Gem Nirmaalayam - Covai Property Centre, Coimbatore, Kovai, Covai

Vanakkam. This News Letter is further to our e-mail dated 24 November 2006 with regard to the work status at project Gem Nirmaalayam.

As pointed out in our earlier News letters, since the nature of soil being clay, it has retarded the progress of work. Our initial assessment of time plan was wrong because of nature of soil which resulted in additional works like changing the top soil, and further affected by the effect of rain, movement of traffic etc.

Due to unseasonal and heavy rain, the sub soil level of water in Coimbatore has come up and all the ponds have got filled up. In Ganapathy area, the sub soil water has risen alarmingly. We found water after digging only 3 feet which hampered further progress of work.

Besides, we have been experiencing labour problems since January’07. The labour problem is universal thanks to the boom in the real estate business. We have since sorted out this problem by managing to contract some additional labour. We have also invested in some additional construction equipment so that we can speed up the construction activity with less of labour.

Some of the features like Sewage Treatment Plant, Underground cable, and Hydro pneumatic water system necessitate a minimum level of completion of project and occupation by residents before we can make these systems functional. Therefore, we were forced to spread the work uniformly which resulted in work being delayed in many cases as others had to catch up. Unless we have the minimum number of Villa (60) and at least one apartment complex (16 apartments) completed and occupied these systems would not be functional. This is the problem of using high end and more advanced technology in various systems.

Notwithstanding the above, we have scheduled to complete 60 Villas and C Block of the apartment with all basic infrastructures in place by 31 August’07. The next set of 20 Villas and B block will be ready by November 2007 and the remaining 17 Villas by 15 January 2008.

Apartment Block C, Third floor & Block B Second floor roof slab completed. Brick work on both the apartment blocks is progressing simultaneously.
Ground floor roof slab of 42 Villas and First Floor Roof Slab of 7 villas have been completed. This also includes E Type Ground Floor Roof. Four more roof slabs will be completed by the end of the week.
Simultaneous plastering is progressing in all the above mentioned villas
Work on Sewage line systems & inspection chambers have been completed and work on initial stage of aeration sump has commenced.
OHT-spiral staircase upto flush water tank roof has been completed and is being used.
Temporary electrical arrangements have been completed.
We have placed orders for Solar Street Lights
Internal plastering alongside electrical pipe laying of villas for which the Roof slab has been completed are in progress.
Two corporation water connections are installed in the project location.
Entire stretch of main road i.le.2kms in Kattabomman Street is repaired and regularly maintained.
Initial survey for the 80 feet Scheme Road has been carried out by the authorities
Machineries such as bar bending, bar cutting, suspended scaffoldings & compression testing machine have been purchased and put to use.
Additional labour has been inducted

Following works are planned to be carried out during April’07 to June 2007:

To speed up and complete the work in 60 Vilas & Apartment block C upto final handing over stage.
To commence work in Apartment “A” block and Shopping complex before 15 May 2007. We are in the process of shifting the site office to Apartment B Block stilt floor so that the existing site can be demolished.
Completion of Over Head Tank
Formation of the roads (Second stage) inside the project. This work will Commence once the water pipelines are laid, for which we have received the pipes from New Delhi and the work will commence this week.
Internal electrical work will be done for villas for which roof has been laid and the Apartment Block C. We will also be completing the trenching for laying electrical cables.
Internal plumbing work for the Villas and the C Block of the apartment
Joinery work of door & windows for the Villas as well as C Block
Laying of common pipelines & Corporation & RO water as well as recycled Water
Compound wall at outer perimeter of project area – the work will continue even after 30 June
Paver stone laying
STP sump and installation of STP
Progress of work on other villas as well as Block A and the Shopping Complex would continue/have commenced

AC requirements (Window/Split) of individual Villas/Apartments as given by you have been consolidated. M/s Elvin Engineers has given the type and capacity details. Necessary provisions are being made as per your decisions. The details which have been consolidated are attached.

