Thursday, March 29, 2012

Stamp duty rationalisation by the State Govt of Maharashtra.

The recent Maharashtra Budget has levied 
1. A flat stamp duty of 5% on all purchases in areas within municipal corporation boundaries across the state. Though this would lead to a further increase in the cost of purchasing a property, the overall impact of this alone will not be very significant. For example, for a property worth Rs 50 lakh, situated within municipal corporation limits of Mumbai, the overall cost will increase by only 0.34% for the buyer - if analysed purely on the basis of the change in stamp duty. 
2. A similarly priced property located in a municipal council limit would attract a lesser stamp duty at 4%, and even lower, if located in a Gram Panchayats where it will be 3%.
Buyers in locations like Ambernath, Karjat and Badlapur in the outskirts of the city would gain from this move. These locations have a number of low cost and affordable housing projects under construction.
Buyers will, however, still need to take into consideration the impact of rise in input costs which proposed to be taxed at a higher rate; as also, the measures introduced by the Central Budget recently. 
Hike in service tax for property purchase and commercial lease transactions will add to their overall cost of purchase. All these factors together may cause some heating up of the prices.

Wednesday, March 28, 2012

PIMCO: QE3 in Sight!!

Pimco has been buying mortgage-backed securities for months in anticipation of another round of quantitative easing , the so-called QE3, when he thinks theFederal Reserve will buy up these securities.
"The periods after QE1 and QE2 when Chairman Bernanke applied the brakes ... produced 10 to 15% declines in the stock market. He doesn`t want to make that same mistake again," said Gross.
Since there is no Fed meeting in May and Operation Twist expires in June, the Fed`s next meeting in April will be "the logical time for strong hints" on whether QE3 is imminent, Gross added.

Saturday, March 24, 2012

India Hit by Australian mining tax on Steel and Coal.

Indian steel companies may have to shell out a few dollars more to import metallurgical coal from Australian mines, effective July 1. The Australian government passed a Bill that will impose a 30 per cent tax on the profits on local iron ore and coal miners, but will allow certain deductions.
Most of the large steel companies in India such as SAIL and JSW Steel depend on imported coal. Others such as Tata Steel with substantial European operations also depend entirely on external sources for iron ore. Australian miners are likely to pass on the tax to customers, primarily from China and India.
While Indian steel companies will be impacted, the new tax may actually benefit Indian miners such as NMDC and Sesa Goa as a result of higher iron ore prices.
The stocks of steel makers such as Tata Steel and JSW Steel as well that of power utilities such as CESC and Adani Power took a hit. But power companies may not be impacted much in the medium term. While a handful of companies such as Lanco Infratech, Adani Enterprises, GVK Power and CESC have stakes in Australian coal mines, supplies from those mines will commence only after 2-3 years. This may provide time for players to build the costs into new purchase agreements with electricity boards.
That said, both Indonesia and Australia, two of the key coal resource regions for India, have turned expensive for power companies.

Power of Attorney Sales in Real Estate.


Property sales through the common practice of general power of attorney (GPA) will not give ownership title to the buyer.

In a landmark judgment that is expected to send a large number of property owners into a tizzy, the Supreme Court held that the GPA method of immovable property sales is not a valid form of transfer of property.

A three-judge bench presided over by Justice R. V. Raveendran said that property can be lawfully transferred only through registered sale deeds.

"A power of attorney is not an instrument of transfer in regard to any right, title or interest in an immovable property," the bench said, after interpreting various provisions of the law concerning property sales. However, the bench said the judgment will not affect "genuine transactions" under the GPA. 

The judgment delivered on Wednesday would have an impact on both freehold and leasehold properties and affect the mode of transfer of property in Delhi and the National Capital Region (NCR) where GPA sales are very common. Even though it can cause some hardship to those who have already purchased property through the GPA, the order will help curb evasion of duties, flow of black money into real estate and also save people from being cheated by unscrupulous owners selling the same property to several people.

Navin Raheja, chairman and managing director of Raheja Developers said, "The court's decision will help to curb the circulation of black money to some extent in the real estate sector where titles are manipulated. Besides, many property transactions where prices are rounded off will be affected. However, overall there won't be any significant impact on normal property sales." 

The apex court said there can be no mutation of property in municipal and revenue records on the basis of such documents. The bench, however, clarified that its order should not be a ground for disturbing mutations already effected by the Delhi Development Authority (DDA) or any other authority.

But, there is little relief for thousands of people who hold property without mutation as GPA sales can only be treated as existing sale agreements. An application of the order with prospective effect would have protected their interest. The court, though, stressed that it had merely reiterated the well-settled legal position that such transactions cannot be treated as completed transfers.

The court could not make the order applicable with prospective effect as it had not laid down any new law. However, it said that those who had already bought property through GPA before its judgment could use the documents to apply for regularisation of allotments and leases by development authorities.

