Rising interest rates, tighter lending norms, poor sales--they all add up to an imminent slump in property prices

Property prices in major Indian cities, including Mumbai and New Delhi, are set to slump by as much as 30% in the next three-six months as rising interest rates and tighter lending norms have led to a sharp drop in demand for homes. "Softening in prices would begin in a month or two if sales continue to be low," said Adhidev Chattopadhyay, an analyst at Mumbai-based Edelweiss Securities Ltd. A Credit Suisse note on 19 January forecast that property sales in India may decline unless prices are cut 10-30%.

The Reserve Bank of India (RBI) has signalled borrowing costs will rise further after increasing interest rates seven times in the past year to curb price rise. It has also tightened lending norms for the purchase of property to rein in surging prices. Even as the supply of residences outstrips demand, property developers, who need to repay an estimated Rs14,000 crore to banks by the end of the financial year, are facing the spectre of loan defaults as dropping stock prices make it difficult for them to access equity markets, and banks tighten lending.

"A consensus is emerging that we are seeing the tip of a slowdown or a semblance of a bubble and the nervousness is evident on a pan-India level," said Amit Goenka, national director, capital transactions, Knight Frank India.

The Bombay Stock Exchange realty index, a measure of 15 property stocks, has dropped 26% in the last year, compared with a 17% rise in the benchmark Sen. The realty index has plunged 25% this year.

In November, RBI asked lenders not to loan more than 80% of the value of a property priced at more than Rs50 lakh. It also asked banks to increase the risk weightage of property loans of more than Rs75 lakh to 125%, making it more expensive to lend. Risk weightage assigns the minimum amount of capital that lenders have to maintain, as a percentage, depending on how risky a loan is.



"This was an additional factor along with the price rise which directly impacted investor sales in the higher end of the residential market," said Chattopadhyay.
"The loan-to-value ratio being capped at 80% effectively reduces the purchasing power of a homebuyer," analysts Aashiesh Agarwaal and Chattopaday wrote in a note to clients. "With a homebuyer having to cough up additional 5-10% equity for buying a house, he may have to delay his purchase decision, leading to a fall in incremental sale volumes."

The drop in residence sales has led to an increase of inventory in several cities. Mumbai has been the worst hit with about 88,000 unsold flats in the metropolitan region. About 25,000 of them are within the city limits of India's commercial capital, according to a survey of 2,400 housing projects in Mumbai, conducted by property researcher Liases Foras.

Recent home sales data suggest it may take as many as 22 months for the inventory to be cleared in cities such as Mumbai, Delhi-NCR (National Capital Region), Chennai and Hyderabad, said Pankaj Kapoor, chief executive of Liases Foras.

Residential sales tumbled 15% in Gurgaon, 20-25% in Greater Noida and Ghaziabad and almost 40% in Faridabad during the last two months of the past year, according to PropEquity Research.

Data from across India shows that only 15% of the home deals struck between April and September were at prices less than Rs2,500 per sq. ft, suggesting it is now difficult to buy even a 1,000 sq. ft house for less than Rs25 lakh in most cities. As a result, volumes have begun to slow and new bookings reported by major developers have been lower than expected, Credit Suisse said in their report.

"Builders have started negotiating across the table and are willing to cut prices by 10-15%, but prices need to fall further to become affordable," said Kapoor.

Some prospective buyers have now decided to delay their purchases until prices fall.

Vishal Jain, 35, has taken a break after six months of house-hunting every weekend. Jain, who runs his own optical lens business, wants to shift from his one-bedroom apartment in Ghatkopar, a Mumbai suburb, to a two-bedroom home in the Malad-Kandivali area, another suburban destination. He has a budget of Rs45-50 lakh.

"Even if I stretch my budget by another Rs10 lakh, there is nothing available other than properties in 25-year-old housing societies," Jain said. "So I can either move further north, towards Dahisar, or wait for another six months."

Indiabulls Real Estate Ltd, which is developing the "Bleu" project in central Mumbai at prices that are 15-20% lower than its earlier luxury projects, has also laid out simpler terms for its buyers to ensure sales.

A price correction will help propel volumes, said developers. Analysts predict a 15-20% correction in prices in NCR and rest of India, while "overheated" markets such as Mumbai and Ahmedabad would see a fall of 20% and above.

"If demand is low, we may correct prices," said Vikas Oberoi, managing director of Oberoi Realty Ltd. "We have corrected prices earlier and we will do it again."

In Hyderabad, the Telangana agitation has hurt both property prices and sales. In Bangalore, home to companies such as Sobha Developers Ltd and Prestige Estates Projects Ltd, sales have been stronger.

"You need to keep a price that will be accepted by the homebuyer," said J.C. Sharma, managing director at Sobha Developers. "India is growing and we know people can and are willing to spend now."

The decline in sales, however, has not slowed building activity. Construction in central Mumbai continues, with textile mills being torn down to make way for luxury housing and shopping projects.

An estimated $10 billion (Rs45,000 crore) of new housing projects are in the pipeline in the Lower Parel area of the city, with large developers such as Indiabulls, Peninsula Land Ltd, DLF Ltd and Lodha Developers Ltd in the fray to sell about 10 million sq. ft of luxury housing at an average price of Rs15,000-20,000 per sq. ft.

Knight Frank's Goenka said that despite sluggish sales of premium homes, residences that cost Rs20-40 lakh will find buyers.

Tightened bank lending, declining equity markets, private equity funds demanding steep returns and negligible property sales have compounded the trouble for property developers, said Pujit Aggarwal, managing director at real estate developer Orbit Corp. Ltd.

Indian real estate has always relied heavily on bank financing, with outstanding banking loans to the real estate sector having increased 33% in the past 21 months to over Rs1 trillion, according to Credit Suisse.

Analysts say the pressure is mounting on developers from all sides.

Hari Prakash Pandey, vice-president, finance and investor relations, Housing Development and Infrastructure Ltd, said that if the environment is hawkish--be it the government or financial authorities--decision-making is impacted, affecting business growth.

DLF, the nation's largest developer, said after its third-quarter earnings that it is banking on a series of new properties to generate cash flow and partly pare its Rs20,694 crore debt.

DLF may not meet its sales forecast of 12 million sq. ft by March, as about six of its new projects have been delayed, and due to price rises in recent months, said Angel Broking Ltd in a 1 February report.

To make problems worse, banks may further tighten lending to property developers after DB Realty Ltd and Unitech Ltd have been linked to ongoing investigations into the allocation of telecom spectrum. Lenders are turning down new loan proposals and may also take a close look at the proposed end use of loans that have already been sanctioned, but not yet disbursed to real estate companies.

