27 February 2020

Table of Contents for Ticker Tapes





Construction

INVESTOR APPETITE AT ALL TIME HIGH

India clocked an all time high of investment inflow into the real estate sector during the first-half (H1) of calender 2017. The total investment during 1H 2017, which stands at more than Rs.16,000 crore,  was the highest ever seen in any year’s first-half. It has not only exceeded the 1H 2007 but also 1H 2016. Considering the scale of investment, 2017 seems set to break all previous investment records. A slew of reforms unleashed by the government are whetting investor appetite, making India an attractive destination among emerging markets. A comparison between debt and equity investments between 2014 and 1H2017, which stand at more than Rs.98,000 crore, is higher than the Rs.95,000 crore seen during the entire decade, from 2003 to 2013.

 

 

MAHARASHTRA RARING ON RERA

As the RERA registration deadline closed in on July 31, Maharashtra emerged a front runner, registering 10,852 projects. It was the first state to have notified the rules and also appoint an authority to oversee the same. Madhya Pradesh has received around 700 applications for project registration, Karnataka around 900 applications. Rajasthan around 200 applications, Gujarat about 400 applications, and Chennai has received close to 100 applications for registrations. The real estate Developer fraternity has underlined several ambiguities’ in RERA, which they feel will adversely affect the business cycle and can cripple the entire industry. As per the clause in the Act, if a project is not registered under RERA by July 31st, then the builder is liable to be penalised up to 10 per cent of the project cost. Several States have sought an extension of deadline for RERA registrations.

 

 

Rs.11,412 CR SANCTIONED FOR AFFORDABLE HOUSING

The government has released an amount of over Rs.11,412 crore, for 24 lakh affordable houses under the Pradhan Mantri Awas Yojana (Urban), according to the Ministry of Housing and Urban Affairs.  The pace of construction is much faster than the earlier JNNURM scheme. The number of houses sanctioned and the amount of Central assistance in PMAY(U) is almost doubled compared to JNNURM.  The government is focused on providing 1.2 crore houses by 2022 under its programme ‘Housing for All’ by 2022. To achieve the target it is now collaborating with private builders and developers under a public-private partnership model (PPP).  With an eye on encouraging the millennial population to invest in real estate, the government has also amended the PMAY(U)and ‘Housing for All’ mission guidelines to include any adult earning member irrespective of marital status as a separate household who does not own a proper house.

 

 

SBI REALTY’S ONE-STOP WEBSITE

The country’s largest commercial bank, State Bank of India, has launched SBI Realty – a one-stop integrated website www.sbirealty.in  for home buyers. The site will help customers to choose their dream home from 3,000 SBI approved projects spread across 13 States and Union Territories covering 30 cities, including metros, semi metro and towns.  Currently, there are 9.5 lakhs home units available on the website, where  customers can compare current and past price trends for properties in various localities. It will assist customers in calculating the appropriate loan amount a customer should borrow based on his income and credit profile.  The website highlights projects which focus on thorough market research with a notable and consistent track record of growth, credibility, customer satisfaction, and innovation.  The website is developed by SBICAP Securities in association with PropEquity in terms of data support, project information.

 

 

FAT ORDER BOOKS FOR EPC COS

India’s construction sector is poised to register a fat order book due to strong traction seen in the Metro rail sector, according to ratings’ agency Icra, which expects the sector to help boost the order books of construction companies by Rs.75,000 to Rs.90,000 crore over the next three to five years. The overall cost of expansion of operational and under-implementation Metro projects is over Rs.2.5 lakh crore. Metro Rail projects  worth  another Rs.2 lakh crore are at various stages of approval and will come up for bidding within the next five years, says  Icra note. Going by current trends, roads and urban infra, including Metro Rails,  are the two key segments that will build up robust order inflows. Having a sizeable number of projects in the pipeline, these segments will have sufficient order inflows and companies with a strong track record and a healthy balance sheet are expected to exhibit robust growth.  Among  companies likely to benefit from the fresh order flows include; ITD Cementation, L&T, Afcons, NCC, and  the IL&FS Group, all of whom have major exposure to the Metro rail sector.

 

 

MOTILAL OSWAL’S IREF SERIES

Motilal Oswal  will invest Rs.120 crore in ATS Group’s housing project in Gurugram, from its two funds — India Realty Excellence Fund II & III. This will fund ATS Grandstand, a 1.7 million sq ft residential development in Gurugram, and adds up to the company’s fourth investment in ATS Group last three years, with a commitment of close to Rs.300 crore. According to ATS Group, the Dwarka Expressway micro-market is about to be rerated and an opportune time to invest in that market. IREF II recently pulled out its investment of Rs.75 crore in an ATS Pristine project in Noida. Motilal Oswal is about to achieve final closure of its third real estate fund, India Realty Excellence Fund III of about Rs.1,000 crore. The fund will focus on top six Indian metros under the mezzanine and structured equity strategy, targeting early stage investments. IREF II has already made commitments of about Rs.650 crore and exited three transactions till date. Motilal Oswal aims to invest close to Rs.1,000 crore in the current financial year across both funds.

