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10-Oct-2019 26-Nov-2019
CREDAI Bengal Daily News Update | 26.11.19
We are not asking for free money, we are just asking for time:
Satish Magar, CREDAI
In order to kick start the economy, the housing sector needs to come up.
We have to remember that to kick start the economy, the housing sector needs to come up. We
are the second largest employers. A lot of industries depend on the housing sector, says Satish
Magar, President, Credai. Excerpts from an interview with ETNOW.
Mr Hiranandani has said he personally has been spearheading the talks with PMO on behalf of
Naredco and you have been doing it on behalf of Credai. The ball is now in RBI’s court. We
have been told that Centre is in favour of it and it is going to be the RBI’s decision to allow this.
Are you optimistic that you could see this one-time recast that we saw in 2008 or could it
perhaps come with a lot of other caveats?
If it comes, the one-time debt rollover should be across the board. There are projects which are
nearing NPA status. They are cash flow positive but because of interruptions which has
happened in the last couple of years, some stress features have come in. There is going to be a
breather for the developers, so that he can complete the projects. What will happen is that banks
will get the money which is stuck, the buyer will get his flat back and so it will be a win-win
situation for all three.
That is why Naredco and CREDAI has been pursuing this. We have had meetings in Delhi. We
have spoken to the RBI governor requesting for all this. We have to remember that to kick start
the economy, the housing sector needs to come up. We are the second largest employers. A lot
of industries depend on the housing sector. If it is going to go down because of some problem,
if it is a problem of a developer, do not bail him out. We are totally in favour of that. But if it is
a problem which is created by the circumstances, I think this rollover for one-time is required.
We are not asking for a waiver, we are asking for a rollover. There is a difference between
waiver and a rollover. We are not asking for free money, we are just asking for time, so that
everything comes back on track.
____________________________________________________________________
Newspaper/Online The Economic Times(online)
Date November 25, 2019
Link https://economictimes.indiatimes.com/markets/expert-view/we-are-not-asking-for-free-money-we-are-just-asking-for-time-satish-magar-credai/articleshow/72223668.cms?from=mdr
Housing minister launches portal for subsidy scheme under PMAY
At the launch of the Credit Link Subsidy Scheme (CLSS) Awas Yojana, the union housing
and urban affairs minister said that grievances of beneficiaries will be addressed in a
comprehensive and organised manner.
Union minister Hardeep Singh Puri on Monday launched CLSS Awas Portal through which
people seeking to avail housing subsidy under the Pradhan Mantri Awas Yojna (PMAY)-Urban
will be able to track their applications.
At the launch of the Credit Link Subsidy Scheme (CLSS) Awas Yojana, the union housing and
urban affairs minister said that grievances of beneficiaries will be addressed in a comprehensive
and organised manner.
Under CLSS, the Centre provides interest subsidy of up to around Rs 2.67 lakh on home loans
to individuals, which reduces the principal outstanding amount of the loan.
He said that the CLSS Awas Portal will help other stakeholders to work in synergy for release
of subsidy to beneficiaries on time.
According to the ministry, to accomplish 'Housing For All Mission', Global
Housing Technology Challenge-India (GHTC-India) was launched to get globally acclaimed,
alternate and proven construction technologies for speedier and cost-effective construction of
affordable housing.
At the event, Memorandum of Agreements (MoAs) for Light House Projects under GHTC-
India were also signed between the ministry and six states--- Gujarat, Jharkhand, Madhya
Pradesh, Tamil Nadu, Tripura and Uttar Pradesh.
Puri expressed his appreciation to the state governments for construction of light house projects
at Indore, Rajkot, Chennai, Ranchi, Agartala and Lucknow.
For LHPs, the ministry has introduced a technology innovation grant as an additional grant of
Rs 2 lakh per house which is over and above of the existing share of Rs 1.5 lakh per house
under PMAY(U).
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Newspaper/Online ET Realty(online)
Date November 26, 2019
Link https://realty.economictimes.indiatimes.com/news/technology/housing-minister-launches-portal-for-subsidy-scheme-under-pmay/72233440
PMO asks RBI to consider one-time roll over of builders loans
Sources say the proposal is for banks to be empowered to take commercial decisions for a
one-time recast of loans, and without classifying those loans as SMAs or Special Mention
Accounts.
