June - July 2012 - mchi-credai

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The Industry comes
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Special Report:
Rental Housing
Legal:
Redevelopment Matters
VOL.: 01/10 | June-July 2012| MUMBAI
Page 24 Page 01
An
Are developers
being over-burdened?
Regulatory Bill reviewed
Publication

Page 02
C O N T E N T S
COVER
STORY
Possible return to the
‘License Raj’?
New Act to replace ‘MOFA’
SPECIAL
REPORT
One man takes on the
cement cartel:
Shankarbhai, Trustee BAI
MCHI-CREDAI
NEWS
Convocation of
MCHI-CREDAI
- Rustomjee Academy
USABF at MCHI-CREDAI
Mumbai
Felicitating Shankarbhai
(BAI Trustee)
Seminar on VAT
MCHI-CREDAI
UNIT NEWS
Kalyan-Dombivali Unit
Mira-Virar City Unit
Navi Mumbai Unit
Thane Unit
Raigad Unit
INTERVIEW
Hans Fuchs,
ACC Concrete Ltd.
NEWS YOU
CAN USE
06
08
12
14
17
18
Knight Frank India report
Knight Frank Mumbai report
SEAC – II in Maharashtra
E D I T O R I A L
Positive outlook
amidst challenging times
While one hopes for the best, and works with a positive outlook, as an industry we find
that some positives have started happening post our interaction with the Hon’ble Chief
Minister in May, and I hope the opportunities for more smiles increase.
Something hurts, and let me share it with you. Recently, I have seen instances where we,
the organised developers who work by the guidelines and rule book, seem to be getting
into challenges and tough times more often than the segment who work without any
‘registration’ or ‘official status’. It is almost as if we developers who go by norms of
regulations are being slapped with penalties and all sorts of new regulations. I am not
sure what the message is here – is it that those who share data and work in a transparent
manner face punitive action while those who work outside norms, rules and regulations
are not dealt with? I hope not. I hope that we will not see a situation where you play by the
rules and suffer just because of this.
The Union Government's decision to extend the interest subsidy at the rate of 1 per cent
on housing loans upto Rs.15 lakh where the cost of the house does not exceed Rs.25 lakh
for the year 2012-13 will mean that select projects in peripheral areas will gain. More
important, it creates a positive sentiment among home seekers, which augurs well for
real estate. Some decisions have not been as encouraging – RBI’s status quo in its credit
policy, for one. It seems to overlook the importance of real estate sector in the national
economy and GDP, the capital and labour intensive sector plays a key role in employment
generation and accelerating growth.
As I recall, the encouragement given to real estate in 1998 had kick-started the growth of
cement and steel industries along with over 165 other industries including transport that
with no additional cost incurred by the government. The risks attributed to real estate
and the RBI advisories against lending to real estate have only harmed the sector and
made housing costlier for consumers, apart from badly impacting the economy. The result
has been that the governments – state, central and local bodies - have seen loss in
revenue.
The status quo on interest rates will further dampen the sentiment. On a positive note,
I hope further policies will see rate cuts positively and conservatism does not become
a lasting attitude.
BOMAN IRANI
HON. SECRETARY, MCHI-CREDAI & EDITOR, PROPERTYSCAPE
PROPERTYSCAPE ISSUE • JUNE • JULY 2012
031603
Page 03

As we move into the middle of 2012, the months of June and July, it is not just the monsoon
that is not coming up to expectations – I am seeing opportunities where the powers-thatbe
could have done something positive which would have impacted sentiment at two
levels – the economy and real estate. Sadly, it seems to be ‘opportunity missed’.
First, there is disappointment at the RBI maintaining status quo in its credit policy. It
seems the RBI is undermining the importance of real estate sector in India’s economy and
GDP. The real estate sector plays a vital role in generating employment opportunities and
accelerating the growth of the nation.
From a Mumbai perspective too, this is an opportunity lost - being the financial hub of the
country, the real estate sector in Mumbai will be negatively impacted by RBI’s status quo
on credit policy
On the positive side, we at MCHI-CREDAI welcome the BMC Chairman and High-rise
Committee’s decision to approve the development proposals for 78 skyscrapers.
Skyscrapers are defined as "buildings above the height of 70 meters”.
We at MCHI-CREDAI believe this step, taken jointly by the Hon’ble Municipal
Commissioner Shri Sitaram Kunte and the Committee is in the right direction. That’s the
“Khushi”. However, MCHI-CREDAI is disappointed that the Committee did not find
favour with the proposal of building high-rises on smaller plots – for us at MCHI-CREDAI
that is the ‘Gham’.
It is common knowledge that Mumbai faces an enormous space crunch. To add to this,
people from all over the country come to Mumbai in search of livelihood. It is very difficult
to provide housing facilities for all these people. MCHI believes the city has already
exhausted its horizontal limits. In such a scenario, building high-rises in all the plots big
and small is the only option.
So, we move into the second half of the year, on a mixed note – and I hope we will have
many more occasions for “Khushi”, as we move towards end-2012.
PARAS GUNDECHA
PRESIDENT, MCHI-CREDAI
04
Page 04
PRESIDENT SPEAK
Mixed feelings . . .
Kabhi khushi, kabhi gham
PROPERTYSCAPE ISSUE • JUNE • JULY 2012
C R E D I T S
PROPERTYSCAPE
BUSINESS JOURNAL FOR THE REAL ESTATE INDUSTRY
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Last issue: Apr-May 2012
Page 05

06
Page 06
COVER STORY COVER STORY
Are we looking at a
possible return to
‘license raj’? Does the Regulatory Bill cover all aspects of real
estate and impact all stake-holders – or, does it focus only on primary sales, placing the
onus squarely on developers, while keeping other stake-holders out of purview?
Setting up of a Regulatory Authority usually
means an industry has reached the stage
where it needs to follow norms, rules and
regulations - something that industry
players welcome. In Maharashtra, the real
estate industry is faced with a situation
where a Bill which seeks to set up a
regulatory authority for real estate, which
has been deliberated on for five years,
recently underwent over a dozen changes
by a joint select committee of the
Maharashtra Legislature - as compared to
the earlier version of the Bill drafted by the
state housing department. Now, the
‘revised’ version of the Bill seems like it may
result in a ‘mixed bag’ for developers as well
as the industry.
