Companies & Sectors
The shine fades from wine

Winemakers see stocks piling up for want of takers due to the ongoing slowdown

Although Cyclone Phyan hit Nashik a week back and damaged a major portion of the grape crop under cultivation, consumers might not have to pay much for their bubbly in the coming months as last year’s recession has left unsold stock of wine at various wineries across Maharashtra.

The unsold wine stored in tanks will result in winemakers selling their produce at a lesser price. Sula Wines still has over 40%-50% of its wine lying unsold in its tanks, while Indus Wines has around 90% of its wine still in its inventory.

“Because of the recession and the terrorist attacks, the hospitality industry was hit hard. People stopped patronising hotels or visiting Mumbai. The food and beverage industry also took a hit with a result that our wines could not be sold,” said Violet D’souza, director, Indus Wines.

For winemakers, the season from Diwali to the end of the year is the peak season which sees maximum wine sales taking place.

The market for wine before 2007 was growing at 28%. However, since 2008, the market has dropped by 30%.

The problem facing the industry is not only reduction in sales and demand, but also the restricted marketing structure—both domestic and international—for Indian wine firms, according to Nasik Valley Grape Promotion Association president, Pradeep Panchpatel.

Adding to this, winemakers are a part of the agriculture industry, but are made to pay 20% sales tax as wine is considered as ‘hard liquor’ which impacts the annual bottom-line of various winemakers.
 
According to Sula Wines vice president Neeraj Agarwal, the prices of grapes will increase by at least Rs10/kg as there will be a shortage in the fruit output this year.

“The production cost will increase by about 10%-20% as the wines are still in our tanks. Holding cost will go up,” Mr Panchpatel said, adding that due to the cyclone the production of grapes will decrease.

Even with this scenario, winemakers will not increase prices of their product as their main objectives for this year is to promote the product, Mr Panchpatel added. This view is maintained by Indus Wines which has launched Mumbaai Dreamz, a low-priced wine category.

- Aaron Rodrigues [email protected]

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New index launched for realty market

Liases Foras has launched Ressex, a real-estate sensitivity index that will capture trends in price, inventory, sales and demand in six cities.

Real-estate research firm Liases Foras has launched its Real Estate Sensitivity Index, or RESSEX, which will provide data on price, inventory, sales and demand changes in six cities—Mumbai Metropolitan Region, Pune, National Capital Region (NCR), Bengaluru, Chennai and Hyderabad.
 
This Index will increase transparency in real-estate transactions by providing timely, accurate and relevant data to investors, developers and financial institutions, said Pankaj Kapoor, founder and chief executive officer of Liases Foras.
 
“Ressex data are collected through primary surveys and include detailed micro-research of the six cities,” he said.
 
“This type of a tool was needed in the industry for a long time and we are working closely with Pankaj. It will bring more transparency in the market,” said Renu Sud Karnad, joint managing director of housing finance major HDFC.
 
Subscribers will be charged a quarterly fee of Rs25,000 for access to this website, while yearly access will cost Rs 75,000, Kapoor said, adding that a separate service will be launched for individual investors to select projects using analytical tools.
 
 The website provides calculators that allow the user to tweak various parameters such as prices, gestation period, location, etc. to compute key valuations like fair value, net present value and even Ressex futures.
 
“Developers will benefit a lot from such a sensitivity index because it will be easy for us to know which sector is enjoying more demand and work accordingly,” said Niranjan Hiranandani, managing director of real-estate developer Hiranandani Constructions.

Pallabika Ganguly, [email protected]

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HDFC sees home loan rates rising by 50bps by mid-2010

However, higher rates will not impact demand if property prices remain stable, says HDFC’s Renu Sud Karnad

Housing Development Finance Corporation (HDFC) expects interest rates on home loans to increase by 40-50 basis points by the middle of next year as inflation inches up, but that will not impact the demand for home loans, its joint managing director Renu Sud Karnad told Moneylife.
 
“The interest rate might harden by 40-50 basis points by the middle of next year, but I don’t think that will change the demand scenario,” she said.
 
However, “What worries me more is that property prices are going up again over the past two months. Developers should understand that affordability is very important in the Indian scenario. They should not let short-term benefits erode the long-term ones,” she said.
 
HDFC has seen robust growth in its home loan portfolio, mainly in Bengaluru, Mumbai and Chennai but also in smaller cities. Ms Karnad expects this trend to continue in the coming quarters. “I think genuine buyers have now come into the market due to the drop in property prices. The demand is here to stay, as the housing shortage is huge, and I am very confident that we are going to see good numbers in the March quarter,” said Karnad. 

– Pallabika Ganguly [email protected]
 

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