June - July 2012 - mchi-credai
June - July 2012 - mchi-credai
June - July 2012 - mchi-credai
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Personal Billiards Room<br />
The Industry comes<br />
together as ONE<br />
Special Report:<br />
Rental Housing<br />
Legal:<br />
Redevelopment Matters<br />
VOL.: 01/10 | <strong>June</strong>-<strong>July</strong> <strong>2012</strong>| MUMBAI<br />
Page 24 Page 01<br />
An<br />
Are developers<br />
being over-burdened?<br />
Regulatory Bill reviewed<br />
Publication
Page 02<br />
C O N T E N T S<br />
COVER<br />
STORY<br />
Possible return to the<br />
‘License Raj’?<br />
New Act to replace ‘MOFA’<br />
SPECIAL<br />
REPORT<br />
One man takes on the<br />
cement cartel:<br />
Shankarbhai, Trustee BAI<br />
MCHI-CREDAI<br />
NEWS<br />
Convocation of<br />
MCHI-CREDAI<br />
- Rustomjee Academy<br />
USABF at MCHI-CREDAI<br />
Mumbai<br />
Felicitating Shankarbhai<br />
(BAI Trustee)<br />
Seminar on VAT<br />
MCHI-CREDAI<br />
UNIT NEWS<br />
Kalyan-Dombivali Unit<br />
Mira-Virar City Unit<br />
Navi Mumbai Unit<br />
Thane Unit<br />
Raigad Unit<br />
INTERVIEW<br />
Hans Fuchs,<br />
ACC Concrete Ltd.<br />
NEWS YOU<br />
CAN USE<br />
06<br />
08<br />
12<br />
14<br />
17<br />
18<br />
Knight Frank India report<br />
Knight Frank Mumbai report<br />
SEAC – II in Maharashtra<br />
E D I T O R I A L<br />
Positive outlook<br />
amidst challenging times<br />
While one hopes for the best, and works with a positive outlook, as an industry we find<br />
that some positives have started happening post our interaction with the Hon’ble Chief<br />
Minister in May, and I hope the opportunities for more smiles increase.<br />
Something hurts, and let me share it with you. Recently, I have seen instances where we,<br />
the organised developers who work by the guidelines and rule book, seem to be getting<br />
into challenges and tough times more often than the segment who work without any<br />
‘registration’ or ‘official status’. It is almost as if we developers who go by norms of<br />
regulations are being slapped with penalties and all sorts of new regulations. I am not<br />
sure what the message is here – is it that those who share data and work in a transparent<br />
manner face punitive action while those who work outside norms, rules and regulations<br />
are not dealt with? I hope not. I hope that we will not see a situation where you play by the<br />
rules and suffer just because of this.<br />
The Union Government's decision to extend the interest subsidy at the rate of 1 per cent<br />
on housing loans upto Rs.15 lakh where the cost of the house does not exceed Rs.25 lakh<br />
for the year <strong>2012</strong>-13 will mean that select projects in peripheral areas will gain. More<br />
important, it creates a positive sentiment among home seekers, which augurs well for<br />
real estate. Some decisions have not been as encouraging – RBI’s status quo in its credit<br />
policy, for one. It seems to overlook the importance of real estate sector in the national<br />
economy and GDP, the capital and labour intensive sector plays a key role in employment<br />
generation and accelerating growth.<br />
As I recall, the encouragement given to real estate in 1998 had kick-started the growth of<br />
cement and steel industries along with over 165 other industries including transport that<br />
with no additional cost incurred by the government. The risks attributed to real estate<br />
and the RBI advisories against lending to real estate have only harmed the sector and<br />
made housing costlier for consumers, apart from badly impacting the economy. The result<br />
has been that the governments – state, central and local bodies - have seen loss in<br />
revenue.<br />
The status quo on interest rates will further dampen the sentiment. On a positive note,<br />
I hope further policies will see rate cuts positively and conservatism does not become<br />
a lasting attitude.<br />
BOMAN IRANI<br />
HON. SECRETARY, MCHI-CREDAI & EDITOR, PROPERTYSCAPE<br />
PROPERTYSCAPE ISSUE • JUNE • JULY <strong>2012</strong><br />
031603<br />
Page 03
As we move into the middle of <strong>2012</strong>, the months of <strong>June</strong> and <strong>July</strong>, it is not just the monsoon<br />
that is not coming up to expectations – I am seeing opportunities where the powers-thatbe<br />
could have done something positive which would have impacted sentiment at two<br />
levels – the economy and real estate. Sadly, it seems to be ‘opportunity missed’.<br />
First, there is disappointment at the RBI maintaining status quo in its credit policy. It<br />
seems the RBI is undermining the importance of real estate sector in India’s economy and<br />
GDP. The real estate sector plays a vital role in generating employment opportunities and<br />
accelerating the growth of the nation.<br />
From a Mumbai perspective too, this is an opportunity lost - being the financial hub of the<br />
country, the real estate sector in Mumbai will be negatively impacted by RBI’s status quo<br />
on credit policy<br />
On the positive side, we at MCHI-CREDAI welcome the BMC Chairman and High-rise<br />
Committee’s decision to approve the development proposals for 78 skyscrapers.<br />
Skyscrapers are defined as "buildings above the height of 70 meters”.<br />
We at MCHI-CREDAI believe this step, taken jointly by the Hon’ble Municipal<br />
Commissioner Shri Sitaram Kunte and the Committee is in the right direction. That’s the<br />
“Khushi”. However, MCHI-CREDAI is disappointed that the Committee did not find<br />
favour with the proposal of building high-rises on smaller plots – for us at MCHI-CREDAI<br />
that is the ‘Gham’.<br />
It is common knowledge that Mumbai faces an enormous space crunch. To add to this,<br />
people from all over the country come to Mumbai in search of livelihood. It is very difficult<br />
to provide housing facilities for all these people. MCHI believes the city has already<br />
exhausted its horizontal limits. In such a scenario, building high-rises in all the plots big<br />
and small is the only option.<br />
So, we move into the second half of the year, on a mixed note – and I hope we will have<br />
many more occasions for “Khushi”, as we move towards end-<strong>2012</strong>.<br />
PARAS GUNDECHA<br />
PRESIDENT, MCHI-CREDAI<br />
04<br />
Page 04<br />
PRESIDENT SPEAK<br />
Mixed feelings . . .<br />
Kabhi khushi, kabhi gham<br />
PROPERTYSCAPE ISSUE • JUNE • JULY <strong>2012</strong><br />
C R E D I T S<br />
PROPERTYSCAPE<br />
BUSINESS JOURNAL FOR THE REAL ESTATE INDUSTRY<br />
EDITOR<br />
Mr. Boman Irani<br />
EDITORIAL BOARD MEMBERS<br />
Mr. Pujit Aggarwal<br />
Mr. Deepak Goradia<br />
Mr. Sujal Shroff<br />
PUBLISHED BY: Mr. Zubin Mehta<br />
For and behalf of MCHI-CREDAI<br />
CONTENT & EDITORIAL<br />
CO-ORDINATION BY: A Media Inc.<br />
www.amedia.co.in<br />
Executive Editor: Kamlesh Pandya<br />
DESIGN BY: Source Printz<br />
PR & CORP. COMMUNICATIONS<br />
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ADVERTISEMENT SALES:<br />
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FOR ADVERTISING IN<br />
PROPERTYSCAPE CONTACT:<br />
MCHI-CREDAI<br />
Maker Bhavan II, 4th Floor, Sir Vithaldas<br />
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Mumbai – 400 020. Tel. 42121421<br />
This Magazine is distributed to all members of MCHI-CREDAI,<br />
Members Associations, Housing Finance Companies and Allied<br />
Members. Material in this Publication may not be reproduced in<br />
any form without permission. Editorial opinion expressed by<br />
contributors in the Magazine are not necessarily those of the<br />
