Indiabulls Blue Fund will invest in blue-chip, large-caps; but very little is known about past performance of the fund managers
Indiabulls Mutual Fund has filed an offer document with the Securities and Exchange Board of India (SEBI) to launch Indiabulls Blue Fund, an open-ended equity scheme. The new fund offer price will be Rs10 per unit. The fund will invest predominantly in blue-chip, large-cap companies. Indiabull has defined large-cap as the top 125 companies by market capitalisation in the BSE 500 index.
Indiabulls is launching a fund with fund managers whose past performance could hardly be tracked. The scheme will be managed by Aviral Gupta and Amarjeet Singh. Mr Gupta managed proprietary investments for HB Stockholding Ltd. He has been associated with FIIs like Venus Capital Management, Boston, and Dundee MF and Escorts MF. There is very little information about Amarjeet Singh. The only piece of information we get from the offer document is that he had worked in the Department of Central Excise and Customs, of the Ministry of Finance, for more than two decades.
The S&P CNX Nifty will be the benchmark index for the scheme. The exit load will be 1% if redeemed / switched out within the first year and 0.5% if redeemed/switched out in the second year. The minimum application amount is Rs5,000.
The scheme will invest 65% to 100% of assets in equity and equity-related securities, of which up to 35% of assets would be allocated in equity and equity-related securities of companies with a high-risk profile. Up to 35% of assets would be invested in debt and money market securities/instruments with low- to medium-risk profile.
According to an interaction Motilal Oswal Securities analysts had with real estate agents, sales volumes in Mumbai are weak and they are plummeting in the NCR. However, they are largely stable in Bengaluru and Chennai, with a limited impact on increasing mortgage rates
The real estate sector is going through a rough phase with a decline in demand, and an increase in inventory and interest rates, which has affected the sales volume. However, according to a brokerage, while sales volumes are declining in the western and northern regions of the country, it has remained steady in the southern market, especially in the metros.
From an interaction Motilal Oswal Securities (MOSL) analysts had with real estate agents, they found that sales volumes in Mumbai are weak and plummeting in the National Capital Region, but they are largely stable in Bengaluru and Chennai, with a limited impact on the increasing mortgage rates.
The brokerage said in a report that although prices have not appreciated in Mumbai, there is no meaningful sign of rationalisation either. "Residential sales volumes in Mumbai continue to be weak and have declined 20%-25% year-on-year (y-o-y). A sharp price appreciation after the 2008 peak has taken a toll on volumes. Prices have stayed flat over the past six months, with no meaningful sign of rationalisation," the brokerage said.
Delays in obtaining approvals, slow execution and low investor demand have impacted absolute volumes in Mumbai. "Ongoing price-volume dynamics in all Mumbai's micro-markets are similar, with four primary characteristics such as a slowdown in transactions and piling up of inventory, cautious investor activity, tightening lending rates and no real sign of broad-based price rationalisation," the report said.
MOSL said real estate agents did not expect broad-based price moderation in Mumbai, although they felt an 8% to 10% correction was possible in specific micro-markets. Specific developers, facing a tight cash flow situation, may be willing to offer certain price discounts, it said.
On the trend in Mumbai's real estate market over the next six months, MOSL said, "While sales are likely to be muted in the immediate six months, volumes should improve with de-freezing of approval delays and traction in launches. Affordable housing projects on the outskirts of Mumbai would gain momentum, with a trend-reversal in mortgage rates. Improving macro factors, salary increases and better liquidity could slowly accelerate demand in the city."
The brokerage said that over the past couple of months, sales volumes in the National Capital Region (NCR) have been hit by lower drive from investors, worsening affordability and expectations of price moderation. Strong demand had resulted in a steady 30%-60% price appreciation across properties in Gurgaon. However, a huge supply pipeline had kept prices relatively flat in Noida, the brokerage said.
"Our interaction suggests a possible price moderation of 5%-10% over the next six-nine months in Gurgaon and prices in Noida are likely to remain flat. In the NCR, demand is likely to be steady for under construction and ready property over the next couple of quarters along with a natural uptick in capital values," MOSL said.
