Monthly Archives: January 2009

Unitech looks for $560 million from PE funds

DLF and Unitech, New Town KolkataIndia’s second-biggest real estate developer Unitech is in talks with private equity (PE) funds for investments up to $560 million (Rs 2,750 crore).

The realtor is also in negotiations with banks to restructure an additional Rs 500 crore of loans as part of its plan to cut debt and secure funding to complete existing projects.

The Gurgaon-based realty firm, whose stock is now trading at less than a tenth of its 52-week peak on the Bombay Stock Exchange (BSE), plans to draw down $110 million (Rs 540 crore) from Unitech Real Estate International Fund to invest in its realty projects in the National Capital Region (NCR). When contacted, the company declined to comment on the development.

Last year, Unitech received commitments of $330 million (Rs 1,620 crore) for its international fund, which was launched exclusively to raise money to invest in the company’s residential projects.

The realty major is also in talks with PE funds to raise $300 million (Rs 1,480 crore) at the corporate level and as much as $150 million (Rs 740 crore) for specific residential projects being developed in Hyderabad and Kolkata. While the company expects to tie up PE funding for its Hyderabad and Kolkata projects, being developed through special purpose vehicles (SPVs), by the end of March 2009, PE funding at corporate level is expected only after the fortunes of the market turn for the better.

Unitech has admitted that it has a debt of Rs 8,000 crore on its balance sheet, of which it has to repay Rs 2,500 crore by March 2009.

Of the Rs 2,500 crore, the developer has already restructured Rs 1,000 crore of loans with banks and is in talks to restructure an additional Rs 500 crore. It expects to complete the process by the end of this month.

For the balance Rs 1,000 crore. The company is in talks to sell its Gurgaon-based hotel project and also the project in the national Capital’s Saket area to meet the remaining Rs 1,000 crore. However, a report by CLSA said Unitech needed to repay Rs 1,000 crore of debt to mutual funds this quarter, indicating trouble for the company. Unlike banks, where it has the option of restructuring loans, the debt owed to mutual funds will have to be repaid by this quarter, the CLSA report said. However, Unitech has disputed the report, saying the company did not owe debt to mutual funds.

New Incentivised Schemes for Affordable Housing in Offing

In its upcoming mid-term appraisal, the Planning Commission is likely to introduce couple of new schemes for real estate sector so that it acquires a priority status at times of meltdown and provide for “affordable housing”.

Announcing this at the ASSOCHAM National Conclave on Threat Before Real Estate Sector – What are Solutions? held here today, Housing & Urban Development Adviser in Planning Commission, Mr. Harish Chandra also informed that the Cabinet Secretary has already convened a meeting of all States to seek solutions to revive stressed sectors including that of real estate, without specifying the date for the meeting. He, however, added that the mid term appraisal of Planning Commission will now take place immediately after conclusion of forthcoming Parliamentary Polls.

The new schemes will be unfolded during the forthcoming mid-term appraisal exercise of the Planning Commission even at the cost of deficit financing for which the Commission will enter into series of consultation with industry association like ASSOCHAM, said Mr. Chandra.

According to him, in its recent exercises, the Planning Commission, the RBI and the Finance Ministry have jointly announced series of measures to rebuild confidence in Indian economy and many more such initiatives could also be announced by the Commission after concluding the proposed mid-term appraisal, hinting at further lowering of interest rates for affordable housing.

In the meanwhile, Chief Executive Officers of Omaxe Ltd., Raheja Developers, Pioneer Urban Land & Infrastructure, Jones Lang LaSalle Mehgraj that participated in ASSOCHAM organized conference on Real Estate sector, collectively raised their voice, opposing foreign direct investments in real estate sector.

CMD, Omaxe Ltd., Mr. Rohtas Goel who heads the ASSOCHAM Real Estate Committee said that FDI’s in real estate would neither increase supply and demand for affordable housing. Their entry into it will enhance and shoot up the prices of land and therefore, real estate FDI’s should be discouraged as this will pose a serious challenge to affordable housing.

He demanded that the present model on which real estate sector currently stands crippled, needs to be changed and sought that in its stimulus packages of Rs.40,000 crore for infrastructure development, Rs.10,000 crore should exclusively be allocated for real estate sector as subsidy so that affordable housing becomes a reality.

