Indian Economy: News and Discussion (June 8 2008)

svinayak · Post by **svinayak** » 17 Oct 2008 06:48

Impact on India

http://www.hindu.com/2008/10/17/stories ... 401100.htm

What will be the impact of the crisis on the Indian economy? In the sub-prime instance, two negatives had cancelled each other in India: the crisis “virus” from abroad versus the local financing of the housing boom in India by black money — which is immune to interest rates and grows like a financial amoeba. In the present larger crisis, we would have been largely unaffected if the Mauritius-routed black money “washing machine” called Participatory Notes (PNs) had not been permitted. PNs need not conform to the regulations of the Securities and Exchange Board of India (SEBI), or comply with international standards of disclosure as to who owns them and how they were paid for. More than 55 per cent of the foreign fund inflow comes today from these PNs, which even the terrorists, not to mention financial buccaneers and corrupt politicians, have used to earn money on the Bombay Stock Exchange, and make the Sensex go up or down at the will of a small cartel. Recently, All India Anna Dravida Munnetra Kazhagam leader Jayalalitha openly challenged Finance Minister P. Chidambaram to answer certain basic questions about the financial propriety of PNs and the violation of disclosure norms that they involve, but the Finance Minister tucked tail and ran away from the challenge. As of now, three things will happen. First, foreign funding will reduce due to a global liquidity crunch, interest rates abroad will rise, and the rupee will depreciate as the existing PNs will exit the country. In panic, the government has made PNs even easier to use, but in this situation of uncertainty that will not help much. All that PNs will do anyway is to pump rupees into the economy and cause inflation. This will affect our investment and the cost of imports that are essential for our export industries. This is why while the dollar is sinking the rupee-dollar rate has risen from Rs. 39 to Rs. 49 in just a month. Therefore, with a rise in import cost due to the devaluation of the rupee, we should expect a deceleration in the growth rate of the gross domestic product (GDP) and a recession till correctives are applied — including voting out the incompetent United Progressive Alliance from office in the next elections.

While the government has cut the CRR claiming that the step would bring down the interest rate, the prime lending rate (the rate at which banks lend) has actually gone up from 10 per cent to 12 per cent, reflecting the tight liquidity position after foreign inflows have slowed down.

vina · Post by **vina** » 17 Oct 2008 10:37

BRF ahead of the curve as always!!

Investors dump equities and MFs for good old FDs

Yawn.. After we were hollering when sensex was at 19K to exit and park money in FDs of PSU banks, ( I am sure a lot of fat cats in BRFites locked their profits in), the rest of India is doing it now, after the sensex has crashed 10000 points!..

But damn, I think I should ask SHQ for my financial advisor's fees..not that there is a chance in hell of getting any..

.If only she had listened to my advice to sell Infy on the day when Igate announced their results the last time before going private and Infy spiked (which I knew was a sucker run up), she would be sitting on a mountain of profits.. Damn wimmin, what will it take to make them get it that unless you sell, the profits are only paper profits, I wonder.

Singha · Post by **Singha** » 17 Oct 2008 11:15

my situation is the reverse, I lost my SHQ money on ELSS and stocks and everytime we argue
thats a convenient stick to beat my back with - "give me back my money you stole"

btw Cholamandalam MF is closing tens of branches and due to liquidity shortage to meet
redemption demands, ABN Amro MF has imposed a sell limit of 1 lakh/account/day.

vina · Post by **vina** » 17 Oct 2008 12:04

Gurulog, would anyone know the weightage of the BSE Senxex and the CNX Nifty by sector.. eg. % telecom, % auto, % metals etc? If there is a link or if someone knows consolidated percentages sector wise, would appreciate it.

Moi is doing my math and getting girdling up to put together a portfolio that I think I want to put my money in soon . Just waiting for the Tamil Nadu MPs to turn up the heat a bit and give the central govt a shake or two..