"Investors want to know whether the money borrowed by developers for real estate purposes are being used for what it is actually meant or are being diverted elsewhere and they want to be doubly sure," said Rajiv Sahni, partner, real estate practice, Ernst and Young India.
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  • Except Kashmir, which should not have been a part of India to begin with. Only for Nehru's love for his homestate and pakistan's stupidity and impatience that we have been in a mess since independence. Patel was all for giving it to pakistan. Now there is so much sunk cost that parting with it is unthinkable for any Indian worth his salt and for good reasons.

    Sorry off topic .

    Originally Posted by RamanT
    Well I disagree, where is the cheating in partition, all hindu majority areas are in India.... Reality is India tends to bully small coutries like Bangladesh and Nepal in the same way as US bullies the world...

    Had we been a sole Hindu nation we could have far lesser religious tolerance... north east me banladeshis aaye na ayen but they will be treated like shit as long as they are in india for sure... the same way some indians are treated when they work outside india eg Indian labourers in Gulf...
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  • Kashmir

    There's more to Kashmir than nehrus love. River Jhelum flows through Srinagar and Indus near leh. Pakistan is a dead civilisation if we choke the Himalayan rivers that flow thru India. Look up indus water treaty on google....it took many years and US had to mediate to solve it.

    Also major strategic point as you don't want china and Pakistan teaming up right above our head.


    Originally Posted by sheeshu
    Except Kashmir, which should not have been a part of India to begin with. Only for Nehru's love for his homestate and pakistan's stupidity and impatience that we have been in a mess since independence. Patel was all for giving it to pakistan. Now there is so much sunk cost that parting with it is unthinkable for any Indian worth his salt and for good reasons.

    Sorry off topic .
    CommentQuote
  • Originally Posted by sheeshu
    Except Kashmir, which should not have been a part of India to begin with. Only for Nehru's love for his homestate and pakistan's stupidity and impatience that we have been in a mess since independence. Patel was all for giving it to pakistan. Now there is so much sunk cost that parting with it is unthinkable for any Indian worth his salt and for good reasons.

    Sorry off topic .


    Good to hear this... I believe that Kashmir was acquired by India thru force directly/indirectly... at present also it has some characteristics of a military colony with far less development... and India never want to discuss it in UN/ take plebiscite
    (though many of us have been tought to beleive otherwise)
    Off topic just for Independence day...
    CommentQuote
  • Originally Posted by RamanT
    Good to hear this... I believe that Kashmir was acquired by India thru force directly/indirectly... at present also it has some characteristics of a military colony with far less development... and India never want to discuss it in UN/ take plebiscite
    (though many of us have been tought to beleive otherwise)
    Off topic just for Independence day...



    Sirjee this issue is releated to running a country not a home, where we can think whether to use Force or not...

    how to define India is major question here...
    Why u say that except Kashmir every other place should be in India..
    why we thought other 500 provinces merged and become a contry like India and do not include Kashmir ...

    Who used Force first.. I guess it was Afghans sponsered by Pakistani.. then on request of Province head India acted...

    It is not so simple to declare that by force India acquired it..

    Just to add on we have many elections also in Kashmir... you can doubt whether they are free or not... second thing is more than 1 party is able to rule in Kashmir..(as State Govt..)


    If we want to discuss more bring this out of this RE buble topic and put it in some other place.. I'm not sure where..

    I responded because simple decalation of your that India using force..forced me to react.. :)
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  • Originally Posted by Stots2708
    Sirjee this issue is releated to running a country not a home, where we can think whether to use Force or not...

    how to define India is major question here...
    Why u say that except Kashmir every other place should be in India..
    why we thought other 500 provinces merged and become a contry like India and do not include Kashmir ...

    Who used Force first.. I guess it was Afghans sponsered by Pakistani.. then on request of Province head India acted...

    It is not so simple to declare that by force India acquired it..

    Just to add on we have many elections also in Kashmir... you can doubt whether they are free or not... second thing is more than 1 party is able to rule in Kashmir..(as State Govt..)


    If we want to discuss more bring this out of this RE buble topic and put it in some other place.. I'm not sure where..

    I responded because simple decalation of your that India using force..forced me to react.. :)


    Lets cut it short here... Happy Independence Day.
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  • Originally Posted by RamanT
    Good to hear this... I believe that Kashmir was acquired by India thru force directly/indirectly... at present also it has some characteristics of a military colony with far less development... and India never want to discuss it in UN/ take plebiscite
    (though many of us have been tought to beleive otherwise)
    Off topic just for Independence day...


    Go and check the preconditions for plebiscite.
    CommentQuote
  • Originally Posted by shrek2011
    There's more to Kashmir than nehrus love. River Jhelum flows through Srinagar and Indus near leh. Pakistan is a dead civilisation if we choke the Himalayan rivers that flow thru India. Look up indus water treaty on google....it took many years and US had to mediate to solve it.

    Also major strategic point as you don't want china and Pakistan teaming up right above our head.


    I had gone recently to Kashmir on vacation and seeing condition there it seems its already a war-zone. Though the valley was mostly peaceful but military forces made their heavy presence felt.

    There was major argument between a group of Indians and kashmiri Guards at Gulamrg cable car . This could have led to serious consequences, but fortunately was averted. I would only blame the group of Dabang Indians for this mess .

    I really don't know much where kashmir should have been after independence.
    But in current times I feel it has better future with India provided Indian Govt. let it function without much military interference.
    This state is better developed than other states like Bihar and Orissaa and has good potential.

    Kashmiris know that tourists are major sources of Income and would never harm us, a minimum security should be more than enough.
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  • Demand for retail space remained subdued in April-June quarter: DTZ

    NEW DELHI: Restrained consumer spending due to high level of inflation and slowdown in expansion by retailers subdued demand for retail space across the country in the April-June 2012 quarter, according to a report by property advisory firm DTZ India.

    As a result, the quarter also saw restrained supply of mall space. Bangalore was the only city to get a new supply of 1.3 million sq ft of retail space. "No new supply was witnessed across other key retail hubs, namely Delhi-NCR and Mumbai, in the quarter," said the DTZ report.

    The vacancy levels across the three main cities, NCR-Delhi, Mumbai and Bangalore, stood at 9.96% of the total retail mall stock in the cities. Delhi-NCR and Mumbai registered high vacancy levels at approximately 13% and 10% respectively and Bangalore had a vacancy of 3%.

