Adani gets shareholders’ nod to raise Rs4,000 crore

Adani Enterprises Ltd on Friday said that it has received approval from its shareholders for upsizing the amount to be raised through share sale to qualified institutional buyers (QIBs) to Rs4,000 crore from Rs1,500 crore which was planned earlier, reports PTI.

The members of the company have given their approval for enhancing the present limit of issue of shares or instruments convertible into shares to QIBs to the overall amount up to Rs4,000 crore, Adani Enterprises said in a filing to the Bombay Stock Exchange (BSE).
 
On 18th June this year, shareholders had given their approval for issue of shares or instruments convertible into equity shares to the QIBs for an amount not exceeding Rs1,500 crore.
 
In today's shareholders meet, the company also received approval from the issue of bonus shares in the ratio of one new equity share for every one share held by investors, it said.
 
Shares of Adani Enterprises closed at Rs810.60 on the BSE, down by 1.4% from the previous close.
–Yogesh Sapkale
 
 

 

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Dubai crisis may not impact Indian realty market

A majority of big real-estate developers in India on Friday said that they are insulated from the financial crisis in Dubai and the developments in the emirate will not have any impact on the country's property market, reports PTI.

DLF Ltd, Unitech Ltd, Parsvnath Developers Ltd and Emaar MGF Ltd have all said that they have no exposure in Dubai, while Omaxe has said that it has an investment of Rs40 crore for which it has asked for a refund.
 
But consultant Jones Lang LaSalle Meghraj country head Anuj Puri cautioned that if the corporate debt default in Dubai turns into a sovereign default, there would be real economic issues, which may not only hit India but other international markets too.
 
"(The) Indian property market is very robust and largely dominated by internal demand. So there will be no adverse impact on us," DLF executive director Rajiv Talwar told PTI.
 
Emaar MGF, a joint venture between Dubai-based Emaar Properties and India's MGF, said its operations are only in India and the developments in Dubai would have no impact on its operations.
 
"Our business and funding plans are on track," a company statement said. Emaar MGF is in the process of coming up with an initial public offer.
 
"Emaar has not asked for any external support and maintains good financial strength. Emaar Properties remains committed to its investments and Emaar MGF's business in India," it added.
 
Faced with a funding crisis, the Dubai government on Wednesday had asked creditors of State-owned Dubai World and property group Nakheel for a six-month ‘standstill’ on interest payments on debts amounting to $80 billion.
 
Unitech vice president for corporate planning and strategy R Nagaraju said that Indian real-estate developers have little exposure in Dubai, so there will be no impact of the crisis.
 
Expressing similar views, Parsvnath Developers chairman, Pradeep Jain said, "I do not forsee any concern in the Indian real-estate market as it is entirely different from the Dubai property market. In India almost 100% demand is from (domestic) end-users but in Dubai only 10% is local demand."
 
Mumbai-based Hiranandani Group, which is developing a 90-storey housing project in Dubai through a joint venture with the ETA-ASCON group, said the financial crisis there will not have any impact on its operations.
 
Hiranandani Developers managing director Niranjan Hiranandani said, "Already we have sold 97% of the project and received 70% of the money. Almost 85% of the construction has been completed. The project will be completed by June next year." The company has no debt in Dubai, he said, adding, "We don't see any negative impact on ourselves".
 
Omaxe chairman Rohtas Goel said the company had made an upfront payment of Rs40 crore for two property projects in Dubai to Nakheel, but since it has been put on hold the company has asked for refund of the amount. "We hope to get a refund within one month's time," Mr Goel said.
 
The projects were envisaged to have a total cost of Rs1,500 crore with estimated revenues of about Rs2,850 crore, Mr Goel added.
–Yogesh Sapkale

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The Dubai debt saga

Dubai, the paradise of investors, has mired all markets across the globe with its debt restructuring plans. The emirate of Dubai has external debts of about $80 billion, out of which, nearly 75% is owned by Dubai World, its biggest holding company.

In something that may turn out to be the biggest sovereign default since Argentina in 2001, the Dubai government has asked the creditors of Dubai World and developer Nakheel group to accept a moratorium on debt that runs into billions of dollars until at least May 2010 because of the crisis triggered by real-estate slump. According to a statement issued by the Dubai Financial Support Fund, "Dubai World intends to ask all providers of financing to Dubai World and Nakheel to (agree to) a 'standstill’ and extend maturities until at least 30 May 2010.”
 
However, the government clarified that DP World, the world's fourth-largest port operator, and its debt would not be a part of the restructuring of Dubai World. As of August 2009, Dubai World, the conglomerate that spearheaded the emirate's breakneck growth, had some $59 billion in liabilities, while Nakheel Properties, the world’s biggest privately held real-estate company, is also due to pay off about $3.50 billion in maturing Islamic bonds in December 2009.
 
Dubai World is closely related to all government-linked companies, following its high rise in a short period. At the same time, the company is also closely associated with the huge debt that has followed.
 
Earlier, in August, Dubai World hired an advisory firm to help it explore options to improve the financial position of its US-based luxury chain unit Barneys New York.
 
According to a news report from Al Jazeera, the emirate accumulated its debt as it expanded into the banking and real-estate sectors before the global financial crisis dried up available financing.
 
"Restructuring its government-linked debts is now a top priority as the government seeks to assure a rebound for its trade, tourism and services-focused economy and recover from the precipitous property crash,” the Al Jazeera report said.
 
Even for Nakheel, the developer who built the famous Palm islands, it would be difficult to repay debts due next month. With work on many of Nakheel's high-profile properties either slowing down or completely stopped, it still remains to be seen from where it would get the funds, other than a government bail-out, to repay its $3.50 billion debt maturing next month.
 
Indian construction companies, like Nagarjuna Construction Ltd and Simplex Infrastructure, with exposure to Dubai could thus witness project cancellations, and delayed execution and payment timelines.
 
"We believe Dubai exposure has long been discounted in (various) valuations. Strong order inflows and now, attractive valuations make NCC a good pick in our view. The event-based correction also presents a good opportunity to enter into L&T and Voltas, who will be relatively unscathed by the developments in Dubai," said Religare Capital Markets Ltd in a note.
 
The financial crisis in Dubai may not impact remittances sent by Indian expatriates in the Gulf country back to their home nation. India gets nearly a quarter of its total remittances from the United Arab Emirates (UAE). "Remittances from expats didn't suffer during the period when the larger crisis was on. So whether this would have an impact in terms of employment, in terms of salaries and therefore in terms of remittances is somewhat unlikely," finance secretary Ashok Chawla told reporters in New Delhi.
 
Speaking with PTI, former RBI governor YV Reddy said, "On the basis of past evidence, the recent development in the Middle East should not have any serious impact on Indian remittances."
 
Although the debt problems in Dubai are related to the real-estate market, mostly driven by supply rather than demand, it may not lead to sovereign default. In this context, it would be necessary to observe whether the situation in Dubai remains confined to Dubai World and Nakheel or if it escalates into a full-blown sovereign default. -Yogesh Sapkale [email protected]
 

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