There are two ways of looking at the Bill in
its current ‘avataar’ – on one hand, it
encourages transparency: this is something
the industry has, on its own, been doing
since the past few years. On the other hand,
it seems to place the responsibility for some
of the problems that the industry faces
squarely at the doorstep of developers,
which very obviously is an unfair way of
regulating.
For MCHI-CREDAI, which has been selfregulating
in form of its Grievance
Committee for flat buyers as also its rules
and norms for members, it comes as
something totally unexpected. Across the
organisation’s members, the question
doing the rounds is: after almost two
decades of liberalization, does The
Maharashtra Housing (Regulation and
Development) Bill 2012, indicate a return to
‘license raj’ – and, is the developer
community being singled out for what
e s s e n t i a l l y s h o u l d b e a s h a r e d
responsibility?
From the perspective of developers, the
MCHI-CREDAI President Paras Gundecha’s
statement to the media was a snapshot of
developers’ reaction to the Bill: “The Bill is a
definite game changer. It will lead to
transparency. It is a good beginning, but our
strong feeling is that it is a just one-sided
effort. The Bill seeks to punish errant
PROPERTYSCAPE ISSUE • JUNE • JULY 2012
developers delaying possessions and other
so-called irregularities, but the Bill is totally
silent on the authorities and government
officials who could be responsible for
delaying projects by sitting on approvals,”
he said. Paras Gundecha gave the example
of the last 18 months, when hardly any
building plans have been cleared in
Mumbai, the capital of real estate. “Things
have started moving, but only now, and that
too after much hue and cry,” he added.
Similar was the MCHI-CREDAI Hon.
Secretary Boman Irani’s statement: “I am in
favour of the Bill, provided it doesn’t
produce pressure only on developers
because they are dependent on banks,
government policies and even customers to
develop and deliver a project,” he said.
“Imposing a penalty on the developer isn’t
fair, because it’s only a part of the sector,”
he added.
RERA should be like SEBI
When the Maharashtra Legislative
Assembly, on 16th July, passed the Housing
(Regulation and Development) Bill, 2012,
the aim, as expressed was: to regulate and
promote construction, sale, management
and transfer of flats on ownership basis;
and establish the Housing Regulatory
Authority (HRA) and Housing Appellate
Tribunal (HAT).
MCHI-CREDAI President Paras Gundecha
said the Regulatory Bill was important to
ensure transparency in all deals, be it
between developers and customers or the
authorities and developers. “It should be on
the lines of SEBI, encompassing all, and not
one-sided, as proposed.”
The Bill mandates that builders make
complete disclosure regarding housing
projects they are developing and provide
details of ownership of land where required.
Developers will also have to disclose the
number of flats which will be built; and the
floor space index (FSI) applicable for each
housing project. All these details have to be
published by the Regulator, on its website,
before approval is granted to a project.
MCHI-CREDAI President Paras Gundecha
brings out the aspect of business planning
and need for sharing some aspects only
with actual buyers and not making such
information ‘open to all’ through posting on
the regulatory website.
Delays and fines
The Bill, in what seems to be a move to
ensure that projects get delivered on time,
imposes penalties and fines on developers
who fail to comply with the various
provisions such as failure to give
possession within the period mentioned in
the agreement between the buyer and
builder. The Regulator can also impose a
fine of up to Rs 10,000 for each day of delay.
The moot question, said MCHI – CREDAI
President Paras Gundecha, is whether
imposing such a penalty only on the
developer is fair, given that in some cases,
delays are due to reasons beyond the
developers’ control. “There is the aspect of
other stakeholders in real estate, who are
responsible for delays - but the Bill does not
recognize these, nor does it apportion a
share in the responsibility for delays on
these stakeholders,” he said.
Developers need time-bound permissions
and clearances, are still waiting for a single
window clearance system, are largely
dependent on banks, government policies
and even customers to develop and deliver
a project, he added.
Far-reaching effect
MCHI – CREDAI President Paras Gundecha
said the Bill will have far-reaching effects on
the real estate sector. "The Bill will affect
almost every aspect of the housing
industry, starting from and reaching up to,
managing, sale and delivery of projects in
future,” he said, adding that, ‘a thorough
analysis of the bill is needed at this stage’.
One of the issues which has been a matter of
concern is the introduction of punitive
measures that includes awarding
punishment of three years imprisonment in
case a developer defaults. “As developers,
our concern is that we are being held liable
for completion of a project when in reality
it's a cumulative effort of a lot of
stakeholders,” explained MCHI – CREDAI
President Paras Gundecha. He further said
that a developer may default on a project
due to multiple reasons. "One of them could
be delay in granting approval for the project
on the part of government agencies and
related departments. The Bill makes only
the developer accountable, not government
bodies. Also, we object to giving the
Housing Regulator the power to take
criminal action against developers. We
believe only the courts should be vested
with such powers," he said.
New Act to replace MOFA
Advocate Rajan R. Hiranandani provides a summary of what will most likely happen the
day the Maharashtra Housing (Regulation and Development) Bill, 2012 becomes an Act
and comes into force.
Once the Maharashtra
Housing (Regulation
and Development) Bill,
2012 becomes an Act
and comes into force,
then the Maharashtra
O w n e r s h i p F l a t s
(Regulation of the
Promotion of Constr uction, Sale,
Management and Transfer) Act, 1963 or
MOFA as it is popularly known; shall stand
repealed.
One of the main reasons for the change over,
as stated in the preamble, is that MOFA did
not provide for an effective implementing
arm for its various statutory provisions.
Thus under the proposed Act, Housing
Regulatory Authority (HRA) and the
Housing Appellate Tribunal (HAT) shall be
established for ensuring effective
implementation of the law
Developer’s duties as per the Act
There are many responsibilities that have
been cast on a promoter under the proposed
Act. Some of the provisions of the proposed
Act are given below.