    "The overall retail market sentiments remained largely "tenant favourable" across major cities. Large upcoming supply across most markets coupled with high vacancy rates and restrained take-up levels helped retailers negotiate favourable deals from developers," said the report.

    Even though a number of Indian and international retailers want to set up new stores, only a quarter of the new mall developers are expectedto be completed in the next 12 months

    "Even as Indian consumers have exhibited a growing demand for luxury and high end imported brands, the steep depreciation in domestic currency value will adversely impact demand for imported products in the short term.

    However, most retailers are bullish on the long-term growth potential of retail industry in the country," said Anshul Jain, chief executive officer of DTZ India.

    "Moreover, the upcoming festive season in the second half of the year is likely to provide some stimuli to the retail landscape in the country."






    Demand for retail space remained subdued in April-June quarter: DTZ - The Economic Times
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  • Buyer's market for India Inc's assets

    Buyer's market for India Inc's assetsJitendra Kumar Gupta / Mumbai August 16, 2012, 0:46 IST
    The Lodha Group had, last week, claimed it bought DLF’s 17-acre plot in Mumbai at one-third the price paid in such deals two years ago. Though the claim may well be true, DLF, which is looking to shed some of its assets to reduce its high debt, was simply being pragmatic.
    Like DLF, several others are looking to sell assets or stake in some businesses to de-leverage their balance sheets. However, very few deals are materialising, as discussions are stuck on valuations, with too many deals chasing too few buyers. Buyers are looking for deals at half the price sellers are asking for, says Nirmal Gangwal, managing director, Brescon Advisors.
    Many agree. Issac George, director & chief financial officer of GVK Power & Infrastructure, says the scenario is normal, given investors are just not willing to take any risk due to policy uncertainties. He should know. GVK plans to sell stake or assets in its power, airport and coal businesses to raise funds. However, so far, it has been unable to do so because the valuation offers are just not good enough. In this respect, GVK is not alone.

    WHO PUT WHAT ON THE BLOCK
    DLF Aman Resorts, Mumbai mill, wind power unit
    Hotel Leela Real estate
    Suzlon Energy Chinese facility sold
    HCCS take in associate company, selling land, BOT assets
    Lanco Infratech Land, stake in power
    IVRCL Stake in Hind. Dorr, land, BOT projects
    JP Associates Cement business
    GMR IPL franchise, road projects
    GVK Hancock coal mines
    Rcom Tower business, Flag Telecom
    NCC BOT, real estate
    Source: Analysts, companies

    Experts say debt-laden promoters would have to come off the valuation high horse and leave something on the table for buyers before it’s too late. When the economic or industrial outlook is subdued, the debt stress builds up. On an average, companies have a debt-to-equity ratio of about three times and their average interest cost is about 80 per cent of the operating profits (earnings before interest, tax, depreciation and amortisation), leading many to report huge losses.
    “There is very high stress at this time point. Raising funds through equity is already difficult. On top of that, many bankers are not willing to extend funds to leveraged companies,” says Gangwal.
    In the listed space, the infrastructure and construction segments account for the most distressed companies. Companies like HCC and ARSS Infra have already been referred to the corporate debt restructuring cell. “There are a host of others like IVRCL, NCC, Lanco Infratech, etc, looking to monetise assets,” says Nitin Arora, who tracks infrastructure companies at Angel Broking. Buyers, however, are eluding these companies.
    Recently, IRB bought 100 per cent stake in MVR. But the stake sale was possible because the seller was desperate to sell assets. Some like Manish Kumar, who tracks the infrastructure sector at SBICAP Securities, say valuation is just a part of the problem. The quality of the projects was a major factor in the case of deals that materialised.
    In the hotels segment, Leela has opted for corporate debt restructuring. Last year, it sold its Kovalam property for Rs 500 crore. However, though the group has a high debt-to-equity ratio of 2.8, which is affecting its financial performance, no other deal was recorded.
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  • Indians biggest buyers of Dubai property with Dh3.7bn spent

    Figures for in H1 2012 show over Dh22 billion invested by foreign nationals in emirate's real estate
    Over Dh22 billion was invested by foreign nationals in Dubai's realty market in the first half of 2012 with Indians topping the list in value terms, followed by Britons.

    The total number of properties (buildings, lands, apartments and villas) sold during the first half touched 12,875 units, Dubai Land Department said in a statement.

    Indians bought a total of 2,153 properties worth Dh3.751 billion, followed by Britons who purchased 1,564 properties worth Dh 2.53 billion.

    Pakistanis invested Dh1.71 billion to purchase 1,814 properties, while Russian and Iranian investors competed for the fourth and fifth positions. Iranians bought 1,057 properties worth Dh1.52 billion while Russian purchased 694 properties for Dh1.44 billion.
    Saudis purchased 416 units valued at Dh1.06 billion, followed by Americans who invested Dh694 million to buy 415 properties.

    Canadians bought 329 properties worth Dh754 million. Jordanians purchased 268 properties worth Dh460 million, while investors from other nationalities bought 4,165 properties valued at Dh8.23 billion.
    Emirates 24|7 reported this month that Indians, Iranians and Britons together invested more than Dh1.5 billion to buy properties in global icon Burj Khalia in the first half of this year.

    Earlier in August, the Land Department said property transactions had jumped 21 per cent to Dh63 billion in the first half of 2012 compared to the same period last year, while transactions surged 82 per cent in value terms quarter-on-quarter, reflecting growing confidence among investors.

    Total transactions reached 18,953, with plot sales and mortgages dominating the first half transaction activity, with 3,522 deals worth Dh42.3 billion taking place.

    A total of 14,428 sale and mortgage transactions on apartments and villas, valued at Dh18 billion, were registered during the period, while 1,003 building sale and mortgage transactions, valued at over Dh 2.7 billion, were recorded. On an average, there were 133 transactions per day and 16 transactions per hour.

    In 2011, Dubai reported 35,297 real estate transactions worth Dh143 billion, an increase of more than 16 per cent over previous year's total of deals worth Dh123 billion. Indians continued to the top new investors in Dubai's real estate market last year, pouring in more than Dh2.1 billion.

    Majida Ali Rashid, Chairwoman of the Real Estate Investment Promotion and Management Centre, in a statement, said: "The real estate sector performance is moving from strength to strength over the past two years. The market has been attracting more foreign investors, which reflects the solid national economy and its excellent growth potentials."

    She added that the increased investor confidence in Dubai properties and the growth of deals and transactions in terms of quality and quantity represent positive indicators for further growth, which the government of Dubai is seeking and nurturing to secure a better future for the country and its citizens.

