Story of Bennett, Coleman & Co (TOI Group) and Real Estate Companies

This is about how one media group can manipulate the "news" and its content to make money and control the public opinion for its profitability. This is about Bennett, Coleman & Co (TOI Group) which owns media assets like ToI,ET(across all cities),regional newspapaers and TimesNow TV.They have something called "Times Private Treaty" which invests in emerging enterprises and small & midcap companies just like a VC. But its slightly different with Times Private Treaty(TPT) where in TPT will get equity for its media coverage (whatever TPT pays, gets back for media treatment).Investee companies will get special coverage,increased exposure and mouth piece service. We dont know much about the very details of the agreement between TPT and investee companies.

Details:

India’s largest new company, Bennet, Coleman & Co. Ltd., (BCCL) has signed Times Private Treaties with over 200 companies in the past 3 years.

What is TPT?

TPT identifies growth rich but Advertisement shy comapnies (???!!) and gives them media space in BCCL platforms. In return, they get a share in Equity. Expected value of these TPT’s - Rs.1,700 Cr- Rs.3,000 Cr.

http://www.timesprivatetreaties.com/portfolio/list-as-per-industry.html

Why TPT?
BCCL believes that Indian market is commodity driven, not Brand driven. Only 14,000 brands are actively advertising in India. But in US there are 8 lakh active brands. Hence there is a future for brands.

Who is following?
HT Media, NDTV, Dainik Bhaskar, Dainik Jagran, Mid Day.

Conflict: Editorial lenience to TPT companies.


We could see the list (portfolio) of compnaies earlier in their website( which has been removed. I list the companies later from my memory. I noticed about these investments in 2003 and impressed by the idea(didn't know details) of Jain family but what happened latter is big let down for the indian public. There are no goverment controls at present but we expect a little ethics, social values, moral control and culture for media group with such long tradition.

List of companies from Mint
http://www.livemint.com/2008/01/14234923/F7C03521-A4FD-40D1-B769-A38A8D7DE369ArtVPF.pdf

I remember the list of companies as Sobha Builders, Rajesh Exports,Pyramid Saimira, JetKing, Peninsula and many more realty players.I guess we should stop reading newspapers like these which actually doesn't add any knowledge but only noise.

Here are the links for more understanding;

http://ajayshahblog.blogspot.com/2008/01/murky-ethics-on-part-of-media-and-firms.html

You can find many more links in Ajay's Blog.

http://www.business-standard.com/india/news/bennett-colemans-private-treaties-business-sees-sharp-value-erosion/357692/

http://www.dnaindia.com/money/report_private-treaties-a-public-and-investor-menace_1254804

http://www.livemint.com/2008/01/14234923/Should-private-treaties-be-mad.html

http://www.suchetadalal.com/?id=cc8c67c4-6674-207a-4947b1bb96dc&base=sections&f&t=CURRENT+ACCOUNT+(MoneyLIFE+Issue%2C+1st+Jan+09)

http://www.suchetadalal.com/?id=ee33e5a1-2d4b-8231-4a24f507414e&base=sections&f&t=Pyramid+Saimira%3A+Weak+Follow+Up

http://www.suchetadalal.com/?id=2f109f06-d1bf-afca-4a0176e5b38e&base=sections&f&t=Ring+of+Thieves

http://www.vccircle.com/500/content/bccl-picks-up-652-per-cent-in-sujana-industries-hats-off-to-times-private-treaty


I would like to get the views of our readers. I am sure many of you already knew but its good for those who still believe whatever newspapers say is truth and newspapers are run by the people who care very much about this poor country and its people.

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Realtors Seek Share Sales To Repay Debt, Await Sales

From VCCircle.

Since the start of 2009, almost $ 2 bn has been called for by realtors via share sales.

India's real estate firms are seeking share sales to settle debt and meet working capital needs as valuations improve, but the funds won't be enough to salvage them if sales don't pick up, say industry watchers.

Since the start of 2009, almost $1.7 billion has been raised by home builders, according to Thomson Reuters data, while up to $2 billion more has been called for by realtors via share sales, especially qualified institutional placements (QIPs).

"It is an over-leveraged market...the overall market is too huge. This (money) is nothing. It's small peanuts. It won't suffice," Pankaj Kapoor, founder of Liases Foras Real Estate Rating & Research, said.