Mr. Goel said that he has decided to offer affordable housing to people for which the first site identified is that of Indore and subsequently this initiative will spread in other parts of the country like Chandigarh, Ludhiana, Jaipur etc.

Speaking on the occasion, Mr. Navin Raheja, Managing Director, Raheja Developers and Sr. Member of ASSOCHAM Real Estate Committee also opposed FDI’s entry into real estate as it would lead to shooting up of land prices and hardly provide for affordable housing.

According to him, the real estate which is currently under stressed would come out of it in next 2-3 months as developers would have to build houses for all stake holders to stay and survive in the business.

Among others who spoke on the occasion demanding another Stimulus package for real estate sector include ASSOCHAM Secretary General, Mr. D S Rawat, Ex-CMD HUDCO, Dr. P S Rana, Mr. Pankaj Renjhen, Managing Director- North India, Jones Lang LaSalle Mehraj, Mr. Kuldip Chawla, Vice President, Red Fort Cappital and Mr. Shashikant Arora, President, Association of Certified Realtors of India.

Cushman ties up with Technopak

mansLeading real estate services firm Cushman and Wakefield tied up with Technopak to make an integrated platform of end-to-end retail services. Technopak is well known management consulting firm in retail in India.
The partnership serves to deepen Cushman’s capabilities for its clients in the retail industry by accessing Technopak’s retail strategy and consulting services, a release said.
For Technopak, this partnership would enable its clients to access Cushman and Wakefield’s global platform of real estate market intelligence, management expertise and a broad range of real estate services.
Cushman and Wakefield and Technopak would together have a market share to more than 50% in the retail services sector and this tie up will help both companies to gain much more control on market and provide their clients a platform of knowledge-based advice backed by execution capabilities.
Mr. Sanjay Verma, Executive MD, South Asia, Cushman and Wakefield said, “This partnership also forms a key component of our long-term strategy to further expand our retail services and strengthen our real estate portfolio in India”.

Indian economy may grow 6.7%

Morgan Stanley & Lehman Brothers Buildings, Canary Wharf, London. According to Morgan Stanley, Indian economy may grow 6.7% in current fiscal.

According to Chetan Ahya and Tanvee Gupta, economists at Morgan Stanley, “Higher capital flows have been the anchor of a self-fulfilling virtuous cycle of an appreciating exchange rate, lower interest rates, and strong domestic demand growth”. Further they said that however, capital inflows will remain slow for some more period due to continued risk aversion, resulting from slow global environment and rising credit defaults.

Morgan Stanley looks forward to credit growth to down to ten percent over about next half year compared with 4-year average of 28.3% as rising bad loans may make banks risk-averse.

Karnataka High Court serves notice to former PM

High Court of Karnataka, BangaloreThe Karnataka High Court on has served a notice to the former Prime Minister Mr. H.D. Deve Gowda and asked him to appear before the court on his own or through his advocate to justify his charges of misappropriation of funds and lands by the Nandi Infrastructure Corridor Enterprises which is executing the controversial Bangalore-Mysore Infrastructure (BMIC) project.

The Chief Justice P.D. Dinakaran said the letter written by Mr. Deve Gowda has been treated as Public Interest Litigation and posted the case for February 2.

However, NICE Advocate Dushyant Dave decided to file a contempt of court against the former prime minister for his letter to judges which aimed at influencing the decision of the court.

A few days ago, Mr. Deve Gowda alleged that the government headed by former Chief Minister B.S. Yeddyurappa has granted more lands Nandi Infrastructure Corridor Enterprises.

Mr. Deve Gowda,the president of the Janata Dal (S), alleged that granting more lands to the project; company was aimed to close the cases pending before the courts.
Mr Deve Gowda had recently written a book, which includes allegation against Chief Minister of karnataka in connection with controversial Bangalore- Mysore Infrastructure Corridor Project.

Mr. Gowda spoke of a “massive fraud” to the tune of several thousand crore of rupees in collusion with an infrastructure company. Mr Gowda alleged that the ruling BJP had funded its Operation Lotus through the “NICE loot and mining and real estate mafia.”
However, Mr Yeddyurappa rejected the charge and asked Mr. Gowda to prove his charge in the court of law.

Mr Yeddyurappa had sometime ago said he would file defamation case against Mr Deve Gowda for leveling charges against him, but on January one the Chief Minister said he has decided to drop it and wanted to begin the new year on a positive note by maintaining “good relations” with opposition parties.