1: Every promoter of a project shall make an
application to the HRA for registration of the
project and for displaying the project on the
Some other aspects
From a developers’ perspective, the Bill
seems to focus more on regulation and not
on development. It seems to only cover
developers in the ‘revised’ form, so should
logically expand the scope and include
other stakeholders including brokers,
sanctioning authorities and so on, who are
not covered in the present Bill.
One aspect which needs to be looked at is
that the Bill covers only primary sales, but
says nothing about secondary sales. It also
excludes from its purview the Maharashtra
Housing Area Development Authority
(MHADA) and boards established under
the MHADA Act, 1976.
Another aspect which needs clarity is the
condition that developers will have to
website of the HRA. This shall not be
required in certain cases such as if the land
proposed to be developed does not exceed
two hundred fifty square metres or when
the total number of flats is less than five.
2: The promoter will have to retain a
prescribed percentage of flats not
exceeding ten percent till the occupation
certificate in respect of that building is
obtained.
3: A promoter shall, before he accepts any
sum of money as advance payment or
deposit exceeding twenty percent of the
sale price, enter into a written agreement
for sale with each of such persons who are
to take or have taken flats, and the
agreement shall be registered under the
Registration Act, 1908.
4: When any person makes payment on the
basis of information contained in an
advertisement or prospectus and sustains
any loss by reason of any willful untrue
statement included therein, then such
person shall be compensated by the
promoter for the loss that he may have
sustained consequent to such information.
5: The promoter is required to take steps for
formation of an organization of flat
purchasers within four months from the
deposit 70 per cent of the amount in an
escrow account in the bank which will be
used for the project. Does this also include
the land cost that a developer has incurred
along with the construction cost? This
needs to be clarified.
While the Bill introduces several innovative
provisions, the scope of these appears to be
limited. For instance, the Bill covers only
new projects (projects yet to receive
occupation certificates or re-development
projects that will market or offer for sale
new flats or buildings in the open market).
In effect, the Bill represented an excellent
opportunity to introduce a market-wide
regulator, which could oversee all forms of
realty transactions. Sadly, this has not been
done.
date on which the occupation certificate in
respect of the building is issued or minimum
sixty percentage of the flat purchasers in
such building have taken possession or the
promoter has received full consideration
and other amounts for the same, whichever
is earlier.
6: The promoter is to convey title and
execute documents according to the
agreement. If no such period is agreed upon
in respect of property where one building is
constructed, the promoter shall execute the
conveyance within four months from the
date on which the co-operative society or
the company is registered or the association
of the flat purchasers is duly constituted,
failing which application can be made to
the Competent Authority for unilateral
deemed conveyance.
7: Any person who wilfully fails to comply
with the orders or directions of HRA or HAT
shall be liable to imprisonment for a term
which may extend to three years or penalty
which may extend to rupees ten lakhs or
with both.
8: A promoter who without reasonable
excuse contravenes section 9, 12, 14, 18 or
19 shall upon the order by the HRA be liable
to a penalty which may extend to rupees
one crore and for contravention of any other
provisions, the penalty may extend to
rupees ten lakhs.
9: It is provided that no civil court shall have
jurisdiction in respect of any matter which
the Competent Authority, HRA or HAT is
empowered by or under the Act to
determine.
PROPERTYSCAPE ISSUE • JUNE • JULY 2012
07
Page 07

Cartelization by cement manufacturers was brought before the Competition
Commission of India (CCI) by Shankarbhai, Trustee of Builders Association of India (BAI).
CCI upheld his contention and imposed a penalty for ‘unfair practices’ on cement
manufacturers. The Managing Committee, MCHI-CREDAI recognised this unique
achievement and acknowledged it by felicitating him
R e c e n t l y, t h e
C o m p e t i t i o n
Commission of
I n d i a ( C C I )
passed an Order
against ‘unfair
trade practices’
adopted by major
c e m e n t
manufacturers in
Shankarbhai the country. The
CCI Order said
cement manufacturers had been ‘dictating
prices’ by ‘controlling supply’, unmindful of
the adverse impact on infrastructure and
housing. The CCI Order mentioned the
recent rise in cement prices which added to
the cost of housing: cement accounts for 15
per cent cost of construction.
In the last week of July, CCI imposed a
penalty of Rs 397.51 crore on Shree Cement
for indulging in ‘restrictive trade practices’
while issuing final order in the case against
cement manufacturers and their trade body
Cement Manufacturers Association (CMA).
T h e C C I f o u n d e l e v e n c e m e n t
manufacturers in contravention of the
provisions of the Competition Act, 2002,
which deal with anti-competitive
agreements including cartels, it asked the
company to refrain from such anticompetitive
activities in the future.
With regard to other companies, the CCI
said as they were fined earlier, it was not
08
Page 08
SPECIAL REPORT
A true fighter takes on the cement cartel
PROPERTYSCAPE ISSUE • JUNE • JULY 2012
imposing any penalty on them again for the
same period of contravention (in June, CCI
imposed a fine of Rs 6,307 crore on 11
leading cement makers, including ACC,
Ambuja Cements, Ultra Tech, India
Cements, Binani Cement, JK Cement,
Madras Cement, Lafarge and Jaypee
Cement). Industry body CMA was also
fined Rs 73 lakh.
The inquiry was based on a case
transferred from the Office of the Director
General (Investigation & Registration) of
the erstwhile Monopolies and Restrictive
Trade Practices Commission to the CCI,
which had initiated investigations on basis
of press reports as well as a letter of
Builders Association of India.
On 17 July 2012, MCHI-CREDAI felicitated
Shri Dhr uvk umar Lallubhai Desai
( S h a n k a r b h a i ) Tr u s t e e , B u i l d e r s
Association of India (BAI), who spearheaded
the entire challenge. MCHI-
CREDAI Hon. Secretary Boman Irani
conducted the proceedings.
“Mahatma Gandhi had said, ‘Find a
purpose and the means will follow’, and the
man (Shankarbhai) who travels by bus, took
on giant cement companies,” said Boman
Irani. He assured Shankarbhai of support
from MCHI-CREDAI in
any fight for the good of
the industry.