 

 

ANGEL FUNDS A REBEL DISRUPTIVE

A specialised precast construction technology provider, REBEL Disruptive Building Technologies has received Rs.5 crore as angel funding from Bengaluru-based DivyaSree Developers. REBEL plans to utilise these funds to resolve the construction industry’s enduring challenge of project completion delay by building structures in record time.  Founded recently in March, this company uses precast technology that not only shortens building time and construction cost by at least 10-15 per cent but also helps in very high quality finishes, wastage saving, energy saving, all with minimal teething trouble.  The company plans to deploy the funds on expanding medium sized pre-cast units, shifting to a more precision-based construction processes. 

 

 

BIRLA CONSOLIDATES CAPACITY

Birla Corporation Ltd is planning a green field cement project investing around Rs.2400 crore, at Mukutbandh near Nagpur. The four mtpa green field cement project will now be sent to the Board for approval, according to parent M P Birla Group. Completion of the new plant will add to the total cement production capacity touching 20 mtpa, from the present 15.5 mtpa after the acquisition of Reliance Cement’s capacity. The project funding will be a mixture of debt and internal accruals. Earlier it had acquired capacity from Reliance costing it Rs.4,800 crore, for which it had taken a loan of Rs.1,000 crore on its books.  Lodha said that the company was making some capital expenditure at the acquired plants to make it more efficient. With robust demand for cement in central India and no new capacity coming up in the region, the company was well-poised to take advantage of this.

 

 

JSCL’S OPTIC FIBRE PROJECT

Aksh Optifibre Ltd has been awarded the Jaipur smart city project optic fibre networking by the Jaipur Smart City Ltd, (JSCL) who invited a bid for Development of Smart Road in ABD areas of Jaipur.  Aksh participated in the bid and has been awarded with the Letter of Acceptance (LOA) from JSCL. Akash will deploy its OFC network to install the smart city Wi-Fi network, smart LED lighting system for energy efficiency, IP-based surveillance system with vehicle identification and counting, environment sensors for monitoring the environment, smart parking system, and smart communication. It will also set up the network, provide internet connectivity through ISP to things, people, devices, and vehicles in the city street; wired and wireless, scalable, and highly secure network platform; a data management framework to enable data collection, organisation, and distributed compute and storage services, location services, and security services. The organisation will maintain the network for five years.

 

 

JUST ASK, TO REVIVE STALLED PROJECTS

ASK Property Investment Advisors, the real estate private equity arm of ASK Group has announced initial close of its Rs.1,000 crore seventh domestic fund - ‘ASK Real Estate Special Situations Fund - I ( RESSF-I). ASK has raised Rs.535 crore for this fund till date.  The fund will provide flexible and patient capital. Although developers’ balance sheets and individual projects are facing a cash crunch,  ASK’s research team will identify bankable projects needing capital for timely project execution. It believes that declining home loan interest rates will revive residential real estate demand leading to an improvement in cash flows sufficient to generate returns. The fund will focus on investing in mid segment and affordable residential projects and generating sustainable risk adjusted returns.  ASK  has a CRISIL Fund Management Capability Level - 1' rating.  The ASK Real Estate Special Situations Fund will focus only on top 6 cities (Mumbai, Delhi-NCR, Chennai, Bengaluru, Pune and Hyderabad), investing and partnering reputed and bankable developers. The investments will be in launched projects at the construction stage with all requisite approvals in place.

 

 

PIRAMAL EYES OFFICE SPACE

Piramal Realty, the real estate arm of Piramal Group, expects revenue of Rs.5,300 crore from its maiden commercial project. The company, which completed the first phase of the project, plans foray into developing more office spaces in the coming years. Its commercial real estate project, Agastya Corporate Park, is located on the arterial LBS Road, at Kurla, in Mumbai. Additionally, Piramal Enterprises Ltd (PEL) has bought close to 1.67 lakh sq ft space from Piramal Realty at an estimated Rs.439 crore.  Commercial projects give an annuity in returns. The total investment into this project was Rs.2,400 crore including land and project execution costs. Phase 1 of Agastya Corporate Park comprises three independent office buildings, and the project has a total leasable area of 1.9 million sq ft and is spread over an area of 16.25 acres.

 

 

IL&FS IN RACE TO BAG ZOJILA PROJECT

Infrastructure Leasing & Financial Services (IL&FS) is  leading the race to bag the Zojila tunnel project that will provide year–round connectivity between Srinagar and Leh.   Other bidders for the tunnel project include Larsen & Toubro, Reliance Infrastructure, and Jaiprakash Ventures.  Located at an altitude of 3,528 metres, the tunnel  will provide an alternative to the national highway that connects Srinagar and Leh but remains shut for close to six months due to snow.  IL&FS’ bid of Rs.4,849 crore stunned industry executives as it is lower than the reserve price of Rs.5,630 set by the government.




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