    Jones Lang LaSalle has said that the Dubai residential real estate market appears to have bottomed out as prices are now at rates similar to early 2008 levels and the general rental trend being positive, while UK-based Royal Institution of Chartered Surveyors said funds for investment in the UAE commercial property market are beginning to rise with capital values expectations turning positive for the coming quarter - first time since 2008.

    Dubai has already launched two initiatives, Tanmia and Tayseer, that aim to restart stalled projects in the emirate. Emirates 24|7 has reported an Indian developer has already acquired two projects under the Tanmia scheme while the same number of projects have got funding Tayseer.

    Besides, the department, in order to ensure and safeguard the investors' rights, is working on the Real Estate Investor Protection Law, which provides clauses of full refund to investors in cases where the developer breaches the contractual terms.
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  • very good panel discussion on indian real estate market trends & issues

    The panellists at Mint’s annual real estate conclave agreed that a complex Indian real estate sector needed a watchdog, especially to regulate the biggest stakeholder—the Indian government. They also pointed the mismatch between demand and supply as being an inherent part of the realty puzzle. The participants were Maneesh Srivastava, CEO, Muthoot Housing Finance Co. Ltd; Anuj Puri, chairman and country head, Jones Lang LaSalle India; Vikhyat Srivastava, co-founder, .com; Akash Deep Jyoti, director, real estate ratings, Crisil; Gaurav Gupta, director, Omkar Realtors and Developers Pvt. Ltd.
    The 27 July panel discussion on Reviving Residential Markets: are innovative financing options driving growth? was moderated by Mint’s Lisa Pallavi Barbora. The discussion covered the dynamics of the real estate sector and what the future holds. Edited excerpts:
    Lisa Pallavi Barbora: What does the fall in absorption rates mean, are genuine buyers and investors not buying?
    Anuj Puri: A lot of government data say demand is infinite and, as of 31 March 2012, there is a shortage of over 26.3 million dwelling units. When you look at the demand and the shortage, it really is infinite. I think what has happened here is that the demand is in one category and the product is being placed in another category. This has been seen largely in the three cities of Delhi, Mumbai and Bangalore. Outside of these three cities, the pricing, demand and supply is stacking up well. In Mumbai, 80% of the cost is the land cost, and unless we bring in better infrastructure land prices will continue to remain high. The builders are left with the balance 20%, making it very difficult for them to bring the price down.
    Barbora: Muthoot looks at affordable housing, loans for up to Rs.10-15 lakh—is there demand in that segment?
    Maneesh Srivastava: There is a lot of demand in the affordable housing space. As Anuj said, the demand exists in a certain space but there is a larger opportunity with the number of houses coming up in urban cities. The urban population in the cities is going to be 600 million in the next 15 years. That is the creation of at least another 20 Mumbais. Clearly, a city like Mumbai or a city like Delhi is not going to take such a load, and whether you like it or not, it is going to happen. Decongestion needs to happen from some of the larger cities and a larger plan needs to be taken up to allow planned development in some of the upcoming urban centres across the country. Unless and until we do that, we are looking at a situation which is likely to turn into a crisis. The whole question of whether the supply matches the kind of demand that is there, nothing can be done unless there is the right kind of supply to match the demand.
    Jyoti: First of all, we cannot have an overall demand and overall supply in context of the Indian real estate sector as the sector is very complex altogether, and cannot be compared to the real estate sector of any other country.
    There is no concept of overall demand and supply as far as the sector is concerned and it is all about offering the right kind of product to the market. So, while there could be humongous demand and humongous supply, the matching has to be product-specific and cannot be in terms of numbers. I think it is about time we moved beyond demand and supply and looked at other dimensions. In terms of city specific demand, there is demand in some cities that has really not dried out. In others, like Mumbai, there is demand and the pricing is really never going to come down. Then there are cities where we see demand coming down. The kind of diversities that exist from the various cities is very different. For example, NRI (non-resident Indian) wealth could be driving the real estate demand in Kerala. While cities like Bangalore and Gurgaon are getting driven by IT (information technology), and Mumbai has some other aspects.
    Vikhyat Srivastava: When you look at it fundamentally, 50% of India is still below 25 years of age and when these guys grow up, they will need houses. So the demand will always be there but what we need to focus on is at what price. As Akash pointed out, there is a product perspective to it and there is a pricing perspective to demand. I would say that demand is definitely there and supply is slowly coming up, especially in places like Mumbai and Gurgaon.
    Barbora: The other side of demand is supply, so is inventory a burden?
    Gaurav Gupta: I think India is the only country where we pay real estate prices upfront. If you go world over, people buy real estate and hope for the prices to increase. That is how the world phenomenon is. Coming to Mumbai, as Anuj mentioned, 80% of the price of real estate is land cost and that the developer has to pay upfront. So, to say that a very small scale of stock is enough to complete the project is not the case. First, we should look at the financial costs in terms of debt, in terms of equity and in terms of NBFCs (non-banking finance companies). So, after taking all these factors into consideration, the debt is so high, the pricing is so high, that the product has to be priced accordingly. In Mumbai real estate, the regulations have changed and have again added to the cost.
    Barbora:Are we at a stage where we need a common regulatory authority for the Indian real estate, considering the fact that it is such a complex affair and transparency has been a problem with this sector?
    Maneesh Srivastava: Yes, absolutely, we need regulation because it becomes more relevant as we go down the social ladder. This whole debate of what type of housing is in what part of the country—I think India is a large country. To start looking at the big numbers downwards, you will have to dissect that demand. The fact of the matter is that there is enough entrepreneurism to be able to construct according to demand as per the geographies. But what is obstructing is that the people who want to actually construct in those space are finding themselves constrained by the amount of time it takes to get approvals.
    Barbora: Is transparency a problem?
    Vikhyat Srivastava: Yes, like what is happening in Noida all these years. There has been lack of structured financing, because of which a lot of developments are stuck there.
    Barbora: What does a regulator mean for the developers?
    Gupta: The regulator is always welcome but again you cannot regulate demand and you cannot regulate supply. And the provision of the regulator should be such that we should equally benefit from them. Historically, the sector used to be very fragmented with small developers; with FDI (foreign direct investment) coming in, many corporates have entered, thus improving corporate governance and transparency.
    Jyoti: When we talk of regulators, immediately the stock market or capital market comes to mind; here there is a regulator in place and we are seeing that the regulator really does not determine the prices but facilitation in terms of price discovery and I think that component is completely missing in real estate. Transparency is also missing in this sector. When I think of regulation, it is not in terms of the regulator alone. No sector can only work under the regulator alone, I think it should be self-regulation to begin with, second component is market regulation. The market should be made more powerful and institutions that facilitate flow of information should be brought into this sector and lastly the regulator’s regulation. And each one should have their own role to play. This country needs more enforcement than regulation.
    Barbora: Is it possible to regulate such a complex sector?
    Puri: Our transparency index has improved, as eight years ago India was 72 on the index of nations in terms of transparency and corporate governance and we have moved up to 44, and at 44 we have actually beat China. The regulator needs to cover the entire sector, geographies and stakeholders. At the moment you are regulating the various stakeholders and not the government, the biggest stakeholder. Secondly, if regulation wants to come in its true sense, bureaucracy needs to come in. Some of your best corporates are already in, be it Mahindra, Godrej, Tata and in the process will bring more efficiency.
    Barbora:Old projects are not getting sold and even then new projects are coming up. It is a well-oiled machinery, there is enough funding through private equity funds, NBFCs and non-convertible debentures (NCDs) available for HNIs (high net-worth individuals). On the other hand, conversions are not happening and sales are slowing down. So, is this kind of supply and pricing creating an asset bubble?
    Puri: I think in real estate, money can’t be enough, so I am not sure what is enough money. There may be enough money but it is not sufficient money. Out of the three, this is the most important topic of discussion as it is one of the biggest challenges at this point of time given the liquidity situation in the country. I see this challenge coming from scheduled banks, dried up private equity, NBFCs running out of money, sales going down and combining all that the Reserve Bank of India coming heavy on interest costs. Would that lead to prices coming down? As Gaurav mentioned, this depends on demand and supply and they cannot be regulated. Not many know that post Lehman, from January 2009 to March 2009, the prices of real estate have gone down 20 to 25%, so it is not true that real estate prices only go up. But they are back up, because the demand came, the money came in and the liquidity got pumped in.
    Vikhyat Srivastava: I totally agree with his last point. You look at the economy in the bull market, it is the strongest player that leads the prices and in a bear market it is the weakest player that pulls the market down. In this bear market, transactions have slowed down a little, either due to external factors like in Noida or lack of approvals in Mumbai Private equity financing is replaced in a big way by NCDs. If transactions do not pick up and approvals do not come in and other factors do not loosen up, this sector is going to face some heat.
    Maneesh Srivastava: We had a project or we worked on a project in Ahmadabad that got sold out quickly. And these people financed the developer as the developer constructed. The question here comes in whether I am constructing for the right type of audience? I don’t think the debate is whether financing is available, as there is a lot of money available for the real home buyer who is restacking it in one way or the other waiting for the prices to come down.
    Gupta: What happens is that every developer has his own business plan and redevelopment is a very different industry. Take Mumbai and Gurgaon where land acquisition is very difficult, so they have their own set of business plans. Some say they want to do two projects in three years or say 20 projects in three years so the demand, pricing and product all depend on his business plan. Real estate is an industry and in the micro market the price range of the product can range between 15 and 20%. Financing from a private equity player is important as they should be confident putting their money and should have studied the market.
    Barbora: Does financing need to be more broad-based?
    Jyoti: Maneesh made a relevant point about the product. If in the residential market the product is right, we do not need any other form of financing. The customer finance available to incur all the financial costs puts you in a very good situation. Having said that, the private equity funds, banks or NBFCs—they really have to make sure that the value addition is not restricted to the funding alone. If that happens and say if the product is not right, to begin with you will need alternative financing as the customer funds are not coming in.
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  • DLF says annual rentals to service Rs 11,000-12,000cr debt