Mumbai flat rates will come down in near future

Nice Entry Step DetailMumbai flat price drop now is marginal, will be steeper later, say brokers and consultants, though developers don’t agree.
It is better to continue waiting and watching before putting your money into that new flat, brokers and real estate consultants advise. They concede that prices have decreased but point out that the fall has been marginal; the real reduction is yet to come.
There had been talk of a price correction since the middle of lat year but builders continued to increase prices through the monsoon and Diwali, said real estate consultant Sandeep Sadh, CEO of the portal Mumbai Property Exchange.
“Only after November did they start decreasing prices, marginally. As of January, buyers want a reduction of more than 35%; they should not buy for another six months. It is a farce of a market with builders talking in the air and buyers fishing in the market. Unless builders offer a substantial discount, the market will stagnate till October,” said Sadh.
Only in the distant suburbs does availability outstrip demand, he said, with developers having started reducing rates by 10 – 25%. As per data compiled by the portal, existing rates in Mumbai on an average are not much different than those last September.
Ishwar Kakkad, a broker working in Dadar-Worli area, said that in today’s market he would rather sell than buy. “A price rise can be called healthy if it happens at the rate of inflation, say about 8 – 10% per year. But in the last three years, prices have increased by about 400%. Right now builders are willing to negotiate depending on their urgency; an actual price cut will come when builders openly announce one,” said Kakkad.
He expects the prices to fall eventually, by 40%, “but that will take at least three months to start”.
Faced with little choice as they are, home buyers are not jumping the gun. “The price of my 440 square feet rented apartment at Seven Bungalows in Andheri is now Rs 42 lakh; a year earlier it was Rs 45 lakh. So technically the decrease in price has been less than Rs 500 per square feet,” said Akshay Mishra, who works with a multinational financial firm. Mishra, who has been looking to buy a home for over a year now, has put his plan on hold.
Developers maintain that the market has already seen the much expected correction. “We clearly feel the prices have stabilised and that there would be no more decrease in rates. Developers haven’t increased their rates since March 2008; in the last three months, these rates have fallen by 5 – 20%,” said developer Dharmesh Jain, chairman of Nirmal Lifestyle and vice-president of Maharashtra Chamber of Housing Industry.

Is Maytas on the edge of a sellout?

With its promoter in jail, stock price nearing 52-week lows, downgrades by rating agencies and the state chief minister saying he would look into the realty major’s ability to complete plum projects, Maytas is clearly tottering and looks like it is on the brink.
A cross section of its employees, however, maintains that all is well and they are not the same as Satyam. Nevertheless, pointers suggest that either a strategic deal or a sell out is imminent.
Sample this: The promoters of Maytas Infra have pledged substantial portion of their holding -36% as of September 2008-to raise money. With margin calls getting triggered, institutions have begun offloading stakes.
While IL&FS Trust has sold off 11.52%, Investmart dumped 5.61% of the promoter holding pledged with them. The exact quantum of stake that the promoters hold today is not known.
“With an order book of over Rs 13,000 crore, the company needs an immediate cash infusion of Rs 1,200-1 ,300 crore to complete existing projects. With the current situation of promoters, that looks difficult,’’ an analyst tracking the company said.
Only last week, ICRA downgraded the debt programme to LBBB. This means Maytas would now access funds at a higher rate than what it would have before.
State-run MMTC has cancelled its association with the company for the proposed Rs 8,603 crore SEZ near Chennai.

SEZ growth may follow down track

The adverse effects of the Satyam fiasco are not only going to be felt by the IT industry. Even the real estate sectorbio code levels is worried.
If global clients and investors in the IT domain decide that India is not the best place to dabble in for the moment, then there is going to be an enormous amount of vacant commercial and residential space in the market. This will add to the woes of the real estate sector, which has seen a correction in prices of 25%-30% in the year gone by.
According to global real estate consultants Cushman & Wakefield, over 80% of commercial space taken up in the country is by the IT and ITeS sector. The total commercial space absorption in 2008 by the country’s main business metros that include Bangalore, Chennai, Hyderabad, Kolkata, Mumbai, NCR and Pune was 36.7 million square feet.
“There could be a significant slump or deferment of planned IT SEZs across the country,” says a leading real estate developer who has a large bank of commercial office space planned for.
Besides, companies like Satyam traditionally lead the herd to set up shop in tier II and III towns, which in turn spurs real estate development in those destinations. This too may slow down.
But developers and consultants are more worried about Hyderabad’s real estate market, which is already reeling under the impact of the global slowdown. The absorption rate of commercial units for 2008 had fallen by a whopping 67% in the city at just 1.3 million square feet when the total supply was close to 4 million square feet.