Editorial Panel and MCHI-CREDAI Trust.<br />
Printed and Published by Mr. Zubin Mehta on Behalf of MCHI-<br />
CREDAI and Printed at Source Printz and Published at MCHI-<br />
CREDAI, Maker Bhavan II, 4th Floor, Sir Vithaldas Thackersey<br />
Marg, New Marine Lines, Mumbai – 400 020.<br />
www.<strong>mchi</strong>.net<br />
Last issue: Apr-May <strong>2012</strong><br />
Page 05
06<br />
Page 06<br />
COVER STORY COVER STORY<br />
Are we looking at a<br />
possible return to<br />
‘license raj’? Does the Regulatory Bill cover all aspects of real<br />
estate and impact all stake-holders – or, does it focus only on primary sales, placing the<br />
onus squarely on developers, while keeping other stake-holders out of purview?<br />
Setting up of a Regulatory Authority usually<br />
means an industry has reached the stage<br />
where it needs to follow norms, rules and<br />
regulations - something that industry<br />
players welcome. In Maharashtra, the real<br />
estate industry is faced with a situation<br />
where a Bill which seeks to set up a<br />
regulatory authority for real estate, which<br />
has been deliberated on for five years,<br />
recently underwent over a dozen changes<br />
by a joint select committee of the<br />
Maharashtra Legislature - as compared to<br />
the earlier version of the Bill drafted by the<br />
state housing department. Now, the<br />
‘revised’ version of the Bill seems like it may<br />
result in a ‘mixed bag’ for developers as well<br />
as the industry.<br />
There are two ways of looking at the Bill in<br />
its current ‘avataar’ – on one hand, it<br />
encourages transparency: this is something<br />
the industry has, on its own, been doing<br />
since the past few years. On the other hand,<br />
it seems to place the responsibility for some<br />
of the problems that the industry faces<br />
squarely at the doorstep of developers,<br />
which very obviously is an unfair way of<br />
regulating.<br />
For MCHI-CREDAI, which has been selfregulating<br />
in form of its Grievance<br />
Committee for flat buyers as also its rules<br />
and norms for members, it comes as<br />
something totally unexpected. Across the<br />
organisation’s members, the question<br />
doing the rounds is: after almost two<br />
decades of liberalization, does The<br />
Maharashtra Housing (Regulation and<br />
Development) Bill <strong>2012</strong>, indicate a return to<br />
‘license raj’ – and, is the developer<br />
community being singled out for what<br />
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<br />
responsibility?<br />
From the perspective of developers, the<br />
MCHI-CREDAI President Paras Gundecha’s<br />
statement to the media was a snapshot of<br />
developers’ reaction to the Bill: “The Bill is a<br />
definite game changer. It will lead to<br />
transparency. It is a good beginning, but our<br />
strong feeling is that it is a just one-sided<br />
effort. The Bill seeks to punish errant<br />
PROPERTYSCAPE ISSUE • JUNE • JULY <strong>2012</strong><br />
developers delaying possessions and other<br />
so-called irregularities, but the Bill is totally<br />
silent on the authorities and government<br />
officials who could be responsible for<br />
delaying projects by sitting on approvals,”<br />
he said. Paras Gundecha gave the example<br />
of the last 18 months, when hardly any<br />
building plans have been cleared in<br />
Mumbai, the capital of real estate. “Things<br />
have started moving, but only now, and that<br />
too after much hue and cry,” he added.<br />
Similar was the MCHI-CREDAI Hon.<br />
Secretary Boman Irani’s statement: “I am in<br />
favour of the Bill, provided it doesn’t<br />
produce pressure only on developers<br />
because they are dependent on banks,<br />
government policies and even customers to<br />
develop and deliver a project,” he said.<br />
“Imposing a penalty on the developer isn’t<br />
fair, because it’s only a part of the sector,”<br />
he added.<br />
RERA should be like SEBI<br />
When the Maharashtra Legislative<br />
Assembly, on 16th <strong>July</strong>, passed the Housing<br />
(Regulation and Development) Bill, <strong>2012</strong>,<br />
the aim, as expressed was: to regulate and<br />
promote construction, sale, management<br />
and transfer of flats on ownership basis;<br />
and establish the Housing Regulatory<br />
Authority (HRA) and Housing Appellate<br />
Tribunal (HAT).<br />
MCHI-CREDAI President Paras Gundecha<br />
said the Regulatory Bill was important to<br />
ensure transparency in all deals, be it<br />
between developers and customers or the<br />
authorities and developers. “It should be on<br />
the lines of SEBI, encompassing all, and not<br />
one-sided, as proposed.”<br />
The Bill mandates that builders make<br />
complete disclosure regarding housing<br />
projects they are developing and provide<br />
details of ownership of land where required.<br />
Developers will also have to disclose the<br />
number of flats which will be built; and the<br />
floor space index (FSI) applicable for each<br />
housing project. All these details have to be<br />
published by the Regulator, on its website,<br />
before approval is granted to a project.<br />
MCHI-CREDAI President Paras Gundecha<br />
brings out the aspect of business planning<br />
and need for sharing some aspects only<br />
with actual buyers and not making such<br />
information ‘open to all’ through posting on<br />
the regulatory website.<br />
Delays and fines<br />
The Bill, in what seems to be a move to<br />
ensure that projects get delivered on time,<br />
imposes penalties and fines on developers<br />
who fail to comply with the various<br />
provisions such as failure to give<br />
possession within the period mentioned in<br />
the agreement between the buyer and<br />
builder. The Regulator can also impose a<br />
fine of up to Rs 10,000 for each day of delay.<br />
The moot question, said MCHI – CREDAI<br />
President Paras Gundecha, is whether<br />
imposing such a penalty only on the<br />
developer is fair, given that in some cases,<br />
delays are due to reasons beyond the<br />
developers’ control. “There is the aspect of<br />
other stakeholders in real estate, who are<br />
responsible for delays - but the Bill does not<br />
recognize these, nor does it apportion a<br />
share in the responsibility for delays on<br />
these stakeholders,” he said.<br />
Developers need time-bound permissions<br />
and clearances, are still waiting for a single<br />
window clearance system, are largely<br />
dependent on banks, government policies<br />
and even customers to develop and deliver<br />
a project, he added.<br />
Far-reaching effect<br />
MCHI – CREDAI President Paras Gundecha<br />
said the Bill will have far-reaching effects on<br />
the real estate sector. "The Bill will affect<br />
almost every aspect of the housing<br />
industry, starting from and reaching up to,<br />
managing, sale and delivery of projects in<br />
future,” he said, adding that, ‘a thorough<br />
analysis of the bill is needed at this stage’.<br />
One of the issues which has been a matter of<br />
concern is the introduction of punitive<br />
measures that includes awarding<br />
punishment of three years imprisonment in<br />
case a developer defaults. “As developers,<br />
our concern is that we are being held liable<br />
for completion of a project when in reality<br />
it's a cumulative effort of a lot of<br />
stakeholders,” explained MCHI – CREDAI<br />
President Paras Gundecha. He further said<br />
that a developer may default on a project<br />