Singha · Post by **Singha** » 17 Oct 2008 12:12

look at the rightmost column.
http://www.moneycontrol.com/stocks/mark ... mp&index=9

Raj Malhotra · Post by **Raj Malhotra** » 17 Oct 2008 12:47

What are good forums/sites to follow on Indian stock market?

Moneycontrol is too complicated and I think fixed.

Singha · Post by **Singha** » 17 Oct 2008 12:50

finance.livemint.com

Nayak · Post by **Nayak** » 17 Oct 2008 14:05

vina's prayers answered -

DMK's 7 ministers to quit today over Lankan Tamils issue

Raj Malhotra · Post by **Raj Malhotra** » 17 Oct 2008 14:14

Singha wrote:finance.livemint.com

Thanks for the prompt reply but I cannot seem to locate the link for their forum/board?

Singha · Post by **Singha** » 17 Oct 2008 14:26

there is no forum. generally all desi online forums other than BR are junk.

vina · Post by **vina** » 17 Oct 2008 14:58

Ya Allah!! Sensex in Phour Digits.. XXXX !

.

Raju · Post by **Raju** » 17 Oct 2008 15:04

finally the thing comes down to earth.

Singha · Post by **Singha** » 17 Oct 2008 15:52

L&T has a PE of 20, down from 75.
the bigger realty stocks have lost 80%, the smaller ones 90%
the midcap darling stocks have PE < 10
DLF PE = 6

but the "India growth story" is intact

vina · Post by **vina** » 17 Oct 2008 16:18

Singha wrote:L&T has a PE of 20, down from 75.

If you remember, we had a discussion on L&T and it's P/E of around 72 back then right here on the Economy thread. I had argued that it was absolutely ridiculous and that Google with a P/E of 56 (back then) was a far better buy and if you had 1 lakh, go buy google.(you could back then). Google has held up and with currency fluctuation and everything, you would have made money out of google and lost your shirt with L&T.

We had bet that P/E was going to contract and those valuations were ridiculous. None of the research "analysts" in any of the banks could say it , could they.. That is the great plus at BRF, we can say things as they are without being politically correct and speak the truth!..No Investment bankers in Drag , which in reality is what most "Analysts" , esp on the equity side are.

Of course, the Sensex at 25k booster were out arguing why P/E of 75 was absolutely kosher.

Well this is what we have from moneycontrol.

"It took 384 sessions to go up from 10000 to 21207 while took just 192 sessions to come down 10,000"

:

krishnan · Post by **krishnan** » 17 Oct 2008 16:29

The heavier you are the harder you fall

SaraLax · Post by **SaraLax** » 17 Oct 2008 17:26

Singha wrote:there is no forum. generally all desi online forums other than BR
Raj Malhotra wrote: Thanks for the prompt reply but I cannot seem to locate the link for their forum/board?
are junk.

I agree MoneyControl is cluttered and cumbersome to navigate around. I found a new one and it was/is impressive.

Please go to this forum LINK .... the best forum for Indian stocks & market actions....many great threads on sectors, individual companies & etc supported with good, analysed and disciplined posts by the forum members (or rather investors in Indian stocks). My second abode in the virtual world after BR.

John Snow · Post by **John Snow** » 17 Oct 2008 19:36

Mullahs and Maulanas Addab

I am re con figuring my massa land portfolio, but I want gradually shift my ass_ets to India.
I heard the FD/CD rates in Nationalized banks are at 11.5 % is that true?

pradeepe · Post by **pradeepe** » 17 Oct 2008 20:30

11.5% for senior citizens possible for a 1-3 year FD. If not 0.75 to 1% lower.

Singha · Post by **Singha** » 17 Oct 2008 20:38

icici raised rate on NRE deposits today by 0.5%

amitmas · Post by **amitmas** » 17 Oct 2008 21:01

John Sahab they are as high as 12.5% these days in some banks be careful and choose your pick.

Katare · Post by **Katare** » 17 Oct 2008 22:08

India Inc margins shrink in the second quarter

While sales for the fifty firms that have come out with second quarter results so far have gone up 42 per cent, net profits are up just 17 per cent. This clearly indicates thinning margins.