Vimal Shah, President-
Elect, MCHI-CREDAI
Vimal Shah
e m p h a s i z e d t h a t
Shankarbhai’s services to
the industry went a long way back. And
that he never ever gave up on a cause. He
recalled his association with Shankarbhai
in 1984, when a young Vimal Shah, fresh out
of college and Chartered Accountancy
course, began working with Shankarbhai
and all other builder-friends at BAI. He
recalled having worked with Shankarbhai
on the Works Contract Case, which lasted
10 years.
“Shankarbhai,” said Vimal Shah “was told
by many that going against the might of the
cement companies was a fruitless pursuit,
people were cynical about anything being
achieved in this pursuit against the cement
cartel. Despite all the negative sentiment,
Shankarbhai didn’t stop because he fights
for a cause, and when he fights for a cause,
he pursues it till he gets justice.”
Vimal Shah said Shankarbhai collects
information from sources without spending
any BAI money, works very hard and
ensures that BAI is spared any major
expense. He listed the causes Shankarbhai
pursued over the years: Works Contract,
Escalation of Costs and the case against the
cement cartel. Whatever the issue,
Shankarbhai pursued it with due diligence,
analyzing the facts when he takes up a
subject, analyses thoroughly, goes into the
entire nitty-gritty of the issue, and builds up
a whole case, with facts and figures that
would not be countered.
Vimal Shah also revealed one other facet of
Shankarbhai’s personality: Shankarbhai
handles his workload with just one
functioning kidney. “We are inspired by you,
Sir, we respect you tremendously, and pray
that you continue to lead
us for many more years,”
said Vimal Shah.
Past President Rajni S
A j m e r a p r a i s e d
Rajni Ajmera
Shankarbhai’s initiative
in taking up cudgels
against the cement cartel, and recalled
how, the real estate and construction
Page 09

10
Page 10
SPECIAL REPORT
industry had for the first time taken out a
morcha against the cement cartel. And
how, Shankarbhai had worked to gather
information and build up a case over the
years. He recalled Shankarbhai’s efforts in
understanding the cost of producing
cement, so that a case could be built up. “It
has been Shankarbhai’s perseverance that
brought about this success against the
cement manufacturers, and we are all
The genesis of the case against cartelization
The case against cement cartelization was
being considered since some time –
Shankarbhai recalled it was from the time
when Narendra Kumar was the IMC
President.
“Recently, the Standing Committee of
Parliament pointed out that there was ‘huge
profiteering’ in cement, and that was why
the price of cement was very high. It was
estimated that cost of production was about
INR 90 per unit of manufacture, and
accounting for amortization, interest and
profits, the cost should not have crossed Rs.
180. The Standing Committee of Parliament
recommended that the Competition
Commission of India look into the matter,”
he explained.
It was in May 2009 that the section on
cartelization was incorporated in the CCI’s
charter. “We filed our case in June 2010. We
submitted to the Commission that steel had
three broad consumers, including
automobile and construction, cement had
only one: construction. Prima facie, the CCI
found there was ground to believe a cartel
was in operation and directed the Director
General of Investigation to launch an
Comparative Statement of Growth of Cement Industry & Construction Industry
Year
Installed
capacity in MMT
Growth in %
2005-06 157.35 - 141.81 - 90 16.20
2006-07 165.64 5.26 154.64 9.75 94 11.80
2007-08 179.10 8.12 168.31 8.14 94 10.10
2008-09 205.96 14.94 181.61 7.90 88 7.25
2009-10 246.75 19.80 205.00 12.87 83 7.00
2010-11 286.38 16.06 210.85 2.85 73 8.10
2011-12 301.60 5.31 228.00 8.13 75 4.80
Sources: (1) For Cement Sector Page 202-203 of C.C.I. Order. (2) For Construction Sector 2005-06 to 2008-09 from Page 19 of National Accounts of Statistics page 19 &
20 for 2009-10 and 2010-11 page 225-226 of C.C.I. order. (3) For 2011-12 figures from Indian Economy Review April 2012 issue. Capital Market March 2012 issue. (4) For
Construction Industry growth 2011-12 from note issued by C.S.O. on 30-5-2012.
PROPERTYSCAPE ISSUE • JUNE • JULY 2012
inspired by your example,” he said.
Boman Irani lauded Shankarbhai for his
guidance. He then invited MCHI-CREDAI’s
President Para Gundecha and Past
President Rajni Ajmera to felicitate
Shankarbhai, with a floral bouquet and a
plaque, in recognition of his invaluable
services to the industry.
C. G. Deochake, Chairman, BAI Mumbai
enquiry. In the submission made to CCI, we
said the growth of the construction industry
had come down between from 2006 to 2010.
While the cement industry added capacity,
capacity utilization went on decreasing and
the prices went up. From 94 per cent,
capacity utilization came down to as low as
72 per cent,” he said.
The Director General of Investigations
c a l l e d c e m e n t m a n u f a c t u r e r s ’
representative, and to the question on how
prices kept on rising, the reply was: ‘the law
of supply and demand was in operation’.
The next question put to cement
manufacturers was, ‘how do you measure
demand?’ There was no cogent answer.
The President of Cement Manufacturers’
Association, (CMA) too, when called, could
only admit that they had no mechanism to
measure demand. “We go by Planning
Commission figures,” said the CMA
President. “If the economy grows 9 per cent,
the industry grows by 1.2 times.”
Not satisfied with the answers and
information provided, the DGI called for
cement plant production and dispatch
Production
in MMT
Growth in %
Centre, thanked MCHI-CREDAI for
“felicitating our Shankarbhai. He has won a
great battle, but the war is still on. And we
all need to do much much more to see that
this is concluded successfully,” he said.
Boman Irani’s response was: “I thank all the
BAI Members who joined MCHI-CREDAI’s
Managing Committee to felicitate your
Shankarbhai, and our Shankarbhai!”
figures. These, said Shankarbhai, turned
out be revealing. “It was found that the
production of say January, was followed by
February registering a decline, and the
price was increased. Again, investigations
revealed that the CMA had formed a highpowered
committee. The DGI found a direct
co-relation between cement prices before
this committee’s meeting, and after the
meeting, when cement prices went up. The
DGI concluded that CMA provided the
platform to create a cartel.”