Modi Sarkar is looking at yet another way to resurrect the real estate sector, without which the
economy cannot bounce back. Sources tell ET Now the Prime Minister’s Office and the Finance
Ministry have asked the RBI to consider allowing a one-time recast of real estate developers
loans, which can also be seen as a preventive measure to prevent a housing crisis and would
hurt banks badly.
Sources say the proposal is for banks to be empowered to take commercial decisions for a one-
time recast of loans, and without classifying those loans as SMAs or Special Mention Accounts.
Currently, banks are hesitant to allow a one-time recast as they would then be incumbent to
classify those loans as SMAs, and that would lead to higher provisions and a deterioration of
their balance sheets.
It should be pointed out that the PMO is not seeking a blanket one-time roll over of all loans,
but to empower banks to decide which developers and projects deserve to avail of this facility.
According to Fitch, nearly $25bn needs to be repaid by builders in the first of 2020.
“This is the reason why CREDAI and NAREDCO have been asking for this one-time rollover,
similar to what happened in 2008 at the time of Lehmann Brothers fall. This one-time loan
recast is to prevent other NPAs from happening,” said Niranjan Hiranandani, the President of
the builders association NAREDCO.
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________________________________
Newspaper/Online ET Realty(online)
Date November 26, 2019
Link https://realty.economictimes.indiatimes.com/news/industry/pmo-asks-rbi-to-consider-one-time-roll-over-of-builders-loans/72233483
Despite demonetisation and RERA, builders still asking for cash
When asked about the mode of payment for any realty transaction undertaken by
respondents over the last one year, 57% said they paid 25-50% in cash and rest via e-
payment or cheque.
Indians’ love affair with cash purchases shows little signs of abating. Especially when it comes
to buying real estate. The incidence of high cash component in property sales in metros has
come down sharply since 2016, but it continues to be rampant in smaller and even some bigger
cities like Ahmedabad and Indore.
Builders continue to ask for a hefty cash pay-out in property and land purchases forcing
customers to either drop plans or raise cash from other sources. And all this is happening when
large property markets with established realty developers are moving towards cheque payment
in a big way. Smaller cities like Ahmedabad, Chandigarh, Jaipur, Noida, Aurangabad, Kochi
and Indore are still witnessing large-scale usage of cash in property sales.
“Large property markets, being under the direct glare of authorities, have seen the proportion of
cash and instances of deals involving cash going down. However, relatively smaller markets
have not seen a decline like this as yet,” said property broker operating in Jaipur.
A late October survey conducted by a community platform LocalCircles, based on over 50,000
responses across 220 districts across India, pointed out that cash continues to dominate the real
estate market despite the demonetisation of high-value currency notes 3 years ago.
Approximately 42% of the respondents were from tier 1 cities, 28% from tier 2 cities and 30%
were from tier 3 and beyond cities or rural locations.
When asked about the mode of payment for any realty transaction undertaken by respondents
over the last one year, 57% said they paid 25-50% in cash and rest via e-payment or cheque.
Around 33% said they paid the full amount by e-payment or cheque, while 10% said they paid
less than a quarter portion of the consideration in cash and rest via e-payment or cheque.
Limiting it around 10-12% is an improvement as against pre-demonetisation level of up to 30-
35% cash component that was demanded by builders irrespective of which markets they were
operating in.
A developer in Vadodara said that cash usge is more prevalent in deals related to vacant land
parcels. Most of the landlords are either farmers or related to unorganised sectors and therefore
Newspaper/Online ET Realty(online)
Date November 25, 2019
Link https://realty.economictimes.indiatimes.com/news/industry/despite-demonetisation-and-rera-builders-still-asking-for-cash/72225048
are fine with receiving certain part of consideration in cash.
In most of the land transactions, cash is usually insisted by either parties to avoid the tax
incidence.
“Lower taxes would lead to better compliance, higher revenue and less usage of cash.
Reduction in long term capital gains tax (LTCG) from current 20.8% to 10% would encourage
more deals’ registration at actual value as against keeping a cash component,” said Jaxay Shah,
national chairman of the Confederation of Real Estate Developers Association of India
(CREDAI).
Builders operating in these cities may not agree to accepting or asking for cash as part of total
consideration but they do admit anonymously that they need to have a stream of cash
component for specific reasons
“If every vendor accepts cheque payments, why do we need cash? But seriously, can we really
put permissions, approvals and liasoning work under this category?” asked a builder operating
in Noida market.