Banks and financial firms could be one bright spot in the picture. The major results that have come out so far, Axis Bank, HDFC Bank and HDFC, have not given any unpleasant surprises.

vina · Post by **vina** » 18 Oct 2008 08:32

The russians have taken it on the gonads. The swagger, arrogance and supercilous smirk have been slapped off thier faces . With oil below $70 , the Russian budget cant balance and the excess cash that gave them all that arrogance is gone.

Now that the Russians have come crashing down to earth, time for India to kick them in the gonads and get retribution for all the smoke and mirror show in the arms deals.. T-90, Admiral Gorshkov and all the others. Now time to renegotiate those in worthless Roubles opps.. rubbles..

I am sure Dash Deripaska wont be the hottest minx around in London's Socialte circuit for too long if daddy goes bankrupt. Will crash down to the levels of Paris Hilton or worse. From NY Times.

October 18, 2008
Empires Built on Debt Start to Crumble
By ANDREW E. KRAMER

MOSCOW — Are the Russian oligarchs going bust?

In the current global financial crisis, perhaps no community of the superaffluent has fallen as hard, or as fast, as the brash Kremlin-connected insiders whose wealth was tied up in the overlapping bubbles of the Russian stock market, commodity prices and easy credit.

Already, Russia’s richest man, Oleg V. Deripaska, the nuclear physicist turned post-Soviet corporate raider, has ceded more than a billion dollars in assets to jittery creditors as his aluminum-to-automobile empire reels.

“Half the Russians could fall off the Forbes list” by next year, Maxim V. Kashulinsky, the editor of the Russian edition of the magazine, said in an interview.

Those most in favor with the Kremlin — who expanded fastest and ran up the largest debts — are most at risk now as borrowing costs soar.

Most of the ultrawealthy have large stakes in the mining and petroleum behemoths of the Russian economy, stakes gained through the legally questionable privatizations of the 1990s. A decade later, company ownership has still not spread to a broad shareholder base as in the West. Without a broad base of potential customers, the stock market here has tanked even faster than exchanges in the United States.

In America, toxic mortgage-backed securities sank mighty investment banks. In Russia, it is the empires of the oligarchs and the loans they took out from Western banks, using shares in their companies as collateral, that are at risk.

In a number of cases the value of shares pledged by Russia’s rich has fallen below the value of the loans, an ominous sign for the market here, where the benchmark RTS index is already down 71 percent from its peak in May.

Western banks are not immune. Their exposure to oligarch debt came into focus last week when the Russian central bank reported that, all told, Russian companies have to repay $47.5 billion to foreign creditors by the end of this year, and $160 billion by the end of 2009.

If banks require businesses to sell shares to repay these loans, “the Russian stock market could come down like a house of cards,” Michael Kavanagh, a mining sector analyst at Uralsib bank, said.

“This could be a game changer for a lot of very, very large players,” Rory MacFarquhar, an economist at Goldman Sachs in Moscow, added. “The ground is shifting under them.”

Not all of Russia’s rich are hurting. Their yachts, jets and London mansions are not yet up for sale. For instance, Roman A. Abramovich, the owner of the Chelsea Football Club in London, has not sold his 377-foot yacht, Pelorus. Or the 282-foot Ecstasea, his other yacht.

In the 1998 financial crisis, ordinary Russians lost savings in a devaluation of the ruble. This time is different. The wide middle class that emerged under the former president and now prime minister, Vladimir V. Putin, and the oil boom has yet to feel the financial turmoil, because few own stocks. That could change depending on how badly the economy is hurt by falling commodity prices and the flight of an estimated $74 billion in foreign investment since Aug. 1.

Estimates of the oligarch’s losses are necessarily rough. Bloomberg News calculated the richest 25 Russians on the Forbes list lost a collective $230 billion since the market peak, based on declines in value of publicly traded companies and analysts’ estimates of private company losses. That would make their collective loss over five months four times greater than the total wealth of Warren E. Buffett.

The oligarchs’ remaining assets, based on this estimate, would be worth about $140 billion.

