I am wondering, is it possible that recession will begin from 2012? I have seen many articles on internet about this, and recently one from Gary Shilling (please see the link Paul Farrel: A Recession Is Coming In 2012 And Things Don )

Any thoughts from intellectual people ...

How will it impact on IT and RE sectors?
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  • Sky was falling till date ... but seems that in future sky will fall down even beneath our feets.:bab (59):

    Originally Posted by compuwalah
    Last 3 days events confirm the 2012 recession ? So what were last 5 years pointing to with rising stock indexes, prop prices ?


    The sky is fallling ... sky is falling ...:)
    CommentQuote
  • It is impotant to undestand the Balance Sheet!

    Originally Posted by compuwalah
    Last 3 days events confirm the 2012 recession ? So what were last 5 years pointing to with rising stock indexes, prop prices ?


    The sky is fallling ... sky is falling ...:)


    Folks,

    Looking at rising Indices and then falling indices does not help us understand what next!

    We need to understand why rising, why falling and at this juncture what are the possible future directions ...

    For example, its now quite clear that the rising phase was largely because of loose money policy regime. Too much money, too easily available made our Industrialists greedy and they jumped in with both feel, bit off much more than they could chew or digest in terms of debt.

    So long as the music played, the party went on and the bankers played both sides. They lent to producers to produce much more than necessary, they lent to consumers to consume much more than needed. and so as to not alarm both parties in terms of repayment, they kept the interest rates low and the EMIs easy on the pocket! And obviously everything rose.

    But unknown to both parties, the bankers kept score of how much was owed to them. Then the music seemed to stop - or at least falter. Now the situation seemed to go out of hand. Too much money sloshing around the economy was starting to make everything costly - INFLATION!

    To keep inflation in check and not lose control totally, the Central Banker jumps in and cracks the whip - raising interest rates.

    Then suddenly a strange thing happened. People suddenly realised that they are on the hook for ALL the money they borrowed. Not only that, they now have to pay muh more in terms of interest and all the time that Plasma TV and fancy SUV was losing value rapidly!!!

    Then as production fell off, companies suddenly felt people were getting too costly and started cutting salaries and then jobs - maybe simply shipping them to even cheaper locations.

    Now we are all well and truly stuck!


    The West has come to a complete standstill. They now are staring at the abyss of a deep and prolonged recession with no real understanding of when exactly things will turn around. With very high unemployment, no jobs growth, high debt and consumers drying up, its the season of revolution - or WAR!

    Just look at the top tier RE companies in India and tell me that the RE sector is sitting on a sound base. The 2008 bottom for DLF was around Rs.170. With Sensx more than double the 8000 bottom, DLF is a paltry Rs 35 from that bottom at Rs 205. Profit for the latest quarter has fallen 55%. They are selling all "non-core" assets in a firesale. Debt is a humongous 21500 Crores.

    You all know the story of Unitech. They cheated their Telenor as well as did the 2Gscam partner to get 5500 Crores to pay down some of their debt.

    The entire RE sector has borrowed more than 100000 Crores from Banks alone. How much more money is taken from Private Sector, no one knows. Interest rates on these are mounting to over 24% on rollover.

    They are sitting on HUGE amount of unsold property at ridiculous "market" prices. 3 years of these interest rates will see cost of property in inventory DOUBLING! Will people buy these properties at double these prices 3 yers from now? If not these companies will see some serious NPAs!!! And their lenders will see their NPAs rise dramatically!

    I see the situation RIPE for a major debacle in the Indian RE market. This is no ordinary cycling decline. We may be at the cusp of a very major "event" followed by a long period of painful adjustment. In 2009 I mentioned that the builders were missing the BEST chance they had of dumping inventory by cutting prices. Instead they arrogantly went and RAISED prices!

    I am waiting patiently for prices to show serious declines. It may take another 2-3 years. But I'm very confident that there is NO OTHER WAY for builders to squirm out of this situation!!!

    Just my point of view.