According to an estate agent operating in Indore, higher stamp duty rates and the mismatch
between circle rates and actual market rates has been prompting deals with higher cash
component.
“If the actual market rate is higher than circle rates, both buyer and seller find it convenient to
add cash component to the deal. There are many such localities in Madhya Pradesh where this
situation exits. Also, the recently hiked 12.5% stamp duty rate is also encouraging cash deals
indirectly,” said the agent.
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________________________________
PMC Bank only disclosed Rs 439.6 crore as loans to HDIL: RBI
The Reserve Bank of India has reported that the fraud was perpetrated by the PMC Bank
by withholding and falsifying pertinent information about its exposure to HDIL.
The Punjab and Maharashtra Cooperative (PMC) Bank had disclosed an exposure of only Rs
439.6 crore to the HDIL Group out of Rs 6,226 crore, underlying the loan was camouflaged,
Parliament has been told.
The Reserve Bank of India has reported that the fraud was perpetrated by the PMC Bank by
withholding and falsifying pertinent information about its exposure to HDIL.
During the current inspection, PMC Bank has admitted to having a total exposure of Rs
6,226.01 crore (inclusive of interest accrued in the related accounts) as on March 31, 2019 to
the HDIL group. Out of this, only Rs 439.58 crore was disclosed to the RBI and remaining Rs
5786.43 crore remained undisclosed, the Finance Ministry told Lok Sabha in a reply.
The exposure to HDIL group was camouflaged/misreported to RBI and have since been
classified as NPAs by the RBI, requiring huge provisioning to be made as per RBI instructions,
and this resulted in a steep deterioration in the financials of the bank, the Finance Ministry
added.
It said that banking functions of cooperative banks are regulated by the RBI under the Banking
Regulation Act, 1949 and the apex bank conducts statutory inspection of Urban Cooperative
Banks (UCBs) under section 35 of BR Act, 1949.
Meanwhile, based on a complaint filed by the bank against its officials and borrowers
associated with the fraud/financial irregularities in the bank and manipulation of its books of
accounts, the Economic Offences Wing of Maharashtra Police has started its investigations into
the matter. Forensic auditors have been appointed to look into the related transactions.
The RBI has issued various circulars and guidelines relating to frauds. These include
instructions relating to audit, cyber security, early detection and reporting etc.
The RBI has also informed that as per the provisions of Deposit Insurance & Credit Guarantee
Corporation (DICGC) Act, 1961, the DICGC provides insurance for bank deposits upto Rs 1
lakh per depositor. Banks are required to maintain 1 per cent higher Capital to Risk-Weighted
Newspaper/Online ET Realty(online)
Date November 26, 2019
Link https://realty.economictimes.indiatimes.com/news/regulatory/pmc-bank-only-disclosed-rs-439-6-crore-as-loans-to-hdil-rbi/72233455
Assets Ratio (CRAR) than the Basel III norms framed by the Basel Committee on Banking
Supervision.
________________________________________________________________
________________________________
Telangana government mops up Rs 338 crore property tax from
gram panchayats
However, officials said that they could not focus on collecting taxes due to election duties.
Property tax collection in the gram panchayats in Telangana has taken a hit due to a series of
elections in 2018-19 fiscal. The government mopped up only Rs 338 crore during 2018-19
fiscal year compared to Rs 440 crore in 2017-18 and Rs 411 crore in 2016-17 fiscal years.
From September 6, 2018, when chief minister K Chandrasekhar Rao dissolved the state
assembly to go for early elections to gram panchayats in January 2019, and up till Lok Sabha
polls in April/May 2019, there was no focus on tax collections.
In fact, the government has been discouraging officials to not collect taxes from voters. “The
house tax collection declined drastically during the previous financial year as it was an election
year. Neither was there government pressure to collect taxes nor the willingness among house
owners to pay the taxes,” said Dhanalakshmi Narayana, a sarpanch in Nalgonda district.
However, officials said that they could not focus on collecting taxes due to election duties.
Panchayat Raj deputy commissioner Rama Rao said payment of house tax arrears during 2017-
18 and 2016-17 fiscal has also resulted in demand for property tax in 2018-19 being less than
previous fiscals.
________________________________________________________________
________________________________
Newspaper/Online ET Realty(online)
Date November 25, 2019
Link https://realty.economictimes.indiatimes.com/news/industry/telangana-government-mops-up-rs-338-crore-property-tax-from-gram-panchayats/72219676
Chandigarh Housing Board may reduce sector 53 flats' price by
10%
Till date, the CHB has received around 75 applications under demand survey for the
housing scheme offering 492 flats.
