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India’s Housing Markets Continue To Boom

In The Third Quarter of 2023, Housing Sales are at an All-time High with 120,000 units Sold in Top 7 Cities - Up 36% Year On Year, housing real estate consulting firm Anarock has said

By Govindraj Ethiraj
New Update
India Housing Market Boom
On today’s episode, financial journalist Govindraj Ethiraj talks to ndirect tax expert Rohit Jain, Partner at the Mumbai headquartered Economic Laws Practice or ELP as well as Atul Chaturvedi, Chairman of Sri Renuka Sugars.

Our Top Reports For Today

  • [00:00] Stories Of The Day 
  • [03:08] India’s housing markets continue to boom even as stock markets turn weak. 
  • [05:09] More and more GST inspectors are landing up at businesses and factories. Who is at fault ? With Rohit Jain, ELP
  • [13:46] Sugar stocks and prices rise as companies position themselves as energy companies. With Atul Chaturvedi of Renuka Sugars
  • [21:35] Indian roads are best for, destructive testing
  • [23:08] Asian Paints co-founder Ashwin Dani passes


NOTE: This transcript contains only the host's monologue and does not include any interviews or discussions that might be within the podcast. Please refer to the episode audio if you wish to quote the people interviewed. Email [email protected] for any queries.

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India’s current account deficit (CAD) widened sequentially to $9.2 billion in the quarter ended June 2023 or 1.1 per cent of the gross domestic product (GDP) compared to $1.3 billion in Q4 FY23 (0.2 percent of GDP). 

CAD was $17.9 billion, or 2.1 per cent of the GDP, in the year-ago period.

The quarter-on-quarter increase in CAD was on account of higher trade deficit coupled with a lower surplus in net services and decline in private transfer receipts, said the Reserve Bank of India (RBI) in a statement.

Trade deficit rose sequentially to $56.6 billion in April-June 2023 (Q1 FY24) from $ 52.6 billion in Q4 FY24.

The falling remittances, both quarter on quarter and on year is worrisome and bears watching, more so because of slowing global growth, Dharmakriti Joshi, Chief Economist, Crisil said last evening.

This can have a bearing on CAD, which was anyway expected to rise sequentially in the first quarter of this fiscal because of higher merchandise trade deficit and softening of services trade surplus, DK Joshi said.

Rising oil prices will weigh further, he said adding together, these have put an upside pressure on Crisil’s estimate of CAD for this fiscal, which stands at 1.8% of GDP.

Speaking of oil, Saudi Arabia and Russia have raked in billions of dollars in extra oil revenues in recent months, despite pumping fewer barrels, after their production cuts sent crude prices up, the WSJ is reporting.

Oil revenues in Saudi Arabia this quarter are likely up by nearly $30 million a day compared with the April-June period, or an increase of about 5.7%, analysis by Energy Aspects shows, said the WSJ. 

For the whole three-month period, that would equate to about $2.6 billion. Russian oil revenues are likely up by about $2.8 billion, WSJ quoted data saying

Back home rising crude prices, among other factors, weighed on stock prices. 

The BSE Sensex fell 610 points to 65,508 levels, while the Nifty down 193 points to 19,524.

Stock prices Are Down But Housing Prices Are Staying Strong And Up

Q3 2023 Housing Sales are at an All-time High – with 120,000 units Sold in Top 7 Cities, Up 36% Y-o-Y, housing real estate consulting firm Anarock has said.

The monsoon quarter is usually slow but not this time. 

Remember we discussed earlier this week how India’s savings levels have fallen to decadal lows. Possibly this is one reason.

Average residential property prices across the top 7 cities collectively registered double-digit yearly growth of 11% - from INR 6,105 per sq. ft. in Q3 2022 to around INR 6,800 per sq. ft. in Q3 2023. 

Hyderabad recorded the highest 18% yearly growth, followed by Bengaluru with 14% rise.

Mumbai led the pack with around 38,500 units sold followed by Pune at 22,880 units.

The western cities were half of total sales.

And there is more supply as well. Some 116,000 new units came into the market, which in itself was up 24%. Mumbai again led the race with 36,250 units launched in this quarter followed by Hyderabad by 24,900.

The supply of luxury units is rising, now holding a share of 27%, highest in 5 years while affordable housing has dropped to its lowest of 18%.

The total inventory of houses fell 3% to 610,000 units.

TAX RAIDS

In the last three months, at least three listed companies have seen tax authorities, specifically representing the Goods & Service Tax department land up at their premises.

Of the three companies Prataap Snacks, Chalet Hotels saw their stock prices fall in reaction while SRF, the Indian chemicals major did not.

Last week, casino company Delta Corp was served with an over Rs 16,000 crore notice and the move sent its stock price plummeting.