    Its always important to understand the Balance Sheet along with the P&L, taken with market conditions to know the true picture of where a company (or sector) is headed!!! :)

    cheers
    CommentQuote
  • You are a knowledgeable person wiseman, but you always tweak facts and exxagerate things to prove your point. Use your knowledge in a better way...



    Originally Posted by wiseman
    Folks,

    Looking at rising Indices and then falling indices does not help us understand what next!

    We need to understand why rising, why falling and at this juncture what are the possible future directions ...

    For example, its now quite clear that the rising phase was largely because of loose money policy regime. Too much money, too easily available made our Industrialists greedy and they jumped in with both feel, bit off much more than they could chew or digest in terms of debt.

    So long as the music played, the party went on and the bankers played both sides. They lent to producers to produce much more than necessary, they lent to consumers to consume much more than needed. and so as to not alarm both parties in terms of repayment, they kept the interest rates low and the EMIs easy on the pocket! And obviously everything rose.

    But unknown to both parties, the bankers kept score of how much was owed to them. Then the music seemed to stop - or at least falter. Now the situation seemed to go out of hand. Too much money sloshing around the economy was starting to make everything costly - INFLATION!

    To keep inflation in check and not lose control totally, the Central Banker jumps in and cracks the whip - raising interest rates.

    Then suddenly a strange thing happened. People suddenly realised that they are on the hook for ALL the money they borrowed. Not only that, they now have to pay muh more in terms of interest and all the time that Plasma TV and fancy SUV was losing value rapidly!!!

    Then as production fell off, companies suddenly felt people were getting too costly and started cutting salaries and then jobs - maybe simply shipping them to even cheaper locations.

    Now we are all well and truly stuck!


    The West has come to a complete standstill. They now are staring at the abyss of a deep and prolonged recession with no real understanding of when exactly things will turn around. With very high unemployment, no jobs growth, high debt and consumers drying up, its the season of revolution - or WAR!

    Just look at the top tier RE companies in India and tell me that the RE sector is sitting on a sound base. The 2008 bottom for DLF was around Rs.170. With Sensx more than double the 8000 bottom, DLF is a paltry Rs 35 from that bottom at Rs 205. Profit for the latest quarter has fallen 55%. They are selling all "non-core" assets in a firesale. Debt is a humongous 21500 Crores.

    You all know the story of Unitech. They cheated their Telenor as well as did the 2Gscam partner to get 5500 Crores to pay down some of their debt.

    The entire RE sector has borrowed more than 100000 Crores from Banks alone. How much more money is taken from Private Sector, no one knows. Interest rates on these are mounting to over 24% on rollover.

    They are sitting on HUGE amount of unsold property at ridiculous "market" prices. 3 years of these interest rates will see cost of property in inventory DOUBLING! Will people buy these properties at double these prices 3 yers from now? If not these companies will see some serious NPAs!!! And their lenders will see their NPAs rise dramatically!

    I see the situation RIPE for a major debacle in the Indian RE market. This is no ordinary cycling decline. We may be at the cusp of a very major "event" followed by a long period of painful adjustment. In 2009 I mentioned that the builders were missing the BEST chance they had of dumping inventory by cutting prices. Instead they arrogantly went and RAISED prices!

    I am waiting patiently for prices to show serious declines. It may take another 2-3 years. But I'm very confident that there is NO OTHER WAY for builders to squirm out of this situation!!!

    Just my point of view.

    Its always important to understand the Balance Sheet along with the P&L, taken with market conditions to know the true picture of where a company (or sector) is headed!!! :)

    cheers
    CommentQuote
  • Wiseman I am doing this for the fourth time Guess but you still keep on tweaking the facts for your self interest...

