Sahara’s Rs 19,000-cr land valuation based on future developments

Property experts say developers cannot come up with valuations based on proposed developments during a slowdown

The Rs 19,000-crore valuation for Sahara group’s 106-acre land at Versova in Mumbai hinges on many things for it to become real. In the contempt case filed by the Securities and Exchange Board of India (Sebi) against the Sahara India Real Estate and Sahara HousingInvest, the Sebi counsel said on Wednesday that the land was “disproportionately overvalued” and  Sahara’s valuer had arrived at the Rs 19,000-crore valuation based on future developments.

According to an affidavit filed by Sahara entities in January 2012, the same Versova property was valued more conservatively, the Sebi counsel pointed out. “The two firms said they owned one-third of this property and it was worth Rs 1,800 crore.”

In valuing the Versova property, Sahara’s valuer has reportedly used the discounted cash flows method, in which the valuation of a township proposed to be completed in 2021 was discounted to the present value. According to experts, developers cannot come up with valuations based on proposed developments during a slowdown.

“In today’s distressed market, you cannot come up with valuations based on proposed developments. It is more acceptable during boom times,” said Raja Kaushal, managing director at GATERE Real Estate, an alliance member of BNP Paribas Real Estate.

Added Pranay Vakil, former chairman of Knight Frank: “Unless we know all facts pertaining to the land, we cannot say anything. But nobody pays for the land. People are willing to buy depending on the potential of land and how one can develop it.”

Although a valuation of Rs 19,000 crore is theoretically possible, leading consultants say the proposed developments depend on various approvals from government and civic bodies. According to back-of-the-envelop calculations, if Sahara secures a floor space index (FSI) of two on a 100-acre plot, it could build 8.71 million sq ft (200 by 43, 560 sq ft) and if it sells at the ongoing rate of Rs 20,000 a sq ft, it can make around Rs 17,000 crore from the sale of properties. FSI means permissible construction on a given plot of land and one acre is equivalent to 43,560 sq ft.

“If the land contains mangroves, they may find it difficult to get approvals but if approvals come, they will be sitting on a goldmine,” Kaushal said.

Another prominent consultant said valuation also dependent on under what zone the land falls, whether it is in forest zone, mangroves or no development zone and so on.

“Even if you have 1000 acres of land which is in no development zone, it is of no use,” the consultant said.

Sachin Sandhir, managing director, South Asia, Royal Institution of Chartered Surveyors (RICS) said that in the absence of proper valuation norms in the country, people are still giving higher valuations and valuing properties which are not in conformity with standard practices.

Supreme Court grounds Subrata Roy, bars Sahara Group from selling property

Utkarsh Anand | New Delhi | Updated: Nov 21 2013, 22:00 IST

In a blow to the Sahara Group, the Supreme Court on Thursday restrained Subrata Roy and other directors from leaving the country and also prohibited all its companies from selling any property until further orders.

The court passed the order in view of Sahara’s failure to hand over “acceptable”  title deeds of properties worth Rs 20,000 crore to the Securities and Exchange Board of India (Sebi) for refunding its around 3 crore investors.

“We are satisfied that our order dated October 28 has not been complied with. Hence, we direct Sahara not to part with movable and immovable properties till our further orders. All contemnors shall not leave the country…,” a bench of Justices K S Radhakrishnan and J S Khehar said.

The bench made it clear that the restraining order was applicable to all companies of the Sahara Group, and that they would get a hearing only after they have complied with the court order in letter and spirit.

“It is important for Sahara to understand. We can see our order has not been complied with. First you deposit title deeds and then we will hear you. Till you don’t comply with our orders, there is no question of granting you a hearing,” the bench told Sahara’s counsel C A Sundaram.

Sundaram sought to convince the bench that they had already submitted to Sebi the best available title documents they possessed, but the court said that these deeds were “not acceptable”.

The group had submitted to Sebi documents of two plots of land: an 106-acre chunk in Versova in Mumbai that it claimed to be worth around Rs 19,000 crore, and 200 acres in Vasai, estimated to be worth Rs 1,000 crore.

The quantum of money indicated the outstanding that Sahara requires to shell out towards the refund to investors. Sundaram also adduced valuations by two professional companies to corroborate their estimates.

Counsel for Sebi Arvind Datar, however, pointed out that the 106 acres were in a ‘no development zone’, whereas the assessment had been done on the basis of developing residential and commercial properties on it.

