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Thursday, November 30, 2017

Cracking the Code: MahaRERA

Cracking the Code: MahaRERA

Demystifying the residential real estate scenario in the state of Maharashtra, MahaRERA has been driving change and proving to be a great initiative undertaken by the government.

Here’s a report that decodes the current data and analyses how it can be used by the end users, investors, developers and lending institutions to ensure a more informed decision making. 

The report also features an exclusive interview with the man behind the success of the initiative, Mr. Gautam Chatterjee, Retd. IAS officer and current Chairperson, RERA.

For Research queries, please contact:
Ashutosh Limaye
Head - Research & REIS

Shalby Hospitals IPO: Should you Invest?

Shalby Hospitals IPO: Should you Invest?

Shalby Hospitals IPO - Should you Invest to this IPO?
Ahmedabad based, Shalby Hospitals IPO would open for subscription on 5th December, 2017.
Shalby Limited one of the leading multi-speciality chain of hospitals in India. Its consolidated revenues grew at 10% CAGR in the last 5 years.

It posted consolidated profits of 18% for FY2017. […]

Wednesday, November 29, 2017

Trends affecting MSME credit in India...!

Trends affecting MSME credit in India...!

A. Shankar, SVP – MSME & Rural Banking, Lakshmi Vilas Bank

India has 388 SME clusters across 180 districts contributing to 40% of the country’s industrial output and 35% of the direct exports. In terms of employment, MSME is second to agriculture and has provided employment to 14 million people. In the last 7 years, the number of MSME enterprises has grown at 4.4%. During the same time, the loan penetration has increased 2-3 times.

While the total demand for credit is ~ INR 40 lakh crores, the current supply through formal channels is 60% indicating that informal channels like moneylenders, etc. are still existent. This is an opportunity for formal channels like banks and NBFC’s to capture in the next few years.

There are 5 major trends that have helped the MSME segment in the past few years

1.     Robust growth of 6.8% in the Indian GDP over the last 10 years 

2.   Strong thrust to improving manufacturing through the “Make in India” campaign with some key initiatives like

a.    Opening up of key sectors including Railways, defence, insurance and medical devices to higher levels of Foreign direct investment

b.   Development of industrial corridors across various regions of the country

3.   Slew of reforms, both at the central and the state governments, to facilitate setting up of businesses

4.   Improved availability of formal credit for the small and micro enterprises segment

5.    In the last few years, digital retail channel has blossomed, this has also led to heavy investments in ramping up the supply chain to support this infrastructure. There has also been immense growth in the Engineering &  Automotive industry, food processing industries thereby fueling a growth in supply chain dominated SME industries.

While these trends have helped the MSME business to flourish, there needs to be concerted effort in 4 important aspects to carry forward this thrust:
1.     Providing adequately trained and skilled manpower: With more and more sophisticated machinery usage, the industry needs have shifted to highly skilled operators and there needs to be a seamless supply in the near future. Skill programmes through the National skill development agency & National council on vocational training could potentially help bridge this skill gap. 

2.   Thrust in policy reforms:

a.    Ease in starting and exiting business
b.   Single window system for approval
c.    Relaxation of Foreign investment norms
3.   Massive need for providing adequate infrastructure including roads, power, etc for these industries

4.   Continued supply of credit: Currently despite the best efforts 40% still rely on the informal sources for funds. There needs to be a concerted effort to provide funds for these sources.

-         The author is Mr. A. Shankar, SVP – MSME & Rural Banking, Lakshmi Vilas Bank

Tuesday, November 28, 2017

SEBI tightening the norms for rating agencies, any negative news may lead to downgrades

Overrated issuers may be the first ones to be downgraded

by Mr. Ritesh Nambiar, UTI AMC

With SEBI tightening the norms for rating agencies, any negative news may lead to downgrades and MFs will be very selective as far as portfolio addition is concerned: 

Outlook on credit opportunities in the debt segment

The credit/income opportunities category has grown over ₹1 trillion and is one of the fastest growing segments in the debt category. Currently, credit theme is prevailing over duration due to uncertainty over further policy rate cuts amid rising inflation. The category has seen a good degree of upgrades and credit spread compression over the years. HFCs/NBFCs, which form a major part of the portfolio, have seen upgradation by multiple notches over the years.