due to multiple reasons. "One of them could<br />
be delay in granting approval for the project<br />
on the part of government agencies and<br />
related departments. The Bill makes only<br />
the developer accountable, not government<br />
bodies. Also, we object to giving the<br />
Housing Regulator the power to take<br />
criminal action against developers. We<br />
believe only the courts should be vested<br />
with such powers," he said.<br />
New Act to replace MOFA<br />
Advocate Rajan R. Hiranandani provides a summary of what will most likely happen the<br />
day the Maharashtra Housing (Regulation and Development) Bill, <strong>2012</strong> becomes an Act<br />
and comes into force.<br />
Once the Maharashtra<br />
Housing (Regulation<br />
and Development) Bill,<br />
<strong>2012</strong> becomes an Act<br />
and comes into force,<br />
then the Maharashtra<br />
O w n e r s h i p F l a t s<br />
(Regulation of the<br />
Promotion of Constr uction, Sale,<br />
Management and Transfer) Act, 1963 or<br />
MOFA as it is popularly known; shall stand<br />
repealed.<br />
One of the main reasons for the change over,<br />
as stated in the preamble, is that MOFA did<br />
not provide for an effective implementing<br />
arm for its various statutory provisions.<br />
Thus under the proposed Act, Housing<br />
Regulatory Authority (HRA) and the<br />
Housing Appellate Tribunal (HAT) shall be<br />
established for ensuring effective<br />
implementation of the law<br />
Developer’s duties as per the Act<br />
There are many responsibilities that have<br />
been cast on a promoter under the proposed<br />
Act. Some of the provisions of the proposed<br />
Act are given below.<br />
1: Every promoter of a project shall make an<br />
application to the HRA for registration of the<br />
project and for displaying the project on the<br />
Some other aspects<br />
From a developers’ perspective, the Bill<br />
seems to focus more on regulation and not<br />
on development. It seems to only cover<br />
developers in the ‘revised’ form, so should<br />
logically expand the scope and include<br />
other stakeholders including brokers,<br />
sanctioning authorities and so on, who are<br />
not covered in the present Bill.<br />
One aspect which needs to be looked at is<br />
that the Bill covers only primary sales, but<br />
says nothing about secondary sales. It also<br />
excludes from its purview the Maharashtra<br />
Housing Area Development Authority<br />
(MHADA) and boards established under<br />
the MHADA Act, 1976.<br />
Another aspect which needs clarity is the<br />
condition that developers will have to<br />
website of the HRA. This shall not be<br />
required in certain cases such as if the land<br />
proposed to be developed does not exceed<br />
two hundred fifty square metres or when<br />
the total number of flats is less than five.<br />
2: The promoter will have to retain a<br />
prescribed percentage of flats not<br />
exceeding ten percent till the occupation<br />
certificate in respect of that building is<br />
obtained.<br />
3: A promoter shall, before he accepts any<br />
sum of money as advance payment or<br />
deposit exceeding twenty percent of the<br />
sale price, enter into a written agreement<br />
for sale with each of such persons who are<br />
to take or have taken flats, and the<br />
agreement shall be registered under the<br />
Registration Act, 1908.<br />
4: When any person makes payment on the<br />
basis of information contained in an<br />
advertisement or prospectus and sustains<br />
any loss by reason of any willful untrue<br />
statement included therein, then such<br />
person shall be compensated by the<br />
promoter for the loss that he may have<br />
sustained consequent to such information.<br />
5: The promoter is required to take steps for<br />
formation of an organization of flat<br />
purchasers within four months from the<br />
deposit 70 per cent of the amount in an<br />
escrow account in the bank which will be<br />
used for the project. Does this also include<br />
the land cost that a developer has incurred<br />
along with the construction cost? This<br />
needs to be clarified.<br />
While the Bill introduces several innovative<br />
provisions, the scope of these appears to be<br />
limited. For instance, the Bill covers only<br />
new projects (projects yet to receive<br />
occupation certificates or re-development<br />
projects that will market or offer for sale<br />
new flats or buildings in the open market).<br />
In effect, the Bill represented an excellent<br />
opportunity to introduce a market-wide<br />
regulator, which could oversee all forms of<br />
realty transactions. Sadly, this has not been<br />
done.<br />
date on which the occupation certificate in<br />
respect of the building is issued or minimum<br />
sixty percentage of the flat purchasers in<br />
such building have taken possession or the<br />
promoter has received full consideration<br />
and other amounts for the same, whichever<br />
is earlier.<br />
6: The promoter is to convey title and<br />
execute documents according to the<br />
agreement. If no such period is agreed upon<br />
in respect of property where one building is<br />
constructed, the promoter shall execute the<br />
conveyance within four months from the<br />
date on which the co-operative society or<br />
the company is registered or the association<br />
of the flat purchasers is duly constituted,<br />
failing which application can be made to<br />
the Competent Authority for unilateral<br />
deemed conveyance.<br />
7: Any person who wilfully fails to comply<br />
with the orders or directions of HRA or HAT<br />
shall be liable to imprisonment for a term<br />
which may extend to three years or penalty<br />
which may extend to rupees ten lakhs or<br />
with both.<br />
8: A promoter who without reasonable<br />
excuse contravenes section 9, 12, 14, 18 or<br />
19 shall upon the order by the HRA be liable<br />
to a penalty which may extend to rupees<br />
one crore and for contravention of any other<br />
provisions, the penalty may extend to<br />
rupees ten lakhs.<br />
9: It is provided that no civil court shall have<br />
jurisdiction in respect of any matter which<br />
the Competent Authority, HRA or HAT is<br />
empowered by or under the Act to<br />
determine.<br />
PROPERTYSCAPE ISSUE • JUNE • JULY <strong>2012</strong><br />
07<br />
Page 07
Cartelization by cement manufacturers was brought before the Competition<br />
Commission of India (CCI) by Shankarbhai, Trustee of Builders Association of India (BAI).<br />
CCI upheld his contention and imposed a penalty for ‘unfair practices’ on cement<br />
manufacturers. The Managing Committee, MCHI-CREDAI recognised this unique<br />
achievement and acknowledged it by felicitating him<br />
R e c e n t l y, t h e<br />
C o m p e t i t i o n<br />
Commission of<br />
I n d i a ( C C I )<br />
passed an Order<br />
against ‘unfair<br />
trade practices’<br />
adopted by major<br />
c e m e n t<br />
manufacturers in<br />
Shankarbhai the country. The<br />
CCI Order said<br />
cement manufacturers had been ‘dictating<br />
prices’ by ‘controlling supply’, unmindful of<br />
the adverse impact on infrastructure and<br />
housing. The CCI Order mentioned the<br />
recent rise in cement prices which added to<br />
the cost of housing: cement accounts for 15<br />
per cent cost of construction.<br />
In the last week of <strong>July</strong>, CCI imposed a<br />
penalty of Rs 397.51 crore on Shree Cement<br />
for indulging in ‘restrictive trade practices’<br />
while issuing final order in the case against<br />