The Chandigarh Housing Board (CHB) has planned to reduce prices of flats by around 10% for
the city’s costliest housing scheme that will come up in Sector 53.
Recently, the CHB board of directors in their meeting directed officials to reduce the profit
margin and review the pricing of flats. A senior CHB official said they would soon put up the
revised proposal before the CHB chairman.
Till date, the CHB has received around 75 applications under demand survey for the housing
scheme offering 492 flats. Those interested can file applications through the official website of
the CHB. The forms can be filled till November 30. The process was started on October 25.
In July, the CHB had proposed a flat with three-bedroom, hall and kitchen (BHK) for Rs 1.85
crore, 2 BHK for Rs 1.6 crore, 1 BHK for Rs 1.15 crore and for the economically weaker
section (EWS) at Rs 58 lakh, drawing a lot of criticism.
The housing board released new prices on October 10 and mentioned that a 3BHK (HIG) will
cost Rs 1.80 crore, 2BHK (MIG) Rs 1.47 crore, 1 BHK (LIG) Rs 95 lakh and a two-room flats
(EWS) Rs 50 lakh. According to market experts, the prices are still on the higher side.
A CHB official said the board had fixed the prices after taking land rates and profit into
consideration. The board plans to construct self-financing housing scheme in different
categories under which an allottee is required to make 100% payment of chargeable price
before possession.
The decision to conduct the survey was taken to check if there was a demand for the general
housing in the city or not. The CHB board of directors in July had directed officials to carry out
Newspaper/Online ET Realty(online)
Date November 25, 2019
Link https://realty.economictimes.indiatimes.com/news/residential/chandigarh-housing-board-may-reduce-price-by-10-for-sector-53-flats/72220538
the survey. The Sector 53 housing scheme was proposed to be made open for all.
Times View
Going by the poor response to the demand survey for CHB’s costliest housing scheme in the
city, the board may have decided to slash the rates by 10%, but even this may not enthuse
buyers. The price is not in sync with the profile of the buyer who would opt for such an
accommodation. With luxe apartments available at much cheaper rates within a radius of 10 km
from the proposed site, the prospective buyers would think twice before investing their money
in the scheme.
________________________________________________________________
________________________________
Jaypee buyers seek clarity on completion procedures of unfinished
flats
Buyers have also pointed out that the resolution process needs to look at long-term
implications as well, to the period after all flats are handed over and the housing projects
are require maintenance.
A group of homebuyers in Jaypee Infratech Ltd projects have sought clarity on completion
procedures for all the unfinished apartments before voting begins to bring in either Suraksha
Realty or public sector company NBCC to do the job.
SD Mitroo, a homebuyer, wrote to BJP MP Jayant Sinha, who is chairperson of the standing
committee on finance, urging him to intervene in the resolution process and request lenders to
take a humane approach to resolve the matter. “While finances are one part of the entire
resolution, buyers are actually concerned about the process of construction and handover of the
giant project (Wish Town). Who will ensure whoever is given the project meets specifications
and hands over the flats to buyers?” Mitroo said.
Buyers have also pointed out that the resolution process needs to look at long-term implications
as well, to the period after all flats are handed over and the housing projects are require
maintenance.
“We need to know in detail the completion timeline and other expense formalities. And after a
project is completed and handed over, who will be in charge of long-term maintenance of Wish
Town? As we see it, all agreements would be rewritten and homebuyers would have to sign new
agreements with the new owner. Timelines would have to be redrawn. Homebuyers cannot seek
legal remedy after the resolution. What will be Rera’s role in this?” AM Gupta, another buyer,
asked.
Newspaper/Online ET Realty(online)
Date November 26, 2019
Link https://realty.economictimes.indiatimes.com/news/residential/jaypee-buyers-seek-clarity-on-completion-procedures-of-unfinished-flats/72233361
Former CMD of NBCC Anoop Mittal, who was at the helm when the feasibility of taking over
Wishtown and incomplete projects of the Amrapali group were analysed, said it was time to ask
for a detailed report not just of finances but the work flow for construction and handover of
flats.