The challenge is the risk not being adequately compensated amid ease in the availability of liquidity. Since credit portfolio does not have a high turnover ratio, hence most of the portfolio gains, over and above the portfolio yield, could remain unrealized. Moreover, credit rating migration will be limited as SEBI has tightened the norms for rating agencies. Any negative news on the sector or company may lead to downgrades.

Limited gains from credit opportunities fund

The credit opportunities fund is an accrual fund. Hence, most of the portfolio gains will come from portfolio yield. Mark-to-market gains from here on could be limited. So, the way forward for such funds is to ensure addition towards right issuers. Therefore credit penetration within lower category issuers stands limited for mutual funds; hence MFs will continue to identify newer issuers/sectors.

Performance of UTI Income Opportunities

Short-term to medium-term credit funds fall within the category where the duration of funds vary from 1.5 years to 4.5 years. As the interest rate cycle has been favorable, longer-duration credit funds have performed better than short-duration credit funds. Hence, UTI Medium Term fund (medium-term credit product) will give higher returns than UTI Income Opportunities fund (short-term credit product).

UTI Income Opportunities fund has a good performance history in the short-term credit category, in terms of risk adjusted return — which means that for the underlying risk that is taken, the returns are superior within the category of funds.

The dynamics of the bond market

Banks have been helping corporates to reduce their cost of borrowing by tapping into wholesale markets. The excess liquidity that banks were left with, post demonetization further skewed the corporate bond spreads as bond demand far exceeded supply. The flow of FPI into domestic bonds since March ’17 has supported the corporate bond spreads. Steady demand from mutual funds/insurance month after month also helped in reducing credit spreads across ratings.

Viewpoint on the interest rate front

Globally, there is an issue which advanced countries are not able to re-inflate, keeping central banks tentative about their rate actions. In India, thanks to the sharp fall in food inflation, the overall trend in consumer inflation has been favorable.

But, just like RBI, UTI believes that this could normalize inflation head over 4 per cent by March ’18 and the room for further rate cuts could be limited. Thus, the fixed income market from here on is much more data-dependent.


About the author

Mr. Ritesh Nambiar, Senior Vice President, UTI AMC

Hike carpet area under PMAY.!

Hike carpet area under PMAY.!

Under the PMAY-U scheme, the interest subsidy will be provided on loans for construction/ acquisition of house with carpet area of up to 120 square metres, against the earlier threshold of 90 square metres.

For MIG-II category, the area has been increased up to 150 square metre from the current 110 square metre. The changes will be effective from January 2017.

Shares of housing finance companies were under pressure due to the prevailing sluggishness in the Indian real estate sector.



1. What are the insurance policies available for the private car?

There are two types of policies – Third party insurance and Comprehensive Insurance Policy

Third party insurance policy covers legal liability of the insured towards death, injury to persons and damage to property of the third party. This cover is a must and minimum as per the Motor Vehicles Act for using any car in a public place. 

This is also known as ‘Act only’ Insurance or Liability only cover.
Comprehensive policy covers damage to the insured vehicle in addition to the third party insurance.

2. What is IDV of the vehicle?

IDV is the Insured Declared Value of the vehicle. It is the sum insured fixed at the commencement date of the policy and normally filled by the proposer in the proposal form. It is the amount which the insurer will pay at the time of claim, if the vehicle is lost or stolen or damaged beyond repair.

IDV reflects the market value of the car and is arrived on the basis of the listed selling price of the manufacturer and adjusted as per the standard depreciation rates. It is to be noted IDV is calculated only for the Comprehensive Insurance and not for Third Party Insurance cover. IDV will decrease with the increase in the age of the vehicle

3. What is No Claim Bonus(NCB)?

Insurance company gives discount on the Own Damage section premium for a claim free year to incentivise accident free driving. This is called No Claim Bonus. The discount starts at 20% and is cumulative. The discount increases with every claim free year. The maximum NCB is 50% and results in substantial saving on Own Damage premium.