cement manufacturers and their trade body<br />
Cement Manufacturers Association (CMA).<br />
T h e C C I f o u n d e l e v e n c e m e n t<br />
manufacturers in contravention of the<br />
provisions of the Competition Act, 2002,<br />
which deal with anti-competitive<br />
agreements including cartels, it asked the<br />
company to refrain from such anticompetitive<br />
activities in the future.<br />
With regard to other companies, the CCI<br />
said as they were fined earlier, it was not<br />
08<br />
Page 08<br />
SPECIAL REPORT<br />
A true fighter takes on the cement cartel<br />
PROPERTYSCAPE ISSUE • JUNE • JULY <strong>2012</strong><br />
imposing any penalty on them again for the<br />
same period of contravention (in <strong>June</strong>, CCI<br />
imposed a fine of Rs 6,307 crore on 11<br />
leading cement makers, including ACC,<br />
Ambuja Cements, Ultra Tech, India<br />
Cements, Binani Cement, JK Cement,<br />
Madras Cement, Lafarge and Jaypee<br />
Cement). Industry body CMA was also<br />
fined Rs 73 lakh.<br />
The inquiry was based on a case<br />
transferred from the Office of the Director<br />
General (Investigation & Registration) of<br />
the erstwhile Monopolies and Restrictive<br />
Trade Practices Commission to the CCI,<br />
which had initiated investigations on basis<br />
of press reports as well as a letter of<br />
Builders Association of India.<br />
On 17 <strong>July</strong> <strong>2012</strong>, MCHI-CREDAI felicitated<br />
Shri Dhr uvk umar Lallubhai Desai<br />
( 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<br />
Association of India (BAI), who spearheaded<br />
the entire challenge. MCHI-<br />
CREDAI Hon. Secretary Boman Irani<br />
conducted the proceedings.<br />
“Mahatma Gandhi had said, ‘Find a<br />
purpose and the means will follow’, and the<br />
man (Shankarbhai) who travels by bus, took<br />
on giant cement companies,” said Boman<br />
Irani. He assured Shankarbhai of support<br />
from MCHI-CREDAI in<br />
any fight for the good of<br />
the industry.<br />
Vimal Shah, President-<br />
Elect, MCHI-CREDAI<br />
Vimal Shah<br />
e m p h a s i z e d t h a t<br />
Shankarbhai’s services to<br />
the industry went a long way back. And<br />
that he never ever gave up on a cause. He<br />
recalled his association with Shankarbhai<br />
in 1984, when a young Vimal Shah, fresh out<br />
of college and Chartered Accountancy<br />
course, began working with Shankarbhai<br />
and all other builder-friends at BAI. He<br />
recalled having worked with Shankarbhai<br />
on the Works Contract Case, which lasted<br />
10 years.<br />
“Shankarbhai,” said Vimal Shah “was told<br />
by many that going against the might of the<br />
cement companies was a fruitless pursuit,<br />
people were cynical about anything being<br />
achieved in this pursuit against the cement<br />
cartel. Despite all the negative sentiment,<br />
Shankarbhai didn’t stop because he fights<br />
for a cause, and when he fights for a cause,<br />
he pursues it till he gets justice.”<br />
Vimal Shah said Shankarbhai collects<br />
information from sources without spending<br />
any BAI money, works very hard and<br />
ensures that BAI is spared any major<br />
expense. He listed the causes Shankarbhai<br />
pursued over the years: Works Contract,<br />
Escalation of Costs and the case against the<br />
cement cartel. Whatever the issue,<br />
Shankarbhai pursued it with due diligence,<br />
analyzing the facts when he takes up a<br />
subject, analyses thoroughly, goes into the<br />
entire nitty-gritty of the issue, and builds up<br />
a whole case, with facts and figures that<br />
would not be countered.<br />
Vimal Shah also revealed one other facet of<br />
Shankarbhai’s personality: Shankarbhai<br />
handles his workload with just one<br />
functioning kidney. “We are inspired by you,<br />
Sir, we respect you tremendously, and pray<br />
that you continue to lead<br />
us for many more years,”<br />
said Vimal Shah.<br />
Past President Rajni S<br />
A j m e r a p r a i s e d<br />
Rajni Ajmera<br />
Shankarbhai’s initiative<br />
in taking up cudgels<br />
against the cement cartel, and recalled<br />
how, the real estate and construction<br />
Page 09
10<br />
Page 10<br />
SPECIAL REPORT<br />
industry had for the first time taken out a<br />
morcha against the cement cartel. And<br />
how, Shankarbhai had worked to gather<br />
information and build up a case over the<br />
years. He recalled Shankarbhai’s efforts in<br />
understanding the cost of producing<br />
cement, so that a case could be built up. “It<br />
has been Shankarbhai’s perseverance that<br />
brought about this success against the<br />
cement manufacturers, and we are all<br />
The genesis of the case against cartelization<br />
The case against cement cartelization was<br />
being considered since some time –<br />
Shankarbhai recalled it was from the time<br />
when Narendra Kumar was the IMC<br />
President.<br />
“Recently, the Standing Committee of<br />
Parliament pointed out that there was ‘huge<br />
profiteering’ in cement, and that was why<br />
the price of cement was very high. It was<br />
estimated that cost of production was about<br />
INR 90 per unit of manufacture, and<br />
accounting for amortization, interest and<br />
profits, the cost should not have crossed Rs.<br />
180. The Standing Committee of Parliament<br />
recommended that the Competition<br />
Commission of India look into the matter,”<br />
he explained.<br />
It was in May 2009 that the section on<br />
cartelization was incorporated in the CCI’s<br />
charter. “We filed our case in <strong>June</strong> 2010. We<br />
submitted to the Commission that steel had<br />
three broad consumers, including<br />
automobile and construction, cement had<br />
only one: construction. Prima facie, the CCI<br />
found there was ground to believe a cartel<br />
was in operation and directed the Director<br />
General of Investigation to launch an<br />
Comparative Statement of Growth of Cement Industry & Construction Industry<br />
Year<br />
Installed<br />
capacity in MMT<br />
Growth in %<br />
2005-06 157.35 - 141.81 - 90 16.20<br />
2006-07 165.64 5.26 154.64 9.75 94 11.80<br />
2007-08 179.10 8.12 168.31 8.14 94 10.10<br />
2008-09 205.96 14.94 181.61 7.90 88 7.25<br />
2009-10 246.75 19.80 205.00 12.87 83 7.00<br />
2010-11 286.38 16.06 210.85 2.85 73 8.10<br />
2011-12 301.60 5.31 228.00 8.13 75 4.80<br />
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 &<br />
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 <strong>2012</strong> issue. Capital Market March <strong>2012</strong> issue. (4) For<br />
Construction Industry growth 2011-12 from note issued by C.S.O. on 30-5-<strong>2012</strong>.<br />
PROPERTYSCAPE ISSUE • JUNE • JULY <strong>2012</strong><br />
inspired by your example,” he said.<br />
Boman Irani lauded Shankarbhai for his<br />
guidance. He then invited MCHI-CREDAI’s<br />
President Para Gundecha and Past<br />
President Rajni Ajmera to felicitate<br />
Shankarbhai, with a floral bouquet and a<br />
plaque, in recognition of his invaluable<br />
services to the industry.<br />
C. G. Deochake, Chairman, BAI Mumbai<br />
enquiry. In the submission made to CCI, we<br />
said the growth of the construction industry<br />
had come down between from 2006 to 2010.<br />
While the cement industry added capacity,<br />
capacity utilization went on decreasing and<br />
the prices went up. From 94 per cent,<br />
capacity utilization came down to as low as<br />
72 per cent,” he said.<br />
The Director General of Investigations<br />
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 ’<br />