“The real challenge is to build 20,000 flats within the committed timeline, and the work flow
methodology is equally important. Finances are one component, but once the issue is resolved
by the NCLT and the case is out of courts, the new owner has to put in a lot of effort to
complete the house as per the original agreement. How the knowledge transfer from Jaypee
Infratech to the company coming on board happens is another issue to be looked at,” Mittal
said.
In the bid evaluation by independent analyst RBSA, NBCC scored 20 points less than Suraksha.
NBCC on Monday challenged the analysis. “Our offer is as good. We have upfront agreed to
sell the Yamuna Expressway to get the Rs 2,000-crore working capital,” a company source said.
One of the reasons Suraksha earned more points in the analysis was its commitment to bring Rs
2,000 crore as working capital from external sources. It produced a private bank’s letter of
intent to support its offer.
“The buyers are more concerned at this point about completion of homes and delay penalties.
We need clarity on these issues before we cast our vote in favour of either resolution applicant,”
said AM Gupta.
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________________________________
Bankruptcy provisions for HFCs positive for banks: Moody's
To allow bankruptcy proceedings against non-banking financial companies (NBFCs) is
positive for banks as its paves the way for orderly resolution of stressed shadow banks,
says a report.
To allow bankruptcy proceedings against non-banking financial companies (NBFCs) is positive
for banks as its paves the way for orderly resolution of stressed shadow banks, says a report.
The government recently empowered RBI to refer stressed NBFCs and HFCs with assets worth
of at least Rs 500 crore to insolvency courts after notifying section 227 of the Insolvency and
Bankruptcy Code.
Prior to this, the only resolution framework available for stressed NBFCs was liquidation and
with this DHFL is set to become the first HFC to go to a bankruptcy court.
"Inclusion of NBFCs into the bankruptcy code is credit positive for banks (NBFCs' biggest
source of funds) because IBC provides for the orderly resolution of a stressed NBFC company,"
rating agency Moody's said in a report on Monday.
Section 227 of IBC empowers the government to notify, in consultation with financial sector
regulators, for insolvency and liquidation proceedings. The section specifies that on the Reserve
Bank can initiate the bankruptcy process for an NBFC/HFC.
On November 20, the Reserve Bank superseded the DHFL board and appointed an
administrator and said it would begin bankruptcy process for the crippled company that owes
close to Rs 90,000 to the system.
The agency said RBI's close involvement in the process indicates NBFC sector's importance to
overall financial stability, including the direct effect of any systemically important NBFC's
failure on banks and other credit providers.
Newspaper/Online ET Realty(online)
Date November 25, 2019
Link https://realty.economictimes.indiatimes.com/news/allied-industries/bankruptcy-provisions-for-hfcs-positive-for-banks-moodys/72224883
"We expect the RBI to selectively approach the IBC to resolve NBFCs with severe liquidity or
solvency issues, or to resolve companies whose weak corporate governance is deterring
potential buyers," it said.
It also expects banks and the RBI to utilise other debt restructuring options before approaching
the IBC.
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________________________________
Electricity companies need to make LED bulbs available: Ajay
Mathur, DG, TERI
If you look at the EESL's Ujala program that provided an LED to anybody- rural or
urban at Rs 10 a month with monthly payments through the electricity bills making up for
the difference.
Ajay Mathur, director general of TERI believes that in order to promote the use of LED bulbs,
electricity companies need to make them available to more users, especially in rural areas on an
EMI payment basis through their bills.
In conversation with Ankit Sharma of ETRealty, he said that like LEDs were provided
in EESL's Ujala scheme at a very low cost with monthly payments through the electricity bills
making up for the difference, electricity companies can soon come up with such schemes.
Edited excerpts:
Will enhanced lifecycle of LED bulb impact the lighting industry?
This happens across the portfolio of consumer durables. Every equipment that we have, the life
cycle has been increasing because of better performance. This is similarly true in the lighting
sector.
In my view, it also provides an opportunity because one of the things that's happening in the
lighting sector is that the initial cost increases with increasing efficiency, so CFL is more
expensive than an incandescent bulb and LED is more expensive than a CFL. So today possibly
the LED is cheaper than a CFL.
Newspaper/Online ET Realty(online)
Date November 25, 2019
Link https://realty.economictimes.indiatimes.com/news/lighting/smart-lighting/electricity-companies-need-to-make-led-bulbs-available-ajay-mathur-dg-teri/72214989
This in my view also gives an opportunity for new business models that are based on lighting
service rather than the sale of assets. Now the current lighting industry has been built on the
basis of the sale of assets. I would respectfully submit that we may need to start looking at
different business models as we move ahead.