Home buyers to return back

New house?Home buyers could arrive back in the Indian real estate market in force after the Reserve Bank of India reduced rates and the cash-reserve ratio requirement. The bank slashed the repo rate by 100 basis points to 5.5% and the reverse repo rate to 4%. Officials also lowered the cash reserve ratio by 50 basis points to 5%, effective from January 17.
Real estate companies are now hoping the move will finally start to see credit moving again after a clampdown on lending saw sales slump.
Mr. Rohtas Goel, M.D., Omaxe, said, “We are confident that banks will reduce interest rates for the housing sector, which will help bring back the end-user to the market.”
Financial analysts are now waiting to see how many of India’s banks pass the cuts on in full.
Confidence in the market had already been boosted in December after officials revealed the government was working on a second stimulus package for the Indian economy.
Many experts believe that home loan rates will drop down to around 8% – the level expected to tempt buyers in huge numbers.

Economy expected to grow in next fiscal

Polski KlubExpecting a lower economic growth of 6.5-7% for the next fiscal, the government today said that its main priority is to minimize job losses resulting from the global downturn.

Minister of State for Industry Ashwani Kumar described the 10 million job loss figure given by the Federation of Indian Export Organizations (FIEO) as “unrealistic”.

However, he admitted that people would be out of employment in certain sectors.

“Our main priority is to prevent job losses and we are working on it. There would be certain job losses in certain sectors of the industry but in certain other sectors there might not be job losses. In fact, they might be doing expansion in those areas,” Kumar said here at a function organized by the Indo-American Chamber of Commerce.

The minister also said the economic growth can go down to 6.5% at the lower end of the band. “I believe that we will be able to record around 6.5% to 7% growth in the next fiscal,” he said.

Kumar said Rs one lakh crore would be spent on infrastructure projects in the next 100 days.

Asked whether the government proposes to bring out any more stimulus package, he said the government has already given major sops. “But if there are certain sectoral issues, that will be discussed,” he said without elaborating further.

On exporters’ demand for more help, Kumar said, “It is in the constant stage of decision-making. Inter-ministerial comments are coming on certain proposals. But it is an ongoing process”.

Disagreeing with the FIEO’s assessment, Kumar said, “I don’t think that is a realistic figure at all.” However, the government would give “all possible” help to the job-oriented sectors like textile, leather, gems and jewellery.

Developers Unable to meet Retail Space Target

Mixed Use Project - Retail @ STREET LEVELDLF, Parsvnath and other real estate developers have lagged behind by 54% in their target to open retail space even as retailers’ vacancy climbed to 16% last year. Cash-strapped real estate developers failed to deliver eleven million square feet of retail space in 2008, according to a study released by Cushman & Wakefield. Out of the proposed 74 malls in key eight cities at the beginning of 2008, only 34 were delivered through the year. Developers in NCR lagged the most with a supply of 4.7 million square feet compared with the earlier target of 7.1 million square feet. Developers may continue to restrict their supply, or go slow on retail space by a similar amount in 2009 across key major cities.

“For any developer, the vacancy level should not cross over 5%. The vacancy level of 16% suggests that most of the malls across India are finding it difficult to manage their operational cost,” said Rajneesh Mahajan, director of retail services at Cushman & Wakefield. The reason for the shortfall was the mismatch between the potential and actual occupancy. The Indian organised retail sector grew at 25% in 2007. Anticipating the growth of retail sector at above 35% in the coming years, developers had announced big retail projects. However, owing to economic slowdown, the growth of the retail sector has come down to 15% in 2008, resulting in developers deferring their projects for 1-2 years. “From the projected supply of 20.8 million square feet space in the first quarter of 2008, we will see a spill over of about ten million square feet development in 2009-10. Lack of funds leading to construction delays and cautious expansion by retailers have resulted in slow absorption of retail space in malls,” said Mahajan.