For commercial properties in the NCR, leasing has been showing steady signs of recovery and rental value has remained stable. The demand has been led mainly by IT/ITES and banking, financial services and insurance (BFSI), followed by other sectors, the brokerage said.
Bengaluru residential market, however, has been steady. Over the past 12 months, sales volumes in Bengaluru grew 50% to 70% y-o-y due to traction in new launches and affordable pricing. According to MOSL, market stability in Bengaluru is also attributable to higher demand contribution of about 60% to 70% from end-users and around 15% to 20% from long-term investors, while participation by speculators was minimal at about 5%.
Rising mortgage rates have had minor impact on recent volumes in Bengaluru. However, better affordability would ensure momentum in mid-income projects and city-centric luxury projects are expected to witness continued response. In the backdrop of new launches, sales volumes in the metro are likely to grow by 30% over the next 12 months. "While robust supply could put pressure on pricing, our real estate agents expect 10%-15% appreciation as prices are still below their peaks," MOSL said.
Further south, the Chennai realty market also witnessed a seasonal decline in sales volumes over the past two months. MOSL said, "The agents we interacted with attribute this mainly to the holiday season (people going for vacations) rather than an ongoing macro concern. Tightening interest rates could be the secondary factor. The overall supply scenario in Chennai is under control and below the prevailing demand level."
To achieve greater customer attention and faster monetization, the brokerage said it expected real estate developers to sharpen focus on product positioning, unit cost affordability and execution certainty, and that Bengaluru-based projects are likely to derive benefits of a stable market, with steady volumes.
"Developers with a strong execution track record and superior product positioning would continue to draw end-users. With several operational and legal headwinds impacting the execution of projects, we expect qualitative factors such as a hassle-free land bank, approvals being in place, readily executable projects and developers' goodwill of on-time delivery to play a significant role," MOSL added.
Anuj Puri, chairman and country head, Jones Lang LaSalle India, argues that "Purchasing activity has already dropped visibly during the last tranche of interest rate hikes, and we will see a further drop in buyer interest now. As for developers coming down on their prices to counter the negative effects of this hike, a lot will depend on the financial ability of individual developers to hold on to their current pricing and risk losing sales till the situation improves. Developers with enough capital base are less likely to relent on their pricing, than smaller developers with an urgent need to sell their stock."
Was there more to scuttling the Skybus Metro project than just the accident that followed many successful test runs? It would be a folly to suspend work on the ongoing monorail project which suffered an accident last week. Also, the government should reconsider its decision on the Skybus Metro
On Friday, at about 6.30 in the evening, one of the two monorail curved guide-way beams collapsed during erection work, in the suburban Chembur area. What went wrong? After all, the whole team working on the job were a competent lot-whether it is the project management consultants M/s Louis Berger, civil works contractors M/s Larsen & Toubro, the monorail technology designers, manufacturers, suppliers and operators M/s Scomi of Malaysia, and on the MMRDA (the implementing agency) side, a team of engineers, largely retired railway engineers.
Three separate inquiry committees are being proposed. One each by the project management consultants and the civil works contractors, and a third is expected to be made up of independent experts to be appointed by the Mumbai Metropolitan Region Development Authority (MMRDA).
'Support system failure' and that 'the beam is on the sharpest curves' have been mentioned as possible reasons for the accident. These are premature statements. The pictures do show that the adjoining curved span is already erected and the two guide-way beams appear to be sitting in place safely. Let us await the inquiry and safety audit report expected during this week.
But the question that one needs to answer is should we shelve the monorail project on account of this accident? Or should we find out why this happened and overcome the problem and go ahead with it?"
The reason why this question is being raised is because there is a precedence where a mode of transport was 'discarded' by the Ministry of Urban Development and Indian Railways after the unfortunate of a death of a Konkan Railway engineer, in an un-conceived accident that occurred on 24 September 2004, during a test run of the 'infamous' Skybus. MMRDA never considered the Skybus seriously and the railway engineers, being a conservative lot, did not give room for innovations.
