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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.CommentQuote0Flag
- I would say a very wise analysis, Mr. WisemanCommentQuote0Flag
- Even now, Unitech is launching several projects and surprisingly all of them have been fully subscribed in Gurgaon.CommentQuote1Flag
- Unitech Challenges NCLT Move To Suspend 10 Directors
Hours after the National Company Law Tribunal (NCLT) debarred its 10 directors, real estate giant Unitech approached the tribunal, contending that the government had not informed it of the Supreme Court bar that no coercive action be taken against the company.
In a high drama at the NCLT, Unitech first suffered a jolt when its 10 directors were suspended by the tribunal, which allowed the government to appoint their replacements.
Ramesh Chandra-led Unitech, approached the NCLT in the afternoon, saying that no "coercive steps for execution" can be taken in view of a November-20 order of the Supreme Court.
Earlier in the day, Unitech was dragged to the tribunal by the government, seeking to take over the functioning of the company on allegations of mismanagement and siphoning of funds.
The counsel representing Unitech approached the NCLT, when the tribunal assembled after lunch hearing, contending that government has not shown the facts correctly.
The tribunal would hear the matter later today.
In the morning, a two-member NCLT Bench, headed by Chairman Justice M M Kumar, also directed the government to give 10 names by December 20, the next date of hearing. NCLT has also issued notice to Unitech, directing it to file reply over it.
"In view of the fact and satisfaction of basic criteria for interim directions, a prima facie case is made out and in larger public interest we grant the interim directions," Justice MM Kumar said pronouncing the order.
Additional Solicitor-General Sanjay Jain, appearing for the government in the NCLT, said: "They (tribunal) have permitted the Central government to appoint 10 nominee directors to run the day to day business and list of that would be given by 20th December."
He further said, "We want to avoid insolvency of this company, otherwise the 19,000 homebuyers will be left high and dry."
Moreover, there are around 51,000 depositors of Unitech. Nobody had appeared for Unitech in the morning.
Jain told the tribunal that the government tried to serve Unitech an advance copy of the petition but the company refused to accept it.
According to Jain, the NCLT has also directed that the "suspended directors of the company shall not sell, mortgage or create charge either their properties or company's properties".
In April this year, the Economic Offence Wing (EOW) of the Delhi Police arrested Unitech Managing Director Sanjay Chandra and his brother Ajay Chandra for allegedly not developing a project despite receiving funds from investors. The company has over Rs 6,000 crore debt, with more than 16,000 undelivered units from a total of nearly 70 projects.CommentQuote1Flag
- SC Stays NCLT Order Allowing Centre Take-Over Of Unitech
The Supreme Court on December 13 stayed the December-8 order of the National Company Law Tribunal (NCLT) allowing the Centre to take over the management of embattled real estate company Unitech Limited.
A Bench comprising Chief Justice Dipak Misra and Justices A M Khanwilkar and D Y Chandrachud considered the statement of Attorney-General K K Venugopal that the government should not have moved the NCLT when the apex court was hearing the matter.
The apex court, which had on December 12 expressed its displeasure over the Centre's move to approach the NCLT, said the stay on the company law tribunal's order would meet the end of the justice. The top court had on December 12 asked the Centre why it had not taken the apex court's permission to move the NCLT for suspension of Unitech's directors and their substitution by government nominees.
Senior lawyers Mukul Rohatgi and Ranjit Kumar, appearing for the real estate firm and its promoters, had said that the apex court had given time to Unitech chief Sanjay Chandra to negotiate from jail to sell assets to generate Rs 750 crore for refunding money to homebuyers, but, the Centre has approached the NCLT in the meantime.
Rohatgi had claimed that the NCLT did not issue notice to the company and its directors, and passed the interim order, which was virtually a final order, and allowed the Centre to take over the company.
Earlier, the apex court had agreed to hear on December 13 the appeal of Unitech, challenging the NCLT order allowing the Centre to take over its management.