US-based hedge fund QVT Financial opposes Hirco’s restructuring

US-based hedge fund QVT Financial LP has strongly opposed Hirco Plc’s proposal to merge two Indian subsidiaries of the Hiranandani group with itself. QVT holds a minority stake in Hirco, a real estate fund floated by the Mumbai-based developer Hiranandani group in the Alternative Investment Market (AIM) of London.

Hirco has called an extra-ordinary general meeting on January 16 in Mumbai to seek the shareholders nod for the proposed merger.

According to a statement issued by QVT, the fund believes that the move is economically damaging to the shareholders of Hirco and favourable to the Hiranandani group. QVT has urged the Hirco shareholders to vote against the resolutions, proposing the merger.

QVT said in the statement that the Hiranandani group would stand to reap financial windfall and would scale up its holding in Hirco by the proposed merger.

It is also troubled that the timing and remote location of the EGM may disenfranchise shareholders, the statement said.

Perfect time to innovate real estate

After a long run, Indian real estate sector has begun to show signs of slump. In fact, the present changes that Indian economy and real estate sector is going through can also been seen as the test of the resilience of the economy and our real estate sector.

In fact, real estate sector is a vital driver of growth of our economy. It is the 2nd largest employer; it provides employment to the real masses and unskilled workers besides skilled workers, with a vast majority of them below poverty line. The sector supports multiple industries, ranging from steel, cement, paint, sanitary ware, light fixtures, glass, aluminum etc. The sector also contributes towards urban development by undertaking public private partnerships including slum rehabs and is a significant contributor to government revenue.

The present situation of the Indian real estate sector reminds the challenging times that the sector faced in the mid nineties. Much of the demand in the early nineties was created by speculative property investors expecting their assets to appreciate in value – an ‘irrational exuberance’ over the short term, without there being a sufficiently wide and deep class of actual buyers of property.

But this time around, the demand was driven by the booming economy. In the last five years, India has grown at a compound annual rate of 8.9%. The high rate of growth dramatically improved the income level of urban Indians and the middle class today has significantly greater buying power than a decade ago. The overall economic development in India has stimulated demand for more and better housing, increase in office space, development of modern retail formats, and demand for more hotel rooms and the need for improved forms of entertainment.

RBI works to boost up market

Unveiling the package moments after the Reserve Bank of India slashed its key policy rates, the government said it was preparing to recapitalise state-run banks to the tune of twenty thousand crore rupees over the next couple of year to ensure the banking system does not suffer from capital adequacy constraints.

Speaking on the actions, Bharat Dalal, fund manager at Dawnay Day AV Financial Services, said, “Although most of the news has already been factored in, a sentimental boost on the back of the monetary policy is expected next week. A rally up to 3200-3250 on the Nifty is likely, provided 2975 hold. In an extremely optimistic scenario, 3400-3450 could be expected.”

The RBI slashed its two key short-term interest rates by hundred basis points each to stimulate an economy that has been slowing faster than expected. It cut the repo rate, at which it lends cash to banks, to 5.5% from 6.5%.

The reverse repo rate was cut to 4%. RBI announced a cut in cash reserve ratio, the proportion of deposits banks must keep with the central bank, by 50 basis points to 5% with effect from January 17th 2009.

It allowed the preparation of a special financing entity to provide liquidity support against investment grade paper to non-banking finance companies. The RBI has separately infused three lakh crore rupees liquidity into the system by way of cuts in key policy ratios – CRR and SLR. In addition, RBI provided a eleven thousand crore rupees fund to National Housing Bank and the SIDBI in a bid to promote lending to housing and SME segments.

The government realized the need for a second package as industrial output slipped into negative zone for the first time in fifteen years in October. The Index of Industrial Production fell 0.4% during that month. Exports also shrunk for two months in a row, with November figures showing a 9.9% decline.

Uttaranchal deserves foreign investment

Real estate of Uttaranchal is fighting for sufficient foreign investments for its development. The real estate in Dehradun is growing at a pace. It has opportunities in industry, tourism, commerce and investment. The state is crowded with lots of real estate builders, who has various township projects for state. Though, commercial and residential properties in major locations like Dehradun look for land in these tourist spots.

With government policy of 100% tax exemption for a decade from central exercise and income tax exemption for next 5 years, housing and building companies are competing to develop virgin lands of Dehradun.

Although the real estate developers are fine with the government’s policies on real estate yet they want government to be more flexible.