    DLF Group CFO Ashok Tyagi says the company is not "overly worried" about its massive Rs 22,680 crore debt which has an EBITDA of Rs 2,500 crore. "Our year-end debt guidance of Rs 17,000-17,500 crore is a conservative estimate," he told CNBC-TV18.

    In its first big step to shave off its huge debt, DLF announced the sale of 17.5 acres of NTC mill land to a peer--Lodha Developers--for Rs 2,700 crore. Further, Tyagi says the company’s Rs 2,000 crore annual rentals will service Rs 11,000-12,000 crore debt, booked for three years.

    "We have not yet started mulling options for meeting the 25% public float," he said.

    DLF is in "serious, advanced talks" to sell its Aman Resorts chain, the CFO said. The company has decided to stick to its core business and sell off its non-core assets, including the hospitality chain and the wind power business. It had acquired the hospitality chain in 2007 at USD 400 million.

    There will be no big ticket asset sale post these two companies, Tyagi said adding, DLF will not sell Aman Resorts at a low valuation.

    Going forward, DLF plans to focus on eight-10 geographies and not 35-40 cities like at the time of its IPO. "We see slowdown in property market but there will be no delinquencies." The realty major saw a slowdown in the pace of growth of property prices. "There has been slowdown in fresh leading but rentals are higher than last year," he told the channel.

    DLF has reported an 18.29% year-on-year drop in consolidated net profit in the first quarter as it was weighed down by costly finance and slowdown in home sales. Finance cost for the quarter was up 25.6% to Rs 623 crore from Rs 496 crore in the year-ago period.

    In the meantime, DLF has kept all big ticket land buying on hold. "We are cautiously planning our capex to make existing land contiguous," Tyagi said.
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  • City Lights: Housing prices show signs of stabilising: NHB

    Housing prices show signs of stabilising: NHB

    Housing prices have risen by up to 10.5 per cent in 16 major cities in the April-June period, while only three towns have witnessed a marginal fall, according to National Housing Bank (NHB) data. NHB ‘RESIDEX’ tracks the movement in prices of residential properties on a quarterly basis since 2007. The NHB RESIDEX now covers 20 cities. “Residential housing prices in 16 cities have shown rise in prices in this quarter ended June, 2012 over the previous quarter ended March, 2012,” NHB said in a statement. The maximum increase in housing prices was observed in Pune (10.5 per cent) followed by Bengaluru (8.7 per cent), Patna (8.6 per cent), Ahmedabad (6.4 per cent) and Ludhiana (5.3 per cent). Housing prices rose by 4.1 per cent in Lucknow, while homes became costlier in Mumbai by 3.7 per cent, Delhi and Kolkatta by 2.6 per cent each, Bhubaneshwar, Bhopal and Chennai by 1.7 per cent each, Surat and Guwahati 1.2 per cent each, and Vijaywada and Kochi by 1.1 per cent each. However, housing prices declined in Jaipur by 2.6 per cent, Indore by 2.4 per cent and Hyderabad by one per cent, NHB said, adding that prices in Faridabad remained stable. NHB said the prices have increased marginally, which can be attributed to local factors like improvement in infrastructure.