“Despite all these revelations,” said
Shankarbhai, “and the CCI’s orders, prices
of cement have gone up by Rs. 20 a bag in
Delhi, and Rs. 10 in Mumbai.” He said he
received a call from a BAI member in Pune,
who asked, in Marathi, “Tumhi hey kaye
kela, (ulta) bhaav wadhavla” (You have
caused cement prices to go further rise).
In conclusion, Shankarbhai said a lot of
work still needs to be done. “Much
spadework has to be undertaken, so that a
truly deterrent penalty, as required, is
imposed on cartels so that they do not find it
profitable to indulge in such profiteering.”
Capacity
Utilization in %
Growth of
Construction
Industry in %
Page 11

Page 12
MCHI-CREDAI NEWS MCHI-CREDAI NEWS
Convocation Ceremony of MCHI-CREDAI - Rustomjee Academy
Shri Boman Irani (Hon. Secretary MCHI-CREDAI) at the dias while
Shri Paras Gundecha (President MCHI-CREDAI) addresses the
crowd at the Convocation Ceremony.
MCHI-CREDAI and Rustomjee Academy for Global Careers (RAGC),
the vocational division of the Rustomjee Group of Schools, have
collaborated to jointly offer “Construction Site Supervisor Skill
Enhancement Certificate Program”. MCHI-CREDAI had co-certified
The proud Certificate Holders at the Convocation!
Felicitation of Shri Dhruvkumar Lallubhai Desai (Shankarbhai) Trustee – BAI
Shri Paras Gundecha (President MCHI-CREDAI), Shri Dhruvkumar
Lallubhai Desai (Shankarbhai - Trustee BAI) addressing the MCHI-
CREDAI Members.
Read the article on pages 08 – 10.
this program of RAGC. This win-win collaboration benefits the
Industry by creating standardization in construction processes;
increase efficiency & productivity; and ensure that quality manpower
is available to the Industry.
USABF at MCHI-CREDAI Mumbai, June 2012
Dr. Nitin Parab of USABF addresses members of MCHI-CREDAI.
CREDAI and the US Asia Business Forum (USABF) invited MCHI-
CREDAI members to explore Joint Ventures, PE and Venture Funding
options and Technical Collaborations with PIOs, NRIs and US-based
Companies at their event, US Asia Business Expo 2012, which will be
held in Florida, USA. This Special Preview was held to enable MCHI-
USABF’s Founder-Chairman Shri Kevin Kaul addresses the
audience at the USABF Seminar.
CREDAI members understand about how they can explore B2B
opportunities and meet potential partners and customers in the USA
at the US Asia Business Expo 2012 which will focus on Synergizing
Strength amongst Asian Countries with USA and Global Companies.
Shri Boman Irani (Hon. Secretary MCHI-CREDAI), Shri Deepak
Goradia (Vice President), Shri Nayan Shah (Vice President), Shri
Paras Gundecha (President MCHI-CREDAI) felicitating Shri
Dhruvkumar Lallubhai Desai (Shankarbhai - Trustee BAI), Shri Rajni
S. Ajmera (Past President), Shri Vimal Shah (President Elect), Shri
Dharmesh Jain (Vice President)
VAT & Service Tax Update
Advocate Vinayak Patkar addressed a seminar on VAT & Service
Tax issues at MCHI – CREDAI on July 17, these are some points he
made during the seminar
Writ Petition No.2022 of 2007 was filed before the Bombay High Court
by the Maharashtra Chamber of Housing Industry (MCHI). It
challenged the constitutional validity of the law introduced by the
State Government imposing VAT on sale of flat. Recently, the Bombay
High Court gave a decision which went against MCHI’s stance.
In response, MCHI has already filed a Special Leave Petition (SLP)
before the Supreme Court; as also has moved an application for Stay of
Operation of the Hon’ble High Court’s Judgement.
The Stay Order, which had been issued by the Bombay High Court
earlier, now stands vacated. Officials of the Sales Tax Department are
now chasing developers for payment of tax, as also to get details
about collection of the tax by them. This data, of taxes collected by
developers, is expected to be used before the Supreme Court when
the application for Stay Order will be contested.
If Apex Court does not issue the Stay, the developers who are not
registered under MVAT Act, 2002 will be required to register
themselves. If the Supreme Court stays the judgement of the High
Court, then the status-quo can be maintained. The developers are
advised to wait till the Apex Court gives the decision on the Stay
Application.
Implementation
Even if the High Court has upheld the constitutional validity of the
introduction of the law levying tax on the sale of flat, it is difficult for
the government to implement the law. The provisions which exist on
the Statute Book, as on today, are not sufficient to levy tax on all types
of sale contracts. In number of cases the customer enters into an
agreement for purchase of the flat after certain portion of the
construction is over.
For example, a customer buys a flat on 18th floor when the
construction upto 15th floor is complete. In such circumstances, the
developer receives consideration from the buyer in lump-sum against
the construction upto 15th floor and thereafter receives money slab
wise against the purchase of such flat. In such a case, the lump-sum
consideration received is against the immovable property sold by the
developer to such buyer which is covered by Transfer of Property Act
and State Government is not competent to levy tax on the same.
VAT Meeting, July 2012
12 PROPERTYSCAPE ISSUE • JUNE • JULY 2012 PROPERTYSCAPE ISSUE • JUNE • JULY 2012 13
SRA Projects
In such cases, the developer is required to reconstruct the houses for
the existing tenants/ occupants without any consideration. The
developer is also required to give some additional area to such
persons. After accommodating such tenants/occupants the
developer is allowed to sell some flats to the outsiders. In such
circumstances, how does one define to whom is the transfer of
property in the material used by the developer in the construction of
plinth etc? Is it the original tenant, or the ‘outsider’ – the new
purchaser?
Shri Vinayak Patkar makes a pertinent point during his talk.
If it is to the original tenant then no tax can be levied, since no
consideration is received against the transfer of property. If it is to the
outside purchaser then how does one identify such material for the
purpose of levy of tax?