In a more narrow sampling, Forbes magazine on Sept. 22 estimated that the loss for 10 oligarchs whose wealth was primarily in public companies totaled $42.75 billion, or 34.1 percent of their estimated worth on Jan. 1.

Vladimir S. Lisin, the steel magnate, led the list with a loss of $11.21 billion on declining share value at his company, Novolipetsk Steel.

Spokesmen for Mr. Deripaska and Mr. Abramovich brushed off estimates based on gyrating stock prices as misleading, noting that the paper gains at the market peak were just as provisional as the losses today.

But the Moscow office of UniCredit, the Italian bank, said Mr. Deripaska; Mikhail M. Fridman, a partner in a conglomerate with telecoms, oil assets and grocery stores; and Vladimir P. Yevtushenkov, who owns a cellphone company, real estate and retail businesses, are at risk from overstretched credit backed by tumbling shares.

UniCredit, with liquidity problems of its own, has turned to Libyan government investors for a cash infusion.

Mr. Deripaska, who, like Mr. Abramovich, was an orphan and a driven young man, achieved unimaginable wealth in the chaos of the immediate post-Soviet period, seizing on the windfall profits of the commodity boom to begin a global expansion. He built his empire on debt.

Mr. Deripaska and Mr. Lisin, the steel tycoon, are seeking bailout loans from the state for an undetermined amount. The government has set aside $50 billion from its rainy day fund, made up of oil revenue, to aid struggling businesses.

The rules under Mr. Putin as understood by all players after the incarceration of Mikhail B. Khodorkovsky in 2003, suggest a strict quid pro quo of government largess in exchange for fealty and payments to Kremlin pet projects.

Mr. Deripaska has been on both ends.

In 2007, the owner of Russneft, one of the country’s largest private oil companies, said he would sell his business to Mr. Deripaska, seen as closer to authorities, but added in an open letter that the sale was not voluntary. “They made an offer to leave the oil business,” the owner, Mikhail S. Gutseriev, said. “To make me more amenable, they tightened the screws.” Mr. Gutseriev fled into exile and is believed to be living in London.

Expansion of his empire, however, put Mr. Deripaska at risk now that markets are falling.

Last month, Mr. Deripaska shed his investment in Magna International, the Canadian auto parts maker, to a bank that financed the $1.54 billion purchase. Mr. Deripaska’s conglomerate, Basic Element, said it did not have a liquidity crisis but sold the stake to finance other projects.

Last week, Mr. Deripaska divested himself of his 9.9 percent stake in the German construction company Hochtief. He refinanced his holding in Strabag, an Austrian construction company, through a 500-billion-euro loan from Raiffeisen Bank, staving off a possible seizure by Deutsche Bank.

“This is global,” said one Moscow banker of the crisis, who did not want his name used in remarks critical of the business practices of his Russian clients. “Home rules don’t apply.”

In April, Mr. Deripaska bought a 25 percent stake in Norilsk Nickel, a once-coveted company whose stock has turned poisonous for the Russian oligarchy. Norilsk stock tumbled on falling nickel prices and rumors that the owners were dumping shares to repay loans.

In the latest sign unlikely to help build investor trust in Russian corporations, some rich Russians have apparently taken to using their board control of publicly traded companies to siphon off money to bail out unrelated personal projects.

For instance, Sibir Energy, a Siberian oil company, spent $274 million on a Moscow hotel this week. The seller? The oligarch Shalva Chigirinsky, who is also the principal Russian shareholder in Sibir. Similarly, Norilsk has bought 25 percent of a natural gas field owned by a Norilsk shareholder, Vladimir O. Potanin, the metals and mining oligarch.

In a deal typical of the high-wire finance of the oligarchy in the boom, for his stake in Norilsk, Mr. Deripaska paid $8.5 billion in shares in his aluminum company and $4.5 billion in cash, drawn on credit from Western banks, including Goldman Sachs and Morgan Stanley. The stake in Norilsk is worth about $2.34 billion today, less than the loan amount.