representative, and to the question on how<br />
prices kept on rising, the reply was: ‘the law<br />
of supply and demand was in operation’.<br />
The next question put to cement<br />
manufacturers was, ‘how do you measure<br />
demand?’ There was no cogent answer.<br />
The President of Cement Manufacturers’<br />
Association, (CMA) too, when called, could<br />
only admit that they had no mechanism to<br />
measure demand. “We go by Planning<br />
Commission figures,” said the CMA<br />
President. “If the economy grows 9 per cent,<br />
the industry grows by 1.2 times.”<br />
Not satisfied with the answers and<br />
information provided, the DGI called for<br />
cement plant production and dispatch<br />
Production<br />
in MMT<br />
Growth in %<br />
Centre, thanked MCHI-CREDAI for<br />
“felicitating our Shankarbhai. He has won a<br />
great battle, but the war is still on. And we<br />
all need to do much much more to see that<br />
this is concluded successfully,” he said.<br />
Boman Irani’s response was: “I thank all the<br />
BAI Members who joined MCHI-CREDAI’s<br />
Managing Committee to felicitate your<br />
Shankarbhai, and our Shankarbhai!”<br />
figures. These, said Shankarbhai, turned<br />
out be revealing. “It was found that the<br />
production of say January, was followed by<br />
February registering a decline, and the<br />
price was increased. Again, investigations<br />
revealed that the CMA had formed a highpowered<br />
committee. The DGI found a direct<br />
co-relation between cement prices before<br />
this committee’s meeting, and after the<br />
meeting, when cement prices went up. The<br />
DGI concluded that CMA provided the<br />
platform to create a cartel.”<br />
“Despite all these revelations,” said<br />
Shankarbhai, “and the CCI’s orders, prices<br />
of cement have gone up by Rs. 20 a bag in<br />
Delhi, and Rs. 10 in Mumbai.” He said he<br />
received a call from a BAI member in Pune,<br />
who asked, in Marathi, “Tumhi hey kaye<br />
kela, (ulta) bhaav wadhavla” (You have<br />
caused cement prices to go further rise).<br />
In conclusion, Shankarbhai said a lot of<br />
work still needs to be done. “Much<br />
spadework has to be undertaken, so that a<br />
truly deterrent penalty, as required, is<br />
imposed on cartels so that they do not find it<br />
profitable to indulge in such profiteering.”<br />
Capacity<br />
Utilization in %<br />
Growth of<br />
Construction<br />
Industry in %<br />
Page 11
Page 12<br />
MCHI-CREDAI NEWS MCHI-CREDAI NEWS<br />
Convocation Ceremony of MCHI-CREDAI - Rustomjee Academy<br />
Shri Boman Irani (Hon. Secretary MCHI-CREDAI) at the dias while<br />
Shri Paras Gundecha (President MCHI-CREDAI) addresses the<br />
crowd at the Convocation Ceremony.<br />
MCHI-CREDAI and Rustomjee Academy for Global Careers (RAGC),<br />
the vocational division of the Rustomjee Group of Schools, have<br />
collaborated to jointly offer “Construction Site Supervisor Skill<br />
Enhancement Certificate Program”. MCHI-CREDAI had co-certified<br />
The proud Certificate Holders at the Convocation!<br />
Felicitation of Shri Dhruvkumar Lallubhai Desai (Shankarbhai) Trustee – BAI<br />
Shri Paras Gundecha (President MCHI-CREDAI), Shri Dhruvkumar<br />
Lallubhai Desai (Shankarbhai - Trustee BAI) addressing the MCHI-<br />
CREDAI Members.<br />
Read the article on pages 08 – 10.<br />
this program of RAGC. This win-win collaboration benefits the<br />
Industry by creating standardization in construction processes;<br />
increase efficiency & productivity; and ensure that quality manpower<br />
is available to the Industry.<br />
USABF at MCHI-CREDAI Mumbai, <strong>June</strong> <strong>2012</strong><br />
Dr. Nitin Parab of USABF addresses members of MCHI-CREDAI.<br />
CREDAI and the US Asia Business Forum (USABF) invited MCHI-<br />
CREDAI members to explore Joint Ventures, PE and Venture Funding<br />
options and Technical Collaborations with PIOs, NRIs and US-based<br />
Companies at their event, US Asia Business Expo <strong>2012</strong>, which will be<br />
held in Florida, USA. This Special Preview was held to enable MCHI-<br />
USABF’s Founder-Chairman Shri Kevin Kaul addresses the<br />
audience at the USABF Seminar.<br />
CREDAI members understand about how they can explore B2B<br />
opportunities and meet potential partners and customers in the USA<br />
at the US Asia Business Expo <strong>2012</strong> which will focus on Synergizing<br />
Strength amongst Asian Countries with USA and Global Companies.<br />
Shri Boman Irani (Hon. Secretary MCHI-CREDAI), Shri Deepak<br />
Goradia (Vice President), Shri Nayan Shah (Vice President), Shri<br />
Paras Gundecha (President MCHI-CREDAI) felicitating Shri<br />
Dhruvkumar Lallubhai Desai (Shankarbhai - Trustee BAI), Shri Rajni<br />
S. Ajmera (Past President), Shri Vimal Shah (President Elect), Shri<br />
Dharmesh Jain (Vice President)<br />
VAT & Service Tax Update<br />
Advocate Vinayak Patkar addressed a seminar on VAT & Service<br />
Tax issues at MCHI – CREDAI on <strong>July</strong> 17, these are some points he<br />
made during the seminar<br />
Writ Petition No.2022 of 2007 was filed before the Bombay High Court<br />
by the Maharashtra Chamber of Housing Industry (MCHI). It<br />
challenged the constitutional validity of the law introduced by the<br />
State Government imposing VAT on sale of flat. Recently, the Bombay<br />
High Court gave a decision which went against MCHI’s stance.<br />
In response, MCHI has already filed a Special Leave Petition (SLP)<br />
before the Supreme Court; as also has moved an application for Stay of<br />
Operation of the Hon’ble High Court’s Judgement.<br />
The Stay Order, which had been issued by the Bombay High Court<br />
earlier, now stands vacated. Officials of the Sales Tax Department are<br />
now chasing developers for payment of tax, as also to get details<br />
about collection of the tax by them. This data, of taxes collected by<br />
developers, is expected to be used before the Supreme Court when<br />
the application for Stay Order will be contested.<br />
If Apex Court does not issue the Stay, the developers who are not<br />
registered under MVAT Act, 2002 will be required to register<br />
themselves. If the Supreme Court stays the judgement of the High<br />
Court, then the status-quo can be maintained. The developers are<br />
advised to wait till the Apex Court gives the decision on the Stay<br />
Application.<br />
Implementation<br />
Even if the High Court has upheld the constitutional validity of the<br />
introduction of the law levying tax on the sale of flat, it is difficult for<br />
the government to implement the law. The provisions which exist on<br />
the Statute Book, as on today, are not sufficient to levy tax on all types<br />
of sale contracts. In number of cases the customer enters into an<br />
agreement for purchase of the flat after certain portion of the<br />
construction is over.<br />
For example, a customer buys a flat on 18th floor when the<br />
construction upto 15th floor is complete. In such circumstances, the<br />
developer receives consideration from the buyer in lump-sum against<br />
the construction upto 15th floor and thereafter receives money slab<br />
wise against the purchase of such flat. In such a case, the lump-sum<br />
consideration received is against the immovable property sold by the<br />
developer to such buyer which is covered by Transfer of Property Act<br />
and State Government is not competent to levy tax on the same.<br />
VAT Meeting, <strong>July</strong> <strong>2012</strong><br />