Other, non listed companies including Edtech, an education technology company often in the news for various announcements, was also visited.

Insurance companies, both private and public have been getting hefty notices, running once again, into thousands of crores each. The gaming companies are facing a close to Rs 50,000 crore or $6 billion demand.

So why the flurry of notices ? Is it because knowingly or unknowingly more companies are not managing their tax accounting well or is it just that the tax department is more aggressive and the slightest infraction invites a sledgehammer response.

I spoke with well known indirect tax expert Rohit Jain, Partner at the Mumbai headquartered Economic Laws Practice or ELP  and began by asking him why we were seeing so many direct visits to the premises of companies ?

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SUGAR PRICES ARE RISING

Why Sugar Companies Are The New Energy Companies

Are sugar companies being rated as energy companies ?

Before I come to that, sugar prices and sugar stocks on the bourses have been rallying. The first is obviously a matter of concern, the second a matter of relief if not happiness I would reckon.

A persistent monsoon deficit in key sugarcane producing states is said to be keeping sugar prices high, closer to ₹40 and ₹45/kg across the country. 

The sugar quota for September is at 2.5 million tonnes, more than over 6% from the quota for the corresponding month of the previous year.

The government allocates a monthly sales quota to every mill in the country because sugar is a regulated industry. India consumes around 27 million tonnes of sugar though only 10% is consumed in households and the rest commercially. 

Meanwhile, sugar companies are increasingly manufacturing more ethanol and the Indian Government has a target of blending 20% of ethanol in petrol by 2025  as part of its biofuels focus. 

Ethanol is made from molasses, a residue from crushing sugarcane. A sugar mill produces both sugar and ethanol and can vary the mix. This can also be done with grain.

 To understand what was happening with sugar prices and sugar stocks, I reached out to Atul Chaturvedi, Chairman of Sri Renuka Sugars and began by asking him why prices were rising.

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Ashwin Dani Is No More

Ashwin Dani, part of the promoter family of Asian Paints and earlier Chairman of the company passed away in Mumbai yesterday. He was 79.

He ran the company as vice chairman and managing director between 1998 and 2009, having taken over following an acrimonious battle with Atul Choskey who was earlier managing director. 

Dani joined Asian Paints in 1968, which was founded by his father and three others in 1942. 

Like most of the Asian Paints family members, he too studied chemical engineering or chemical technology both from India and overseas.

Apart from business, Ashwin was also a yoga practitioner and had an interest in collecting art. As per Forbes, his family’s net worth is ₹68,000 crore.

Dani could be quite forthright and outspoken. I once asked him about a recently departed director and a senior professional of the company and he quite bluntly said, it was just as if he, the director concerned, left and we were happy to see him go.

Asian Paints is one of the rarer companies in India where a founder family has successfully brought in high calibre professional managers to run the company at various points. And balanced their own ambitions and desires to put the company’s success above all.

Asian Paints is considered one of the best performing companies and stocks on Indian bourses and has held its dominance in the market for decades, despite being continually challenged.

Here is an extract from an interview in what is likely his last public appearance at a CNBC-TV18 awards function earlier this year.

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India also lost a famed agricultural scientist M S Swaminathan and best known as  the father of India's Green Revolution. He passed away at his residence in Chennai, at the age of 98. 

Swaminathan was awarded the first World Food Prize in 1987 following which he set up the MS Swaminathan Research Foundation (MSSRF) in Taramani, Chennai.

India - The Best Roads For Destructive Testing

Electric car giant Tesla Inc wants to set up destructive testing for specific components and testing tracks for all vehicles in the country, Moneycontrol is reporting.

This appears to suggest that India has the best roads, not to drive but to bash any car or vehicle to a level where it becomes clear that if it can survive here, then it can survive in any other extreme environment anywhere in the world.

“Tesla has proposed to set up innovation and destructive testing hubs for specific components in India. India has the largest variety of roads. If Tesla conducts destructive testing in India, the company can roll out its cars anywhere in the world. Tesla has discussed this with the Indian government and has been asking for some benefits. India has been considering that,” the official told Moneycontrol.

Destructive testing is a method of destroying a component or material to analyse its point of failure. 

In this technique, a component is subjected to different destructive methods to deform it completely. Its flexibility and strength are then assessed to understand how that material performs under pressure.

India has many official testing tracks too, like the National Automotive Test Tracks, the High-Speed Track, the Multi-Friction Braking Track, the Gradient Track, the Fatigue Track, the Gravel and Off-Road Track, and the Comfort Track, MoneyControl has pointed out.

None of these tracks, I would wager, would even come close to the stress test of driving, say, over the potholes of Mumbai city on any given day.