Konstantin A. Panin, a spokesman for Basic Element, said the company’s diversity would help it pull through the financial crisis and swooning commodity prices. “There are, however, no companies that have not been affected by the global crisis,” he said. “We believe that this crisis will only make us stronger, because we know how to stay competitive and will be there for our partners and customers when everything settles down.”

Until that happens, the Moscow business elite are on edge.

Just last week, they gathered for an anticrisis pep talk from a man who knows: Rudy Giuliani, the former New York mayor. As waiters drifted silently about, balancing trays of caviar canapés, a string quartet played Tchaikovsky and bankers traded market collapse rumors.

The evening was sponsored by Mr. Fridman’s Alfa-Bank to honor Intel with a foreign investors award. Mr. Giuliani suggested that Russia and the United States cooperate on financial stabilization, despite their differences. “We don’t want it to affect the bottom line,” he said. Meanwhile, a banker eyed the passing caviar trays and with a sigh lamented he had not brought a carry-out bag. (The Alfa Group partners have lost at least $12.1 billion, Bloomberg News estimates.)

Not all of the Moscow business world is worrying about tomorrow’s meal, however.

Mikhail D. Prokhorov, the youthful mining tycoon, seemed washed up earlier this year after selling his shares in Norilsk to Mr. Deripaska. Now, he is sitting on $4.5 billion from a syndicated loan from Goldman Sachs, Morgan Stanley and other Western banks.

Speculation has swirled about how Mr. Prokhorov might occupy his early retirement after the Norilsk sale. One pet project is a lifestyle magazine for the Russian rich, titled Snob.

On the cover of the October issue is a man crumbled on the floor, covering his face with his hands, as if in sorrow.

malushahi · Post by **malushahi** » 18 Oct 2008 12:51

John Snow wrote:Mullahs and Maulanas Addab

I am re con figuring my massa land portfolio, but I want gradually shift my ass_ets to India.
I heard the FD/CD rates in Nationalized banks are at 11.5 % is that true?

adaab indeed snow saheb..

kya shart-e-mohabbat hai, kya shart-e-zamana hai
awaz bhi zakhmi hai, aur woh geet bhi gana hai

Raj Malhotra · Post by **Raj Malhotra** » 18 Oct 2008 20:10

Thanks guys for your suggestions, i will try to read these sites for a few days to get a hang on things.

Neshant · Post by **Neshant** » 19 Oct 2008 07:32

this is the guy Ramesh Chauhan who sold Thumbs Up, Limca, Mazaa...etc his whole soft drink empire to Coca Cola for a song back in the early 90s.

i think he made a grave mistake which he won't admit to. but he's since made good money in the bottled water business.

read his story...

---------
How do you build a brand around water

William Charles D’Souza asks Ramesh Chauhan – aka the ‘water king’, and the man behind Bisleri

http://www.mumbaimirror.com/net/mmpaper ... 16d6707782

Vipul · Post by **Vipul** » 19 Oct 2008 19:34

He had to sellout as all his bottling franchisee favoured the MNC.He did no have a choice.

jerry · Post by **jerry** » 19 Oct 2008 22:26

Just an hr back there was a program on ndtv called market mind or such
missed it seem there was a lot of gyaan on the current world and indian situation, an interview with someone from reliance mutual fund. Did someone here catch it?

Nayak · Post by **Nayak** » 20 Oct 2008 09:45

Trepidation at top schools as regret letters trickle in
Archana Mohan & Kalapana Pathak in Bangalore

During this year's final placements at IIM-Calcutta in March, the highest salary offer was Rs 1.3 crore (Rs 13 million), by - say sources - Lehman Brothers. The beleaguered Lehman has opted out.

At IIT-Roorkee, too, Lehman Brothers and Citi Group have indicated that they wouldn't participate in placements this year. Barclays and HSBC are, however, understood to be keeping their options open.

A couple of days back, 15 students of IIT-Kharagpur received regret letters from US-based information technology companies - Montolova, Magma Design Automation and Paradigm - saying they could not absorb the students due to "internal restructuring plans".