    Members please read the independent article below which came in The Hindu

    The Hindu : News / National : Joint venture investments in Unitech cleared by Centre: Telenor

    Joint venture investments in Unitech cleared by Centre: Telenor
    4 April 2011, Sandeep Joshi
    Telenor on Monday distanced itself from the 2G spectrum scam and the naming of its joint venture (JV) partner Sanjay Chandra, managing director of Unitech, in the CBI charge sheet. The Norwegian telecom major said the CBI investigations covered the period prior to the Telenor Group's entry into India and that its investments in the JV with Unitech Wireless were cleared by the Government of India at each stage.

    “When Telenor invested Rs. 6,120 crore for a 67.25 per cent ownership in Unitech Wireless, it was in a company that already had a genuine licence issued by the Indian government with all necessary approvals. These investments were cleared by the Government of India at each stage,” Telenor said in a statement. In 2008, Telenor joined hands with Unitech Wireless to provide telecom services under the brand name Uninor.

    Defending its JV with Unitech, Telenor said: “The investment was made in the operating company and not to its promoters. This is the equity that has been used as working capital to fund the establishment of Uninor as a successful young operator in India with over 2.1-crore subscribers now. It is Telenor Group's intention to fight for its rights and continue the operational progress that has been achieved in the Indian market.”

    Telenor said the CBI charge sheet had named Mr. Chandra as managing director of Unitech, besides naming Unitech Wireless for actions when it was a fully owned Unitech Company. “This was a period prior to the Telenor Group entering India. Unitech Wireless will argue its case in court, and we expect Mr. Chandra to do the same. Telenor fully supports these proceedings. Telenor has zero tolerance for corruption. If any malpractice has indeed occurred, those responsible must be brought to book,” the company said.


    It clearly shows that all the 6000 crore telenor invested in the JV and not a single rupee was handed over to Unitech...

    I have all the excels describing the whole deal structure. If you want i can again put it on the forum....


    Originally Posted by wiseman
    Folks,

    Looking at rising Indices and then falling indices does not help us understand what next!

    We need to understand why rising, why falling and at this juncture what are the possible future directions ...

    For example, its now quite clear that the rising phase was largely because of loose money policy regime. Too much money, too easily available made our Industrialists greedy and they jumped in with both feel, bit off much more than they could chew or digest in terms of debt.

    So long as the music played, the party went on and the bankers played both sides. They lent to producers to produce much more than necessary, they lent to consumers to consume much more than needed. and so as to not alarm both parties in terms of repayment, they kept the interest rates low and the EMIs easy on the pocket! And obviously everything rose.

    But unknown to both parties, the bankers kept score of how much was owed to them. Then the music seemed to stop - or at least falter. Now the situation seemed to go out of hand. Too much money sloshing around the economy was starting to make everything costly - INFLATION!

    To keep inflation in check and not lose control totally, the Central Banker jumps in and cracks the whip - raising interest rates.

    Then suddenly a strange thing happened. People suddenly realised that they are on the hook for ALL the money they borrowed. Not only that, they now have to pay muh more in terms of interest and all the time that Plasma TV and fancy SUV was losing value rapidly!!!

    Then as production fell off, companies suddenly felt people were getting too costly and started cutting salaries and then jobs - maybe simply shipping them to even cheaper locations.

    Now we are all well and truly stuck!


    The West has come to a complete standstill. They now are staring at the abyss of a deep and prolonged recession with no real understanding of when exactly things will turn around. With very high unemployment, no jobs growth, high debt and consumers drying up, its the season of revolution - or WAR!

    Just look at the top tier RE companies in India and tell me that the RE sector is sitting on a sound base. The 2008 bottom for DLF was around Rs.170. With Sensx more than double the 8000 bottom, DLF is a paltry Rs 35 from that bottom at Rs 205. Profit for the latest quarter has fallen 55%. They are selling all "non-core" assets in a firesale. Debt is a humongous 21500 Crores.

    You all know the story of Unitech. They cheated their Telenor as well as did the 2Gscam partner to get 5500 Crores to pay down some of their debt.

    The entire RE sector has borrowed more than 100000 Crores from Banks alone. How much more money is taken from Private Sector, no one knows. Interest rates on these are mounting to over 24% on rollover.

