build homes that were better than what I lived in," he says.Both Niranjan's son and daughter — Darshan and Priya — stepped in early but followed different courses. Young Darshan cut his teeth as an independent entrepreneur when he found himself in Dubai in 2004 at age 23 with independent charge of group company Hircon. "I found out how difficult it was to get things done. I had to build the company from scratch," says Darshan tracing his early days.His was no mean achievement. Hircon, in partnership with Dubai-based ETA Star, completed 23 Marina, a 90-storey, Rs 1,000-crore luxury housing project. Fortunately for the group, a lot of the advance sales were executed before the 2008 recession struck West Asia. With the slowdown, Darshan now shuttles between Dubai and Mumbai, as he devotes time to business ventures in India as well.The history of 30-year-old Priya Hiranandani has been more chequered and less spoken about. She headed out to London to take charge of the family-promoted, AIM-listed real estate investment firm Hirco a few years ago, with husband and investor Cyrus Vandrevala. But Hirco's performance has always been under a cloud and minority shareholders Laxey Partners had called for the ouster of Niranjan and two of his nominees from the board. Meanwhile, the relations between Niranjan and the Priya-Cyrus duo came under strain. In September 2010, Priya stepped down as CEO of Hirco."Priya has been a recluse," says father Niranjan, but adds: "She and her husband Cyrus continue as private equity investors." Cyrus Vandrevala is a technology investor and started Intrepid Capital Partners.Ravi Puravankara is another first-generation developer. But he moved to Bangalore from Mumbai in 1983 "for the cleaner and more transparent business atmosphere". The Rs 500-crore Puravankara Projects now has 19 million sq. ft in the pipeline, and reported a net profit of Rs 145 crore in FY10. Unlike others, Puravankara has stayed with low-cost housing in the long term even after recessionary conditions abated. Ashish, the only son, joined in 2001, took a break to complete his studies, and returned just before the company went public in August 2007."What I am adding is the best practices — consumer communication and technology — to ramp up quality," he says. The young 32-year-old joint MD gives the example of going for digital ‘Yale' locks that are Rs 8,000 a piece for flats as they provide better protection, though at double the price of the traditional bolting systems. break-page-breakAshish has been nominated to the board of the national real estate apex body, Confederation of Real Estate Developers Associations of India (Credai), where he is pushing for using carpet area as the selling norm. "It is not easy. It may take years," he concedes.But if sheer scaling up of business is the criteria, then the award must go to Ajay and Sanjay Chandra of the Unitech Group. The company, started by a group of civil engineers led by their father Ramesh Chandra, began as a small construction and contracting firm in 1972.Though it diversified into real estate with the 300-acre South City project in Gurgaon in 1986, Unitech was still a small operation at the turn of the century. The big leap came over the past decade, soon after younger son Sanjay joined the company in 2002 as head of marketing and sales, followed by Ajay in 2003, as head of business development. The group's foray into amusement parks, diversification into telecom in 2008 and, finally, spinning off Unitech Infra into a separate vertical followed in quick succession. Hiranandani Constructions - First Gen: Niranjan Hiranandani (with father Dr Lakhumal Hiranandani) Next Gen: Darshan Hiranandani Other than heading the family's real estate business in Dubai, Darshan is also looking after the new business of power generation (BW pic by Subhabrata Das) Unitech today has an annual turnover touching Rs 3,000 crore with businesses spread over office space, hospitality and mall development. From Gurgaon, the Chandras expanded to Delhi, Kolkata and Bangalore. Says father Ramesh Chandra of his two sons: "Pan-India growth would not have been possible without them. They have provided more bandwidth.""In just 7-8 years, they ramped up the market cap to Rs 16,000 crore — the fastest we have seen," says Anshuman Magazine, chairman and MD of property consultants CB Richard Ellis India. Magazine ascribes the growth to the brothers quickly developing a strong backroom and professionalising operations. "Ramesh Chandra had little personal money. It was a classic case of stock growth," says HDFC Property Ventures' CEO K.G. Krishnamurthy.Of late, there has been speculation that Unitech Infra has been set up to divide the group for the eventuality that Ajay and Sanjay can't work together. But Sanjay denies this. "On the