    City Lights: Housing prices show signs of stabilising: NHB - Indian Express
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  • Buyer's market for India Inc's assets

    Jitendra Kumar Gupta / Mumbai Aug 16, 2012, 00:46 IST
    http://www.business-standard.com/india/news/buyers-market-for-india-incs-assets/483416/

    The Lodha Group had, last week, claimed it bought DLF’s 17-acre plot in Mumbai at one-third the price paid in such deals two years ago. Though the claim may well be true, DLF, which is looking to shed some of its assets to reduce its high debt, was simply being pragmatic.
    Like DLF, several others are looking to sell assets or stake in some businesses to de-leverage their balance sheets. However, very few deals are materialising, as discussions are stuck on valuations, with too many deals chasing too few buyers. Buyers are looking for deals at half the price sellers are asking for, says Nirmal Gangwal, managing director, Brescon Advisors.

    Many agree. Issac George, director & chief financial officer of GVK Power & Infrastructure, says the scenario is normal, given investors are just not willing to take any risk due to policy uncertainties. He should know. GVK plans to sell stake or assets in its power, airport and coal businesses to raise funds. However, so far, it has been unable to do so because the valuation offers are just not good enough. In this respect, GVK is not alone.

    Experts say debt-laden promoters would have to come off the valuation high horse and leave something on the table for buyers before it’s too late. When the economic or industrial outlook is subdued, the debt stress builds up. On an average, companies have a debt-to-equity ratio of about three times and their average interest cost is about 80 per cent of the operating profits (earnings before interest, tax, depreciation and amortisation), leading many to report huge losses.
    “There is very high stress at this time point. Raising funds through equity is already difficult. On top of that, many bankers are not willing to extend funds to leveraged companies,” says Gangwal.
    In the listed space, the infrastructure and construction segments account for the most distressed companies. Companies like HCC and ARSS Infra have already been referred to the corporate debt restructuring cell. “There are a host of others like IVRCL, NCC, Lanco Infratech, etc, looking to monetise assets,” says Nitin Arora, who tracks infrastructure companies at Angel Broking. Buyers, however, are eluding these companies.
    Recently, IRB bought 100 per cent stake in MVR. But the stake sale was possible because the seller was desperate to sell assets. Some like Manish Kumar, who tracks the infrastructure sector at SBICAP Securities, say valuation is just a part of the problem. The quality of the projects was a major factor in the case of deals that materialised.
    In the hotels segment, Leela has opted for corporate debt restructuring. Last year, it sold its Kovalam property for Rs 500 crore. However, though the group has a high debt-to-equity ratio of 2.8, which is affecting its financial performance, no other deal was recorded.
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  • Kanda's rise using Gurgaon realty

    Gopal Kanda's can of worms

    Who is Gopal Goyal Kanda and why is he in hiding? Brijesh Pandey and Sai Manish chronicle the rise and fall of the Haryana minister who profited from Gurgaon’s boom, ran an airline aground and figures in a suicide note

    FROM HAWAII CHAPPAL to hawai jahaaj (flip-flops to aeroplanes), Gopal Goyal Kanda’s meteoric rise is a classic rags-to-riches story. The wheeler-dealer from Sirsa was touted to be one of the rising stars of Haryana politics until a suicide note sent him on the run from the state police.

    Kanda, 48, an independent MLA who held the home, urban bodies and the commerce portfolios in the Haryana government, was reportedly planning to contest the 2014 Lok Sabha polls in a bid to step on to the national stage. But he has already grabbed national attention after Geetika Sharma, 23, who worked as an air hostess at Kanda’s now-defunct MDLR Airlines, committed suicide on 5 August, leaving behind a note blaming him for her death.

    So, who is Gopal Kanda, the mystery man who has managed to give the police the slip for more than a week?

    Kanda’s origins were extremely humble. His father Murli Dhar was a lawyer at the Sirsa district court and was not known to have a flourishing practice. Some neighbours recall that he primarily used to deal in petty criminal cases. Gopal was the eldest among three brothers and a sister — and perhaps the most ambitious of the lot.

    A school dropout, Kanda started off doing odd jobs such as renting novels, repairing radios, even running a kaleidoscope shop. Soon, he used his savings to start Shoe Camp, a footwear store in Sirsa, which was upgraded to a small shoe factory in 1994.

    Kanda’s business acumen was inversely proportional to his ambitions. His stock started plummeting in the trading circles because he would often default on borrowed money. In a small town like Sirsa, with its closely-knit trading community, he soon became an outcast.

    During his trading days, Kanda got close to Abhay Chautala, the son of Indian National Lok Dal (INLD) leader Om Prakash Chautala, and became his lackey.

    “Kanda has the ability to read your mind and conjure up exactly what you want,” says a close associate who wished to remain anonymous. “Sirsa was just a small town with 2-3 lakh people. Gopal Kanda was a nobody and Abhay Chautala was the prince of Haryana. Soon, Kanda became Abhay’s stooge, which in itself was quite an achievement.”

    In the meantime, Kanda also became friendly with a powerful IAS officer, who took him along to Gurgaon when he was posted there in 1997-98. It was he who arranged the first tranche of cash (Rs 25 lakh) and a list of few properties that were disputed. Kanda opened an office in Sector 14, Gurgaon, where he dabbled in a readymade garments business as well as real estate. The garment business failed but realty turned out to be Kanda’s calling in life and he never looked back since.

    MDLR operated only three aircraft, but had 60 air hostesses. The airline was a front to keep politicians happy, says an ex-staffer

    Kanda acted as the front man for the IAS officer. His modus operandi was to buy disputed land for a low price, settle the dispute with the help of the IAS officer, and then sell the property for a premium.

    “The IAS officer was not the only one. When Kanda came to Gurgaon, the Bansi Lal government was in power and his relative Ajit Singh was the local tehsildar. Kanda became close to him. You cannot dabble in such business without support from powerful people. Kanda worked with him for close to two years,” says former Haryana deputy speaker and INLD leader Gopi Chand Gehlot.

    IN 1999, when Om Prakash Chautala became the chief minister, fortune smiled on Kanda. He rose to dizzying heights during this period under the alleged protection and tutelage of Abhay Chautala. The senior Chautala’s tenure also coincided with the property boom in Gurgaon. The IT sector and the call centre industry came to Gurgaon at around the same time.