    They are sitting on HUGE amount of unsold property at ridiculous "market" prices. 3 years of these interest rates will see cost of property in inventory DOUBLING! Will people buy these properties at double these prices 3 yers from now? If not these companies will see some serious NPAs!!! And their lenders will see their NPAs rise dramatically!

    I see the situation RIPE for a major debacle in the Indian RE market. This is no ordinary cycling decline. We may be at the cusp of a very major "event" followed by a long period of painful adjustment. In 2009 I mentioned that the builders were missing the BEST chance they had of dumping inventory by cutting prices. Instead they arrogantly went and RAISED prices!

    I am waiting patiently for prices to show serious declines. It may take another 2-3 years. But I'm very confident that there is NO OTHER WAY for builders to squirm out of this situation!!!

    Just my point of view.

    Its always important to understand the Balance Sheet along with the P&L, taken with market conditions to know the true picture of where a company (or sector) is headed!!! :)

    cheers
    CommentQuote
  • CommentQuote
  • Yes, there won't be any effect on RE in high demand areas like S Delhi, Gurgaon etc. People who wants to buy will buy regardless of what is happening. It is also very difficult to time the RE market so some folks just bite the bullet and buy it.
    CommentQuote
  • Similar things were said when recession was heading 3 yrs back. People used to say 'Its the problem in US, Indian economy will have no impact' , 'Indian economy have strong basics' and 'This is the right time to enter the market'. But they fail to understand the depedency of India (even world economy) on US. One of the major RE buyer class which is IT people have direct and drastic impact of US economy issues. Europe is also in deep crisis. This time if slow down happens then it would be much more horrific as apart from economic issues, common man will be much more conservative for his spendings keeping in mind the last recession experience. This will lead to dramatic drop in demand and impact all sectors including RE. I am sure lot of people might already have started re-thinking about their planned expenses by seeing the current situation.

    Now the people who don't have impact of such situations are much lesser in count (like Govt employees) than the impacted ones and such people's expenses cannot consume all of the supply in a sector. What will happen to the prices then???

    Originally Posted by djvjain
    Yes, there won't be any effect on RE in high demand areas like S Delhi, Gurgaon etc. People who wants to buy will buy regardless of what is happening. It is also very difficult to time the RE market so some folks just bite the bullet and buy it.
    CommentQuote
  • What now??

    dow Jones Falling.......Indian market fluctuating...........

    US ppl clamouring for jobs to be back.....

    Indian IT firms on the backfoot......

    seems like all money printing policies of Obama's administration didn't work.....or could they have ever worked with no real growth happening......

    Whats Next?????????????????
    CommentQuote
  • Originally Posted by kingmanish
    What now??

    dow Jones Falling.......Indian market fluctuating...........

    US ppl clamouring for jobs to be back.....

    Indian IT firms on the backfoot......

    seems like all money printing policies of Obama's administration didn't work.....or could they have ever worked with no real growth happening......

    Whats Next?????????????????


    everybody asks but noone knows...
    CommentQuote
  • What personal benefit of mine do you know about that I don't?

    Originally Posted by amit001
    Wiseman I am doing this for the fourth time Guess but you still keep on tweaking the facts for your self interest...

    Members please read the independent article below which came in The Hindu

    The Hindu : News / National : Joint venture investments in Unitech cleared by Centre: Telenor

    Joint venture investments in Unitech cleared by Centre: Telenor
    4 April 2011, Sandeep Joshi
    Telenor on Monday distanced itself from the 2G spectrum scam and the naming of its joint venture (JV) partner Sanjay Chandra, managing director of Unitech, in the CBI charge sheet. The Norwegian telecom major said the CBI investigations covered the period prior to the Telenor Group's entry into India and that its investments in the JV with Unitech Wireless were cleared by the Government of India at each stage.