contrary, Unitech is still the largest shareholder in Unitech Infra. In terms of management, we have made it independent under one CEO." Lodha Group - First Gen: Mangal Prabhat Lodha Next Gen: Abhisheck (right) and Abhinandan Lodha While Lodha senior is in charge of land acquisition, the brothers handle brand building, project management, finance and marketing (BW pic by Satheesh Nair) As of now, the areas of control between the two brothers are fluid, and father Ramesh continues to play a hands-on role as the executive chairman. "The three of us are not involved in any day-to-day activity or deal-making. That is for the professionals," says Sanjay.What is startling is the appetite the brothers had for risky gambles. Entering Mumbai realty only in 2008, they floated a 50:50 joint venture with Lehman Brothers for a Rs 1,500-crore slum redevelopment project near Goregaon. Slum rehabilitation, even by Mumbai developers, is considered high risk given the political ramifications. Similar forays in alliance with Indonesian Salim group to acquire thousands of acres of rural land in West Bengal also failed.As is the case with high-risk ventures, many hit a stone wall. Not anticipating the recession, the group's over-leveraged position landed it in heavy debt estimated at nearly Rs 11,000 crore at peak. To recoup, Unitech had to sell off many of its non-core assets such as Gurgaon's Hotel Courtyard in 2008, and more recently its own office complex in Delhi's upmarket Saket area. Trimming debt by 40 per cent and with sales again picking up, the brothers have managed to stem the slide.Aggressive StyleGenNext wants to get things done, and is more aggressive than their fathers. But as family-run units, the father figure always looms large.Rapidly expanding the Mumbai-based Lodha group — largely built by Mangal Prabhat Lodha — are Abhisheck (31) and Abhinandan Lodha (29). "The boys are mature and balanced, but they are more aggressive than the previous generation," says Krishnamurthy of HDFC, which recently invested Rs 500 crore in the builder's Srinivas Mills project.Lodha Senior, an active BJP legislator from Mumbai's Malabar Hills, mainly drives the sticky agenda of land acquisition and lets his sons work the daily grind in the company. Abhisheck, as part of brand building, has a large annual Rs 40-crore advertising budget. Five years ago, such spends would have been seen as criminal.Another big Mumbai developer — the unlisted Runwal Group, estimated to have an annual turnover of about Rs 1,000 crore — is run by father Subhash Runwal and sons Sandeep (39) and Subodh (35). The father still sits in on all important decisions, but the work is divided amongst the three project-wise. Their styles, however, differ. "Dad wanted to do everything himself. We have learnt to professionalise, to delegate authority so that we can get more done," says Subodh.For young Gaurav Mittal (32), director of the mid-size realty company CHD Developers, it has been a long journey from Bathinda to Bhikaji Cama Place in Delhi. His father, R.K. Mittal, saw no future for the family's traditional legal practice in Bathinda. He branched out on his own as an MES contractor but Bathinda was too small for his dreams. In 1989, Mittal senior caught the Punjab Mail to Delhi, booked a Delhi Development Authority plot in an auction, and became a developer.CHD Developers was incorporated in 1990, and was among the early real estate companies to go public — it listed on the Bombay Stock Exchange in 1995. Gaurav joined the business in 2000, by then it was established in Tier II cities such as Karnal, Haridwar and Varanasi. break-page-break"I have built professional teams to scale up the business to around Rs 150 crore. For that, I have changed focus from our Tier II city projects to the upper-middle class market in the Delhi NCR region," says Gaurav. His signature project is Avenue 71, a 1.6 million-sq ft upscale housing venture in Gurgaon, which aims to deliver 867 units over the next 2-3 years.Gaurav says he had broken with the past by insisting on transparency. "Every visitor at a project site can go through our ‘Blue Book' — a 500-page compendium of all our permissions, layout maps and copies of the title of the property — so that his doubts are cleared."First Generation HeroesIf there were marks for style and suavity, builder Vikas Oberoi would be among the front-runners. He wears crisp formals, works out in a gym, likes Japanese sushi and knows his wines. He has recently shed his S-Class Mercedes for an Aston Martin and has graduated to sport flying having acquired a Cirrus single-engine aircraft.But his USP is his success as a first generation builder. Standing in his plush Weston tower office overlooking Mumbai's Western Express Highway, Oberoi is a man in a hurry. Oberoi Realty, incorporated