Realty firms piled up debt as they rushed to launch projects amidst a three-year bull run in the sector. But, sales began slumping in 2008 amid a global meltdown and reluctance among buyers at higher prices, leading to a severe cash crunch.

Sentiment improved with the successful share sales by Indiabulls Real Estate, Unitech and India's largest listed real estate firm DLF, prompting more builders to seek board approval to raise money via share placements.

"They don't have an option," Shobhit Agarwal, Joint Managing Director, Capital Markets, Jones Lang LaSalle Meghraj, said, referring to QIPs. "If you go to private equity, which is the other extreme, this kind of size is not available."

"They have no further capacity to raise debt... or to service that debt," he added.

Outstanding bank loans to real estate firms rose to 623 billion rupees in FY08, up about 38 percent from a year earlier, the latest central bank data shows. Confederation of Real Estate Developer's Association of India (CREDAI) estimates that listed companies account for over half of those loans.

DEMAND REVIVAL?

Sales are trickling back as realtors focus on medium to low-priced houses, redesigning projects and cutting prices by as much as 40 percent in some markets, but most buyers appear to be flighty investors, suggesting that recovery may be months away.

Residences account for the bulk of real estate up for sale and select projects across India are seeing a revival of demand, developers say.

Equity analysts remain sceptical even about firms that were successful in raising money.

Indiabulls Real Estate's share issue brought down promoter holding to about 16.7 percent said a Motilal Oswal June report, "however, till date no concrete plans on the usage of the QIP proceeds have been shared."

Stock investors have pushed up the industry's market value but analysts don't think the rise can be sustained. India's realty index is up almost threefold from March.

With most stocks trading at NAV (net asset value) premiums and equity dilution a likely overhang, we view risk/reward as unfavorable, Karishma Solanki, analyst at Citi said in a June report.

India's property market pick-up is typically seen starting from Mumbai, then Delhi, followed by the southern markets, Jones Lang's Agarwal said.

But, the future still rests on revival of demand and a further price correction to bring back fundamentals.

The only thing that will bring back efficiencies into the (realty) market is sales," said Liases Foras' Kapoor. "For that prices have to come down, because until they come down, the buyer will not be motivated to come and purchase."

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Time for a realty check

If you thought buy-one-get-one free offers were limited to trousers, shoes and other small-ticket items, think again. You could get houses too for free, thanks to Orange Properties, which came out with a ‘buy-one-flat-get-one-free’ offer recently for its Orange Resorts in Devanahalli, in Bangalore.

Sales didn’t quite skyrocket and the advertising campaign across print and outdoor met with mixed response, but given the current market conditions perhaps that’s understandable.

With real estate being struck badly in the slowdown, real estate developers, who were once riding a high, have now tightened advertising and marketing expenses. They have also had to think out of the box even while operating on leaner budgets. They have been forced to rework their marketing strategies to woo consumers at a time when the propensity to buy is not very high. Marketing initiatives may be fewer but they are becoming more focussed, specific and project-based, using direct and candid communication. And pricing is obviously the key premise around which the initiatives revolve.

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Real Estate from a Landlord's point of view.

Hi All,

This is my first post on this blog, after having spent a great time as a reader and commentor. I am feeling a sense of pride at being 'promoted'. (Thanks Vik :).

This post will discuss an issue dear to my heart and my wallet:

Being a landlord in Pune (the financial equation).

Firstly, some background info:
<start_info>
I own 3 flats in Pune in good areas which are rented out. All flats are 2 BHK, rented out to software professionals.

The rent : emi ratio for each flat is approx 1:2. This is because one flat was bought when the boom in Pune was just starting, and other two flats are part of a duplex bungalow constructed on a plot owned by the family.

The going rates in these areas are currently so high that a flat bought now (in June 2009) and given on rent will have a rent : emi ratio of approx 1 : 4.
</end_info>

The landlord is not buying a flat for her own consumption, but for investment purposes. But she does not want to sell it immediately and turn a quick profit, so she is not a speculative investor.
She is a long term investor who is also interested in the betterment of the society and the neighborhood so that rents can increase.
In this sense, she has the same concerns as a homeowner.

Increases in rent generally are linked to income and standard of living. So only when the overall economy improves, rents increase.
Rents go down quickly in recessions.
Also, people like to rent the cheapest house which will "just support their lifestyle", as compared to buying the best house which will "enhance their lifestyle".