NCB can be availed when policy is renewed before the expiry date. The benefit can be also availed if the policy is renewed before 90 days from the date of expiry. Afterwards, NCB can not claimed.

4. If new car insurance is to be bought online, what information do I need to fill and what documents are to be submitted?

Normally, the car dealer will arrange for the insurance for new car. Insurance is mandatory for vehicle registration under Motor Vehicles Act. Even the dealer offers choice of insurers.

Due to some reasons, if the insurance is to be purchased online, the information of the new car like Engine capacity like Engine Number and Chasis Number is required. In addition, the details like CC, make, model and manufacturing year of the car, purchasers address, value of the vehicle etc have to be filled up.

However, it is recommend to keep details of the previous expired insurance policy (if NCB is to be claimed) and Registration Certificate of the car ready, to buy online insurance or renew the policy.

5. What is a cover note?

It is a temporary document that acts as a proof of insurance of the vehicle. It is valid for 60 days and is replaced by the policy document. 

Earlier, the car dealer or the insurance official used to issue cover note as policy cannot be issued immediately. Nowadays, cover note is rarely used.

6. How is the premium of new car insurance determined?

The premium for your car insurance is calculated on different factors for the Own Damage cover (Comprehensive cover) and the Third party cover.
Engine CC – Engine Cubic capacity of the car is one of the factor for rating of Own damage and Third party insurance premium.

The IDV (Insured Declared Value) of the car (the value of your car that will be compensated in case of theft or total damage)

Manufacturing Year – This is to decide whether comprehensive cover can be given or not. Many insurance companies do not give own damage cover for vehicles more than 7 years old.

Your geographical location – According to India Motor Tariff, India is divided into 2 zones.

Zone A – It includes cities like Ahmadabad, Mumbai, Delhi, Kolkata, and Chennai

Zone B – The rest of the country. The premium varies for each zone and more for Zone A.

The applicable No Claim Bonus, accumulated over claim free years

Any add-on benefits opted like Personal Accident cover etc.

7. What are the additional covers (Add-on covers) available with the car insurance policy?

Add-on covers provide additional protection or extra benefits / less deduction when a claim is preferred. Extra premium is to be paid and they are optional.

Zero Depreciation cover is an absolute must have for all new or relatively new cars. This is also known as Bumper-to-Bumper cover or Nil Depreciation cover. It does not take into account depreciation on car parts to be replaced in a claim.

Electrical or non electrical extra – This cover is for the insurance of extra items fitted in the car. This is part of own damage section of comprehensive policy.

Personal Accident insurance – The PA insurance is available for Insured while driving the car, passengers travelling and paid driver.

The other add-on covers are the Invoice Cover and Roadside Assistance cover.

8. What are the discounts that can be availed in taking car insurance?

The main discount is the No Claim Bonus (NCB) which is explained earlier. This forms a main benefit in saving the premium.

Membership discount – Discount is given if the insured is the member of recognised Automobile Association of their respective region. For example, for Chennai, the membership is to be with Automobile Association of Southern India.

Loyalty Discount – some insurers give discount for insured for their continuous renewal.

Occupational Discount – some insurers give discount for professionals as they are deemed as safe drivers.

Installation of anti-theft and safety devices – Discount is given as this improves the risk against theft.

Voluntary Higher Deductible – Car insurance are subject to an excess, over and above only a claim can be preferred. If the proposer is willing to bear additional amount in a claim, then voluntary deductible discount is given.

The new car owner should avail Nil depreciation add-on cover to avoid unnecessary high repair payment due to depreciation in case of a claim.

9. Can a Claim for minor damages be made under the private car insurance policy?

Minor damages normally require small amount to be spent on repair and replacements. It is difficult to decide which a minor damage is. The fact is when a claim is made; the benefit of no claim bonus (NCB) is lost. 

