In your interest.
Online Personal Finance Magazine
No beating about the bush.
Builders are offering ‘guaranteed’ returns to home-buyers in return for upfront payments even for under-construction properties. This is the second part of a continuing series
Last week, Moneylife reported how Delhi developers are tempting investors, promising 12% assured returns on commercial properties. Now, a few big developers in Mumbai and Delhi are offering ‘guaranteed’ returns to homebuyers for a fixed period, or until such time the buyer gets possession of an apartment.
Various developers are promising 11% (or even above) returns per annum(pa) on reducing balance if a customer pays 100% money upfront at the time of booking an under-construction property.
K Raheja Corp is offering 11% returns on a reducing balance basis if a customer pays 100% down-payment within one month from booking a property at its project ‘Raheja Vistas’, Mumbai. Currently, the property costs Rs7,900 per square feet.
According to sources, this kind of a scheme is run by almost all developers in Mumbai and Delhi—be it K Raheja Corp, Hiranandani, Unitech Ltd or DLF Ltd. According to a Delhi real-estate agent, Unitech is offering 10% rebate on the basic sale price (BSP) of its property at ‘Nirvana Country II – ‘Alder Grove’, if the buyer pays 95% of the price of the property within 45 days. According to the scheme, you pay 10% down payment at the time of booking; 85% of the basic sale price, in addition to external developmental charges (EDCs), infrastructure developmental charges, club membership & registration charges along with preferential location charges—all within 45 days of booking.
Currently, a villa at ‘Nirvana Country II’ of 1,523 sq ft costs Rs1.22 crore. In India, under-construction projects are usually delayed by a year. The consumer is trapped because all developers have a clause mentioned in the agreement in favour of the developer which says that the developer has six months’ of ‘extension time’ from the delivery date. The agreement also mentions, that if the consumer fails to pay the full amount within the stipulated time, he will be charged an interest penalty rate of 20% pa.
Therefore, there are chances that the projects for which the prospective buyer is shelling out an upfront payment—in anticipation of returns—may not be completed on time, or the developer may not pay returns every month.
“The risk attached to such properties is very high. It is very difficult to get returns out of a property investment because soon the properties may undergo 30% price correction,” said Pankaj Kapoor, founder, Liases Foras.
(This is the second part of a continuing series on ‘assured returns’ being offered by various developers across the country).
The ‘stable’ outlook reflects the high level of integration in RIL's core businesses, the global scale of the company's operations, a strong competitive position, and expectation that the company will maintain its financial risk profile
Ratings agency Standard & Poor's (S&P) has said that it has affirmed its long term corporate credit rating on Reliance Industries Ltd (RIL) to 'BBB' and revised the outlook to ‘stable’ from ‘negative’ on expected improvement in the company's financial metrics.
"We have assumed that going forward, RIL would use most of its internal cash flows for investment in growth opportunities. We also believe that RIL's financial metrics currently do have some headroom to accommodate a potential adverse ruling on the legal dispute," said Suzanne Smith, credit analyst and managing director for corporate and government ratings, South and Southeast Asia, S&P.
S&P said it expects RIL to further improve its operating performance by maintaining the existing level of gas production and a potential improvement in refining margins. But this depends on the favourable resolution of RIL's legal dispute with Reliance Natural Resources Ltd and NTPC Ltd that relates to the company's gas business, the ratings agency added.
The ratings agency said it expects RIL's earnings before interest, taxes, depreciation and amortisation (EBITDA) to have increased by 20% for the fiscal year ended 31 March 2010. The improvement is driven by gas production at the KG D6 block surpassing 60 mmscmd (million standard cubic metres per day) of gas within 12 months of starting production, the strong market conditions for the petrochemical business and the successful ramp-up of the new Jamnagar refinery. These factors offset the effects of the very weak market environment for the refining business, S&P said.
The ‘stable’ outlook reflects the high level of integration in RIL's core businesses, the global scale of the company's operations, a strong competitive position, and expectation that the company will maintain its financial risk profile, the ratings agency said.
Coca-Cola has got back to us on the issue we had raised earlier on insects being found in a 200-ml Coke bottle
We had earlier reported on how a few insects were found in a 200-ml Coke bottle (http://www.moneylife.in/article/8/4652.html) and the delay in Coca-Cola's reply (http://www.moneylife.in/article/78/4694.html).
The soft-drink major has got back to us. In an email received by us today, Coca-Cola clarifies: “The outlet has no Coca-Cola 200 ml stock of 20 March 2010 in the store. Other filled stocks and empty bottles present in the store are of different manufacturing dates. Therefore, the possibility of any spurious products getting into the outlet is being investigated. We have on occasion received complaints of spurious and counterfeit products, and have in the past sought support from police and other law-enforcing authorities to unearth such rackets. What compounds our ability to accurately conduct a product and package integrity investigation in our laboratory is that the package in the given case is open and empty."
Coke has gone on to describe its state-of-the-art manufacturing machinery and has invited Moneylife to inspect its facilities at Wada, near Mumbai.
All through, our intention has not been to malign the reputation of the manufacturer. The points that Coke makes in its letter are well taken. However, we would hasten to add that control on the entire supply-chain mechanism is a responsibility that lies squarely on Coca-Cola's shoulders. There is no point in manufacturing a quality product if there are leakages in the last-mile connectivity.
Again, caveat emptor cannot be applied in this case, as you cannot expect a customer to inspect a bottle before consuming the contents.
Whether the product is spurious or otherwise, the jury is out on this one.