We have been in touch with the authorities for water connection (Athikadavu Scheme). We will be getting bulk connection to a common sump and then distribute it through the OHT. RO water will be supplemented whenever there is shortage of Athikadavu Scheme water
Each villa to have a tank of 750ltrs for fresh water and 250 ltrs for the Recycled water
In the case of apartments, the water supply, both RO and the Corporation will be common arrangements, as is the practice for all apartments
Besides above, we will be providing a separate water tank with connection to the EWCs in the toilet for the Re-cycled water.
We will also provide one tap connection for recycled water for use in your gardens and common areas.
Water Tax will be required to be paid by individuals for which we will get the assessment done along with the House Tax assessment

We assure you that we shall do our level best to complete and handover the Villa/Apartments as per the schedule worked out now without compromising on the Quality of construction.

Please rest assured that there shall be no Escalation in cost even though the material and labour cost has risen significantly.

We have selected the tiles for villas and apartments. The details are available in our Photo Album, which you can see at:

The tiles for flooring of Living, dining and First Floor Family Rooms are Vitrified tiles from Naveen and other tiles both for flooring and walls are from SOMANY. The staircase tiles will be from Eurocon Tiles, which are ready made staircase tiles. We have chosen tiles even for the Car Portico instead of suing Paver Blocks.

Orders are being placed by us. If you wish to see the same in your city you can visit any of the show rooms and see the same after noting down the details of the tiles from the web site. In Coimbatore, you can see the tiles either at the Site Office of GEM Nirmaalayam or at ELDEC-SEL Enterprises. Please contact us for any query.

The real estate market continues to be bullish in Coimbatore. Currently a villa in Gem Nirmaalayam will cost Rs 3500 per sq ft and an apartment Rs 2500 per sq ft. These are the offers that we have received from prospective clients.

We have completed Madhuban apartments and have handed over the same. We had booked these apartments on an average of Rs 1600 per sq ft and the current selling price is Rs 3000 per sq ft.

Therefore, by the time you get your villa or apartment in GEM Nirmaalayam, there would be further appreciation in price.

As you are aware, there has been significant increase in interest rate for housing loan in the past 15 months are so. While many articles have appeared in various newspapers and magazines, an article which appeared in New Indian Express on 21 March is at the link given below:

The simple fact is that the increase in home loan rates and the raising inflation would increase the Retail Prime Lending Rate (RPLR). A time will come when the EMI that you are currently paying but for an increased term, thanks to the increase in interest rate, would not be enough. This is because the banks and HFCs take more interest and less principal in the initial period of your repayment of EMI. Therefore, a few years down the line, if the interest rates fall (as it happened between 1995 and 2005) and assuming that the inflation rate also decreases, which would also make Retail Prime Lending Rate to fall, you would still be left with larger principal amount to re-pay. However your interest component would be lesser than what you are paying now. But from now until that happens, you would have paid more interest thanks to higher interest rate. This is because in the initial years of re-payment of your housing loan, you are being charged more interest and less of principal of your EMI component.

EMI is charged only after the final disbursement of loan sanctioned is released by the bank or HFC. Until then you pay interest on the amount of loan released and this is known as pre-EMI interest. This rate of interest is the rate that is applicable at that point in time. If you take Flexible or Adjustable Rate of Home Loan (ARHL), the rate of interest though lower than Fixed Rate of interest, would fluctuate depending upon the RPLR and the Bank/HFC applicable rate of interest to you. This applicable rate is the rate that you agreed to pay when you signed the loan documents. This is known as the "spread" between your applicable rate of interest of the client and the RPLR.

Please remember that all clients do not get the same interest rate for the same amount of loan sanctioned. This depends upon the term of the loan. One can also "negotiate" the interest rate with the bank or HFC. In some cases the builder or developer can get special rate for the clients who invest in his project.

