Idea gets show-cause for M&A norm violations in Punjab

Idea cellular,owned by the Aditya Birla group, received show-cause notice for violating norms in  Punjab circle. 

In 2008, Idea Cellular had bought 41.09 per cent stake in Spice, resulting in both operators having 12 licences in six circles. 

Recently, the Additional Solicitor General of India (ASGI) Amarjit Singh Chandhiok had said Idea Cellular had violated the merger and acquisition (M&A) norms.

In his findings, he suggested imposition of stringent penalties, including a Rs 300 crore fine, withdrawal of 3G spectrum in four circles and cancellation of 2G licences in the six circles where the companies Spice and Idea held multiple licences.

Idea fell by 2.4% in todays trading and closed at 58.2. The stock lost 18% in the current month on relentless selling pressure. 

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Punjab Based Companies

While Punjab contributes significant % of India's GDP, the no of companies based out of Punjab are few. While there are more than 20000 companies in India, only 211 of them are registered in Punjab amounting to less than 1%.
While the sales of all Indian Companies is at 47 lakh crores, punjab based firms account for 37 thousand crores, i.e 0.8%. What is worrying is the net profit of all punjab based companies put together is -2314 crores. This is due to the 2900 crores loss of Patiala registered companies.

For more details, check the table below

All figures in crores

Region	Companies	Equity	Gross Bulk	Sales	Net Profit
India	20768	380681	2999969	4732835	351710
Northern States	3579	107083	951559	1061218	79080
Punjab	211	2671	34549	37364	-2314
Amritsar	14	87	114	533	4
Bhatinda	11	22	105	374	-2
Faridkot	2	6	145	211	9
Gurdaspur	4	26	47	178	-1
Hoshiarpur	9	385	1670	1198	-174
Jalandhar	17	57	256	444	-9
Kapurthala	7	63	778	1011	17
Ludhiana	116	1379	11381	14331	644
Patiala	25	491	19570	18069	-2907
Ropar	3	13	1	15	0
Rupnagar (Ropar)	1	2	3	0	0
Sangrur	5	153	480	1016	105

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New Levy to drive Property Prices in Punjab

The  new government levy for residential or commercial projects in municipal areas will drive property prices. With the present high input cost, the rise could be as high as 20% in the near future. 

The Department of Local Government, Punjab, has recently imposed Processing Fee (PF), External Development Charges (EDC) and Change of Land Use (CLU) for real estate projects falling in municipal areas across the state in order to augment the financial resources of Urban Local Bodies(ULB). 

As per the notification, the department has imposed a fee of minimum of Rs 1 lakh per acre (4,840 square yards) to the maximum of Rs 15 lakh per acre on residential projects depending upon areas under municipal authorities across the state. 

Maximum charges have been levied on Dera Bassi, Zirakpur, Kharar and Banur, which are situated on the periphery of Chandigarh. New commercial projects starting from Rs 10 lakh per acre to Rs 1.30 crore per acre have attracted highest charges. These charges would be enhanced by 10 per cent every year by the state authorities. 


The real estate developers are not happy with the same. In the recent past , cement prices increased by Rs 25 per 50 kg to Rs 275 while rates of bricks have jumped to Rs 4,500 per truck from Rs 3,500 per truck. Steel prices have increased to Rs 42 per kg from Rs 30 per kg four months back. This move is set to impact Real estate developers margins and they may resort to price hikes to protect the same.

A few developers have already started increasing the rates of their projects in the state. "I have already raised the price of my flats (100 square yards) in Kharar from Rs 16 to Rs 18 lakh and will further raise rates to Rs 21 lakh next month," said a Kharar-based real estate developer.

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