To compound matters, IITs have more students to place this year. IIT-Kanpur has added 100 seats this year, IIT-Kharagpur 300. B K Mathur, the placements chairman at IIT-Kharagpur, says: "There is no dearth of jobs for our graduates. We are pinning our hopes on other companies, especially IT-ITeS, manufacturing and FMCG firms."

The trend is likely to change this year. "International companies may recruit less this year. Although the number of international offers did not amount to much, their reduction may lead to the average salary going down. Students may have limited choices," said P K Jain, head of training and placement at IIT-Roorkee.

Added B Lohani, the head of training and placement at IIT-Kanpur: "Companies may recruit in fewer numbers this year considering the global crisis, which is why we had invited more companies compared to the previous year. We expect 10-15 more companies to be added this year."

The good days of corporate investment banking are long gone. The heydays of getting 30% annual bonus will never come back. I have never had a good opinion of these so called 'managers' from IIM. They are of smooth-talking-jargon-dropping-financial-types.

The gravy train has run dry and every abdul has to milk his own goats to survive.

I won't shed a tear for these idiots any day!!

vina · Post by **vina** » 20 Oct 2008 09:55

I recently spoke with some one in the industry recently and he told me that ICICI had started cutting back last year itself. They had an an internal target of letting go some 3000 people. Nothing "formal" mind you, but make working conditions so miserable (like transfer from credit to sales in some random place or some such thing) and make the guy quit "voluntarily". To be fair to them, they did exit service lines like "personal loans" and a lot of personal unsecured credit business. Now that is hitting the 2nd tier and 3rd tier players who rushed in to fill in the places in unsecured retail business vacated by the likes of ICICI , Citi and GE.

The trick is this. You dont make high ROI in secured products. So all new comers launch in unsecured products, where you can show quick ROI in the first couple of quarters (oh yeah.. it is mostly interest payments), but longer term you are hosed because when more of the capital becomes due, they default big time. So what these guys do is to show the high ROI to the "phoren" laad sahibs in Head Quarters and come smelling of roses, atleast until the yellow matter hits the fan.

Suraj · Post by **Suraj** » 20 Oct 2008 13:08

Just last week I mentioned the RBI's next course of action would be lowering the repo rate, and that just happemed:
India Lowers Key Rate for the First Time Since 2004

India's central bank unexpectedly lowered its key repurchase rate for the first time since 2004 as the risk of an economic slowdown caused by the global financial crisis outweighed inflation pressures.

The Reserve Bank of India cut its overnight lending rate to 8 percent from 9 percent, according to a statement in Mumbai today. The move came after the bank has reduced the cash reserve ratio by 2.5 percentage points to 6.5 percent since Oct. 11.

``The RBI faces an economy where the downside risks to growth have increased, while the upside risks to inflation have receded,'' said Rajeev Malik, regional economist at Macquarie Group Ltd. in Singapore said. ``We expect inflation to continue improving, thereby facilitating a shift in the RBI's monetary stance.''

India's key wholesale price inflation slowed more than economists expected to 11.44 percent in the week to Oct. 4, a four-month low.

Singha · Post by **Singha** » 20 Oct 2008 13:08

IBM which has 50K people in India sent out 3K in phases recently.

HP+EDS is around 2L worldwide. but HPs per employee revenue is 4x of EDS.
some reduction is inevitable there.

vina · Post by **vina** » 20 Oct 2008 13:41

Quick.. All you greedy Yindoos who want to lock in the current high deposit rates and are looking for a safe place to park your money, run to the nearest banks NOW before the deposit and lending rates start falling.

Oh, dont go to the grubby old worn out SBI branches or SBI Mysore or any associate bank branches. Check out the SBI website for "Personal Banking" branches. These are specially for retail customers and none of the govt and small business clientele and hence a different fee, ambience and customer orientation.