12 PROPERTYSCAPE ISSUE • JUNE • JULY <strong>2012</strong> PROPERTYSCAPE ISSUE • JUNE • JULY <strong>2012</strong> 13<br />
SRA Projects<br />
In such cases, the developer is required to reconstruct the houses for<br />
the existing tenants/ occupants without any consideration. The<br />
developer is also required to give some additional area to such<br />
persons. After accommodating such tenants/occupants the<br />
developer is allowed to sell some flats to the outsiders. In such<br />
circumstances, how does one define to whom is the transfer of<br />
property in the material used by the developer in the construction of<br />
plinth etc? Is it the original tenant, or the ‘outsider’ – the new<br />
purchaser?<br />
Shri Vinayak Patkar makes a pertinent point during his talk.<br />
If it is to the original tenant then no tax can be levied, since no<br />
consideration is received against the transfer of property. If it is to the<br />
outside purchaser then how does one identify such material for the<br />
purpose of levy of tax?<br />
Payment options<br />
There are different options for payment of the Tax. Section 42 of the<br />
MVAT Act, 2002 provides for composition. Section 6 read with Rule<br />
58(1) & (1A) provide for the regular method of payment of tax.<br />
Under Section 42 the composition is 5 per cent on the total<br />
consideration of flat. It should be noted that no reduction has been<br />
provided for the price of land under the composition scheme and<br />
therefore, the 5 per cent VAT is required to be paid on the total value of<br />
the flat. It can be assumed that the customers will not accept such<br />
heavy tax burden. It is quite possible, that some customer may<br />
approach the Consumer Court. Such customers can compel the<br />
developer to adopt the particular option.<br />
HC equates developers with contractors<br />
Developers need to understand that the High Court has equated them<br />
with the contractors. The liability of the developers can’t be more than<br />
that of the contractors. The sales price of the contractors is around 15<br />
per cent more than the purchase price of the material used by them.<br />
The contractors are paying VAT on such sales price and are also<br />
claiming full set off of the VAT paid on purchases. The sales price of<br />
the developer qua material would at the most be 25 per cent more<br />
than the purchase price of the material. The developers are required<br />
to pay tax only on such sale price and not more than that.<br />
SC Judgement<br />
The Supreme Court, in the case of State of Andhra Pradesh v/s Larsen<br />
& Toubro Ltd., reported in 17 VST 1(SC) held that once the subcontractor/contractor<br />
incorporates the material in the construction<br />
then there can be no further sale of such material, since under the<br />
building contract, the property passes by way of accretion. Once the<br />
sub-contractor transfers such property nothing thereafter remains for<br />
re-transfer. But, the Hon’ble Bombay High Court, in MCHI’s case, has<br />
distinguished this judgment. Therefore, developers who can afford<br />
litigation upto Supreme Court should only take help of this judgment.<br />
Conclusion<br />
In the present scenario, the Developer is both, the contractor and also<br />
the employer. He will have to deduct the tax as envisaged u/s.31 of<br />
the MVAT Act, 2002.<br />
Page 13
14 08<br />
Page 14<br />
MCHI-CREDAI UNIT NEWS<br />
President of Kalyan-Dombivali Unit, Shri Bandish Ajmera, will<br />
continue as President for another term, <strong>2012</strong>-13. He was felicitated<br />
by Shri Johar Zojwalla, Shri Shrikant Shitole, Shri Praful Shah, Shri<br />
Manoj Rai and Shri Ravi Patil.<br />
MCHI-CREDAI Mira Virar Committee with Speakers CA Naresh K.<br />
Sheth and CA Paresh Vakharia at the seminar on recent<br />
implications of service tax and VAT.<br />
Interactive seminar on service tax & VAT for the real<br />
estate industry<br />
A seminar on recent implications of service tax and VAT was<br />
conducted by Mira Virar City unit of MCHI-CREDAI on 14th <strong>July</strong> <strong>2012</strong><br />
at GCC Club, Mira Road (E). The objective of the Seminar was to<br />
enable Builders and Developers to effectively deal with Service Tax<br />
and VAT challenges in the light of the amended laws and new tax<br />
positions and the recent Bombay High Court Judgment. In this<br />
interactive seminar, two eminent Speakers CA Naresh K. Sheth and<br />
CA Paresh Vakharia clarified the Service Tax amendments and the<br />
VAT Law, and explained its implications and intricacies on<br />
A delegation from MCHI-CREDAI Navi Mumbai Unit held a fruitful<br />
discussion with the Navi Mumbai Police Commissioner, Shri A.K.<br />
Sharma<br />
PROPERTYSCAPE ISSUE • FEBRUARY APRIL JUNE • JULY MAY • MARCH <strong>2012</strong><br />
<strong>2012</strong><br />
Kalyan Dombivali Unit<br />
Mira-Virar City Unit<br />
Navi Mumbai Unit<br />
The Kalyan-Dombivali Unit of MCHI-CREDAI has been following up<br />
on various issues that impact members, such as staircase premium,<br />
Solar NOC, Fire NOC, TDR to be given on RG areas, TDR against<br />
amenity development etc. One news that is positive for members is<br />
the recent order passed by the Hon'ble Municipal Commissioner,<br />
KDMC rendering staircase premium from 100% of the ready reckoner<br />
rate to 40%. This happened because of team work and support of all<br />
member developers.<br />
The Kalyan-Dombivali Unit of MCHI-CREDAI has put in enormous<br />
efforts to strengthen the association and create a sense of unity<br />
amongst developers; it has taken up initiatives for 'city development<br />
projects', whereby Unit members can contribute towards<br />
development of infrastructural projects like roads, hospitals,<br />
gardens, rotaries, islands, bus-bays, entry gate, public amenities etc,<br />
where the developer can get TDR against development of amenities<br />
which would serve a dual purpose: development of the city and<br />
benefit to member-developers.<br />
A view of the MCHI-CREDAI Mira Virar members who heard the<br />
speakers with attention.<br />
construction, real estate sector.<br />
Speaking on this occasion, Mr. Shailesh Sanghvi, Secretary Mira Virar<br />
city unit of MCHI-CREDAI, said that “This is the toughest time in real<br />
estate where we can see lot of amendments in the rules and<br />
regulations, so it is decided by the unit’s committee to organize<br />
seminars once in two months on such topics. Developers should be<br />
made aware of the implication of any rule on industry and the<br />
mechanisms involved in it.”<br />
The seminar, attended by most of the Mira Virar unit Members and<br />
Committee members witnessed more than 150 audience.<br />
New plans in the pipeline<br />
The MCHI-CREDAI Navi Mumbai Unit has put in enormous efforts to<br />
strengthen the association and create a sense of unity amongst<br />
developers; it has taken up initiatives for the same. The Managing<br />
Committee of MCHI- CREDAI - Navi Mumbai Unit meets at least once<br />
and at times, even twice in a month to chalk out the future programs.<br />
It plans to organize a property exhibition in the month of October<br />
<strong>2012</strong>. On 3rd <strong>July</strong>, <strong>2012</strong>, a delegation from MCHI-CREDAI Navi<br />
Mumbai Unit participated in a fruitful discussion with the Police<br />
Commissioner of Navi Mumbai Mr. A.K. Sharma. The Navi Mumbai<br />
Unit of MCHI-CREDAI has been following up on various issues that<br />
impact members, and hopes to work for the benefit of memberdevelopers<br />
through <strong>2012</strong>.
