Sundaram BNP Paribas expands into new geographies

Sundaram BNP Paribas Home Finance will open offices in Bhubaneshwar and Nashik

Sundaram BNP Paribas Home Finance is in the process of opening 15 new offices across the country as part of plans to expand into new geographies.

The company has opened an office in Kolkata to enter into the eastern region and in the coming quarter, it will open offices in Bhubaneshwar and Nashik, stepping up its presence in Orissa and the Maharashtra region, a company statement said.

The company said it was also setting up new offices in Chennai, Bangalore, Hyderabad and Kochi, among other territories.

Sundaram Home Finance recently opened up four offices in tier II cities in Andhra Pradesh and two offices in Karnataka, it said.

Sundaram BNP Paribas Home Finance is a 50.1:49.9 joint venture between Sundaram Finance and BNP Paribas.

“While expanding into new geographies and establishing our presence in select national markets is part of the growth strategy for this year, we will continue to strengthen our presence in the Southern market. We expect Tier-II and III towns in the South to be the major growth drivers for the business over the next 12 months,” Sundaram BNP Paribas home finance vice-president and head (finance) G Sundararajan said.

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Housing prices may go up by 5%-10% with rising interest rates

The hike in repo and reverse repo rates would result in an increase in interest rates for builders and the same would be passed on to home buyers

Housing prices may rise by 5%-10% in the next 3-6 months as the cost of funds for developers is expected to increase following the Reserve Bank of India’s decision to raise key policy rates by 25 basis points.

“Property prices are bound to go up in next 3-6 months by 5%-10% across the country,” Confederation of Real Estate Developers’ Associations of India (CREDAI) chairman Pradeep Jain told PTI.

Jain, who is also the chairman of Parsvnath Developers, said the hike in repo and reverse repo rates would result in an increase in interest rates for builders and the same would be passed on to home buyers.

He, however, said demand would not be hit despite the expected rise in interest rates on home loans. “People will continue to buy knowing that housing prices would go up further,” he said.

Instead of demand, Jain said supply would be affected, as the increase in interest rates would impact the liquidity situation of small developers.

Asked about impact of the hike in repo and reverse repo rates on the realty sector, DLF Group Executive Director Rajeev Talwar said, “The constant increase in interest rates over the last one year would definitely have an impact,” and suggested that the government initiate reforms to boost the supply of housing.

The Reserve Bank, for the tenth time since March, 2010, raised the repo rate by 25 basis points to 7.5% and the reverse repo rate by a similar margin to 6.5% today.

Echoing similar views, Credai president Lalit Kumar Jain said, “Any increase in the rate of interest will be counter-productive and my fear is that it will give rise to inflation instead of curbing it.”

“... The cost of funding from the developers’ point of view would also shoot up. This will be passed on to the customer, who is already under stress,” Jain, who heads Mumbai-based Kumar Urban Development Ltd, said.

Raheja Developers chairman and managing director Naveen Raheja said: “As the cost of money goes up, the cost of construction and production will also go up. This will lead to further inflationary pressures.”

The need is to increase supply so that demand pressures can be eased and consequently, the prices are curtailed, he added.

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MCX’s proposed IPO has strong fundamentals: Crisil

Crisil has given “five on five” IPO grade for MCX, which is promoted by Financial Technologies India

Rating agency Crisil said the proposed initial share sale of Multi Commodity Exchange of India (MCX) has strong fundamentals, especially reflecting its leadership position in the Indian commodity futures market.

MCX filed draft papers for the IPO with capital market regulator SEBI on 31 March 2011. The share sale is expected to raise an estimated Rs800 crore, according to market sources.

Crisil has given “five on five” IPO grade for MCX, which is promoted by Financial Technologies India.

“This grade indicates that the fundamentals of the IPO are strong relative to other listed equity securities in India,” the rating agency said in a statement.

According to Crisil, the grade also reflects MCX’s leadership position in the Indian commodity futures market over the past four years. The entity had an 82% share of the overall traded turnover in fiscal year 2010.

“It is a leader in the trading of bullion, crude oil, copper and natural gas,” the statement noted.

“With a strong technology-backed trading platform and infrastructure, MCX is able to provide high liquidity and low impact cost of transactions–key criteria for the success of any exchange,” it added.

Crisil pointed out that the rating also considered the benefits that MCX would derive from amendments to the Forward Contracts (Regulation) Act--that would allow trading of options and indices as well as participation by institutional investors. This would in turn increase the traded turnover on commodity exchanges.

“While new commodity exchanges have been set up over the past couple of years, they have not been able to nudge MCX from the top. However, we expect competition could intensify in the future,” it said.

MCX’s operating income has increased at a CAGR (compounded annual growth rate) of 18.3% over FY08-10.

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