Brick-makers oppose service charge

Our Chennai Bureau | Updated on April 16, 2011


Manufacturers of fly ash bricks and block in Tamil Nadu have urged the Tamil Nadu Generation and Distribution Corporation of the State Electricity Board to stop levying service charge on fly ash in line with the directions of the Ministry of Environment and Forests.

According to a press release from the Tamilnadu Fly Ash Bricks & Blocks Manufacturer's Association, the Ministry had issued an office memorandum on March 18, 2011, which stated that collection of service charge accounts to indirectly charging cost and constitutes violation of its earlier notification.

The notification 2804(E) dated November 3, 2009, directed the thermal stations to allot at least 20 per cent of ESP dry fly ash generated daily free of cost to fly ash, clay fly ash bricks, blocks and tiles manufacturing units on priority basis over other users.

The service charge levied on supply of dry ESP Fly ash by Tangendco is illegal and shall discontinue it forthwith.

The Ministry had heard the representation of both parties on March 10 in line with the directions of the Green Bench of the Madras High Court. The direction had followed a writ petition by the Association seeking relief from the levy of service charge on fly ash.

Tangendco has four thermal plants in Tamilnadu at Ennore, North Chennai, Mettur and Tuticorin which generate about 6.5 million tons of fly ash annually.

Despite the merits of the notification, the utility had levied service charges for the issue of dry fly ash at the rate of Rs 100 a tonne, and had continuously escalated the service charges to Rs 150 and now Rs 300.

The association had filed a writ petition in the Madras High Court Green Bench which directed that “we feel it appropriate to direct TNEB to approach MoEF by way of an application for approval for collection of service charges from the members of the association as well as from other users of the fly ash bricks for the supply of dry ESP fly ash.”

The TNEB was permitted to collect the service charges at the rate of Rs 100 a tonne pending a decision by MoEF. In case the decision is against them, the amount should be refunded, similarly if MoEF permits such collection of service charge TNEB would be entitled to collect the arrears.

Edelweiss predicts downswing

Based on a visit to a property expo in Mumbai, Edelweiss Securities Ltd real estate research expects transaction volumes to ‘remain tepid' and prices to correct by about 15 per cent by October and revert to April 2010 levels.

The property exhibition organised between April 14 and 17 by the Maharashtra Chamber of Housing Industry (MCHI), at MMRDA grounds, BKC, Mumbai, had over 40 developers participating.

Affordability remains the key issue with prices going up over the past six months across the city dampening buyers' enthusiasm. Edelweiss expects transaction volumes which is down by half as compared with peak levels to remain tepid, said a press release.

The property expo witnessed lower participation compared with the past exhibitions, both from developers and visitors. The key reason was a 25 per cent hike in prices over the last one year, the premium of 15-20 per cent charged for projects with ready possession or those to be completed in less than a year. At the expo, over 65 per cent of the projects on offer at the expo were in ticket size of over Rs 70 lakh, which was beyond the realm of affordability of majority of buyers.

Channel checks indicate continued sluggishness in volumes

Interactions with market intermediaries and prospective home buyers showed the reluctance to complete transactions, despite the relatively low levels of ready inventory available in Mumbai, owing to the continuous price rise. Other key issues were prohibitive parking charges and low carpet area/saleable area ratio of 55-60 per cent in several projects against the normal range of 70-75 per cent.

Home loan financing intermediaries indicated that the loan-to-value was capped at 80 per cent in line with the directive of Reserve Bank of India and the National Housing Bank. Some of the PSU banks were quoting mortgage rates for home loans above Rs 30 lakh at 10-10.5 per cent, with an additional 50 bps mark-up on loans with tenor of over 15 years. Further, since the LTV excludes parking charges, the effective LTV reduces drops to 75 per cent.

Published on April 16, 2011

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