Singhaji.. since you are in the civilized valleys of Jayanagar, try the SBI Personal Banking branch in Jayanagar, 22nd cross street, just behind the Jayanagar shopping complex. The manger is Gokarn and was asking for references from "friends". He wants more business and I am sure that if you call the branch and tell them that you are looking to make a large deposit, he can land up at the Gorilla's office in Medina valley to help out, just in case, you cannot go to the Mountain where the branch is.

SHQ is sitting pretty with everything locked in at 10.x% deposit rates. Oh, dont worry about liquidity. The bank will be more than happy to lend you money against your FD at the then lending rates, which given the downward trend will be lower than your deposit rates after a few weeks..

Dileep · Post by **Dileep** » 21 Oct 2008 12:28

Masha Allah, I am loving the exchange rate. Got compensated a bit for the previous losses.

Prasad · Post by **Prasad** » 21 Oct 2008 20:40

O/T
@^^^

Me has to pay for grad school. Total hit on finances onlee..

Vipul · Post by **Vipul** » 21 Oct 2008 22:16

The Top companies in sales turnover.

Tatas, Birlas and Ambanis are names that are synonymous in India for wealthy industrial groups, but they have been beaten by little known names, barring Procter & Gamble, in a list of top 10 corporate houses named by the government.

SPT Commodities tops the list of country's top 10 corporate houses in terms of turnover at Rs 9,63,516 crore, followed by Frost International (Rs 8,55,739 crore), Corporate Affairs Minister P C Gupta informed the Rajya Sabha today.

As per the information provided by the Ministry, two of the P&G companies -- Procter and Gamble Home Products Pvt Ltd, fourth in the list has a turnover of Rs 8,43,905 crore while Procter and Gamble Hygiene and Health Care has a turnover of Rs 6,31,001 crore.

Further down in the list are Tetra Pak India NRC Limited, Behr India and LT Foods Limited.

Giving details about foreign companies that have invested the maximum in India between January 2000 and July 2008, the ministry said UK-based Cairn UK Holding had pumped in Rs 6,663.24 crore through its Indian subsidiary, followed by Oracle Global from Mauritius with investments worth 4,805.58 crore in India's Iflex Solutions.
Other companies like CMP Asia have Foreign Direct Investments worth Rs 2638 crore in HDFC, Merrill Lynch Mauritius in DSP Merrill Lynch at Rs 2230 crore.
Also, Tata Consultancy services has FDI worth Rs 2,148 crore by a group of Non-Resident Indians. Besides, Enron Power USA had made investments in Dhabol Power Company.

vina · Post by **vina** » 22 Oct 2008 13:19

I literally had to rub my eyes.. A measured, well thought out editorial in the ET (economic TOI(let)) .

I had posted here in this thread about the move a year ago by the real estate developers on their "strategy" to beat the "downturn" by going up market (aka above 2 crores and into "Presidential Villas"). That was such a stupid thing to do and it was clearly visible.. No sir. Sobha had to go and build "Presidential Villas" at Devanahalli.(er..devan what , a true Bangalorean would ask, but I digress) for 3.5 crores onree (for the Jarnails and Karnails of the Airlines industry.. who are well now bankrupt

, pilots seeing pay cut to 20K per month). Such hubris and stupidity are getting their just desserts. I would wager that all projects in Singha's words in Bajaur Whitefield past the derelict half built railway bridge are just so much doo doo, including all the "Presidential" or otherwise villas. Those who speculated on Devanahalli and are holding on even now, sorry folks, you just lost your shirt if you bought within the last 2 years. That dawg aint going anywhere. There are no jobs there.

The TFTA ETA Star properties at the former Binny Mills land, next to Bangalore City Station is in the dog house. Not even selling and all those who put money into it will take losses if they sell anytime. If something that close to the city can bomb , I shudder to think about North Bangalore where there are no IT/Vity fat cats..What will happen to the huge Rs 4000 psft properties..

Printed from ET

Realty check
22 Oct, 2008, 0359 hrs IST, ET Bureau
The crisis in India’s real estate sector will cause a much needed course correction by the industry. It would start building homes for which there
is a genuine demand and not just for a small minority of speculators.

