Birla Sun Life, housing projects and transparency...

I read with interest the news that Birla Sun Life is raising a Rs 1,200-crore realty fund focussed on residential real estate projects (Business Line, July 3, 2010).

The paper quotes Sri Shashi Kumar, Head, Real Estate Investment Advisory, Birla Sun Life Asset Management Company as saying that the intention was not to be a “one more realty fund,” but to bring about as much transparency as possible in the projects. That's a great news.  To this end, Birla Sun Life plans to identify two developers in each of the cities of Mumbai, Hyderabad, Chennai and Bangalore and participate in the development process, right from land purchase.

While this is a good news, what is troubling is the answer to the question as to how the fund house would overcome the unaccounted component of the land deal, since land deals, in general, are known to carry a financial consideration that does not reflect in the accounts, he said the developer would have to take care of that.

Starting a fund, announcing that their intention was not to be a “one more realty fund,” but that the intention is to bring about transparency in the projects, keeping that in view and participating in the development process, right from land purchase, etc but ultimately saying that the developer would have to take care of the "unaccounted component" of the land deal... this is disappointing.