Amidst overgrown bushes and muddy landscape, stands a half-constructed project site of property developer Unitech in Sector 117 of Noida. Barring a security guard and camp site executive, there is no sign of any construction activity at the site.
An executive present at the site said the matter is “sub-judice” and construction activity can only resume after the Supreme Court’s direction. Opposite the abandoned under-constructed units, the company has managed to deliver a few apartments.
Almost four years after the government appointed new directors in 2020, not a single project of the Gurgaon-based developer has taken off, say former employees, home buyers and people in the real estate business. In 2020, the Supreme Court approved nominations of seven directors to the board.
About 74 residential and twelve commercial projects of the developer have been stuck and 15,000 home buyers have been waiting to get possession of their apartments for over a decade now, after the Unitech promoters, the Chandras, got embroiled in so called ‘2G scam’ in 2011 and later faced investigations by the Central Bureau of Investigation, Enforcement Directorate and Delhi Police for siphoning off buyers’ funds.
In 2020, the board submitted the roadmap for completing the stuck projects to the apex court. It proposed to complete the construction of all units within four years. As per the resolution plan, the board would require Rs 5,000 crore to complete construction of units.
When reached through email, YS Malik, chairman and managing director of the company said that the time-frame (four years) is linked with the effective date, i.e. award of contracts. He said it has taken considerable time to overcome the initial hurdles such as approval for engagement of project management consultants, renewal of expired licenses in case of Haryana-based projects and associated statutory approvals, revision in layout plans for the Noida-based projects, obtaining consents from 2/3rd of the homebuyers in these cases and taking statutory approvals, among others.
He said the management has already finalised a total of 49 tenders, processed as part of Lot-1 and Lot-2, and is awaiting approval of the Supreme Court for award of contracts in these cases. The management stands by its commitment to the resolution framework.
The hearing by the Supreme Court on awarding contracts for project construction, revised payment plans and direction to Noida Authority on approvals was postponed to Friday.
It was estimated that Unitech had an unsold inventory of around Rs 3,000 crore and land worth another Rs 6,000 crore. Apart from selling off land parcels and collecting money from buyers, the new board was planning to raise money from SWAMIH (Special Window for Affordable and Mid Income Housing) Fund, banks and other financial institutions.
Malik said the figures might need to be revisited.” The non-project land assets of the Unitech Group, which are encumbrance-free, are such that it is extremely difficult to find buyers for the same,” he said.
These are non-contiguous, scattered land parcels with no defined access and in many cases, non-partitioned shares were purchased by the erstwhile management which has title-related issues, he said.
“. As a result, the management’s focus so far has been on the completion of various projects and finds money for the same. As per the rough cost estimates, the company would need about Rs 11,000 crore for completion of all the projects, of which an amount of about Rs 3200 crore is the balance receivable from the homebuyers,” he said.
He said the company plans to commence the sale of unsold inventory in projects only after the commencement of works on sites to generate confidence and credibility in the minds of the potential buyers, failing which any sale at this stage would be like a stress sale and not fetch the optimal market prices.
Problems galore:
But tenants staying in a few of the premises in sector 117 said there is no water supply and tanker was the only rescue there. The situation was so desperate that several buyers had forcefully taken possession in the project which is half done up and does not have a proper road. Local residents say several people have made distress sale for as low as Rs 20 lakh and exited the project.
Nand Kishore Taori, an aggrieved buyer at a Gurugram project and a member of the Unitech Home Buyers association alleged, “We have been fighting for a long time. Our money is spent on salaries of the current board members without a brick being laid at the site”.
He also alleged that the present board during the AGM had stated that it had received Rs 450 crore through proceeds of a land sale in Telangana and over Rs 250 crore was spent on salaries and perks of the current government-led employees.
Kusum Puri, a 74-year-old buyer, said” I booked a flat in 2009 in Unitech Residence in Gurgaon. It was supposed to be delivered in 2012. The developer had assured us that it will be ready in another 24 months. But since then we have been running from pillar to post for our flat.”
Stressed financials
The company is also struggling on the financial front. As per exchange filings by the company, Unitech posted a loss of Rs 627 crore in Q4 FY 2023 quarter as against Rs 318 crore loss in Q4FY22. Revenues came down by 39% at Rs 97 crore in the March quarter of FY23 as against Rs 160 crore in Q4fy22.
For FY23 it posted a net loss of Rs 3,103 crore on revenues of Rs 405 crore. In FY22, it posted a net loss of Rs 1,026 crore on revenues of Rs 533 crore. The company has not published quarterly financial results after March 2023.
To this, Malik said the accounts for the period ending June, 2023 and September 2023 are being prepared and expected to be finalised and audited by December 2023.” The management hopes to be updated on this behalf by the close of the FY 2023-24. Simultaneous exercise has been taken in hand for preparation and audit of the accounts in respect of the subsidiary companies also.”
Amidst the problems faced by the company, four board members resigned last year. Hiranandani group founder and MD Niranjan Hiranandani, former NBCC chairman and MD AK Mittal, HDFC MD Renu Sud Karnad and former SBI MD B Sriram resigned last year.
While YS Malik is the chairman and managing director, Embassy group chairman Jitu Virwani, former CPWD director Prabhakar Singh, auditor Girish Ahuja, former RBI executive director Uma Shankar are on the board.
“The management has represented that the standalone financial statements have been prepared on a going concern basis, notwithstanding the fact that the company has incurred losses and has challenges in meeting its operational obligations, servicing its current liabilities including bank loans and public deposits.”, the company said in its FY23 annual report.
Many say the current management is strictly going by the book and hesitant to take tough calls, which are not helping the matters.
Malik, however, says “It has to be appreciated that given the liabilities of various stakeholders and the litigations at various levels, this board could not have moved even a bit without the intervention, support and guidance of the Supreme Court. It is a very complex matter and involves a large number of stakeholders. The Hon’ble Court has heard the matter on 46 different occasions since the approval of the constitution of the new board.”
“Once the Board is appointed by the Union of India with the approval of the Supreme Court, “transparency” cannot be compromised and has to be maintained at any cost otherwise also,” he said.
Way ahead
Malik further said that as per their assessment, the completion of all the pan India projects would entail the preparation of about 130 to 135 tenders. “These tenders are proposed to be floated and processed in 4 to 5 lots as they cannot float all the tenders in one go. The new management has been able to finalise 49 tenders so far through Lot[1]1 and Lot-2 Tenders. We are awaiting the approval of the Supreme Court for the award of contracts in these cases,” he said.
“About 50 tenders are also ready for floatation as part of Lot-3, which are proposed to be floated once contracts are awarded against already finalised 49 tenders of Lot-1 and Lot-2. “Work has also simultaneously commenced on the preparation of tenders to be floated as part of Lot-4, which will be floated after the finalisation of Lot-3 tenders. Subject to all the required approvals, we plan to float and finalise all the Tenders by about March 2024,” he said.
For the buyers, the wait remains endless.