    Kanda made a killing in influencing the change of land use, from agriculture to residential and commercial, which was the single biggest reason behind the astronomical growth in the wealth of politicians and landholders. For example, land that was bought for Rs 25 lakh per acre in 2002 became worth more than Rs 5 crore in just three years. Till 2005, it was alleged that Kanda was Chautalas’ front man, who took care of almost every big deal that happened in the satellite city.

    However, INLD leaders look away in disgust at the mere mention of Kanda’s name now. From Om Prakash Chautala downwards, they all deny that he was close to them. “He was never a member of the INLD,” says Chautala.

    Prod another senior INLD leader a bit and he agrees that Kanda must have reaped some benefits through the Sirsa connection. “Our government came to power in 1999. People allege that he rose when we were in power. To the best of my understanding, he took advantage of the Sirsa connection. People like him very easily develop closeness.”

    Kanda’s proximity to the Chautalas can be gauged from the fact that when the Bhupinder Singh Hooda-led Congress government came to power in 2005, the intelligence wing of the Haryana Police was asked to investigate the source of Kanda’s wealth. According to police sources, the real purpose of the investigation was to trap the Chautalas through Kanda, who was widely known as the Chautalas’ Man Friday. In 2007, this dossier was handed over to the internal security division of the Union home ministry.

    Kanda’s palace boasts of a helipad, gym, lawn tennis court and horse stable, and has four chandeliers worth Rs 1.5 crore each

    According to the dossier, “Till five years ago, Gopal Kanda and his family did not own much property. When his assets were looked into, it was found that Kanda and his family has now amassed properties worth hundreds of crores.”

    Some of the properties listed in this dossier include:
    • 1,125 sq yard plot in Gurgaon
    • Shop/office at Old Judicial Complex, which was bought in 2005 by LKG Builders. Gopal Kanda is a director of the company
    • A piece of land in Shikhohabad village bought by Nageshwar Realtors. Both Gopal and Govind Kanda are directors in the company
    • 7,574 sq m hotel in Sector 14, Gurgaon, bought in 2007 by MDLR Hotels. Gopal and Govind Kanda are directors in the company
    • 15 kanal agricultural land in Ramnagar village, Sirsa, in the name of Govind Kanda
    • 30 kanal agricultural land in Ramnagar in Gopal Kanda’s name
    • 12 kanal land in Mangalla village, Rania, bought in 2005 in the name of Kanda’s mother

    According to this dossier, Kanda and his family are associated with many companies. Sources say that Kanda either owns or is a director in at least 36 companies.

    It was based on this dossier that a team of Income Tax officers raided Kanda’s office and residence in 2008 to assess the value of his properties. The officers were assaulted by Kanda’s supporters and 18 of them were later arrested.

    Meanwhile, Kanda ploughed back a portion of his Gurgaon riches into Sirsa. He pumped in crores for refurbishing the ashram of the late godman Baba Tara, who had a huge following in Sirsa. Kanda’s father was a devotee of Baba Tara.

    Thanks to Kanda, the festival of Mahashivratri became a major attraction at the ashram in Sirsa. Every Mahashivratri, celebrities were flown in from Mumbai to perform at the ashram. In 2005, actress Hema Malini re-enacted conversations of Shiva and Parvati in a dance form. Her husband Dharmendra paid a visit to the ashram after he won the Bikaner Lok Sabha seat on a BJP ticket. Singers such as Anuradha Paudwal, Nishta Sharma, Gurdas Maan and Narendra Chanchal have also performed at the ashram.

    IN 2006, Kanda came up with his most ambitious project yet: the launch of MDLR Airlines. In 2007, MDLR (named after his father Murli Dhar Lakh Ram) started operations as a regional airline. It is alleged that the airline operation was a joint venture between Kanda and Chautala, although this has never been substantiated.

    Despite the hype surrounding the airline, Kanda couldn’t save it from folding up within two years. Failure to pay the lessors, employees and airports, violation of licence terms and an absence of safety mechanism forced the airlines to wind up operations.

    “For all his riches, Kanda was only a property dealer. The entry into the aviation sector changed his outlook,” says a former MDLR staffer not wanting to be named. “From a guy who was ill at ease in sophisticated circles, he went for a complete makeover before launching the airlines. The metamorphosis of Gopal Kanda was now complete.”

    “The total requirement for running MDLR was just 64 personnel. Usually, the cabin crew is 10 percent of the total strength. When MDLR was shut down, the number of air hostesses on the rolls was more than 60,” he says. “People who have dealt with Kanda say that this airlines was just a front to keep politicians and bureaucrats happy.”

    By the time the MDLR Airlines shut down in 2009, Kanda’s relationship with the Chautalas had hit rock bottom

    A business associate describes Kanda as a man with “animal magnetism”. “Kanda is crafty. Very clever. He is really blessed when it comes to networking. And see if anybody who can outmanoeuvre the Chautalas, then you can imagine how good he must be in his dealings,” he says.

    Kanda had two casinos in Goa — Mint Club and Rio, which was a floating . Rio’s licence expired after a year. Kanda spent close to Rs 5 crore each on these ventures. Not many know that he also owns a in Nepal. Model Nupur Mehta, who was linked to the cricket match-fixing scandal, worked at MDLR as vice-president, communications.

    As MDLR Airlines bled money, his relationship with the Chautalas turned sour. People close to Kanda say that after the launch of the airlines, he was under severe financial constraints. Apparently, the Chautalas also sensed that Kanda was doing a few deals of his own, which were hurting their interests. They started withdrawing money from Kanda. Sources close to Chautalas say that Kanda had indeed swindled a huge amount of money in the land deals.

    By the time the airline shut down in 2009, Kanda’s relationship with the Chautalas had hit rock bottom. The final nail in the coffin was the denial of the INLD ticket to Kanda from Sirsa (City) constituency. Kanda contested the election as an independent. He spared no expense in the campaigning and won by defeating five-time Congress MLA LD Arora. Destiny smiled on him like never before.

    Kanda’s electoral success stunned the Chautalas, more so because of the kind of opening it created for him.

    The 2009 verdict was a hung Assembly with the Congress getting 40 seats, six short of majority. A great deal of drama ensued in Sirsa when Kanda alleged that his life was under threat. He was airlifted out of the town under heavy police protection. Kanda roped in the support of six other independent MLAs and a few hours of intense negotiations later, he got a plum posting in the Congress-led Hooda Cabinet. Despite facing 10 criminal cases, Kanda was now the home minister of Haryana.