in 1999, saw an 84 per cent rise in net profit — Rs 460 crore on Rs 805 crore sales in FY10. With Morgan Stanley as a minority shareholder, Oberoi completed his IPO in October 2010 raising Rs 1,000 crore. Runwal Group -First Gen: Subhash Runwal Next Gen: Sandeep (right) and Subodh Runwal The brothers have professionalised operations, and delegate authority so that more can be done(BW pic by Subhabrata Das) "I had to scale up faster than others because I had no land bank, no family to back me," says Oberoi, the 41-year-old MD of Oberoi Realty.As a latecomer, his land acquisition has been frenetic. He joined the big league when he acquired pharma company Novartis's 60-acre campus in Goregaon, Mumbai, for Rs 107 crore, in 2002. Today, the layout boasts of the Weston Hotel tower; a 500,000 sq. ft-mall; and Oberoi Garden City, a 11.2 million sq. ft-housing complex. Oberoi's most lucrative project, however, is a 3.1 million sq ft-layout in Mumbai's heartland of Worli, where he is setting up a hotel and commercial and residential buildings.Before the Reserve Bank of India tightened the screws on bank lending to builders, Oberoi was among the first to use bank finance to buy land. The acquisition of Glaxo's 23-acre Mulund property, for instance, was financed by Axis Bank. "I was among the first to monetise my receivables," says Oberoi.Talking of breaking away from tradition, the young builder says: "Developers earlier tried to do everything themselves. In the municipal corporation, you would meet them liaising; if you went to Hafeez Contractor's office (a prominent Mumbai architect), they would be sitting there. After 8 p.m. they would meet customers. Ten years ago, there was no HR, no CFO." To scale up, Oberoi brought in professionals at all levels. He is currently looking for a CEO, too.But not everything has gone as planned for him. Both the Glaxo properties — in Mulund and Worli — are mired in problems and have not been developed yet. Glaxo Mulund has been stalled because of claims of the forest department, while the municipal corporation has refused permission to build in Glaxo Worli till the developer pays a 50-per cent transfer fee.Oberoi's father, Ranvir Oberoi, started off as a small real estate investor and broker. In the 1970s and the 80s, from a 300 sq. ft-office in Maker V in Nariman Point, he would book flats in advance sales, putting down 10 per cent of the cost. As prices rose, he sold at a profit, and went through the reinvestment cycle again. Today, his son, with a personal wealth of Rs 7,000 crore, has come a long way. Pradeep Jain, chairman of Parsvnath Developers, is also a first-generation developer, but is at the other end of the spectrum in terms of style. He runs a simple office on the 6th floor of the rundown Arunachal Bhavan on Barakhamba Road in New Delhi. His demeanor, too, is understated. But years of experience has made him a smart, conservative judge of the realty market.A penniless Jain migrated to Delhi in May 1984 and managed to set up a property brokerage selling apartments for Delhi's big brands such as the Ansals. He then moved on to work as a land acquisition and assembly agent for some other developers. He started construction contracting, too, and, by 1990, with all his experience, graduated to incorporating his own integrated company, Parsvnath Developers.His first big projects were not in Delhi. He launched a shopping mall in Moradabad in 1994 followed by a 120,000-sq. ft commercial complex in Saharanpur, both in UP. His first big housing project in Delhi region was Parsvnath Estate in Greater Noida in 2000, where he built 300 quality homes. Parsvnath, in many ways, pioneered the IPO revolution in real estate, becoming one of the first builders to go public in November 2006 with a Rs 900-crore issue.Over the years, Jain has ramped up his business by snapping up every opportunity. He got the concessions for developing malls at Delhi's metro stations; bagged licences to develop 11 SEZs in the second half of 2006; set up Parsvnath Telecom in 2007 and bid for licences for 22 circles; and by the end of 2007, was in partnership with the West Asian Al-Hassan Group for offshore real estate projects.Speaking about the learning from the two rounds of real estate crises — the first in the latter half of 1990s and then in 2008 — Jain blames the problem on the mad scramble for land by developers. "With their focus on land acquisition, no one was trying to understand the execution and delivery process. If you develop a project in a time-bound manner, people pay and there is no cash flow problem." Project completion is sacrosanct, says Jain. "Kill the developer if he does not complete the project he takes advances for." CHD Developers - First Gen: R.K. Mittal (left) Next Gen: Gaurav Mittal Gaurav changed the