Payment options
There are different options for payment of the Tax. Section 42 of the
MVAT Act, 2002 provides for composition. Section 6 read with Rule
58(1) & (1A) provide for the regular method of payment of tax.
Under Section 42 the composition is 5 per cent on the total
consideration of flat. It should be noted that no reduction has been
provided for the price of land under the composition scheme and
therefore, the 5 per cent VAT is required to be paid on the total value of
the flat. It can be assumed that the customers will not accept such
heavy tax burden. It is quite possible, that some customer may
approach the Consumer Court. Such customers can compel the
developer to adopt the particular option.
HC equates developers with contractors
Developers need to understand that the High Court has equated them
with the contractors. The liability of the developers can’t be more than
that of the contractors. The sales price of the contractors is around 15
per cent more than the purchase price of the material used by them.
The contractors are paying VAT on such sales price and are also
claiming full set off of the VAT paid on purchases. The sales price of
the developer qua material would at the most be 25 per cent more
than the purchase price of the material. The developers are required
to pay tax only on such sale price and not more than that.
SC Judgement
The Supreme Court, in the case of State of Andhra Pradesh v/s Larsen
& Toubro Ltd., reported in 17 VST 1(SC) held that once the subcontractor/contractor
incorporates the material in the construction
then there can be no further sale of such material, since under the
building contract, the property passes by way of accretion. Once the
sub-contractor transfers such property nothing thereafter remains for
re-transfer. But, the Hon’ble Bombay High Court, in MCHI’s case, has
distinguished this judgment. Therefore, developers who can afford
litigation upto Supreme Court should only take help of this judgment.
Conclusion
In the present scenario, the Developer is both, the contractor and also
the employer. He will have to deduct the tax as envisaged u/s.31 of
the MVAT Act, 2002.
Page 13

14 08
Page 14
MCHI-CREDAI UNIT NEWS
President of Kalyan-Dombivali Unit, Shri Bandish Ajmera, will
continue as President for another term, 2012-13. He was felicitated
by Shri Johar Zojwalla, Shri Shrikant Shitole, Shri Praful Shah, Shri
Manoj Rai and Shri Ravi Patil.
MCHI-CREDAI Mira Virar Committee with Speakers CA Naresh K.
Sheth and CA Paresh Vakharia at the seminar on recent
implications of service tax and VAT.
Interactive seminar on service tax & VAT for the real
estate industry
A seminar on recent implications of service tax and VAT was
conducted by Mira Virar City unit of MCHI-CREDAI on 14th July 2012
at GCC Club, Mira Road (E). The objective of the Seminar was to
enable Builders and Developers to effectively deal with Service Tax
and VAT challenges in the light of the amended laws and new tax
positions and the recent Bombay High Court Judgment. In this
interactive seminar, two eminent Speakers CA Naresh K. Sheth and
CA Paresh Vakharia clarified the Service Tax amendments and the
VAT Law, and explained its implications and intricacies on
A delegation from MCHI-CREDAI Navi Mumbai Unit held a fruitful
discussion with the Navi Mumbai Police Commissioner, Shri A.K.
Sharma
PROPERTYSCAPE ISSUE • FEBRUARY APRIL JUNE • JULY MAY • MARCH 2012
2012
Kalyan Dombivali Unit
Mira-Virar City Unit
Navi Mumbai Unit
The Kalyan-Dombivali Unit of MCHI-CREDAI has been following up
on various issues that impact members, such as staircase premium,
Solar NOC, Fire NOC, TDR to be given on RG areas, TDR against
amenity development etc. One news that is positive for members is
the recent order passed by the Hon'ble Municipal Commissioner,
KDMC rendering staircase premium from 100% of the ready reckoner
rate to 40%. This happened because of team work and support of all
member developers.
The Kalyan-Dombivali Unit of MCHI-CREDAI has put in enormous
efforts to strengthen the association and create a sense of unity
amongst developers; it has taken up initiatives for 'city development
projects', whereby Unit members can contribute towards
development of infrastructural projects like roads, hospitals,
gardens, rotaries, islands, bus-bays, entry gate, public amenities etc,
where the developer can get TDR against development of amenities
which would serve a dual purpose: development of the city and
benefit to member-developers.
A view of the MCHI-CREDAI Mira Virar members who heard the
speakers with attention.
construction, real estate sector.
Speaking on this occasion, Mr. Shailesh Sanghvi, Secretary Mira Virar
city unit of MCHI-CREDAI, said that “This is the toughest time in real
estate where we can see lot of amendments in the rules and
regulations, so it is decided by the unit’s committee to organize
seminars once in two months on such topics. Developers should be
made aware of the implication of any rule on industry and the
mechanisms involved in it.”
The seminar, attended by most of the Mira Virar unit Members and
Committee members witnessed more than 150 audience.
New plans in the pipeline
The MCHI-CREDAI Navi Mumbai Unit has put in enormous efforts to
strengthen the association and create a sense of unity amongst
developers; it has taken up initiatives for the same. The Managing
Committee of MCHI- CREDAI - Navi Mumbai Unit meets at least once
and at times, even twice in a month to chalk out the future programs.
It plans to organize a property exhibition in the month of October
2012. On 3rd July, 2012, a delegation from MCHI-CREDAI Navi
Mumbai Unit participated in a fruitful discussion with the Police
Commissioner of Navi Mumbai Mr. A.K. Sharma. The Navi Mumbai
Unit of MCHI-CREDAI has been following up on various issues that
impact members, and hopes to work for the benefit of memberdevelopers
through 2012.

MCHI-CREDAI Thane Unit President Shri Shailesh Puranik
addresses the participants of the VAT Seminar organised by the
Unit. Hon. Secretary Shri Jitendra Mehta looks on, as members hear
him with rapt attention.
MCHI-CREDAI Thane holds VAT Seminar, introduces
new team
The MCHI-CREDAI Thane Unit saw the new president Shri Shailesh
Puranik take over for 2012-13. Shri Jitendra Mehta is the Hon.
Secretary, Nainesh Shah is the immediate past president while Suraj
Shri Mayur Shah, Vice President MCHI-CREDAI, felicitates the
speakers at the Seminar.