How can new technologies in lighting industry impact rural India?
If you look at the EESL's Ujala program that provided an LED to anybody- rural or urban at Rs
10 a month with monthly payments through the electricity bills making up for the difference.
Now as we look to the future, we have also seen that the streetlights in urban areas are LEDs.
We are also saying that the rural street lights which are connected to solar panels are also LED.
This is now a requirement and it makes sense because as soon as you move from incandescent-
CFL-LED the size of the solar panel reduces dramatically, so the overall cost reduces.
The challenge is how do I get a rural household that their second and third replacements are also
LEDs. This happens through two ways- one is that in the slightly more affluent rural
households, the fact that an LED bulb uses less electricity and therefore it helps them remain
within the lifeline rates of electricity helps a great deal. So they buy an LED bulb.
In my view the next step that is going to happen is that the electricity companies would start
offering LED bulbs to users and charging them through the bills. This would make sure that the
second and the third purchases are also LED bulbs.
Can government bodies benefit from the use of LED products?
I think this is already happening. The first street light project which is based on LEDs occurred
in Visakhapatnam in Andhra Pradesh. And the reason it occurred was that there was a need for
a lot of money to change infrastructure which have been destroyed as a result of cyclone
Hudhud.
Consequently, the first model was a service model. The streetlights are owned by EESL and the
Andhra Pradesh government and Visakhapatnam municipality paid EESL a service fee. This is
fast becoming the model that many municipalities are using.
Consequently when their replacement occurs, it is pared of that service contract that they are
required. Now the municipalities who have bought it, they are seeing their lower electricity bill.
It is going to be immensely difficult for them to move to back to tube lights or sodium lamps or
whatever they were using earlier simply because they will now have the problem that their
operational costs will go up. Their lifetime costs will go up and there would be audit objections
if they move back to less efficient lighting devices.
What are government bodies' apprehensions in using LED products?
The major challenge that the shift to LEDs has been inhibiting this change is the budgets to
government departments are still limited. So if I am a school I get a certain amount of money.
Now in that money, I have to figure out what I get and my capital expenditure and my revenue
expenditure are different. So there is another piece of money which is there for paying my
electricity bill.
We are now finding that an increasing number of states are bringing in requirements that the
lighting that they have to purchase has to be LED lights and I think eight states have already
issued these directions and the capital cost is provided accordingly .
I think as more and more states start requiring that procurement of lighting has to be LED-
based, this demand for the use of LED bulbs in government offices, schools etc., would also
increase in the same proportion.
How can we make more people adopt LED products?
So as far as the private sector is concerned, there are two types of developers- one who make
the building and sell or rent out the shell. And then the tenant does all fittings including the
lights. Now the tenant is fitting the lights and is also paying the electricity bills. What we have
found is that in almost 100 percent of the cases, the tenants have chosen LED lighting over
other forms of lighting.
The second model that is used is that the developer fix the building and then rents out the
various places, which are fitted out. In such cases, the fear that you are saying, does happen in
many cases where in order to meet their costs and to meet the goals of keeping costs down,
developers use lower efficiency lighting devices.
What we have seen and you will see this in Gurgaon is that some of the developers who did
this, their customers ask them to change to LED lights- one because they were paying the
electricity bills, two because the ability to play around with LED lights, dimming, colors etc., is
much more than with conventional lights and the private sector players are much more
demanding in terms of the quality of light that they want.
What I'm suggesting is that in the commercial sector we are looking at developers who are
increasingly moving towards LED lighting or are being forced to sometimes even change to
LED lighting.
As far as homes are concerned, there are two things that are happening- one is that in higher
electricity consumption households, we are seeing that LED penetration is near 100 percent.
The problem where it occurs is in the lower electricity consumption households where again
capital costs means that people replace their LED bulb, which they have got through Ujala, with
incandescent bulbs when they fuse out. Again, I think for these kinds of consumers, as for rural
consumers, electricity companies need to make LED bulbs available on an EMI payment basis
through their bills.
Are you in favour of government's intervention to make people adopt LED products?
I don't like prohibition. I tend to favor prohibition only in extreme cases when we have no other
option. In this particular case, I think we can move towards near 100% LED penetration through
the fact that it uses less energy and therefore business models which allow payment on a regular
basis rather than one upfront purchase and second through the availability of LED bulbs for the
lower-income groups through the electricity companies. If we do these I believe that the vast
amounts of the market that we're talking about would have become LEDs in a relatively short
period of time.