The accumulated NCB is lost, if even a single claim is made, how so small the damage should be. 

Hence, the comparison of claims amount should be with the NCB amount being affected.

If the expenses for damage repairs are way too high, then it is better to make a claim and lose the NCB discount.

10. Why the sum insured in private car insurance policy is less than the ex-showroom or the price paid for the car?

The value of the car decreases once the vehicle is taken out of the showroom. The less value is due to notional loss of market value, as the vehicle is already registered. 

The depreciation is the main factor to determine the IDV (Insured Declared Value). The rate of depreciation applicable for age of vehicle upto 6 months is 5%. Hence, the new car value is less by 5%.

Moreover, the price paid includes registration charges, insurance and service charges, which are exclusive of showroom price.

11. How to cancel a new car insurance policy?

It is necessary to know the reasons for the intention to cancel the policy. Driving on the road without an insurance policy is against Motor Vehicles Act and attracts fine and penalty. It is mandatory to have third party insurance policy. On sale of car, normally Car insurance policy is transferred to the buyer.

So, if a comprehensive policy is not required, at least third party insurance policy is a must.

12. Can the vehicle insurance policy be taken for the second hand car, if the car is in the seller’s name?

The insurance can be availed by submitting the sale letter from the seller (Form 29 & Form 30) and previous insurance policy details.

13. What happens to the car insurance covers when the car is sold?

There are two options.

Buyer can get the policy transferred in his name by informing the insurance company in writing. The insurance company will confirm the name change by an endorsement.

The seller can cancel the policy and get refund of premium for the remaining period of the policy provided there is no claim. The buyer will buy a fresh policy. 

The insurance company will cancel the policy only on submission of necessary documents for ownership transfer and also a copy of the new policy for the vehicle. The NCB will remain with the seller and can be availed if the new vehicle is bought.

14. If CNG or LPG kit is fitted in the vehicle, whether the same is to be informed to insurance company?

CNG or LPG kit is insured separately. Hence the same is to be declared while taking the policy. If these are fit during the currency of the policy, this changes the fuel type and risk nature. 

Hence, the insurance company is to be informed with the updated registration certificate to get endorsement for inclusion of the kit.

15. What is not covered under Car insurance?

The Private car insurance policy does not cover:-

Wear and tear of the car and the parts

Loss or damage or liability when the driver is without valid licence

Loss or damage or liability when the driver is under the influence of drugs or alcohol etc.

Loss or damage to engine due to oil leakage

Loss or damage or liability when the policy is not in force

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Highways to Life: Housing on Mumbai’s Western Express Highway...!

Highways to Life: Housing on Mumbai’s Western Express Highway...!

 by Ashutosh Limaye, JLL India

The lifeline of Mumbai has always been the suburban train network with local trains supporting more than 7.5 million commuters daily.  However, due to immense overcrowding in local trains, the highway in the upmarket western suburbs is a viable commuting alternative for office goers. 

Proximity to the highway has become the pièce de résistance for housing in a city where distance is measured not in kilometres, but in time. As a result, the Andheri East-Jogeshwari East corridor, adjoining the highway has become one of the most popular house-hunting destinations in Maximum City.  

When completed, the metro line will provide connectivity among the existing Western Express Highway, Western Railway, Metro Line 1 (Ghatkopar to Versova), the ongoing Metro Line 2A (Dahisar to DN Nagar) and the proposed Metro Line 6 (Swami Samarth Nagar to Vikhroli). With an eye on the highway and the upcoming Metro Line 7 (16.75 km elevated corridor with 13 stations from Andheri East to Dahisar East), many developers have launched projects adjacent to the highway in recent years, including:

·         Omkar’s Alta Monte (Malad)
·         Oberoi Realty’s Sky City (Borivali East)
·         Oberoi Esquire (Goregaon East)
·         Joy and Sayla Realtor’s Callista (Andheri East), and
·         A&O Realty’s Palazzio (Jogeshwari East)

While some of these are standalone redevelopment/SRA projects, the larger ones, such as Oberoi Sky City, are on premium land purchased by the developer to construct large townships.