company's focus from Tier II cities to Delhi NCR. He also insists on transparency(BW pic by Bivash Banerjee) However, in the past few years, one can see the appetite for rapid expansion and for over-leveraging expected receivables. The drive for growth at any cost pushed the Parsvnath group into the very position Jain warns against. By end-2008, it had debts mounting to Rs 2,600 crore, and he was forced to sell numerous non-core assets. Jain's most expensive failure has perhaps been the Pride Asia project in joint venture with Chandigarh Housing Board. Having bid and paid an advance of Rs 567 crore, the Chandigarh project has not taken off and is mired in a web of legal and environmental controversies.Uncertain FutureSo has GenNext overtaken the old guard? "Without a doubt," says Anuj Puri, CEO of Jones Lang Lasalle. "On their side, they have market opportunities that did not exist earlier, and the aggressiveness to tackle these head-on."Agreeing that things have changed for the better, Darshan Hiranandani says: "Earlier, dad (Niranjan Hiranandani) did not have access to capital. That problem is not there now."Also, good education has given them a modern outlook. Unitech's Ajay Chandra is a civil engineer from Cornell University while Sanjay has a Master's in business administration from University of Boston. Vikas Oberoi went to Harvard Business School and has an executive MBA. Ashish Puravankara has a Master's from Willamette University, Oregon, US. Gaurav Mittal of CHD Developers is a graduate from Bradford University, UK.On the ground, though, operational difficulties continue to be crippling. The suspicion that the consumer and political class has for builders, persists. In turn, the builder community, despite the newly-acquired spit and polish, still thinks short-term and employs unethical practices.Says Magazine of CB Richard Ellis India: "In a volatile market, the young builders continue with a short-term view — launch a mall or a housing project, take in as much of pre-sales as possible and worry about completion later."In fact, some, such as Subodh Runwal, feel things have worsened. "There was always lack of clarity, but now things are even more blurred. Expectations have gone through the roof. Land acquisition is tough. Permissions are tougher. Norms get changed overnight."It is, therefore, little wonder that many young builders want to branch out into new businesses, which may be unknown to the previous generations but that offer more stable practices.Darshan Hiranandani, for instance, is anchoring his family's diversification into power generation. Conceived in August 2009, the 2,500-MW natural gas-fired power plant is being set near Pune at a cost of around Rs 10,000 crore.The Puravankaras, too, have long-term plans. "We are seriously looking to enter healthcare and education. Not in the short term, but over the next 3-5 years," says Ashish.Despite the pessimism and the scams, most feel things have become better for the GenNext. "There has been a clean-up by default through consolidation. Public listing has got rid of 95 per cent of benami firms. They have been merged with the main company for better valuation," says HDFC's Krishnamurty.But ‘dirty' money is still a big problem, and nobody is looking for solutions. Most admit it is an issue, but few speak of actual numbers. ‘Speed money' is conservatively estimated to account for as much as 20 per cent of turnover. Will GenNext be able to bell this cat?gurbir(dot)singh(at)abp(dot)in(This story was published in Businessworld Issue Dated 31-01-2011)
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About 38 per cent or Rs 26.22 in petrol price of Rs 68.64 a litre in Delhi is because of central and state government taxes.State-owned oil firms had last week hiked petrol price by Rs 1.80 a litre, the fifth increase this year as oil imports became costlier due to fall in rupee value.The new rate is based on a basic price of petrol, without including any taxes, refining cost or margin, of Rs 41.38 per litre, oil company officials said.The retail selling price is calculated by adding customs duty, central excise rates and VAT to the basic price which is nothing by the average of international oil rate.On Rs 41.38 a litre base price, a customs duty of 2.5 per cent or Rs 1.04 per litre is levied.Beyond this, the central government levies Rs 6.35 per litre basic cenvat duty, Rs 6 per litre special additional excise duty and Rs 2 per litre additional excise duty towards highway cess. The excise duty after including education cess at the rate of 3 per cent, totals up to Rs 14.78 per litre.The central taxes do not increase when the base rate is raised because these are fixed rates.However, VAT, which in Delhi is at 20 per cent, rises with every increase. Earlier, VAT on petrol was Rs 10.62 