"Nothing prevents affected parties from getting registered deeds of conveyance to complete their title. The said transactions may also be used to obtain specific performance or to defend possession under section 53A of TP (Transfer of Property) Act," the court said.

In order to ensure that GPA continues to serve its purpose, the court said its judgment will not affect the validity of sale agreements and powers of attorney executed in genuine transactions. "For example, a person may give a power of attorney to his spouse, son, daughter, brother, sister or a relative to manage his affairs or to execute a deed of conveyance." 

The court further said that a person can enter into a development agreement with a land developer or builder for developing the land either by forming plots or by constructing apartment buildings. In that connection he can execute an agreement of sale and grant a power of attorney that will allow the developer to further sell the property to prospective purchasers.

While hearing a matter on the subject, the court had decided to clarify the law on the issue as such transfers had not only led to evasion of stamp duty and registration charges but had also provided scope for investing black money in real estate. Besides, such transfers were giving nightmares to bona fide purchasers as the same property could be sold to several people in the absence of verification or certification of title. A proper verification of ownership was possible only if all property were transferred through registered sale deeds.

Noting that such transactions were now not just limited to Delhi but had spread to neighbouring areas, the court had sought the views of the Centre and the states of Delhi, Haryana, Punjab and Uttar Pradesh. There was a near unanimity that such transactions should be discouraged as it caused loss of revenue and increased litigation due to defective titles.

Going into the legality of such transfers, the court said any contract of sale which was not a registered sale deed would fall short of the requirements of the relevant provisions of the Transfer of Property Act and could not confer any title.

The court said a transfer of property by way of sale could only be by a sale deed. "In the absence of a deed of conveyance (duly stamped and registered as required by law), no right, title or interest in an immovable property can be transferred," the bench said.


Monday, March 19, 2012

Reliance Capital Trustee buys 13 mn Mahindra Satyam shares

Reliance Capital Trustee Company, a subsidiary of Anil Dhirubhai Group's Reliance Capital Ltd, today purchased 13 million shares of Mahindra Satyam, erstwhile Satyam Computer Services, for over Rs 87 crore.
In one of the bulk deal, Reliance Capital Trustee Company bought 12,960,000 equities of Mahindra Satyam, according to data available on stock exchanges.

Shares were sold at Rs 67.5 apiece, valuing the deal to Rs 87.48 crore.
However, the buyers of the shares could not be ascertained.

Shares of Mahindra Satyam closed at Rs 70.85 apiece on the BSE, up 1.87% from the previous close.


Tuesday, March 13, 2012

Highlights of the Veritas Research report - DLF.

Highlights of the Veritas Research report:

  • DLF may need to restructure loans and dilute equity to get out of the hole it finds itself in, adding the company has negative cash flows of Rs936 crore this year.
  • Questioned the disclosed book equity and asset base of the company, hinting at irregularities in the DLF and DLF Assets Ltd (DAL) merger.
  • Through its dealings with DAL from fiscal 2007 to fiscal 2011, the company inflated sales by at least Rs11,236 crore and its profit before tax by Rs7,233 crore.
  • Based on the quality of management alone, the share is not worth a buy. And considering all its ills, the stock is worth no more than Rs100.
  • DLF has undertaken questionable related-party transactions to boost the value of DAL prior to its acquisition by DLF, thereby subverting the interest of minority shareholders via a higher purchase price for DAL.
  • In the end, DLF will seek assistance from financial institutions to restructure loans. Issuing equity in a secondary offering thereby diluting shareholders, and killing the current dividend are the only reasonable options for the company
  • DLF has also failed to deliver on commitments made during its IPO in 2007. Since then, the management has faltered at every step in executing its grandiose vision to be a conglomerate with tentacles spread across hotels, build mega townships, become free cash flow positive by fiscal 2011, build a mega convention center in the NCR region and so on. 

What this means?

The top notch realtors suffering, the sector is probably worse off than what we are seeing on the surface. Another big realtor, HDIL is saddled with a debt of over Rs 4,000 crore and is selling land parcels. But surely today, HDIL will be feeling better knowing that big brother DLF is in a much bigger mess. Unitech's debt as at 31st Dec 2011 stood at Rs 5,190.26 crore. Debt of Parsvnath at the end of Q3FY12 stood at Rs.1300 crore. The total accumulated debt of the top 12 realtors of India at the end of the third quarter stands at a huge Rs.50,000 crore, of which DLF is responsible for 45%. 


Monday, March 12, 2012

3D Printing: A New Wave of Innovation.

Don't worry if you've never heard of 3D printing. It's so new it's not on many radar screens yet. 

But soon everyone will know about it. 

Still in its very early stages, 3D printing is destined to have a huge impact on the entire world economy.

