Conceptual Advisory Services LLP, a firm in which Sun Pharmaceuticals executive director Sudhir Valia and his wife Raksha are designated partners, has signed a Rs 25,000-crore memorandum of understanding (MoU) with the Maharashtra government for building one lakh affordable houses, on a partnership basis, on private land. Valia is also the brother-in-law of Sun Pharma’s Managing Director Dilip Shanghvi.
Records show that the Valias’ firm was incorporated on January 18, 2018, and that the “total obligation of contribution (of the partners) of the LLP is Rs 1 lakh”. The MoU was signed on the sidelines of the recently-held Magnetic Maharashtra business conclave in Mumbai’s Bandra Kurla Complex. The Maharashtra government recently unveiled an incentive policy for the construction of affordable low-cost houses on private lands under the Centre’s ‘housing for all’ initiative.
The state-run Maharashtra Housing and Area Development Authority (MHADA) has also invited proposals from private players interested in availing the policy’s benefits. Valia and his family already control Fortune Financial Services (India) Limited, which offers loans, broking, wealth management and asset management services. Sources said that the newly-registered company has been set up as a standalone company that will finance and partner in the low-cost housing segment. Valia is also a founding director of Dadar-based Suraksha Realty, which claims to have undertaken a commercial project on Mumbai’s Andheri-Kurla road and three residential projects in Thane.
Valia, when contacted, refused to discuss the deal. “I may be a partner in the firm, but I’m not involved in its day-to-day operations,” he said. Paras Mehta, the firm’s authorised signatory, when contacted, said, “We would not like to discuss our plans at this stage.”
According to sources, the new firm has plans to leverage the relationship built with various construction industry players and partners for building and financing retail low-cost housing projects.
Last September, another business conglomerate, the Piramal Group, had announced the setting up of a housing finance company for retail business in the home loan segment. With land developers and home builders finding it increasingly difficult to avail banking finance, senior government sources said that the non-banking finance companies are set to expand in the retail lending sector.
With the Indian real estate market still stuck in a downturn, several developers have forayed into the budget housing space where the demand remains strong despite the slowdown. In order to create an asset-light model, the industry’s financers have been advocating projects on private or public-private partnerships, sources said.
Apart from Valia’s firm, three other private developers – Poddar Housing, the Bhumi Raj Group, and Mangal Namoh Gruhnirman Private Limited – have signed MoUs to partner with the Maharashtra government in building low-cost houses. The government has also signed three other MoUs with industry bodies – the Maharashtra Chamber of Housing Industry, the Confederation of the Real Estate Developers Association of India (Maharashtra), and the National Real Estate Development Council – to develop affordable housing on partnership basis. Further, sources confirmed that the MHADA’s tender, seeking proposals for such developments, is receiving a wide-spread response from the industry.
To push affordable housing projects, the government has accorded industry status to such construction projects. The Maharashtra government’s policy also provides additional construction rights for such projects. Such projects can now build up to 2.5 times the plot size on the condition that homes built on it would be of 30 square metres and 60 square metres, and that 50 per cent of these homes would be sold at government-determined rates. Such projects can also avail a subsidy of Rs 2.5 lakh per home constructed, besides concessions in stamp duty payments. It has further also permitted the utilisation of lands locked in no-development zones for such projects by availing building rights equal to the plot size. Land holders of such locked lands in the Mumbai Metropolitan Region’s green belts, and also in the Pune Metropolitan Area, are showing the most interest in availing the scheme, sources said.