per litre, but after the hike, it totals to Rs 11.44 a litre.In the case of diesel, the total taxes account for only Rs 7.66 of the retail price of Rs 41.29 in Delhi. The taxes include Rs 0.76 in customs duty, Rs 2.06 in excise duty and Rs 4.84 state VAT.There is no central excise duty on diesel apart from the Rs 2 per litre cess for highway construction. Custom duty is 2.5 per cent. State-run Indian Oil Corp, Bharat Petroleum and Hindustan Petroleum are losing Rs 333 crore per day on selling diesel, LPG and kerosene below cost, officials said."The oil marketing companies (OMCs) are currently incurring under-recoveries of Rs 9.27 per litre on diesel, Rs 26.94 per litre on PDS kerosene and Rs 260.50 per cylinder of domestic LPG," an official said.The current sales price of these retail fuels in Delhi -- Rs 41.29 per litre of diesel, Rs 395.35 per 14.2-kg LPG cylinder and Rs 14.83 per litre of kerosene -- is way below the imported cost of the fuel.Petrol prices have risen by 33 per cent since they were freed from government control in June last year. The price of petrol in Delhi was Rs 51.43 a litre when the government decontrolled the fuel on June 26, 2010. Today, it costs Rs 63.70 a litre.(PTI)
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Oil prices rose over $115 on Tuesday on the back of strong seasonal fundamentals, as investors weighed the prospect of supply disruption from Iran against concerns over Italy's sovereign debt risk.Brent crude futures were up $1.13 a barrel to $115.69 by 0851 GMT, after pushing up to $115.83 as London traders arrived at their desks.Brent settled $2.59 higher on Monday at $114.56, its highest in more than seven weeks. US crude was up 76 cents at $96.28 a barrel."There are several factors at play, some are offsetting each other but the general trend is to the upside," said Carsten Fritsch, an energy analyst at Commerzbank in Frankfurt."We have a temporary solution to the Greek political crisis, strong seasonal demand for heating oil, low gasoil stockpiles in Europe, low distillate stockpiles in the US, and China becoming a net diesel importer in November."There is also the geopolitical risk from the Iran nuclear programme - all these factors are supporting oil prices."Iran's dispute with the West intensified ahead of a report from the U.N.'s International Atomic Energy Agency (IAEA) that is expected to show Iran's nuclear programme is being geared towards weapons manufacture.On the demand side, China's top refineries plan to raise their crude oil throughput in November to the highest in a year, as state oil firms ramp up operations amid domestic diesel shortages and the restart of a key plant after maintenance.Market participants are awaiting Chinese inflation data due out on Wednesday to assess the chance of policy easing in the world's second-biggest oil consumer.China's annual inflation is expected to ease to 5.5 percent in October, the third straight month of decline from a three-year high of 6.5 percent in July, as food price rises cool."It's fundamentals that are driving us higher," agreed Todd Gross, co-founder of Hudson Capital Group in the United States."Gasoil supplies are low in certain parts of the world, everything is now backwardated from gasoline to crude and we're heading into the biggest demand month of the year -- global demand is 1-2 million barrels per day higher in December than it is in October...Oil is driving its own bus."Gross also noted the market impact from the upcoming IAEA report on Iran: "It's a very dangerous situation and you can't blame prices for rising if traders think something might happen in the next six months."The biggest negative factor in the market at the moment is the deteriorating situation in Italy, which has replaced Greece as the prime threat to the stability of the eurozone."Italian bond yields have risen to their highest levels since 1997 despite huge ECB buying activity, which will cap gains in oil prices," said Fritsch. Higher bond yields hinder the debt-ridden country's borrowing ability.Supply IssuesOil prices are also being supported by a slower ramp-up in exports from Libya, and continued unrest in oil producers Syria and Nigeria."Libyan oil production has recovered a little faster than expected and is currently above 500,000 barrels per day," said BNP Paribas analysts in a report."But more production does not equate necessarily with sustained higher exports that would depress Brent prices -- exports, to date, have been at best sporadic."In Syria, troops and militiamen loyal to President Bashar al-Assad moved into a residential district of Homs overnight on Monday after six days of tank bombardment that killed scores of people in the hotbed of unrest, residents and activists said.(Reuters)
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