All this leads to a question (for which I don't have any good answers).
When house price increases without a corresponding increase in house rent, this is a speculative price rise. Should the landlord be happy?

The argument for being happy is that the high price is due to a bubble, and all bubbles eventually burst.
So the landlord should sell the flat now, being happy that she has sold it for more than its financial worth. Then buy it at a reduced rate when the bubble bursts. This is not as easy as it sounds.

The argument for being unhappy is that you can no longer expand your renting business.
The basic financial principal behind renting is Positive Cash Flow. This means that the rent in hand should be greater than the emi + taxes + maintenance + downtime. If there is positive cash flow, the property becomes self sustaining and you can think of expanding your business (i.e. buying another flat and giving it on rent.)
But now in a bubble, positive cash flow is not achievable, so there is a limit on how much emi you can pay out of your other income (read: salary).

In today's real estate scenario in Pune, rent : emi ratio is usually 1:3 or 1:4. Investing in a rental property makes sense only when rent : emi ratio is 1:1.5 or lesser.

Builders are not reducing rates quoting construction costs, growth of the economy etc.
A person who wants to stay in his own home can disregard the financial equation and buy the flat for emotional reasons.
But can a rental investor disregard the financial equation?
If not, should she predict that property rates will fall at least 50% in Pune so that rent : emi ratio comes down to 1:1.5?
Or should she predict that rents will double in the next year, so that a 2BHK which on average rents for 10k will command a rent of 20k next year?

Even when my rental properties have been bought at prices 50% lesser than today's prices, still the rent : emi ratio is 1:2.
This leads to some interesting questions:
1. Does this mean that not only prices will fall to pre-boom levels, but go less than that due to recessionary fears of the consumer?
2. Does it mean that rents are less than reasonable and we can expect a 20% to 30% increase in rents? Even though as a landlord, I would love to see an increase in rent, I don't think that in this recessionary phase, increase in rents is a practical possibility.
3. The ratio will decrease if the interest rates come down to 7 - 8%, from current levels of 10 - 11%. Is this a possibility? As might be expected, the builder lobby is pushing banks and the govt hard for an interest rate decrease.

Thanks
Abeer Bagul

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Searching the blog and other things

Someone asked me on how to search the blog effectively to find out articles related to duping of buyers by the builders. I've tried to tag all such articles with various tags like fraud etc. Look at the bottom of this posting and you will see those tags. Click on those tags and you will find the relevant articles.
On another note, due to some personal commitments I am unable to follow the market and post articles on a regular basis. I would urge some other folks to take up this mantle for the benefit for all concerned parties. I had given some folks posting rights in the past and I can give some more folks who would like to take up the cudgels from me. We have a good audience and the bull bear story will continue for a long time before everyone is exhausted.

As I see the market in Mumbai, speaking to friends everyone tells me the money has dried up. Some businessmen friends have drops of upto 40-50% in their sales. Rents have dropped. I was shocked to see some rentals going for 32k, which were quoting 50-60k last year.

We are in a deep protracted downturn, specially Mumbai. As I have said repeatedly, be it Mumbai, Pune, Chennai, Bangalore, affordability for Indians or NRI's is upto 4,000 per sq/ft. Anything above is for the politicians and black money operators. Anyone who pays more then that is going to suffer for a long time.

Lastly I spoke to a loan banker who said that most builders have reduced rates but still some are holding on. He does not see any hope for anything more then 7k. He is bit more bullish them I am :)

the areas I was referring to in this and previous posts is in Santa Cruz and Vile Parle.

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latest mumbai update

So I was talking to some folks in Mumbai now, realty brokers and otherwise. Everyone is of the consensus prices have dropped, rents are still holding up. Some areas which went to 9k are now at 7k. There is a building built by a Gujju builder, with a total of 15 apts and he is unable to sell even one at 7k. I was telling the broker that if a gujju is unable to find other 15 Gujju's to buy when the prices have dropped by 20%, that means the market is real bad. Everyone knows the amount of money some Gujju businessmen have. I think value is at 5k. so wait and watch.

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UPA govt impact on real estate.

Enough said. The sensex rocketed by 10% and is halted. Is the bear phase over ??

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