B Rajaram, who succeeded E Sreedharan as managing director of KRCL, believed that the Skybus could enthuse his engineers to devote time in converting the concept into a stationary prototype model and put it up in Madgaon in Goa. Then prime minister Atal Behari Vajpayee was very impressed by the prototype during his visit to Goa. The then Railway Minister, Nitish Kumar, sanctioned Rs50 crore for making the test track and operating a prototype, while on a visit to the state back in 2003.
With this assurance, Mr Rajaram got the 1.6 km test track constructed before the monsoon of 2004 and commenced testing with limited instrumentation installed. Testing was going on so smoothly that the media was also taken on a ride. Some bureaucrats visiting Goa at the time are also said to have gone on a ride.
The details about the accident would take considerable space and this is not a discussion of failure modalities but whether a failure should determine the fate of the mode, hence I am skirting around it. The fatality occurred because the KRCL engineer was so confident after the flawless trials over a fortnight that he did not put the harness and did not keep the 4 metre wide door shut.
For three months, no work was allowed to be carried out. Only in January 2005 was further testing permitted and then the performance was made public by Mr Rajaram. Many months prior to the mishap, in Decmber 2003, the Ministry of Urban Development formed an experts' committee, headed by Prof PV Indiresan, former director of IIT Madras, to ascertain the viability of the Skybus Metro. It comprised of officials from the railways, the executive director of carriages RDSO (Research Designs & Standards Organisation), not to forget a director of the Delhi Metro Rail Corporation. In summary, its report recommended that the Government of India provide another Rs60 crore to be spent over a period of two years to get the 'technology' fully tested. A couple of paragraphs from the experts' committee report on the Skybus is in order:
6. Critical Evaluation of the systems integration
KRCL has demonstrated within the limited scope and time that it is possible to have a 1.6 km track and system made operational. KRCL has explained the fatal accident that occurred and KRCL has said that additional precautions have been taken to prevent such accidents in the future. The coach and the station design require further development.
The Committee finds that in spite of the accident during trials, the KRCL design holds much promise, though its full capabilities are yet to be proven.
7.10 We, in India, suffer from the colonial hangover and think that all innovations have to come from abroad. We are skeptical of Indian technology. This report has tried to avoid that bias. Whether the Skybus fulfils all its hopes or not, this project will give confidence to Indian engineers that the government will back up Indian innovation as far as possible. Inspiring such confidence, too, is important, because we cannot live on borrowed technology forever, and should learn to develop our own inventions, and for that reason, learn to place confidence in Indian technology.
This simply means that we must learn from accidents and incorporate additional safety features in the design and construction and avoid accidents altogether. This is what will happen with the monorail project. The question that needs to be answered is, "Why was the Skybus not given its due, given the fact that it competed very well with monorail and challenged the metro rail in terms of costs and capacity."
The Skybus has one feature that neither the metro rail nor the monorail has. It has a deck that is 11 metres wide, as much as the Marine Drive seaside footpath, as part of the girder structure spanning between two columns. This open space becomes available to people starved of accessible open public space in Mumbai. More important, this deck becomes available to people to walk on in the case of an emergency like the deluge in Mumbai in 2005. Any infrastructure should cater to the disaster situation. Neither the metro rail nor the monorail provides this facility that the Skybus provides. Therefore, it is still not late to consider the Skybus for two routes, running 40 km, one for the western suburbs and one for the eastern suburbs.
[Sudhir Badami is a civil engineer and transportation analyst. He is on the Government of Maharashtra's Steering Committee on Bus Rapid Transit System (BRTS) for Mumbai and the Mumbai Metropolitan Region Development Authority's (MMRDA) technical advisory committee on BRTS for Mumbai. He is also member of the Research & MIS Committee of Unified Mumbai Metropolitan Transport Authority (UMMTA). He was a member of the Bombay High Court-appointed erstwhile Road Monitoring Committee (2006-07). He has been an active campaigner against noise pollution for over a decade and he is a strong believer in a functioning democracy. He can be contacted on email at [email protected].]
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