I heard leading propery developer Unitech is in serious trouble. Company is having a debt of 9000 crore. What is the future of Unitech.
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  • You are wrong Biju. The debt is more than 10200 crores!

    Biju is absolutely correct.

    I did a little back-of-envelope analysis of this company. Unitech (the one I knew in the 90s) was a solid company known for its solid buildings and quality construction.

    Then in 2006-07, thing suddenly changed. I think someone must have put in some cock-n-bull stuff into Ramesh Chandra's head about visions of grandeur in an instant (it normally happens near peak time when rich people feel invincible! :). From a debt of 500 crores in 2005, their debt has risen to over 10200 crores in 2007 (maybe even more now). Their WIP is as high as 7000 crores (that is the stuff they build to be sold later). It is this which is scaring the market. IF buyers get scared off (income sharply down) and IF interest rates shoot up (outgo sharply up), do not be surprised that the company may get into such a TIGHT CASH STRAP that it may start selling assets at distress prices (even possibly pulling the general market down in notional price and value). This is what the market is saying when it cut down price by 50% yesterday.

    Ramesh Chandra, the man who counted himself as one of India's top billionaires at around $21 billion has lost 95% of his notional wealth and is below $1 billion, effectively taking him out of the billionaire's club altogether. Excess Greed has its cost!

    But, upon checking the other companies like DLF, Sobha, etc this may not be the case in all companies. Sobha has been fairly prudent with debt. DLF has loaded on the debt. But it was able to con the public with a humongous premium in the IPO, which the public is now seriously repenting.

  • Simply they have Killed to Golden Goose. They have sucked enough money from the Common and rich people.
    They has to pay for their own KARMA.
  • I would say a very wise analysis, Mr. Wiseman
  • Even now, Unitech is launching several projects and surprisingly all of them have been fully subscribed in Gurgaon.