Maharashtra developers body says adopting carpet area norm for sale of flats requires change in Development Control Regulations
Maharashtra Chamber of Housing Industry (MCHI), a representative body of builders and developers in Maharashtra, has sought the state government's intervention to remove irregularities in the Development Control Regulations (DCR), for adopting the carpet area norm in the sale of flats.
Sunil Mantri, president of MCHI, has said in a letter to the Maharashtra government that it is difficult to implement the government's regulations because of various constraints and he sought chief minister Prithviraj Chavan's intervention in the matter.
Explaining the difficulties, Mr Mantri said, the Brihanmumbai Municipal Corporation sanctions the building permission plan based on built-up area, which covered the staircase, passage, lift well, lobby, plinth and common areas that are also taken into account for the purpose of the floor space index (FSI).
The association had requested that the urban development department shift to sanctioning the building permission plan based on the carpet area. But the department has not arrived at any decision on this as yet.
"We are willing to adopt sale of flats on carpet area basis which will enable us to implement the government's stated intention. It is very essential with a view to bringing a uniform practice for the sale of flats on a carpet area basis by all developers," Mr Mantri said. "For this purpose only a minor modification in the Development Control Regulations is needed."
Mr Mantri also said that while the government was insisting on developers following the carpet area norm, the stamp duty is being charged on basis of built-up area. He said that stamp duty charges should also be on a carpet area basis.
"One authority permits projects on built-up area and another asks developers to sell flats on a carpet area basis, this is unjustified. Hence, we urge you to intervene in the matter and accord your approval for sanction of the building permission plan and stamp duty on a carpet area basis. This approval will enable MCHI to direct all the developers under its umbrella to sell flats on a carpet area basis," Mr Mantri said.
New Delhi: The Indian government is planning to introduce a bill in an aim to regulate micro finance institutions (MFIs), which are under the scanner for charging high interest rates and aggressive loan recovery methods.
"The Department of Financial Services proposes to introduce the Micro Finance (Development and Regulation) Bill, 2010 after taking into account the views of RBI and the Malegam Committee recommendations," said Namo Narain Meena, minister of state for finance, in a written reply to a question raised in the Rajya Sabha.
While Reserve Bank of India (RBI) does not regulate the interest rates charged by Micro Finance Institutions, it has issued instructions on a Fair Practice Code to be adhered to by all Non-Banking Financial Companies (NBFCs) in terms of which the NBFCs should not charge exorbitant rates of interest and resort to undue harassment like persistently bothering the borrowers at odd hours and use of muscle power for recovery of loans, the minister said.
Separately, the MFIs have come together to form credit bureaus for exchange of information relating to borrowers and their repayment habits. "For the healthy development of the sector, it is needed to promote responsible lending by the MFIs for which credit bureaus will be formed," the Microfinance Institutions Network (MFIN) said in a statement, reports PTI.
MFIN, a body which represents 44 MFIs registered with the RBI, said that the credit bureaus would be in a position to capture data of all MFI customers and would also help in avoiding multiple lending and over leveraging.
MFIN have also laid a code of conduct which calls for limiting borrowers' group loan sizes to less than Rs50,000 as well as a whistle blower policy, it said in the statement.
MFIs have recently been under fire from various concerned government departments for charging high interest rates.
The diversified company had put too much on the line with its ambitious cement foray, hurting its profitability. The proposed sale will give it some room to breathe
Nagpur-based diversified company Murli Industries Limited (MIL) is close to offloading its cement division to Mexico's Cemex, the world's number three cement maker, according to media reports.
After putting in considerable resources to fund this ambitious project, MIL has found the going tough in this segment and has rightly called off all bets on the cement business. This is a remarkable step since Indian companies are usually in an empire-building spree and are loath to part with losing assets.
MIL made its ambitious foray into cement last year, but was weighed down by the debt it used to build capacities. Now that it is selling off its cement business, the company will be able to concentrate more on its core businesses-solvent extraction, paper and power.
For a company with limited internal accruals and size, its expansion plans for the cement business were highly optimistic. MIL commissioned its first cement plant in Chandrapur, Maharashtra, in February this year, with an installed capacity of 3mtpa (million tonnes per annum).
Faced with inadequate cash flows from existing businesses, MIL was forced to borrow heavily from banks to fund its cement foray. The company had borrowings of Rs972 crore as on March 2009, up 41% from Rs688 crore in the previous year. Its debt-to-equity ratio stood at 3.73 by the fiscal year ending March 2009. As on March 2010, its borrowings stood at Rs1,183 crore, translating into a debt-to-equity ratio of 3.83.
The company had further plans to set up two additional cement plants in Karnataka and Rajasthan, each with a capacity of 3mtpa, along with two captive power plants of 50MW each, on an investment of Rs 1,135 crore each. The cement plants were expected to be operational by the middle of 2013. This would have put additional burden on the books.
We had written about the company's plans in Moneylife (issue dated 23 September 2010) that "these projects were planned in 2007-08 when the market was extremely bullish and smaller companies could easily raise money from a variety of sources. But the situation has changed in the past two years. In fact, given the company's small net worth of Rs265 crore at the end of FY08-09 and large borrowings, capital-intensive growth plans appear too ambitious."
Indeed, interest costs for the company have risen substantially-the September quarter saw a 158% jump in interest outgo to Rs26 crore as it serviced the huge loans taken earlier. During the quarter, the company's revenues jumped by 92% to Rs132 crore compared to Rs69 crore a year ago. However, net profit plunged 74% to Rs2.73 crore, due partly to the rising interest cost.
MIL has been on the look-out for a potential buyer for a while now, but could not find a one that could match its valuation of the business. The cement industry as a whole is facing strong headwinds and a wave of consolidation has already begun to some extent. Small cement companies in the country have been snapped up by large foreign counterparts; the most recent was French cement maker Vicat SA's acquisition of a 51% stake in Hyderabad's Bharathi Cement.
Assuming that the sale of MIL's cement unit does go through, it would ease a lot of pressure on the company's books and would work out in its best interests for the long term.