Getting technical at ‘Swift NA Permission' Seminar
The MCHI-CREDAI Raigad Unit has been following up on various
issues that impact members. On 18th July, a seminar on 'Swift NA
Permission' was held. It was addressed by RDC Shri Jagannath
Virkar. Other attendees included Shri Abhiraj Girkar (ADTP), Shri H.
16 08
Page 16
MCHI-CREDAI UNIT NEWS
LEGAL UPDATES
Thane Unit
Raigad Unit
The audience at the VAT Seminar organised by MCHI-CREDAI
Thane Unit.
Parmar is the President-Elect. The Unit organised a Green Initiative
and a seminar on VAT, where developer-members of MCHI-CREDAI
Thane participated in large numbers. The Unit has taken up various
issues that impact members with authorities at the Municipal
Corporation as also the State Government. The Unit expects to
witness many members participating in events during the year.
The interested audience listens on, makes notes.
K. Jawle (Collector) &Shri
Yogesh Mahagde (Dy. CEO. ZP - Raigad).
The seminar was attended by 64 builders members with their
'technical' support staff. The Unit has also been in communication
with Town Planning Officer, Shri R. B. Patil at CIDCO Ltd, CBD
Belapur for clarification on requirement of Airport NOC, as per
newspaper reports.
•MoEF MCHI has filed writ petition against the Union of India & State of Maharashtra and others challenging the memorandum dated 7th
February, 2012 by MOEF. Writ Petition (W.P. 1180/2012) relating to high rise building & guideline issued by MOEF is appearing for admission.
The advocate for the Union of India has applied for adjournment to file reply. The writ petition has been adjourned to 14th August, 2012.
•VAT Writ Petition challenging the Constitutional Validity of the provisions of the Maharashtra Value Added Tax Act 2002 as amended in
2005. The division bench of Bombay High Court has dismissed the writ petition filed by MCHI-CREDAI and others. MCHI-CREDAI has filed
an SLP in Supreme Court. The said matter came for admission in Supreme Court on 30th July. The Hon’ble Court has admitted the petition,
and has clubbed with L&T matter for hearing.
•ULC Under ULC Act, exemption application was filed by members of MCHI-CREDAI and its Units. MCHI-CREDAI and its Units have filed
petition challenging actions of State Government and to quash & set aside the circular dated 18th March 2009 & in any manner & forcing the
provision of the Principal Act directly & indirectly after 28th November 2007. This matter was mentioned by the Division Bench of Bombay
High Court for forming a Full Bench to hear the ULC matters. Full Bench has been formed & connected writ petitions will be for final hearing
on 30th Aug 2012.
PROPERTYSCAPE ISSUE • JUNE • JULY 2012
ACC’s Self
Compacting Concrete
M-100 Grade
Hans Fuchs, MD, ACC Concrete Ltd.
Hans Fuchs, Managing Director,
ACC Concrete Limited shares information
about an innovative concrete solution.
Q: Tell us about M-100 grade concrete?
A: ACC Concrete Limited, India’s leading
manufacturer of ready mix concrete and a
subsidiar y ACC Limited, recently
introduced an innovative concrete solution
M–100 grade specially designed for the
construction of high intensity towers in
India. M-100 grade concrete, a specialized
concrete solution, is a one stop shop offered
by ACC Concrete for high strength and
performance of vertical Hi towers in the
country.
Q: Could you share with us what makes
this important?
A: Insufficient availability of land is leading
to subsequent scaling of land prices in
mega cities like Mumbai. Buying land is no
more a feasible option in cities and hence,
the way to grow and expand vertically. To
build up tall and high intensity concrete
sk yscrapers, availability of right
specialised Ready Mix Concrete (RMX)
solutions is the most critical thing for
builders in India.
Q: You had a demo of the pumping
process?
A: Yes. Witnessing an upcoming trend of
Vertical Hi Towers in India, ACC Concrete
organized a live demonstration seminar of
pumping Special Hi Tower Concrete at the
ACC Thane complex. The demo-seminar
showcased the process of pumping the
special grade of concrete and the display of
self compacting and temperature controlled
and ‘M – 100 grade of concrete’ over 300
metres. Distinguished customers of ACC
and major builders across the city attended
the seminar and discussed the potential of
using specialized concrete solutions for the
upcoming high rises in the city.
Q: I believe the demo made history of
sorts?
A: Yes, this was for the first time in India
that M-100 RMX was pumped over length of
300m and for the first time in world that
M-100 was manufactured without natural
sand but using only manufactured fine
aggregates.
Q: Would you highlight the key
characteristics of M-100 grade?
A: ACC’s expertise in RMX is backed by 100
years of Global expertise from Holmic and
75 years of indigenous experience of ACC in
India. Today, vertical growth is seen as the
only solution to meet the growing demand
for space in metros in India. In Mumbai
alone, 128 towers with height more than 300
feet are planned to come up in next 3-4 years
while 75 towers of height more than 300 feet
already exist. Concrete Pumping to such
heights requires special mix of desired RMX
grades in which ACC Concrete specializes.
Q: What is the milestone which this helps
ACC achieve?
A: ACC has added a significant milestone to
RMX Pumping
INTERVIEW
contribution and innovations in the
construction industry by manufacturing
Self Compacting RMX of M100 grade. This
concrete attains a high compressive
strength of 100 Map (1 MPa equivalent to 1
Newton force/ mm2) after 28 days. With the
introduction of M-100 grade, ACC Concrete
has become the only ready mix concrete
company in India to offer specialized
solutions for high intensity towers in the
country.
CREDITS: ACC Concrete is one of the largest
manufacturers of Ready Mix Concrete in
India with over 51 modern plants in major
cities including Mumbai. The company has
contributed to landmark structures in
India's metro cities. Its achievements
include construction of iconic structures like
J.J. Flyover, Mumbai-Pune Expressway,
Sripati Arcade - Mumbai, the Indore-Dewas
bypass, Kolkata and Delhi Metro Rail
projects as also construction of mega
housing projects, townships, commercial
complexes, factories, bridges, flyovers, roads
and railways.