MCHI-CREDAI Thane Unit President Shri Shailesh Puranik<br />
addresses the participants of the VAT Seminar organised by the<br />
Unit. Hon. Secretary Shri Jitendra Mehta looks on, as members hear<br />
him with rapt attention.<br />
MCHI-CREDAI Thane holds VAT Seminar, introduces<br />
new team<br />
The MCHI-CREDAI Thane Unit saw the new president Shri Shailesh<br />
Puranik take over for <strong>2012</strong>-13. Shri Jitendra Mehta is the Hon.<br />
Secretary, Nainesh Shah is the immediate past president while Suraj<br />
Shri Mayur Shah, Vice President MCHI-CREDAI, felicitates the<br />
speakers at the Seminar.<br />
Getting technical at ‘Swift NA Permission' Seminar<br />
The MCHI-CREDAI Raigad Unit has been following up on various<br />
issues that impact members. On 18th <strong>July</strong>, a seminar on 'Swift NA<br />
Permission' was held. It was addressed by RDC Shri Jagannath<br />
Virkar. Other attendees included Shri Abhiraj Girkar (ADTP), Shri H.<br />
16 08<br />
Page 16<br />
MCHI-CREDAI UNIT NEWS<br />
LEGAL UPDATES<br />
Thane Unit<br />
Raigad Unit<br />
The audience at the VAT Seminar organised by MCHI-CREDAI<br />
Thane Unit.<br />
Parmar is the President-Elect. The Unit organised a Green Initiative<br />
and a seminar on VAT, where developer-members of MCHI-CREDAI<br />
Thane participated in large numbers. The Unit has taken up various<br />
issues that impact members with authorities at the Municipal<br />
Corporation as also the State Government. The Unit expects to<br />
witness many members participating in events during the year.<br />
The interested audience listens on, makes notes.<br />
K. Jawle (Collector) &Shri<br />
Yogesh Mahagde (Dy. CEO. ZP - Raigad).<br />
The seminar was attended by 64 builders members with their<br />
'technical' support staff. The Unit has also been in communication<br />
with Town Planning Officer, Shri R. B. Patil at CIDCO Ltd, CBD<br />
Belapur for clarification on requirement of Airport NOC, as per<br />
newspaper reports.<br />
•MoEF MCHI has filed writ petition against the Union of India & State of Maharashtra and others challenging the memorandum dated 7th<br />
February, <strong>2012</strong> by MOEF. Writ Petition (W.P. 1180/<strong>2012</strong>) relating to high rise building & guideline issued by MOEF is appearing for admission.<br />
The advocate for the Union of India has applied for adjournment to file reply. The writ petition has been adjourned to 14th August, <strong>2012</strong>.<br />
•VAT Writ Petition challenging the Constitutional Validity of the provisions of the Maharashtra Value Added Tax Act 2002 as amended in<br />
2005. The division bench of Bombay High Court has dismissed the writ petition filed by MCHI-CREDAI and others. MCHI-CREDAI has filed<br />
an SLP in Supreme Court. The said matter came for admission in Supreme Court on 30th <strong>July</strong>. The Hon’ble Court has admitted the petition,<br />
and has clubbed with L&T matter for hearing.<br />
•ULC Under ULC Act, exemption application was filed by members of MCHI-CREDAI and its Units. MCHI-CREDAI and its Units have filed<br />
petition challenging actions of State Government and to quash & set aside the circular dated 18th March 2009 & in any manner & forcing the<br />
provision of the Principal Act directly & indirectly after 28th November 2007. This matter was mentioned by the Division Bench of Bombay<br />
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<br />
on 30th Aug <strong>2012</strong>.<br />
PROPERTYSCAPE ISSUE • JUNE • JULY <strong>2012</strong><br />
ACC’s Self<br />
Compacting Concrete<br />
M-100 Grade<br />
Hans Fuchs, MD, ACC Concrete Ltd.<br />
Hans Fuchs, Managing Director,<br />
ACC Concrete Limited shares information<br />
about an innovative concrete solution.<br />
Q: Tell us about M-100 grade concrete?<br />
A: ACC Concrete Limited, India’s leading<br />
manufacturer of ready mix concrete and a<br />
subsidiar y ACC Limited, recently<br />
introduced an innovative concrete solution<br />
M–100 grade specially designed for the<br />
construction of high intensity towers in<br />
India. M-100 grade concrete, a specialized<br />
concrete solution, is a one stop shop offered<br />
by ACC Concrete for high strength and<br />
performance of vertical Hi towers in the<br />
country.<br />
Q: Could you share with us what makes<br />
this important?<br />
A: Insufficient availability of land is leading<br />
to subsequent scaling of land prices in<br />
mega cities like Mumbai. Buying land is no<br />
more a feasible option in cities and hence,<br />
the way to grow and expand vertically. To<br />
build up tall and high intensity concrete<br />
sk yscrapers, availability of right<br />
specialised Ready Mix Concrete (RMX)<br />
solutions is the most critical thing for<br />
builders in India.<br />
Q: You had a demo of the pumping<br />
process?<br />
A: Yes. Witnessing an upcoming trend of<br />
Vertical Hi Towers in India, ACC Concrete<br />
organized a live demonstration seminar of<br />
pumping Special Hi Tower Concrete at the<br />
ACC Thane complex. The demo-seminar<br />
showcased the process of pumping the<br />
special grade of concrete and the display of<br />
self compacting and temperature controlled<br />
and ‘M – 100 grade of concrete’ over 300<br />
metres. Distinguished customers of ACC<br />
and major builders across the city attended<br />
the seminar and discussed the potential of<br />
using specialized concrete solutions for the<br />
upcoming high rises in the city.<br />
Q: I believe the demo made history of<br />
sorts?<br />
A: Yes, this was for the first time in India<br />
that M-100 RMX was pumped over length of<br />
300m and for the first time in world that<br />
M-100 was manufactured without natural<br />
sand but using only manufactured fine<br />
aggregates.<br />
Q: Would you highlight the key<br />
characteristics of M-100 grade?<br />
A: ACC’s expertise in RMX is backed by 100<br />
years of Global expertise from Holmic and<br />
75 years of indigenous experience of ACC in<br />
India. Today, vertical growth is seen as the<br />
only solution to meet the growing demand<br />
for space in metros in India. In Mumbai<br />
alone, 128 towers with height more than 300<br />
feet are planned to come up in next 3-4 years<br />
while 75 towers of height more than 300 feet<br />
already exist. Concrete Pumping to such<br />
heights requires special mix of desired RMX<br />
grades in which ACC Concrete specializes.<br />
Q: What is the milestone which this helps<br />
ACC achieve?<br />
A: ACC has added a significant milestone to<br />
RMX Pumping<br />
INTERVIEW<br />
contribution and innovations in the<br />
construction industry by manufacturing<br />
Self Compacting RMX of M100 grade. This<br />
concrete attains a high compressive<br />
strength of 100 Map (1 MPa equivalent to 1<br />
Newton force/ mm2) after 28 days. With the<br />
introduction of M-100 grade, ACC Concrete<br />
has become the only ready mix concrete<br />
company in India to offer specialized<br />
solutions for high intensity towers in the<br />
country.<br />
CREDITS: ACC Concrete is one of the largest<br />
manufacturers of Ready Mix Concrete in<br />
India with over 51 modern plants in major<br />
cities including Mumbai. The company has<br />
contributed to landmark structures in<br />
India's metro cities. Its achievements<br />
include construction of iconic structures like<br />
J.J. Flyover, Mumbai-Pune Expressway,<br />
Sripati Arcade - Mumbai, the Indore-Dewas<br />
bypass, Kolkata and Delhi Metro Rail<br />
projects as also construction of mega<br />
housing projects, townships, commercial<br />
complexes, factories, bridges, flyovers, roads<br />
and railways.<br />
PROPERTYSCAPE ISSUE • JUNE • JULY <strong>2012</strong><br />
Page 17<br />
1617
Knight Frank India<br />
Research Report, <strong>July</strong> <strong>2012</strong><br />
Disconnect between the demand and<br />
price of real estate over the last few years<br />
