Emaar calls off merger in Dubai

11 December 2009, 01:24am IST

|

DUBAI/NEW DELHI: In the backdrop of the debt crisis in the region,
Gulf real estate firm Emaar Properties has called off its proposed merger with
state-owned Dubai Holding, citing the deal is not "economically viable".

The move comes in the midst of realty firm Emaar-MGF, the Dubai entity's
JV with domestic company MGF Development, preparing an initial public
offering for over Rs 3,800 crore.

Emaar Properties has said the decision to cancel the proposed merger
with Dubai Holding was taken after intensive feasibility studies that
 were undertaken by a group of international experts and economic analysts.

In a statement late Wednesday, Emaar noted the results of "these studies
 proved that the proposed consolidation (with Dubai Holding entities)
discussed earlier was not economically viable in the current economic climate".

Last month, Dubai government shocked world markets after the government-owned
 conglomerate Dubai World sought six more months to repay debts worth $59 billion.
 The announcement not only dented investors' confidence but also sparked
fears of another financial turmoil. Emaar Properties is the developer of
the world's tallest building Burj Dubai

Source:PTI

Nakheel posts $3.65 billion loss in H1

Dubai, December 9
Nakheel PJSC, the real estate company
of debt-laden conglomerate Dubai World,
has reported a loss of 13.4 billion dirhams ($3.65 billion)
in the first half of this year.

Nakheel's loss is on account of a steep 
fall in the value of land prices and related writedowns.

Dubai World, the parent of the realty firm,
had rattled global markets last months,
after announcing that it would seek six months 
additional time to repay debts of $59 billion, 
including the Nakheel bonds which are due on December 14.

Currently, Dubai World is looking to restructure 
debts of $26 billion, including the bonds
worth about $4 billion.

In a filing to the Nasdaq Dubai Exchange, 
Nakheel said the firm and it subsidiaries
incurred a loss of $3.65 billion.

The entity had a profit of 2.64 billion dirhams 
in the same period a year ago.

Moreover, Nakheel's revenues plunged
78 per cent to 1.97 billion dirhams in
the first half of 2009.  

Source:PTI

Dubai desert storm impacts Chennai companies

9 Dec 2009, 1206 hrs IST, 

Hemamalini Venkatraman & V Balasubramanian,

 

CHENNAI: The Dubai desert storm which sent world markets into

a tizzy has far from settled. Down South, in Chennai to be specific, several 

companies with substantial stakes in Dubai fear that they have to

bear the cascading effect of the Dubai crisis. 

Consultants and senior bank officials ET spoke to have identified 

ETA Star Group (with an exposure of close to Rs 10,000 crore

in Dubai) as one of the leading corporate houses which may

have to bear the biggest brunt of this crisis. 

The extent of damage could, however, not be ascertained. 

Coming Monday (December 14) will be a crucial date 

as ‘Sukuk’, the Islamic bonds, get due for payment. 

The quantum of damage will be determined depending 

upon the realisation, a leading banker, on condition of anonymity told ET. 

The ETA Star group, co-promoted by Chennai-based BS Abdur Rahman, 

has receivables for various projects executed to the tune 

of 800 million Dirham (around Rs 10,000 crore). 

 

These include metro rail, Burj-Dubai project and

infrastructure development-related ones. 

These bills are outstanding since July 2009, sources said.

Mr Rahman, vice-chairman of the Dubai-based group,

is also the chancellor of BS Abdur Rahman University, Chennai.

His sons are actively involved in the ETA Star Group's operations

in West Asia and India.

 

Several prestigious projects that the group has executed

in TN include the Chennai Citi Centre -- the most expensive 

shopping mall in TN, Chepauk Stadium, Marina Lighthouse, 

Valluvar Kottam, Government General Hospital, Gemini Flyover,

Kodambakkam Flyover and Raheja Towers.

 

The East Coast Construction, which is implementing 

projects worth Rs 500 crore for the TN govt, 

including the secretariat, and West Asia Maritime

are part of the ETA Star Group. 

Since the group employs a large number of Tamils,

the crisis may affect the job front as well. In recent years,

the group has started investing more in India in areas like

real estate, housing, retailing and power. It had embarked 

on a mega IT park in Chennai but slowed it down after

the global financial meltdown. 

When contacted, ETA Star ED Abid Junaid refused to 

comment. Repeated mails sent to top ETA group 

officials remained unanswered. 

Meanwhile, the director of another Chennai-based company —

National Asphalt Products and Construction (NAPC) — 

Varun Manian said his company had been trying to re-work

its business plans over the last six months to minimise impact. 