                                                       Residential Projects Near Highway
Project Name
Qtrs. Since Launch
Current Price (Rs per sq ft on carpet area)
Oberoi Sky City
W.E. Highway, Borivali East
Oberoi Realty
Oberoi Esquire
W.E. Highway, Goregaon East
Oberoi Realty
W.E. Highway, Andheri East
JV - Joy & Sayla Realtors
Omkar Signet
W.E. Highway, Malad East
Omkar Realtors
Sold Out
Off. W.E. Highway, Jogeshwari East
A&O Realty

These launches boosted the attractiveness of North Mumbai, which has always been popular due to its rapid civic infrastructure deployment, robust social infrastructure and proximity to commercial establishments and retail markets.


The North Mumbai Market

Locations between Andheri and Dahisar have been very active on the real estate and infrastructure fronts of late. These residential catchments, already well-known for their sound social infrastructure (health, education, recreation and entertainment facilities) have also become sought-after office destinations for mass as well as niche employment. 

Andheri/Jogeshwari, Goregaon and Malad are replete with New Age offices and IT Parks in addition to conventional office buildings. SEEPZ and MIDC offer IT spaces and industrial spaces respectively, while Goregaon’s 10-acre Nirlon Knowledge Park is a buzzing hub for IT offices, BPOs, banks and others. Overall, North Mumbai now has approximately 15 million sft of Grade A office space.

NESCO IT park, Oberoi ‘Commerz’ (located within an integrated development), Raheja Titanium, Sun Pharma, Silver Metropolis and TCS’ Banyan Park are all landmark office locations located along Western Express Highway. Apart from IT companies and BPOs, the location caters to the BFSI sector.

Proximity to the domestic and international airport also makes these markets attractive for logistics companies. It also offers a number of high-end hotels such as ITC Grand Maratha, Westin, Leela and Sahara Star for tourists and business travellers. 

The large talent pool residing between Andheri and Dahisar is a huge attraction for domestic as well as multinational companies setting up offices in these suburbs. As a result, housing in North Mumbai consistently attracts both end-users and investors.

Existing and Upcoming infrastructure projects: In recent years, North Mumbai – particularly the Andheri/Jogeshwari/Goregaon belt - has been the focal point for a number of infrastructure projects which have amplified the East-West connectivity and also provided easy access to office-goers from the Western line suburban train stations to the highway.

·         The Ghatkopar-Versova metro line and opening up of railway overbridges between Jogeshwari and Goregaon have helped office goers reach their destinations faster

·         East-West connectivity has also been amplified by the opening of the Mrinal Tai Gore Flyover connecting the highway in Goregaon East with SV Road on the West, andthe Balasaheb Thackeray Flyover which connects JVLR with SV Road

·         This area is already well-connected to the eastern suburbs through Jogeshwari- Vikhroli Link Road, Goregaon- Mulund Link Road (between Goregaon and Powai through Aarey) and Andheri- Kurla-Ghatkopar Link Road

·         The upcoming Coastal Road will reduce congestion on the Western Express highway

·         The upcoming metro will improve its connectivity with South Mumbai as well as ease out the pressure on Western Express Highway between Dahisar and Andheri

·         Plans to widen the Andheri-Kurla road to resolve morning traffic bottlenecks are underway.

Social Infrastructure in Andheri/Jogeshwari East: 

Apart from proximity to commercial establishments, Andheri/Jogeshwari (East) also has a number of good schools, hospitals, hotels and retail establishments. 5-star hotels viz. Hyatt Regency, ITC Grand Maratha and J W Marriott are located in this micro market. Holy Spirit, Kokilaben Dhirubhai Ambani, Criticare and Nanavati Hospitals are within half an hour’s travel time.  Some famous malls like the Oberoi mall and Infiniti mall are close by.