    “When Telenor invested Rs. 6,120 crore for a 67.25 per cent ownership in Unitech Wireless, it was in a company that already had a genuine licence issued by the Indian government with all necessary approvals. These investments were cleared by the Government of India at each stage,” Telenor said in a statement. In 2008, Telenor joined hands with Unitech Wireless to provide telecom services under the brand name Uninor.

    Defending its JV with Unitech, Telenor said: “The investment was made in the operating company and not to its promoters. This is the equity that has been used as working capital to fund the establishment of Uninor as a successful young operator in India with over 2.1-crore subscribers now. It is Telenor Group's intention to fight for its rights and continue the operational progress that has been achieved in the Indian market.”

    Telenor said the CBI charge sheet had named Mr. Chandra as managing director of Unitech, besides naming Unitech Wireless for actions when it was a fully owned Unitech Company. “This was a period prior to the Telenor Group entering India. Unitech Wireless will argue its case in court, and we expect Mr. Chandra to do the same. Telenor fully supports these proceedings. Telenor has zero tolerance for corruption. If any malpractice has indeed occurred, those responsible must be brought to book,” the company said.


    It clearly shows that all the 6000 crore telenor invested in the JV and not a single rupee was handed over to Unitech...

    I have all the excels describing the whole deal structure. If you want i can again put it on the forum....



    Amit,

    Excellent.

    I don't understand the nature of benefit you claim I'm getting by "tweaking" facts.

    But, as you say, if Unitech did not use that 6500 Crores (less the money they paid to get the licence), then you seem to know more than even the CBI!

    If you read the release carefully, Telenor is actually trying to twist the facts right now to perhaps influence the case and maybe make some excuses to deflect the ABYSMAL record of losing over 13000 Crores in their current JV over the past few years operationally. Are you telling me THAT too is NOT TRUE?!

    If you read what I posted carefully, I expected Telenor to SUE Unitech and perhaps Sanjay Chandra for various acts basically of not disclosing full facts about the JV (which is at the heart of the case right now) and therefore of duping them of their money. In other words I was indicating I was sympathetic to Telenor (for getting gypped) as some foreign companies coming in for JVs are routinely duped by their Indian partners due to the opacity of disclosures!!!

    I also said that this would be another problem Chandra would face in addition to ALL the other problems. And therefore Unitech Ltd, should see downward movement and that would be a great opportunity once the issue blew over!!

    Well, Unitech is down to around 28-29 and within striking distance of its 2008-09 low of 22! And we have not yet even seen the beginning of the bear market. If Unitech is near 2008 lows, when market is near 2011 highs, imagine where Unitech will be when market goes towards 2008 lows!!! :D

    I think you get the picture why my wait for single-digit price for Unitech stock might be fulfilled?!


    Other than this, do you see any particular self-benefit in this argument that you claim I'm tweaking facts for? :) If so, could you please explain exactly how it benefits me?

    Could you please attach the Excel sheets which lay out the whole deal - as you claim!

    I would certainly like to stand corrected AS WELL AS be better educated about the whole deal!

    Eagerly awaiting the EXCEL sheets! :D

    cheers
    CommentQuote
  • Cant you read the news articles attached where the representation of telenor is saying that that ~ 6000 crore was invested in the venture via issue of fresh equity and not paid to promoters.

    I dont know ur english was so weak .

    Please read the articles attached below and highlighted and then tell me what it means

    Originally Posted by wiseman
    Amit,

    Excellent.

    I don't understand the nature of benefit you claim I'm getting by "tweaking" facts.

    But, as you say, if Unitech did not use that 6500 Crores (less the money they paid to get the licence), then you seem to know more than even the CBI!

    Could you please attach the Excel sheets which lay out the whole deal - as you claim!

    I would certainly like to stand corrected AS WELL AS be better educated about the whole deal!