has raised serious questions about the<br />
position of real estate developer. While<br />
there has been a lot of debate about the<br />
standoff between house buyer and<br />
developer, a little has been discussed<br />
about the relationship of the developer<br />
with the suppliers of factor inputs such as<br />
Land and Construction costs; Knight<br />
Frank’s latest report focusses on this:<br />
Land:<br />
• Land is the most significant input for<br />
property development constituting almost<br />
one-third of the property price in most cases<br />
and as high as two-third in some pockets of<br />
cities like Mumbai and Delhi.<br />
• The argument of cheap historical land cost<br />
to justify the expectation for a lower house<br />
price does not command merit as the<br />
current market price of land and not the<br />
developer’s historic cost will determine<br />
replacement cost.<br />
• Analysis of land allotment policy of some<br />
of the major land aggregators provides<br />
interesting insights. CIDCO follows the<br />
'Present Worth’ method for fixing the<br />
reserve price of land and notwithstanding<br />
the economic slump, the reserve prices of<br />
Re-development in SoBo<br />
Page 18<br />
NEWS UOU CAN USE<br />
Intervention of the Bombay High Court in<br />
the matter of redevelopment of buildings<br />
falling under the Coastal Regulation Zone<br />
could have a positive impact for South<br />
Mumbai (SoBo). During hearing of a petition<br />
filed by the developer of a Shivaji Park<br />
building on 19 <strong>June</strong>, the Bombay High Court<br />
asked the Maharashtra Coastal Zone<br />
Management Authority (MCZMA) to<br />
expedite all proposals pending before it on a<br />
fast-track basis.<br />
The Division Bench of Chief Justice Mohit<br />
Shah and Justice Nitin Jamdar said there<br />
was undue delay in granting environmental<br />
clearances even for reconstruction of small<br />
parcels of land. More than 500 proposals are<br />
currently pending before the MCZMA,<br />
including a few of the marquee projects by<br />
land in Navi Mumbai have been increased<br />
by almost 30 per cent in three years since<br />
2009-10.<br />
Construction Cost:<br />
• 57 per cent of the total construction cost is<br />
contributed by three major input items<br />
namely steel, cement and labour<br />
• Steel and cement constitute one-third of<br />
the total construction cost and are<br />
produced by around 520 and 140<br />
manufacturers respectively. In contrast,<br />
there are more than 6,000 developers across<br />
India relying on these manufacturers for<br />
their purchases, leaving a developer with<br />
little bargaining power<br />
• Since 2009, the cost of steel and cement<br />
has moved up by 35 per cent and 24 per cent<br />
respectively.<br />
Conclusion:<br />
• A real estate developer is a price taker in<br />
most of the input items used in construction<br />
and has no significant influence on their<br />
price movement.<br />
• The industry structure clearly highlights<br />
that isolating the developer and solely<br />
holding them responsible for inflated<br />
property price is not justified.<br />
• The government has a pivotal role by not<br />
only being a regulator but also the largest<br />
supplier of land. It should introduce clear<br />
and transparent policies for release of<br />
government land at an affordable price.<br />
top developers, with some of them stuck in<br />
red-tape for over three years.<br />
Media reports quoted State Environment<br />
Secretary, Smt. Valsa Nair Singh as having<br />
said that her department will clear the CRZ<br />
proposals on priority. “We have 60 CRZrelated<br />
proposals, which will be cleared in<br />
the next meeting by the end of this month.<br />
As far as the 500-odd environment<br />
clearance files are concerned, we had<br />
inherited more than 400 of them and are in<br />
the process of setting up two more<br />
committees to expedite the approvals,”<br />
Singh was quoted in media reports as<br />
having said. She said her department<br />
would ensure that waiting time for<br />
environment clearance reduces to just two<br />
months.<br />
Knight Frank Mumbai Report<br />
The key take aways are:<br />
• Disappointing Absorption Rate: 45,000<br />
units were absorbed in the MMR during FY<br />
<strong>2012</strong> which is well below the market<br />
average of 70,000 to 80,000 units annually.<br />
The Mumbai market currently has an unsold<br />
inventory to the tune of 80,000 units which<br />
is approximately valued at INR. 1,050 bn, at<br />
current price-points (as in APR:MAY <strong>2012</strong>).<br />
South & Central Mumbai which only offer<br />
products at the premium end of residential<br />
price band are experiencing highest<br />
vacancy levels.<br />
• Drop in New Project Launches: The MMR<br />
market has witnessed a steep drop of<br />
almost 40% in project launches in FY <strong>2012</strong><br />
compared to the previous period.<br />
•Rising Debt: Developers are hard pressed<br />
to deleverage their positions as they are<br />
getting buried under continuously<br />
mounting debts with the market offering<br />
them little respite. The total debt position of<br />
five major Mumbai based developers is<br />
estimated at approximately INR 62 bn, as on<br />
March <strong>2012</strong>; while it is estimated that they<br />
hold a total unsold inventor y of<br />
approximately INR 143 bn, which is 14 per<br />
cent of the total MMR market.<br />
In the context of various sources of funding<br />
drying up and new launches hitting the<br />
market, the developers may re-plan their<br />
pricing strategy in such a way that the<br />
unsold inventory is monetised within four to<br />
six quarters instead of the currently<br />
estimated eight to ten quarters.<br />
•Regulatory<br />
Bottlenecks: Project approvals<br />
that were practically stalled in 2011, have<br />
started coming through again as the<br />
Development Control Regulations were<br />
amended early this year. However, demand<br />
is likely to remain subdued due to the<br />
prevailing uncertainty in the economy<br />
•Concentration<br />
in Northern MMR: An<br />
estimated 73 per cent of the total residential<br />
units under construction is concentrated on<br />
the northern fringes of the Mumbai market.<br />
Developers are looking to tap into the<br />
largest chunk of buyers looking for<br />
apartments priced up to INR 7.5 mn. Thus,<br />
an estimated 55 per cent of units under<br />
construction presently belong to this price<br />
bracket.<br />
SEAC – II set up in Maharashtra<br />
A total of 554 construction projects are awaiting environment clearance in Maharashtra, which already has a State-level Expert Appraisal<br />
Committee (SEAC). The second committee-SEAC-II-was formed earlier in <strong>July</strong> to clear construction projects mainly in the MMR region.<br />
Maharashtra is the only state with two SEACs to clear construction projects. The SEAC-II will comprise five members, including IIT staffers,<br />
retired BMC and Mhada officials and the deputy secretary (environment). Maharashtra Chief Minister Prithviraj Chavan had met Jayanthi<br />
Natarajan, Minister of State (independent charge) for Environment and Forests in May, and proposed the formation of SEAC (II).<br />
Forthcoming Events - <strong>2012</strong><br />
20th Mega Show<br />
MMRDA Grounds - BKC<br />
1st - 4th November <strong>2012</strong><br />
For Further Information Contact :<br />
18 08<br />
PROPERTYSCAPE ISSUE • FEBRUARY JUNE • JULY • MARCH <strong>2012</strong> <strong>2012</strong><br />
Maker Bhavan II, 4th Floor, V. Thackersey Marg, New Marine Lines, Mumbai - 400 020.<br />
Call : 42121421 E-mail : mktg@<strong>mchi</strong>.net<br />
20<br />
6th INDIA REALTY EXPO<br />
<strong>2012</strong> - LONDON<br />
India Realty Expo - <strong>2012</strong><br />
Hotel Cumberland, London<br />
15th & 16th September <strong>2012</strong><br />
Page 19