Mah Assembly revokes Urban Land Ceiling Act

This act is important because of the transparency factor, that it brings to real-estate companies and the clearance time, that it will take to develop property.

The companies that will benefit from this move are Godrej, as it has the largest bank of property that can be developed. The total land could be in excess of 1,500 acres and the amount goes as high as about Rs 5,000 crores.

Other companies that may benefit from this are Orbit Corporation, HDIL, etc. The key thing the management said was that they will get to tap the Jawaharlal Nehru National Urban Renewal Mission. It is a corpus of fund of about Rs 11,000 crore, that is now open for direct access to these companies, now that this act is being repealed.

The last repealing was done in 1999. The act was initiated in February 1976. It means that the state government does not have to bear Rs 11,000 crore of losses, which it would have to bear if the act was not repealed. That would have essentially resulted in hurting the developers that are Bombay-based, as well.

From a company perspective, Godrej will have the maximum impact of this act. The total amount of land resting with the state government, at this point of time, under the Urban Land Ceiling for Godrej itself, is estimated to be about 6,000 acres. According to market experts, that is the mixture of costal restricted land and developable land.

Apart from that, there is a significant component of this land that is locked with the government, the Wadias, as well as Century Textiles. So, the reaction was seen in stocks like Century Textiles, Bombay Dyeing as well as Godrej in trade today.

The biggest positive is that Rs 11,000 crore can be actually tapped for funds, which could not have happened had this act not been repealed. At this point of time, the only other states that have the Urban Land Ceiling Act, at this point of time, are Andhra Pradesh and West Bengal, where the norms are not severe as it is in our state, especially with regards to Maharashtra.

Some may argue that this move was expected to be seen as coming because a couple of days back, the Nagpur government actually covered about 6,000 acres plus land and took actual physical possession of 1,500 acres of land, under the Urban Land Ceiling Act.

That may have something to do with the fact that this regulation may have been on the anvil. It was something that the Shiv Sena was opposing very vehemently, alongwith the CPI. But the BJP was okay with it and it was to be tabled in the Winter Parliament session and it has been passed.

Some people estimate that over 25,000 acres of land is locked under this ULCA of the state government. But only about 10,000 acres of that land will be developable, and Godrej has about 6,000 acres of land. Only a part of that will have to be developed. So, supply will definitely open up from hereon. Whether it will have any impact on prices remains to be seen.

But if one views it in conjunction with what happened yesterday with the stamp duty rationalisation coming in, there may be some sort of cooling off in prices, but not immediately. There is still a fair amount of clarity awaited on this particular ruling of today.