NEW DELHI: Unitech will exit the telecom business and focus on its core business of real estate, Ajay Chandra, managing director of Unitech, said. Admitting that the decision to enter the business was a mistake, Chandra, said, "Telecom is not our core competency.

Our competence is real estate and we will stick to real estate." He added that the company will not bid for new telecom licences when they are given out later this year.

In the last two years, since the 2G scam broke out, the company's core business had taken a beating and dropping sales of homes and offices around the country haven't helped matters. Things are now starting to look up for the company, which is focusing on executing its projects and reducing debt.

NEW BEGINNING

In the last two years, since the 2G scam broke out, the company's core realty biz had taken a beating.

Unitech had invested $150 m in Uninor and will have to book losses if this investment is wiped off.

Company has managed to reduce its debt considerably, from a peak of Rs 10,900 cr in December 2008 to Rs 5,400 cr currently.
"The negative news does not impact home sales for us but it cannot be quantified. Our sales are up, but they could have been up by a bigger percentage if this wasn't happening," said Chandra. He agrees, though, that the company has had to put in a lot more effort to sell because of the negativity.

The fortunes of the company are still linked to the outcome of its telecom case as it had invested to the tune of $150 million in Uninor, the Telenor and Unitech JV, and will have to book losses if this equity investment is wiped off, he said.

"Most of the damage that had to take place, has taken place. Licences have been cancelled by the Supreme Court so it can't get any worse," he said.

Now the focus of the company is solely on its real estate business and Chandra hopes the high interest rate regime changes soon, which would further improve real estate sales. "The beginning of this year has been good and we have seen strong sales in all segments and categories. Outside of Mumbai, sales are happening and prices have increased," he said.

The company has also managed to reduce its debt considerably, from a peak of Rs 10,900 crore in December 2008 to Rs 5,400 crore currently. In the last few months, it has also secured construction finance of about Rs 550 crore from two public sector banks. "Funding for construction is available and the last six months have been comfortable," said Chandra.

Unitech had decided to enter the telecom services sector in 2007 and had applied for licences for the whole country. In 2009, after it had secured the licences, Telenor bought stake in Unitech Wireless for Rs 6,100 crore and subsequently invested another Rs 8,000 crore in the business.

The two companies got into a dispute after the cancellation of 122 licences by the Supreme Court. After this verdict by the court, the Norwegian company sought compensation from the Indian firm for damages caused to its venture.

Unitech later moved the Company Law Board seeking approval to settle the ownership dispute through arbitration. Last week, the I-T department attached the shares of three companies through which Unitech Ltd holds about 33% stake in the JV with Telenor saying these companies had outstanding income tax dues of around Rs 701 crore.

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  • Finally they learnt the lession after burning their fingers. I believe given the Brand value and expertise they can still retain the no 2 Builder position in NCR. I hope next 3 generations of Unitech will only focus on their core competency without loosing focus and diversifing business verticals without expertise.
    Can we see this as a light end of the tunnel especialy for Unitech investors?
    In fact most of the business houses who forayed in to Insurance,Retail,telcom are paying the price and accumlating huge losses on Balance sheets. This is impacting on their flagship business and its share holders. (For example Bharti - Axa insurance, Birlas,Godrej,Reliance,Goenkas/Spencers - incurred huge losses in their Retail business.
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  • Originally Posted by Average Joe
    Finally they learnt the lession after burning their fingers. I believe given the Brand value and expertise they can still retain the no 2 Builder position in NCR. I hope next 3 generations of Unitech will only focus on their core competency without loosing focus and diversifing business verticals without expertise.
    Can we see this as a light end of the tunnel especialy for Unitech investors?
    In fact most of the business houses who forayed in to Insurance,Retail,telcom are paying the price and accumlating huge losses on Balance sheets. This is impacting on their flagship business and its share holders. (For example Bharti - Axa insurance, Birlas,Godrej,Reliance,Goenkas/Spencers - incurred huge losses in their Retail business.

    I thought Unitech would finally exit from the RE business to focus on the core business - Telecom. Pity ;)

    In next 3 generations - there will be 10-12 baby unitechs, already a power struggle is on in DLF. These are lala companies, they always end up being divided by two per generation - so in 3 generations you should be having 8 companies divided from Unitech.

    PS: I am also a unitech investor but my hope knows reality.
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  • quite possible,when we have 36 Birla companies and Ansals etc.
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  • Originally Posted by Average Joe
    quite possible,when we have 36 Birla companies and Ansals etc.

    which makes you wonder what would have been the case if Tata's were a lala company and/or had lots of progenies?
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  • Matrix - May I ask which unitech project are u invested in?
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  • Originally Posted by amit001
    Matrix - May I ask which unitech project are u invested in?

    Oh... Forgot this was a RE forum - I have unitech shares. I found the projects too expensive and the shares too cheap to ignore for long.
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  • I always seem to think that the spell of bad news about Unitech is over.. but still no real movement in the stock

    There are of course short term movements all the time, but I am yet to see any long-term trend building up... Waiting to invest once i can spot the trading volumes building up
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  • Unitech wins case against Telenor; stock rises 5%
    Unitech wins case against Telenor; stock rises 5% - Moneycontrol.com -
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  • Unitech won the case for going for arbitration,which can be heard only in the Singapore or in the overseas court, which itself will be a very expensive, and long drawn process
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