    “Though he was the home minister, his heart was in property,” says INLD leader Gehlot. “He got licences for six group housing schemes in upcoming sectors in Gurgaon and Manesar. Suppose, if you want to buy the licence for a group housing society, the rate per acre is fixed.

    “In the property market, the slogan is who is the cheapest labour? Labour means politicians who can get a good deal for you without costing a bomb. Kanda was one of the most expensive.

    “After 2009, he would exercise his influence as a minister and get that licence for a pittance and later on sell it for gold. If a licence costs Rs 50-80 crore and on the other hand you get that for free as a minister, then you can easily imagine the kind of profit you are looking at.”


    Living in style Gopal Kanda’s palatial residence in Gurgaon and his fortress in Sirsa

    Photos: Ankit Agarwal, Dijeshwar Singh

    A look at five projects started by Kanda in the past couple of years are indicative of the money power he had acquired. Some of the properties that have attracted attention since Kanda took over as minister are…
    • A three-star hotel on Hisar road in Sirsa, which is under construction. According to Govind Kanda, this hotel would include a beer factory, a multiplex, shopping mall, etc
    • MDK International School in Sirsa, which the officials claim is affiliated to Cambridge University, is built on a three-acre campus and is centrally air-conditioned
    • Tara Baba Charitable Hospital and Research Centre, a multi-speciality hospital, on Rania Road in Sirsa. The hospital will be built on an area of 3 lakh sq ft
    • There is also a plan to construct a temple in Sirsa, modelled on the Akshardham temple in Delhi and Gujarat
    • Kanda’s Red Fort palace — Modelled on a Mughal-era palace, it is built on a 3-acre plot. According to sources close to Kanda, this palace has four chandeliers worth Rs 1.5 crore each. The palace boasts of a helipad, gym, a lawn tennis court and a horse stable

    Those close to Kanda describe his post-October 2009 phase as the most relaxed. Says a close associate, “When he became an MLA, after a long time in his career, he was really free and in command of the situation. He was no longer under anybody’s shadow. And given the political situation in Haryana, it suited him just fine. This started reflecting in his behaviour as well.”

    “You have to understand his obsession with property,” he adds. “He is a failed businessman. Everything, be it shop, shoes, garment, aviation, , he touched turned into big failures. Property was his only success.”

    After Kanda fell out with the Chautalas, Chief Minister Hooda found a suitable man in Kanda to challenge the Chautalas in their pocket borough. In an unintentional revelation to a TV channel, Gopal’s brother Govind admitted that Hooda gave land to them at throwaway prices.

    As the probe gathers steam, a lot of sordid details are emerging about how Geetika was being exploited by Kanda

    One of the deals under question happened in November 2011, when Hooda gave Gopal Kanda 5,200 yards right in the centre of Sirsa. Kanda pledged to build a five-star dharamshala for two castes of the Bania community — the Aggarwals and Aroras.

    According to Kanda’s own admission, the land was “worth several crores” and was given at a cost of Rs 2,000 per sq yard. His political rivals claim that the present land value is at least Rs 1 lakh per sq yard. Govind Kanda admitted that the land was transferred in his brother’s name and “the land would be sold at market rates and the gains accrued would be used to register the land in the name of the charitable trust and build the five-star dharamshala”.


    Hot property Kanda’s vast business interests include a school in Sirsa and a floating in Goa

    Photos: Dijeshwar Singh, Arvind Tengse

    The rise in position and power also saw Kanda having several brushes with the law. If he was aggressive before becoming the home minister, his aggression touched new heights after 2009. He always travelled with a posse of 21 commandos.

    At a rally, Kanda had a public spat with Sirsa MP Ashok Tanwar. The situation became so volatile that Chief Minister Hooda had to rebuke Kanda in full public view. Later, a sulking Kanda did a disappearing act by leaving his security and official car at the guest house in Hisar. Hooda had to depute two senior ministers to placate Kanda.

    In 2010, Kanda was caught on camera using abusive language and instigating his personal staff to fire at shopkeepers of Subhash Chowk market in Sirsa. The shopkeepers had pulled down their shutters in support of a bandh called by the INLD.

    Interestingly, two days after he resigned as the home minister, the Supreme Court issued an order asking a case to be registered against him.


    In custody Gopal Kanda’s associate Aruna Chaddha was also blamed in the suicide note

    Photo: BB Yadav

    In July 2011, Kanda’s security guards assaulted cricketer Atul Wassan near the toll plaza on Gurgaon-New Delhi expressway. Wassan’s fault was that he had overtaken Kanda’s motorcade. Since the incident involved a well-known player, it resulted in a major embarrassment for the Hooda government and Kanda was forced to apologise.

    However, it was Geetika Sharma’s suicide that put the brakes on Kanda’s roller-coaster ride. Geetika committed suicide at her Ashok Vihar residence in New Delhi on 5 August. In her suicide note, Geetika blamed Kanda and Aruna Chaddha, another executive of MDLR, for continuously harassing and torturing her mentally.

    Geetika had joined MDLR as an air hostess in 2006. After the airline became defunct, she was made director of a subsidiary company owned by Kanda. Geetika was also a trustee of the MDK International School run by Kanda. Later on, she quit the company after which she and her family members started getting threatening calls.

    According to the complaint lodged by Geetika’s mother Anuradha Sharma, her daughter had joined Emirates Airlines in 2011 after quitting MDLR. However, she had to quit her job because Emirates received an email from Gurgaon Police claiming that she was a loan defaulter. This mail was allegedly sent by a fake email ID created by Kanda.

    It is alleged that after this, Geetika was forced to join an MDLR subsidiary company as director in 2011, a job she quit to pursue her higher education.

    Acting on the basis of the suicide note, Delhi Police arrested Aruna Chaddha on 8 August but its inaction in calling Kanda for even basic questioning, thus allowing him enough time to go underground, has come in for sharp criticism.

    Kanda has been absconding ever since and his bail application has been rejected by the lower court and the Delhi High Court has reserved its order on it.

    As the police investigation gathers steam, a lot of sordid details are emerging about how Geetika was being exploited by Kanda. Police sources say that her appointment letter had a clause that said she had to the meet the managing director (Kanda) every day after 5 pm, and that she had been exploited by Kanda and his associates. The police is also going through 400 pages of SMSes sent by Kanda to Geetika. They have also informed the court that Kanda had tampered with evidence at his office.

    Sooner than later, Kanda will have to come out of hiding and answer some tough questions. Till then, his lofty ambitions of becoming a leader on the national stage will have to be put on hold.

    Tehelka - India's Independent Weekly News Magazine
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