ITAT ruling likely to boost redevelopment of Mumbai

From now on, tax cannot be levied on the money paid by a builder to a housing society or private individual for redevelopment of property, the Income Tax Appellate Tribunal (ITAT) has said in a recent order. The verdict is expected to give a boost to the redevelopment business in Mumbai which has over 35,000 buildings slated for redevelopment.

The income-tax department has been sending notices to housing societies, which are in the process of redevelopment, demanding that tax be paid on the amount paid by the builder to the society.

New Shailaja Co-operative Housing Society, located in Ghatkopar (east) in Mumbai, which received such a notice, moved the ITAT after it failed to get a relief from the Com missioner (Appeal), the first appellate body on tax matters. The ITAT is the second appellate authority on tax issues.

With ITAT decision favouring the society, all property owners including housing societies and individuals embarking on redevelopment are likely to heave a sigh of relief.

“This order will be of immense help to those living in over 35,000 buildings in greater Mumbai, seeking redevelopment. This order gives a clarity on the issue of taxation in such cases,” Property Redevelopers’ Association’s chief spokesperson and general secretary Pujit Aggrawal said.

The tax demand on New Shailaja Co-operative Society was about Rs one crore. The Society’s 3 floor building was converted into a seven story building after the redevelopment.

Accepting the contentions of Tarun Ghia, the counsel appointed by New Shailaja Co-operative Housing Society for arguing its case before the ITAT, the Tribunal observed that Development Control Regulations vest the rights on the society to use TDR rights for additional construction. Even after the transfer of rights to additional FSI, the building and the land continue to belong to the housing society, Mr Ghia argued.

The Tribunal observed that before development agreement was struck, the society was the owner of the land and building and after the development was completed, the society continued to be the owner of the same land and building.

The society had sold the development rights to the developer but since development rights in this case had no “cost of acquisition”, there is no room for determining the capital gain, Mr Ghia argued.

Good Investment Year Ahead

If 2008 was the year that witnessed an unprecedented crisis of confidence, 2009 could be one of re-building confidence among market participants.

With inflation coming down, leading to lower interest rates, several blue chips are at multi-year lows and insurance companies are showing a marked shift from unit linked plans, the year is sure to throw up interesting long term investment opportunities for investors.

And gold, the asset class that truly transcends geo-political boundaries, could be the one to bet on heavily. Along with the southward movement of interest rates, debt has emerged as one of the top investment opportunities.

For retail investors, investing through debt mutual funds early in the year could turn profitable. “People in the higher tax bracket should invest through bond and income funds, and for at least 2-3 years,” said Gaurav Mashruwala, an independent financial planner. However, for those in the lower tax bracket, bank fixed deposits are usually the preferred investment option.

But, bank FD rates are also headed south and are expected to keep falling as long as banks keep reducing their lending interest rates. With the development of a robust corporate debt market on track, individual investors could expect to start participating in the debt market directly.

The linkages between the debt, spot and derivatives market for foreign currencies, and a market for interest rate derivatives are very strong. This should provide some liquidity to the corporate debt market, which might create opportunities for retail investors who do not want to go through the mutual fund route.

In 2008, investors lost money in shares. But 2009 could be the year of long-term investors with some large cap stocks now available at over 90% discount to their 2008 highs. These stocks have moved from the exclusive large-cap area, past the mid-cap range, are now resting in the small-cap segment.

Yet, market veterans expect stock prices to decline further from the current levels once corporate results start coming in from January second week. So the right time to invest for the long haul could well be after that.

“The good bets are those frontline companies from each sector that are India-centric,” said Arun Kejriwal, director, KRIS, an investment advisory company. Among those expected to give better returns are PSU, auto, FMCG, pharma, power and telecom companies.

“Once the cycle starts turning, banks will be off the block first. Capital goods and power companies would follow,” said Anup Bagchi, executive director with ICICI Securities. “And, with the government stimulus packages in place, infrastructure companies are expected to do well,” Bagchi added.

The life insurance segment is sure to witness a sea change during the new year. During the bull phase, insurance companies sold and buyers mostly bought ULIPs where returns are fully linked to the market.

But,in an uncertain market, these products are turning out to be patently bad ideas. Insurance buyers, having burnt their fingers in ULIPs, are now looking for capital protection and assured returns.