Real Estate Regulatory Bill gets Cabinet nod

The Real Estate (Regulation and Development) Bill seeks to make it mandatory for developers to launch projects only after acquiring all statutory clearances from relevant authorities

A Bill providing for setting up a regulator for the real estate sector and having provisions like a jail term of up to three years for developers who make offences like putting up misleading advertisements about projects repeatedly was approved by the government on Tuesday.


The Real Estate (Regulation and Development) Bill, approved by the Cabinet, seeks to provide a uniform regulatory environment to the sector.


It also intends to make it mandatory for developers to launch projects only after acquiring all statutory clearances from relevant authorities.


Builders and developers who become repeat offenders may even face a jail term of up to three years.


The Bill makes it mandatory for builders to clarify the carpet area of the flat. This would be made uniform for the entire country. This rule would make the concept of super area—which is often used to mislead owners—virtually non-existent.


The Bill has provisions under which all relevant clearances for real estate projects would have to be submitted to the regulator and also displayed on a website before starting the construction, sources said.


The proposed legislation has tough provisions to deter builders from putting out misleading advertisements related to the projects carrying photographs of the actual site.


Failure to do so for the first time would attract penalty which may be up to 10% of the project cost and a repeat offence could land the developer in jail.


The ministry of housing and urban poverty alleviation is working on bringing all projects under a single-window clearance. While the Airports Authority of India and municipal bodies have come on board, there are some objections from the environment ministry which are being looked into.


The ministry sources said 22 states had given their approval to the Bill while five states wanted certain amendments. These changes have been incorporated in the Bill cleared by the Cabinet, sources said. Chhattisgarh is the sole state to still oppose the Bill.


Builders and developers will have to get all clearances—from title deed to project cost—cleared before construction begins. FAR (Floor Area Ratio) will also have to be specified clearly by the builder.


While the regulator in the states will be appointed by the state governments, in Delhi the urban development ministry will appoint the regulator. DDA is likely to be made the regulator in Delhi, sources said.


The Regulator will also be the appellate authority in cases of dispute. This will save the owners the hassle of running around to different authorities for redressal.


The developers will also have to specify the common area in the society. The term ‘apartment’ has been specified in the Bill and will include the space to be provided for a garage.


StockGuru scam mastermind uses RTI to seek SEBI info against him

The information sought by Lokeshwar Dev included copies of complaints against him, and also other details including SEBI’s opinion and clarifications on matters concerning the case

In an unusual use of the Right to Information (RTI) route, the main accused of over Rs 1,500-crore ‘StockGuru’ scam has tried to get complaints and other information against him with the Securities and Exchange Board of India (SEBI), but his request has been rejected.


The information sought by Lokeshwar Dev, who is said to have used different names, including that of Ulhas Khaire, for different fraudulent schemes, included copies of complaints against him, and also other details including SEBI’s opinion and clarifications on matters concerning the case.


Not satisfied with SEBI’s response to his RTI (Right to Information) query, Ulhas approached the regulator's Appellate Authority in April this year, but his appeal was dismissed through an order passed yesterday.


Lokeshwar Dev and his wife Priyanka Dev, both of whom have used numerous names and were arrested by Delhi Police's Economic Offences Wing in November last year, are facing a multi-agency probe for allegedly duping lakhs of investors of more than Rs1,500 crore.


The agencies probing the matter include CBI and the Enforcement Directorate (ED), while SEBI passed an order in January this year against the couple and other entities associated with them, wherein they were barred from the capital markets for ten years and were asked to refund the money collected fraudulently from the gullible investors.


The entities floated by the two for their dubious schemes included Stock Guru India (SGI), SGI Research and Analysis and


Subsequently, SEBI in March this year received an RTI application from Ulhas or Lokeshwar Dev, seeking replies to his 27 queries related to his company, SGI Research and Analysis.


SEBI replied to the RTI query on 3rd April, but the appellate filed an appeal with the Appellate Authority on 15th April against SEBI’s response and said that the information given by the regulator was “incomplete and incorrect” and not what he was seeking for.


“I feel they (SEBI) are deliberately and intentionally hiding the information so that justice is denied to me,” he said in his appeal.


Hearing his petition, the Appellate Authority said that SEBI had told Ulhas that “the information sought by him was in the nature of seeking opinion/clarification/explanation from SEBI and did not fall within the definition of 'information' as defined under the RTI Act”.


The Appellate Authority also concurred with SEBI’s view that said that the information sought in 19 out of the total 27 queries were indeed “in the nature of seeking clarification, opinion, explanation, etc from SEBI” and therefore the regulator cannot be obliged to provide a response to such request for information through RTI.