He said the land cannot

be developed in view of environment ministry norms, and Sahara had, therefore, violated the court order by not handing over clean and unencumbered title deeds. Datar also said that the concerned sub-registrar had valued this plot at only Rs 118.4 crore.

The bench agreed with the counsel, saying that valuation could not be done on the basis of proposed investment prospects, and such a plan was “unacceptable”. It held that Sahara had clearly not complied with its order to hand over valid title deeds within three weeks from October 28. On that date, the court had said that Sahara was playing “hide and seek”, and could not be trusted.

“You have driven everybody around… There cannot be any escape now and the money has to be repaid,” it had said, asking Sebi to examine the deeds given by the group.

The court is hearing three contempt petitions filed by Sebi against Roy, Sahara India Real Estate Corporation, Sahara India Housing Investment Corporation, and their directors.

Sahara and Sebi are locked in a legal battle over the refund of Rs 24,000 crore to the company’s investors, raised through “illegally” floated debentures. On August 31 last year, the court had directed the Sahara group to refund Rs 24,000 crore. The group handed over a draft of Rs 5,120 crore to Sebi in December.

Noida eway set to emerge as a hub of luxury housing

Vinod Rajput, Hindustan Times  Noida, October 20, 2013

With 18 five star hotels, six mega IT parks and various luxury serviced apartments set to be ready in next five years, Noida expressway is set to emerge as a hub of luxury living.

“Mentor Graphics a USA based electronic automation design company with an investment of R100 crore is building a chip designing production house in Sector 142. National association of software and services companies (NASSCOM) is also building its North India headquarter on a 10,000 square meters land in Sector 127,” said Manoj Kumar Rai officer on special duty (OSD), Noida authority.

 

Noida houses 600 IT units mostly along the expressway in Sectors 125, 126 and 127 among others. About 1.5 lakh IT professionals are working in various IT, BPOs, and MNCs operating from here, and if all goes well, the working population is set to double in the next five years.

“Because of the employment generation, demand for luxurious housing has increased manifold. More developers want to cater to this segment and are constructing serviced and multi-purpose luxurious apartments,” said Rai.

Luxe living

Renision Courtyard, Sheraton, Four Seasons, Westin Resort, The Lalit Grand, Grand Hyatt, Hilton, and Marriot among others are lined-up around Noida expressway that connects Delhi with Agra via 165 kilometers long Yamuna expressway. Developers are cashing in on the opportunity and offering luxury along the high-speed link.

“With an investment of Rs. 1000 crore we are building Mist Avenue IT Park in Sector 143 to cater to the international IT players. We are offering Mist Bungalows starting from Rs. 10 crore,” said SS Bhaseen managing director of Bhaseen Group.

To encourage hoteliers, realtors and IT players the Noida authority is planning to ensure smooth ride on the expressway by implementing intelligent traffic management with a budget of Rs. 43 crore.

“IT professionals need multi-purpose serviced studio apartments, therefore eying the demand we are planning to launch a new project that would only cater to them,” said Amit Mavi promoter of BPO Group.

* Hotels coming to Noida

Renision Courtyard — Sector 15

Sheraton — Sector 16

Four Seasons – Sector 16B

Westin Resort — Sector 153

The Lalit Grand — Sector 96

Grand Hyatt  — Sector 94

Hilton — Sector 32

Marriot — Sector 124

RBI raises alarm over loans to real estate,NPAs

GROWING FEAR -RBI raises alarm over loans to real estate,NPAs 

TIMES NEWS NETWORK 

Mumbai: The RBI has expressed concern over rising bad loans in banks and has raised a red flag over a surge in advances to real estate a segment considered as sensitive by the central bank.

Though the Indian banking industry weathered the recent global financial crisis largely unscathed,weakening asset quality has emerged as a major concern, RBI said in its report on Trend and Progress in Banking.In the past,growth in credit to sensitive sectorsviz.real estate,capital market and commoditiesgenerally followed a pattern similar to the growth in overall credit.However,in 2012-13,growth in credit to sensitive sectors almost doubled primarily on account of credit to real estate.This expansion needs to be seen in light of the steep rise in housing prices in all Tier I cities and several Tier II cities in 2012-1312, the report said.