Much of the housing shortage in India is of the low income category. But property developers were focused on the top end segment with prices usually starting at Rs 60 lakh plus in the big cities.

The exuberance in this category was largely speculative, driven by cheap money. With high leverage fuelled supply of cheap money coming to an end, the demand for expensive housing has disappeared overnight.

As the market reverts to fundamentals, the disconnect between demand and supply has become very obvious. A look at the income profile of households underscores the point. Even the top 20% of urban households had an average annual per capita income of only Rs 48,517, according to a NCAER survey. And taxpayers with more than Rs 10 lakh annual earnings number only about 1.5 lakh.

Even after adjusting for unaccounted money, that number is unlikely to become substantial in the context of projects targeted at this category.

Clearly, the current inventory of houses would have to clear at a far lower price and new projects need to be better targeted. Some developers have started conceding that they need to focus on the sub 1,000 square feet dwellings.

But a more grounded real estate sector does not necessarily mean housing would soon get affordable for a large section of the population. The biggest hurdle to affordable housing is poor reach of urban transport and high land prices in cities and towns.

The scarcity of urban land, largely created by the state, has caused cost of housing to move up sharply. This is compounded by a lack of quality public transport, which has precluded the development of suburban areas as people are forced to live close to their work place.

An integrated land-use and transport policy therefore becomes central to efforts to provide affordable housing. Increased vertical spread through redevelopment can also enhance supply and help alleviate the pressure on prices. So, while the market adjusts to the new reality, the state also needs to do its bit.

Singha · Post by **Singha** » 22 Oct 2008 15:18

per anecdotal reports 50% of the 2000 Purva flats in Marathalli are empty and no renters in
sight. more housing is coming online to ORR soon from various players like mantri, sobha,
alpline eco, adarsh etc.

Dileep · Post by **Dileep** » 22 Oct 2008 15:46

I ALMOST bought a unit in DLFs new project here (28 acre, 1800 units township).

Thinking of buying a plot instead, and if DLF come up ok, buy a finished one by selling the plot.

There is massive overbuilding here. You may end up renting out your 2600sqft superlux flat for Rs 6000.

Raj Malhotra · Post by **Raj Malhotra** » 22 Oct 2008 16:04

Dileep wrote:I ALMOST bought a unit in DLFs new project here (28 acre, 1800 units township).

Thinking of buying a plot instead, and if DLF come up ok, buy a finished one by selling the plot.

There is massive overbuilding here. You may end up renting out your 2600sqft superlux flat for Rs 6000.

Prices in NCR outside proper Delhi have gone upto 20 times in 5 years and 100 times in 10-20year frame. Most of the flats/prop are empty and the rent is generally a formality, the owner just wants his house occupied and safe from encraochment.

Wait 2 years and you will get lifetime opportunities to invest in these areas as by that time interest payments will force fire sales.

Rishirishi · Post by **Rishirishi** » 22 Oct 2008 17:00

Raj Malhotra wrote:
Dileep wrote:I ALMOST bought a unit in DLFs new project here (28 acre, 1800 units township).

Thinking of buying a plot instead, and if DLF come up ok, buy a finished one by selling the plot.

There is massive overbuilding here. You may end up renting out your 2600sqft superlux flat for Rs 6000.
Prices in NCR outside proper Delhi have gone upto 20 times in 5 years and 100 times in 10-20year frame. Most of the flats/prop are empty and the rent is generally a formality, the owner just wants his house occupied and safe from encraochment.

Wait 2 years and you will get lifetime opportunities to invest in these areas as by that time interest payments will force fire sales.

I second that. As the builders are under financial preshure, they tend to cut corners here and there. Within a 12-24 months you may see builders desperate to sell finished flats.

The construction cost is approx 1200-1500 rs per sq ft. The rest is land price and profit to builder. Typical profits for buildes range from 30%.
Would not surprise me if you could start to pick up flats in the range of 3500 to 4000 rs pr sq ft. If you are a first time buyer, always save money and wait to enter the market in depression.
Happy hunting.