Some Banks and HFC’s like HDFC Ltd have a Tranche Scheme where you start paying EMI for the loan amount disbursed each time. Some HFC even offer the entire loan to be disbursed in one go to select customers depending upon the reputation of the builder to complete the project and the assessment of the client by the bank/HFC. If you trust your builder to complete the work and the HFC is willing to disburse the amount in one go, then opt for it as this would help you to commence payment of EMI and also help you in Income Tax concessions for housing loan both for the interest and principal paid. Because the builder is getting the amount in one lump sum, you can ask him to give you some discount also.

Please remember that most of the IT Circles do not permit claims on tax concessions for the pre-EMI Interest paid for housing loan.

If you do not trust your builder or the bank is unwilling to disburse the entire loan amount in one go, then opt for Tranche Scheme. This would help you to save some interest burden in the long run.

Option between Fixed and Flexible/ARHL Rate of Interest: We would also suggest that you opt for part of the housing loan under Flexible or Adjustable Rate of Interest and the balance under Fixed rate of Interest. As to how much you want to take the loan under each option is dependent upon the quantum of Tax concession that you want, whether it is a self occupied flat or house or a property that you want to give on rent/lease and the risk that you are willing to take for the fluctuations in the Floating or ARHL rate.

The advantage of splitting the housing loan between the Fixed and Flexible/ARHL Rate of interest is that should the interest rate increase, the effect will not be on the entire loan but only on the amount that is taken under ARHL as the Fixed rate is not affected by this rate change.

But we must caution that some banks link even the Fixed Rate to the RPLR. Therefore, should the RPLR increase beyond a particular rate or the loan term is long, the banks can increase even the Fixed Rate. So, please read the loan documents carefully and seek all the clarifications before signing on the dotted line. We know of a case in our Company who took housing loan by splitting it into ARHL and Fixed Rate about two years ago and today, while the Fixed Rate component is only 7.75% p.a., the ARHL is 10.5% and, he took the loan from HDFC Ltd! So, the gainer is the borrower and since his loan is from HDFC Ltd, they do not increase the Fixed rate with the increase in RPLR.

Another advantage of this arrangement is that if you have some surplus money, you can pay the ARHL component and reduce the increased interest burden and the EMI. If you have some other investments, it may be advisable to withdraw it and reduce the housing loan taken on Flexible or ARHL Rate. With inflation not seeming to reduce, this may be a better option to save your precious money.

We are sharing our thoughts on housing loans. We recommend that you consult your auditor or tax consultant before taking any decisions.

The school for the children of our labourers is running well. As on date we have 54 children studying in the school. The children were recently taken out on a picnic and had lunch in a restaurant. Needless to say they enjoyed the outing, more than the studies!

Doctor’s Visit:

The Lady Doctor continues to visit the labour camp twice a week. We are supplying medicines free of cost for all the patients.

We are happy to inform you that our Company has been awarded ISO 9001:2000 Certification for Quality by the Certification Agency, BVQI. This has been possible thanks to the good wishes of all our esteemed clients. We assure you that we shall do all that is possible to deliver quality villas or apartments which shall speak for itself.

We will be moving to a new premises in April third week. It is a larger office which can accommodate all of us and also provide adequate car park facilities. The New Address with effect from 23 April 2007 will be:

We will send you our new Phone numbers shortly. However, the Office Mobile Phone No will continue to be +98943-17841. E mail IDs remain the same.

To come to the new office location, please take the Puliakulam Road at Lakshmi Mill Junction on Avinashi Road and travel about one km. You will cross the Corporate Office of Super Spinning Mill & Mahindra Pumps, both on your right side. A few meters down this road, you will see a small Vinayaka Temple on the right side and there is a two storied new building in front of this temple. Our office will be housed in this new building. You will be able to see the board from the Main Road.

Conclusion:

This News Letter was delayed for which we apologize. My team and I were working over time under difficult times especially with regard to weather, labour and material. We have explained the ground realities to those of you who have met us or spoken to us. We thank all of you for your understanding and cooperation. We assure you that my team and I shall do our best to fulfill our obligations and commitments.

Thanking you and assuring you of our best services at all times and with best regards,