Dubai contributes around 15% to the company’s Rs 650 crore turnover. 

Incidentally, RBI guidelines stipulate that all equity

investments abroad by Indian companies have to be 

repatriated by dividends. So, companies that have set 

up subsidiaries through the equity route would be severely

impacted. 

 

The Chennai-headquartered company that executes

infrastructure works, specialises in earth-moving and

road development activities. "We have started shifting 

our machines and equipment to Abu Dhabi. 

 

Our customers (including Emaar) are seeking discounts 

that are absolutely unviable since we operate on thin margins.

The Road and Transport Authority of Dubai have asked us 

to stop work," he told ET. 

NAPC expects to take a hit of 10% to 12% on its revenues this year. 

Consolidated Construction Consortium (CCCL)

chairman and CEO R Sarabeswar told ET that the current

scenario has to be viewed in the context of the anticipated 

ripple-effect this will create in the next three months.

Large projects are still available in Abu Dhabi. 

"We have seen no direct impact," he said. In Dubai, 

CCCL has executed many projects —building factories

and villas worth 20 million dirhams. It is expecting to bag

a couple of private contracts for around 35 million dirhams. 

Rakindo honcho Prasad Koneru said his company, which

operates out of Dubai, has not been impacted at all. 

A senior official of an infrastructure company said special

purpose vehicles have their own cash flows and hence, 

companies that have been project-financed are not really 

in a precarious situation. 

However, another top bank official said there are cases wherein,

transactions involving other countries where Dubai is used as the

trans-shipment point, have been hit. For example, companies

shipping their products to the Middle East and North Africa

markets have been hit by the Dubai bubble. 

Ashok Leyland and Hyundai have been using this logistics

hub to gain entry to high-risk countries, where they de-risk 

by opting for Islamic Banking channel. Meanwhile, a few 

contracting companies, routing their exports through Dubai,

are said to have taken a hit to the extent of $1 million or so. 

 

Sources:ET

INDIAN BANKS DO NOT HAVE MUCH EXPOSURE TO DUBAI WORLD : RBI

DEC 5, 2009



The Reserve Bank today said the domestic banks do not 
have much exposure to the debt-ridden Dubai World and 
hence their balance sheets will not be materially 
affected from the crisis. In the larger context,
the rating agency Moody’s also today said the ratings
of Asian banks are not likely to be downgraded,
unless there is a massive restructuring in Dubai.

Reserve Bank Deputy Governor Usha Thorat said
that the crisis will not impact the country’s
banking sector as the exposure “is not significant
 and not a matter of concern. It is not something
that materially affects their balance sheets.”

Moody’s also said Asian banks have relatively
small exposure to Dubai and Dubai World companies.
 “Therefore, no rating actions have been taken on
 Asian banks as a result of the requested standstill
 on select Dubai World debt payments. 

Nor does Moody’s expects that there will be
any need of negative rating action on Asian
banks at a later date…”
So far as the domestic banks are concerned,
 Bank of Baroda has an exposure of Rs 5,000 crore
in Dubai. State Bank of India too had provided
 Rs 1,500 crore to some UAE companies.

Moody’s said, “the Asian banks have billions
of dollars of exposures to the UAE entities,
but this represents small per cent of their assets.
 To date, we have found no Asian banks to have
sufficiently high levels of exposure to members
 of Dubai World group to warrant any ratings actions.”

Thorat, however, admitted that the Dubai crisis can
have some impact on remittances and affect those parts
 of the country that receive inflows from the Gulf
nation in larger quantity.

“Some parts of the country are certainly more dependent
 on remittances from Dubai, but overall I think it is
too early to say. There could be some impact obviously,”
the RBI Deputy Governor said, when asked about the impact
 of the crisis on the country.

Many states, especially Kerala, receive large amount
 of remittances from persons working in the Gulf region.
As many as 42 per cent of the 1.5 million population of
 Dubai are Indians and the UAE contributes nearly 13 percent
of the overall remittances to the country. India was the
 highest recipient of remittance flow at $52 billion or
 15 per cent of the global total last year, according to
a World Bank report. This constitutes 3.3 per cent of the GDP.
“We have to see how far this (Dubai financial crisis) spreads”,
she said, adding that it may be too early to say anything about
the fallout of the crisis on the country at present.

The financial crisis in Dubai erupted late last month with
the conglomerate Dubai World asking for six months time to
repay its USD 59 billion debts.