Do you think Chinese products adversely impact the Indian manufacturers?
There is no doubt that this is a problem but I would suggest it's a problem which is now
reducing in scale. Let me explain why, when the UJALA program was launched, in the initial
three tenders, almost 100% of the bulbs were imported. Often they were imported as different
parts, the LED chip was separate, the heat dissipator was separate, the electronics are separated
and so on.And they are put together in India.
Suddenly we found that in the fourth tender when the price went below a hundred rupees. We
found that except the chip, everything was being largely carried out in India. This was the time
when the margins on the LED bulb became less than Rs 10 and Rs 10 of the cost of transport of
LED bulbs components in China to India.
Today all the products which comprise in a LED bulb are made in India with the exception of
the LED chip. Consequently, to be competitive the challenge today is of scale. If we can get
large enough scales, then it is possible that we can be competitive with international prices. The
small-scale sector has got its own challenges, but my belief is that the small-scale sector can
very easily integrate itself into the supply chain of the larger manufacturers, but at the end of the
day we need to make sure that Indian manufacturers are efficient and globally competitive.
Do you think lighting industry needs cluster development?
The key issue here is the size of economies of scale. Very clearly for LED chip manufacturer,
the scale size is very much larger. That's why it's only in five countries. For the heat dissipator,
the economies of scale are much smaller. For a semiconductor driver, the scales are somewhere
in between that of an LED chip and heat dissipation system.
My own feeling is that there is a certain degree of self-organization that occurs based on
economies of scale. So at the moment there are no LED chip manufacturers in India. To the best
of my knowledge, there are two driver manufacturers in India, possibly three. There are a large
number of heat dissipator manufacturers in India. There are a large number of people who put
these things together. It is possible that the last two may form these clusters that we've been
talking about.
If we see that these clusters reduce prices and increase efficiencies, I would be very strongly in
favor of such zones being created.
Can use of smart lighting help Indian cities?
The key challenge in smart lighting is that the capital costs are much higher. You're putting a lot
more lights and those lights are coming up as and when needed. So the capital cost is high, the
operational cost is low. You're able to provide lighting in a sense on-demand, where it is
needed. This means that it is in a sense the volume of lighting, the amount of lumens of lighting
that matter.
As far as data is concerned, what we are seeing and will see is that there are certain providers of
solutions who become both the keepers of the data as well as use the data to design new
products. It is not in their interest to let this data be open and available because they develop
their algorithms based on the information that they collect. Whether they should be regulated, I
think it's too early to say. Regulation comes in when we start seeing that the leakages are of a
significant enough amount to cause an issue. We have not yet seen that.
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Co-working to gain as global firms expand: Lee Elliott, Knight
Frank
Lee Elliott, research head (occupier services), Knight Frank, said better productivity and
lower attrition is being achieved through office space.
India is one the most attractive destinations for large global corporations, a senior executive at a
global consultancy said, associated as it is with high value and critical business functions.
Lee Elliott, research head (occupier services), Knight Frank, said better productivity and lower
attrition is being achieved through office space. Knight Frank pegs real estate at 15% and
people at 55% of total operational costs for any company.
“The focus is clearly on retention. You can’t push more and more people into the same space,”
said Elliott. This is expected to lead to increasing demand for flexible office spaces that will
expand at least sixfold to account for 35% of all office space globally in the next three years, up
from just about 5% at present.
With India expected to see five generations of workforce over the next five to 10 years,
“convergence between coworking operators and conventional landlords will accelerate. Cost of
replacing staff is much more than real estate,” said Elliott. “Coworking creates vibrancy and
footfall.”
Companies are looking at 50% conventional space on a 10-plus years lease. Separately, 30% of
space will be on the flexible model and 20% in a coworking environment, as per Knight Frank.
“This is mainly due to large companies increasingly planning flexible and serviced spaces that
offer freedom to expand and contract quickly according to market conditions, ” said Elliott.
The IT/ITes sector contributed 35%of the total demand in the first half of 2019.
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Newspaper/Online ET Realty(online)
Date November 25, 2019
Link https://realty.economictimes.indiatimes.com/news/commercial/co-working-to-gain-as-global-firms-expand-lee-elliott-knight-frank/72216040