Infosys: Four challenges before Narayana Murthy

According to stock brokerages, while the return of Narayana Murthy is positive for Infosys in terms of leadership, he will have to take care of the company's communication strategy, succession plan, cash management and cost control

The second inning of Infosys founder NR Narayana Murthy as executive chairman of the information technology (IT) company is termed as morale boosting by analysts at broking firms. However, brokerages, especially Nomura and Barclays, are cautious over the long-term due to several impending issues and challenges that the company founder would have to face head on.


Nomura feels that Narayana Murthy returning as chairman is a positive as it would strengthen the leadership bench at a challenging time for the company, boost employee morale and possibly improve communication to stakeholders.


Barclays, on the other hand expects the company to focus more on long-term growth and take few steps with quicker returns. Infosys (and Narayana Murthy) need to take quick steps in communication strategy, succession plan for chief executive, cash management and cost control, the brokerage says.


According to Nomura, a sustainable turnaround is less likely to be forthcoming, while in the near term Infosys could continue to see sluggish revenue growth and margin pressures. “...we think the challenges for Infosys remain with, no material revival in discretionary spending (about 40% of revenues from this segment, weaker positioning and smaller scale in cost efficiency segments driving growth like infrastructure management services (IMS) and business process outsourcing (BPO) v/s competition and continuing margin pressure from cost escalation and pricing flexibility. In addition, US immigration bill remains an overhang, and if passed the bill could further depress an already flattish earnings growth over FY13-15F,” it said in a note.


Religare Capital Markets, on the other hand, expects Narayana Murthy's return to help bolster the leadership and re-ignite the morale of Infosys. It said, “While a mixed demand outlook is a near-term challenge for growth, at least internal issues like customer connect, sales and cost structure can be addressed. Overall the return of Narayana Murthy will lend lot of credence to vision, leadership and execution, which should drive near-term re-rating.”


Here are the issues, listed by Barclays, which Narayana Murthy would face in his second inning at Infosys...


Communication: Infosys stock has exhibited high volatility around earnings with the shares moving more than 5% on six out of past 10 quarterly results. In the past two result seasons, the stock has moved about 20% on the result day. This indicates ineffective communication on result expectations. Furthermore, the company suspended quarterly guidance in October 2012 and full year earnings guidance from April 2013. We agree that weak performance could be one reason behind higher volatility; however, we also note that despite weak performance, peers like Wipro have exhibited lower stock volatility and a more stable guidance philosophy.


CEO: The next management change (due by March 2015) would be the first transition to a “non founder” CEO for the company. Given the disruption around the last CEO change, we believe it is vital for Infosys to come out with a definite succession plan significantly before the event to manage internal transition and allay investor concerns.


Cash: Low dividend payout (and a reducing payout ratio over the past two years) along with a cautious acquisition strategy have led to a cash pile of $4 billion with the company. While historical conservatism around cash usage could be explained by smaller size and rapid growth, we believe that the management needs to significantly improve its lazy capital structure to increase shareholder value.


Costs: Infosys employee costs have increased by +270bps in the past five years compared with -650bps for TCS. While weaker revenue growth could be one reason, we note that Accenture has been able to protect its margins despite slower revenues growth on account of stricter focus on costs.



Suiketu Shah

4 years ago

Lot of brokers who earn a living by illegal commission would be unhappy with NM and Rohan coming back.The results in less than 6 months are there for us to see.There is no doubt that Infosys still is the most valued IT company in India with due respect to TCS with NM and Rohan coming back and rectifying lot of things which family busineses owners can identify with.

Infosys doesnot need any "broker" push and the rise is only the beginning.


4 years ago

Long back, N R Narayana Murthy had ‘joked’ to a TAPMI(Manipal) audience that Infosys shares were ‘overvalued’. If overall health was ‘manageable’, the company, in all probability, would not have gone for this ICU treatment for five years. A company of its age should have taken the ‘ups and downs’ for a couple of quarters or even a couple of years, in its stride. The panic with which the management has acted sends out adverse signals. The ‘one rupee salary’ sacrifice may not go down the line within the company very well.


4 years ago

I may be wrong, but I suspect that the difficulty has arisen from attempting to maintain multiple standards for a prolonged period without executing a fast, holistic transition plan into a new state of congruence. Infosys has been grappling with moving into markets at higher ends of the value chain (stars)while maintaining its cash cow at the lower end. No organization can do on a sustained basis. Perhaps mitosis and movement into a conglomerate format with each resultant organization having its own clear business focus, targets and manpower policies might be more effective in the short run.

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