These "desktop factories" will one day become a $1 trillion industry-completely changing the traditional factory model forever. 

It's what's known as a "disruptive technology." 
Here's why...

By the end of this decade, everyone from consumers to big businesses to solo inventors will be able to make their own unique products in just a couple of hours.
Need a special tool?... Or a new spare part? 

Soon you will be able to fire up the 3D printer and make one from composite materials.

Indeed, I recently watched a YouTube video of Z Corp. making an adjustable wrench from high-tech compounds. It was a copy made from metal. 

Though it weighed less than the original, the "printed" wrench worked just as well and looked every bit as strong.

And let's not gloss over the medical products that can be created by these revolutionary printers. An 83-year-old woman in Europe recently received a new jaw doctors printed with titanium powder.

Medical team members said they made the implant in just a few hours compared with the several days usually required with existing methods.

That's why I say this technology symbolizes the Era of Radical Change. Now, anyone who knows computer basics can make or invent products on the fly.

3D Printing: A New Wave of Innovation 

Technically, you don't really "print" a new product, though the process is similar. Rather than putting ink on paper, the system creates the product by adding thin layers of special polymers and some metals.

This is literally "cutting edge" high tech that is destined to become big business. 

I believe it is the 21st century equivalent of the laser printer and the dawn of desktop publishing in the 1980s that changed the entire print industry.

But don't take my word for it...

Let's hear from Hewlett-Packard (NYSE: HPQ)the high-tech giant that knows both types of printers extremely well.

The Silicon Valley leader now offers a high-end unit made for professional use. Its DesignJet Color 3D printer reportedly sells for $20,000.

But consider this: 3D printing will soon come to the masses at prices they can afford. 

Today, MakerBot sells its Replicator for $1,749. Its users can download free modeling software such as TinkerCAD or Sketchup from Google Inc. (NASDAQ: GOOG) to print their own products. 

Small-cap leader 3D Systems (NYSE: DDD) also recently launched the Cube, a competing device that lists for $1,299. A related website,, combines the simplicity of a coloring book with robust digital resources.

The firm's CEO, Abraham N. Reichental, told BBC news that 3D Systems already has 1,000 workers -- and nearly as many patents.

Now just think of what will happen when the price of these machines drops to $500....

We're talking mass customization of a wide range of goods, from forks to jewelry to high-tech ski helmets.

When this happens, 3D printing will undoubtedly unleash a whole new wave of innovation.

And for a very simple reason...

Inventors will be able to use a low-cost 3D printer to truly unleash the power of their imaginations. 

When that happens creativity has the potential to increase exponentially. 

There will be no more spending thousands of dollars to have a specialty firm make a mold before you can even build the prototype. 

3D Printing: Endless Possibilities 

Now you know why the top brass at the Smithsonian just gave 3D printing their stamp of approval

You see, the world's largest museum boasts more than 137 million objects. But only a few remain on display at any point in time.

With 3D printing, officials can scan originals with special software. Then they can "print" replicas they can loan to other museums.

At the very least, the Smithsonian can afford to make digital 3D images of its vast collection it can then store for later access.

According to a recent story by CNET, the museum already touts a 3D printed-replica of a Thomas Jefferson statue, which they say is the "largest 3D printed museum quality historical replica" on earth. 

Meanwhile, 3D printing has also created other products with a definite "wow" factor.

Take the case of the two British researchers who printed their own spy plane in a week -- it took two days to design on a computer and five days to make.

The small, unmanned plane with a wingspan of about 4.5 feet soared at 100 MPH. You can watch a YouTube video of what's touted as the first flight of its kind here.

The European aerospace giant EADS also uses the technology to make specialty aircraft parts. 

They've started with items like brackets that hold parts in place. But their long-term goal is to print the entire wing of a jetliner.

German supplier EOS says it gets parts orders from car and aerospace firms. And also from... dentists. 

EOS says it can create up to 450 dental crowns in one day. That compares with about a dozen for most firms using conventional systems. 

Not even music is immune to the disruptive impact of 3D printing. Last year, EOS used a specialty compound to make parts for a violin.

A violin maker assembled the parts into a working instrument that was then played by a concert violinist.

Clearly, 3D printing is destined to have a huge impact on the global economy.

I believe it could be worth $1 trillion in as little as a decade. 

How is that, you ask?....

It's a matter of simple math. 

The global economy measures about $60 trillion. Of that, manufacturing accounts for 17%, or $10.2 trillion. 

If 3D printing captures just 10% of the sector that would total just over $1 trillion.

That's why I say we will see lots of opportunities to invest directly in this technology, or in firms using it to improve profit margins.

Either way, it is time to open your eyes to the possibilities of 3D printing. 

Otherwise you'll miss the Next Big Thing that will change the future of manufacturing.