Real estate,equity markets and commodities are classified as sensitive sectors because these assets are seen to be susceptible to high price volatility.Also the prevalence of speculative investments is higher in these sectors which sometimes results in creation of price bubbles.As a result of increased lending,loans to sensitive sectors grew 16% amounting to 17.4% of bank credit as on March 2013.Bulk of this was exposure to real estate which has seen loans grow 17.3% to 15.9% of bank credit.

According to RBI data,gross non-performing assets in the banking system have risen to 3.6% by March-end 2013 from 3.1% a year earlier.
The central bank said that to bring down bad loans the RBI will extend priority attention to accelerating working of debt recovery tribunals and asset reconstruction companies which are involved in recovery of bad debts.Besides the rise in bad loans,the RBI said there were also signs of a deepening deterioration within NPAs with an increase in the proportion of doubtful loan assets.The central bank also pointed out that bad loans were not on account of directed lending and were highest in the non-priority sector.Industry,which accounts for a little less than half the total credit of domestic banks,has shown a steady deterioration in asset quality in the recent years,particularly in 2012-13.The NPA ratio for the infrastructural sector,which accounted for about one-third of the total industrial credit,showed a rising trend during this period.By contrast,there was a falling trend in the NPA ratio for the retail sector, the report said.

 

3 Years Imprisonment to a Director of Bangalore Firm forRs. 2.41 Crore LOSS TO SBM

THREE YEARS RIGOROUS IMPRISONMENT TO A DIRECTOR OF BANGALORE BASED PRIVATE FIRM FOR CAUSING A LOSS OF Rs. 2.41 CRORE(APPROX) TO STATE BANK OF MYSORE
Press Release
New Delhi , 06.08.2013
            The Special Judge for CBI Cases, Bangalore has convicted Shri Sri Swaminathan Ramji, Director, M/s Impressive Touch Wood Crafts Ltd., Bangalore and sentenced him to undergo three years rigorous imprisonment with fine of Rs.20,000/-. M/s Impressive Touch Wood Crafts Ltd., Bangalore was also fined Rs.20,000/-.

 

The CBI had filed a charge sheet against then AGM; then DGM both of State Bank of Mysore, Bangalore; Shri Sri Swaminathan Ramji Director of M/s Impressive Touch Wood Crafts Ltd. and his firm U/s.120-B r/w 420 IPC and U/s. 13(2) r/w 13(1) (d) of the PC Act-1988. The allegation as per the charge sheet were that the then AGM of State Bank of Mysore in connivance with other accused persons had extended various credit facilities to the said firm by violating the laid down procedures and norms of the bank. The accused also ignored the adverse features pointed out by the Head Office of the Bank on the firm and thereby caused a wrongful loss of Rs.241.59 lakhs to State Bank of Mysore and wrongful gain to themselves.

 

The AGM of State Bank of Mysore died during the course of trial and the then DGM, of State Bank of Mysore was acquitted.

3 YEARS RIGOROUS IMPRISONMENT TO THEN SENIOR MANAGER OF INDIAN BANK

THREE YEARS RIGOROUS IMPRISONMENT TO THEN SENIOR MANAGER OF INDIAN BANK AND THREE PRIVATE PERSONS FOR CAUSING LOSS OF Rs. 20 LAKH(APPROX) TO INDIAN BANK
Press Release
New Delhi , 12.08.2013
            The Special Judge for CBI Cases, Bangalore has convicted Shri S.N.Shankar, the then Senior manager, Indian Bank, Sadashivanagar Branch, Bangalore and three other private persons Sh. G. P. Prabhy; Sh. G. N. S. Sharma & his wife Smt. R. T. Indrakshi all resident of Bangalore to undergo three years rigorous imprisonment with fine of Rs.85,000/-.

 

The CBI had filed a charge sheet against Shri S.N.Shankar and others U/s.120-B r/w 420, 468, 471 IPC and u/s. 13(2) r/w 13(1) (d) of the PC Act-1988. The allegation as per the charge sheet were that Shri S.N.Shankar in connivance with other accused persons had processed & recommended for sanction of term loan to the firm owned by the private persons without conducting pre-sanction verification; without complying the sanction conditions of the Zonal Office and had disbursed the term loan based on the false & fabricated documents submitted by the borrower. A loss of Rs. 20 lakh(approx) was caused to Indian Bank.

 

The Trial Court found the accused guilty and convicted them.