           Schools near Andheri /Jogeshwari (East)
Oberoi International School
St. Xavier's High School
Jogeshwari (East)
Bombay Scottish School
St. Anthony's High School
Sakinaka, Andheri (East)

 Malls near Andheri/Jogeshwari (East)
Infiniti Mall
Andheri West
Oberoi Mall
Goregaon East
The Hub Mall
Goregaon East
Growel's 101 Mall
Kandivali East

Robust rental housing demand: Due to its many advantages, the Andheri/Jogeshwari east corridor has a flourishing rental housing market. Older locations like the Sher E Punjab Society in Andheri East and Greenfields Co-operative Housing Society along JVLR have seen steady rentals. Recent launches which are close to the highway in destinations like Goregaon East have commanded premium rentals.

While 2 BHK options in Raheja Ridgewood fetch rentals of Rs. 50,000 pm, high-end projects like Lodha’s Fiorenza (Goregaon East) are setting new standards with rentals going up to Rs. 60,000 pm for 2 BHKs.

Landlords in Oberoi Exquisite (Goregaon East) are quoting rentals at Rs. 90,000 onwards pm for 3 BHKs. Booming rentals in these markets are a factor of proximity to the highway and the value offering seen in branded projects.

Rising to the affordability challenge: 

While high rentals underscore the market’s ability to pay the price of convenience, it also indicates end-users’ inability to make purchase decisions. In view of this, some new residential launches have their pricing calibrated to make buying easier. These new projects offer end-users 1 BHK options within an affordable budget. 

For instance, Omkar’s Signet project located along the Western Express Highway offers 1 BHKs within 75-80 lakh and 2 BHKs within 105-115 lakh in Malad (East), also on the Western Express Highway.

Due to its location advantage and pocket-friendly pricing, the project which was launched six months ago sold 570 apartments in 15 days and is now already sold out. The performance of this project clearly indicates that a value offering by a branded developer parceled with the ‘excellent location’ tag will always work well in Mumbai.

Demand for self-sufficient townships: Developers with large land parcels in the North Mumbai market can offer end-users generous amenities within self-sufficient townships. After Hiranandani Developers set this trend with their township in Powai, soon a number of other developers followed suit. Along the Western Express Highway in the northern belt, the Thakur Village Township is a perfect example of a cluster of branded developers transforming a rural precinct into an upmarket location replete with schools, retail outlets, high-end residential apartments and cinema complexes. 

In Goregaon East, Oberoi Developers have offered luxurious green surroundings and high-end amenities in their ‘Exquisite’ project.

Omkar Developers are now offering 1, 2 and 3 BHK residences in their recently launched project ‘Passcode Andheri Highway’ at Shankarwadi, adjacent to the Western Express Highway and close to the upcoming Andheri Metro station. 

The first phase of this 5-acre project is offering approximately 1200 apartments with ticket sizes ranging from Rs. 87 lakh onwards for a 1 BHK, Rs. 1.24 crore onwards for a 2 BHK and over Rs 1.6 crore for a 3 BHK. 

The developer has included a host of luxury amenities like culinary services by culinary expert Ranveer Brar, separate recreational areas for senior citizens, yoga zones, urban farming, indoor and outdoor sports, spa, salons and a leisure space which is fast disappearing – terraces.   

While offtake in most of Mumbai’s residential markets has been slow, numbers show that sales have been good in projects which offer value for money and good location. 

Andheri East and Jogeshwari East have an inherent location advantage, and the time is ripe for residential townships which can provide a much-needed work-life balance in India busiest metropolis. These locations will be prime residential hotspots in the immediate future.

 About the author..
Mr. Ashutosh Limaye, National Director – Research, JLL India

Arun Chitnis
Head - Corporate Communications & Media Relations
JLL India
Level 6, Amar Avinash Corporate Plaza
Bund Garden Road,
Pune 411001.
Tel: (020) 40196100 Fax: (020) 40196101
Mob: 91 9657129999

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