PROPERTYSCAPE ISSUE • JUNE • JULY 2012
Page 17
1617

Knight Frank India
Research Report, July 2012
Disconnect between the demand and
price of real estate over the last few years
has raised serious questions about the
position of real estate developer. While
there has been a lot of debate about the
standoff between house buyer and
developer, a little has been discussed
about the relationship of the developer
with the suppliers of factor inputs such as
Land and Construction costs; Knight
Frank’s latest report focusses on this:
Land:
• Land is the most significant input for
property development constituting almost
one-third of the property price in most cases
and as high as two-third in some pockets of
cities like Mumbai and Delhi.
• The argument of cheap historical land cost
to justify the expectation for a lower house
price does not command merit as the
current market price of land and not the
developer’s historic cost will determine
replacement cost.
• Analysis of land allotment policy of some
of the major land aggregators provides
interesting insights. CIDCO follows the
'Present Worth’ method for fixing the
reserve price of land and notwithstanding
the economic slump, the reserve prices of
Re-development in SoBo
Page 18
NEWS UOU CAN USE
Intervention of the Bombay High Court in
the matter of redevelopment of buildings
falling under the Coastal Regulation Zone
could have a positive impact for South
Mumbai (SoBo). During hearing of a petition
filed by the developer of a Shivaji Park
building on 19 June, the Bombay High Court
asked the Maharashtra Coastal Zone
Management Authority (MCZMA) to
expedite all proposals pending before it on a
fast-track basis.
The Division Bench of Chief Justice Mohit
Shah and Justice Nitin Jamdar said there
was undue delay in granting environmental
clearances even for reconstruction of small
parcels of land. More than 500 proposals are
currently pending before the MCZMA,
including a few of the marquee projects by
land in Navi Mumbai have been increased
by almost 30 per cent in three years since
2009-10.
Construction Cost:
• 57 per cent of the total construction cost is
contributed by three major input items
namely steel, cement and labour
• Steel and cement constitute one-third of
the total construction cost and are
produced by around 520 and 140
manufacturers respectively. In contrast,
there are more than 6,000 developers across
India relying on these manufacturers for
their purchases, leaving a developer with
little bargaining power
• Since 2009, the cost of steel and cement
has moved up by 35 per cent and 24 per cent
respectively.
Conclusion:
• A real estate developer is a price taker in
most of the input items used in construction
and has no significant influence on their
price movement.
• The industry structure clearly highlights
that isolating the developer and solely
holding them responsible for inflated
property price is not justified.
• The government has a pivotal role by not
only being a regulator but also the largest
supplier of land. It should introduce clear
and transparent policies for release of
government land at an affordable price.
top developers, with some of them stuck in
red-tape for over three years.
Media reports quoted State Environment
Secretary, Smt. Valsa Nair Singh as having
said that her department will clear the CRZ
proposals on priority. “We have 60 CRZrelated
proposals, which will be cleared in
the next meeting by the end of this month.
As far as the 500-odd environment
clearance files are concerned, we had
inherited more than 400 of them and are in
the process of setting up two more
committees to expedite the approvals,”
Singh was quoted in media reports as
having said. She said her department
would ensure that waiting time for
environment clearance reduces to just two
months.
Knight Frank Mumbai Report
The key take aways are:
• Disappointing Absorption Rate: 45,000
units were absorbed in the MMR during FY
2012 which is well below the market
average of 70,000 to 80,000 units annually.
The Mumbai market currently has an unsold
inventory to the tune of 80,000 units which
is approximately valued at INR. 1,050 bn, at
current price-points (as in APR:MAY 2012).
South & Central Mumbai which only offer
products at the premium end of residential
price band are experiencing highest
vacancy levels.
• Drop in New Project Launches: The MMR
market has witnessed a steep drop of
almost 40% in project launches in FY 2012
compared to the previous period.
•Rising Debt: Developers are hard pressed
to deleverage their positions as they are
getting buried under continuously
mounting debts with the market offering
them little respite. The total debt position of
five major Mumbai based developers is
estimated at approximately INR 62 bn, as on
March 2012; while it is estimated that they
hold a total unsold inventor y of
approximately INR 143 bn, which is 14 per
cent of the total MMR market.
In the context of various sources of funding
drying up and new launches hitting the
market, the developers may re-plan their
pricing strategy in such a way that the
unsold inventory is monetised within four to
six quarters instead of the currently
estimated eight to ten quarters.
•Regulatory
Bottlenecks: Project approvals
that were practically stalled in 2011, have
started coming through again as the
Development Control Regulations were
amended early this year. However, demand
is likely to remain subdued due to the
prevailing uncertainty in the economy
•Concentration
in Northern MMR: An
estimated 73 per cent of the total residential
units under construction is concentrated on
the northern fringes of the Mumbai market.
Developers are looking to tap into the
largest chunk of buyers looking for
apartments priced up to INR 7.5 mn. Thus,
an estimated 55 per cent of units under
construction presently belong to this price
bracket.
SEAC – II set up in Maharashtra
A total of 554 construction projects are awaiting environment clearance in Maharashtra, which already has a State-level Expert Appraisal
Committee (SEAC). The second committee-SEAC-II-was formed earlier in July to clear construction projects mainly in the MMR region.
Maharashtra is the only state with two SEACs to clear construction projects. The SEAC-II will comprise five members, including IIT staffers,
retired BMC and Mhada officials and the deputy secretary (environment). Maharashtra Chief Minister Prithviraj Chavan had met Jayanthi
Natarajan, Minister of State (independent charge) for Environment and Forests in May, and proposed the formation of SEAC (II).
Forthcoming Events - 2012
20th Mega Show
MMRDA Grounds - BKC
1st - 4th November 2012
For Further Information Contact :
18 08
PROPERTYSCAPE ISSUE • FEBRUARY JUNE • JULY • MARCH 2012 2012
Maker Bhavan II, 4th Floor, V. Thackersey Marg, New Marine Lines, Mumbai - 400 020.
Call : 42121421 E-mail : mktg@mchi.net
20
6th INDIA REALTY EXPO
2012 - LONDON
India Realty Expo - 2012
Hotel Cumberland, London
15th & 16th September 2012
Page 19