    Eagerly awaiting the EXCEL sheets! :D

    cheers
    CommentQuote
  • Read of my friend Wiseman

    Joint venture investments in Unitech cleared by Centre: Telenor
    4 April 2011, Sandeep Joshi
    Telenor on Monday distanced itself from the 2G spectrum scam and the naming of its joint venture (JV) partner Sanjay Chandra, managing director of Unitech, in the CBI charge sheet. The Norwegian telecom major said the CBI investigations covered the period prior to the Telenor Group's entry into India and that its investments in the JV with Unitech Wireless were cleared by the Government of India at each stage.

    “When Telenor invested Rs. 6,120 crore for a 67.25 per cent ownership in Unitech Wireless, it was in a company that already had a genuine licence issued by the Indian government with all necessary approvals. These investments were cleared by the Government of India at each stage,” Telenor said in a statement. In 2008, Telenor joined hands with Unitech Wireless to provide telecom services under the brand name Uninor.

    Defending its JV with Unitech, Telenor said: “The investment was made in the operating company and not to its promoters. This is the equity that has been used as working capital to fund the establishment of Uninor as a successful young operator in India with over 2.1-crore subscribers now. It is Telenor Group's intention to fight for its rights and continue the operational progress that has been achieved in the Indian market.”

    Telenor said the CBI charge sheet had named Mr. Chandra as managing director of Unitech, besides naming Unitech Wireless for actions when it was a fully owned Unitech Company. “This was a period prior to the Telenor Group entering India. Unitech Wireless will argue its case in court, and we expect Mr. Chandra to do the same. Telenor fully supports these proceedings. Telenor has zero tolerance for corruption. If any malpractice has indeed occurred, those responsible must be brought to book,” the company said.

    *************************************************************************

    As evident from this independent article....all 6120 crores did not go in the unitech pocket....the profit they made from this deal is 2340 crores, which ED has said it will recover from unitech if it is prove guilty

    Now let me explain the technicalities of this deal……………………………

    For the benefit of members not from finance background...

    Pre Money Valuation - valuation of a company or asset prior to an investment or financing.

    So before the investment of Telenor in Unitech Wireless...

    The pre value money of unitech wireless was 2480 crores, as calculated above...Unitech has acquired the license only for 138 crores, so unitech made a profit of 2340 crores by getting the licenses cheap....

    As per the deal structuring between Unitech and Telenor, the post money valuation of equity was decided to be 9100 crores..

    Post money valuation - Post-money valuation is the value of a company after an investment has been made. This value is equal to the sum of the pre-money valuation and the amount of new equity

    Post money valuation = pre money valuation + investment made

    9100 crores = 2480+ 6620 crores

    Of this total amount Telenor brought 67.25%, so 67.25% of 9900 crores = 6120. This amount was put in the venture and not paid to Unitech

    out of this 9100 crores

    Telenor share = 67.25% = 6120 crores, it brought 6120 crores in the venture.

    Unitech share = 32.75%= 2580 crores, it already had the premoney valuation of 2480 crores, so it infused equity of close to 500 crores in Uninor...

    So as you saw how unitech benefited out of the deal, its pre money valuation was overvalued by 2340 crores, and tht what Unitech gained by getting the licenses cheap (If this is proved in the court, mind you it is not been proved)

    The only benefit Unitech got was over valuation of its pre money valuation of Unitech Wireless
    CommentQuote
  • Sir wiseman please read the whole deal structure

    Lets cross question each other to educate ourselves and see what is right and what is wrong
    Attachments:
    CommentQuote
  • Wiseman - show me one article where CBI says Telenor gave ~6000 crores to Unitech.. That was an investement made in the company by way of fresh issue of shares and most of that invest went into working capital and infrastructure. Not even a single paisa was given to the Unitech or the promoters of Unitech...

    Please correct me if I am wrong
    CommentQuote
  • Originally Posted by amit001


    I dont know ur english was so weak .

    Please read the articles attached below and highlighted and then tell me what it means


    Not to make fun of you ..but

    I dont know ur english was so weak

    is incorrect english in itself...

    PS: I dont understand a word of what you guys are discussing..but carry on...
    CommentQuote