The NCLT, on December 8, had suspended all the eight directors of the company over allegations of mismanagement and siphoning of funds and had authorised the Centre to appoint its 10 nominees on the board.
The NCLT order had come after the Centre moved the panel with a view to protect the interests of nearly 20,000 homebuyers.
Unitech alleged that the takeover of the management of the company by the Centre would make it difficult for them to deposit Rs 750 crore as directed by the apex court to safeguard the interests of homebuyers.
Sanjay Chandra, head of the embattled real estate group, was asked on October 30 by the apex court to deposit Rs 750 crore with it by December end for the sake of the homebuyers.
The apex court had on October 30 said Chandra would be granted bail only after the real estate group deposited money with its registry by December-end. Chandra's lawyer had told the SC that he has been required to be produced in various courts, consumer forum and commissions on a regular basis which hampered his endeavour to arrange money. Keeping that in mind, the production warrants issued against him by various judicial bodies be stayed for 15 days, his lawyer pleaded. He had also said that the accused be allowed to appear in courts through his lawyers. The plea was, however, declined.
The apex court had also clarified that its earlier order directing all lower courts not to take any coercive action against the accused for the time being would also be made applicable on all forums, including state and national consumer commissions.
The top court had earlier directed jail authorities to facilitate Chandra's meeting with his company officials and lawyers so that he could arrange money to refund homebuyers as well as for completing the ongoing housing projects. It had said if any proceedings were pending against Chandra and the company, those might continue and the final order be passed, but, no coercive steps be taken to execute those orders.
Chandra is seeking interim bail from the apex court after the Delhi High Court on August 11 had rejected his plea in a criminal case lodged in 2015 by 158 homebuyers. These buyers had bought flats in two of the group’s Gurgaon-based projects, Wild Flower Country and Anthea Project.CommentQuote1Flag
- How the Unitech empire crumbled like a highrise of cards
“A toddler learns his A,B,C's from a school. He grows up to be a top notch executive working in a cyber park. He buys a house to flaunt his independence. He unwinds in a hotel and catches up with his friends in a clubhouse. He shops in a mall and takes his family to the nearby theme park. And finally, satisfied, he hangs up his shoes in his private villa. A common success story. Except that, Unitech had been a part of his journey all along.” (Sic).
So reads real estate company Unitech’s ‘philosophy’ on its official website. But the financial mess currently surrounding the embattled group seems to belie the “common success story” it once promised to script.
The National Company Law Tribunal (NCLT) recently suspended all the eight directors of Unitech over allegations of mismanagement and siphoning of funds, and authorised the Centre to appoint 10 nominees on its board. This is only the second case since the new Companies Act came into force that the Centre has sought to take over the control of a private company – the first was the Jignesh Shah-led National Spot Exchange Ltd.
Though the Supreme Court has stayed the NCLT order and restrained the government and lower courts from taking up any coercive action for now, the company is hardly clear of troubles.
Estimates by various platforms differ, but as many as 19,000 homebuyers are believed to be waiting for Unitech to complete work across 61 projects so that they can get a roof over their heads. Given that the company has defaulted on a payment of Rs 600 crore to 15,000 small depositors and Rs 880 crore worth of loans, the possibility of a possession anytime soon, all the serious efforts notwithstanding, seems a hope against hope.
How the mighty fell
IITian Ramesh Chandra set up Unitech in 1971 with the aim of offering buyers all that was premium. Even today, you have to shell out crores of rupees for a resale unit in any of its completed projects in Chennai, Noida, Greater Noida, Gurgaon, Kolkata, Lucknow or Mohali.
A golden period for Unitech came in 2007-08, when the company was valued at Rs 1.43 lakh crore. It made a net profit of Rs 1,669 crore on a total revenue of Rs 4,280 crore. Its stock hit an all-time high of Rs 547 in January 2008. Amid the real estate boom of the time, the Unitech group, credited with building popular malls like Noida’s The Great India Place, Delhi’s Rohini Metro Walk and Gurgaon’s The Couture and Gurgaon Central, went on to create a land bank of over 14,000 acres.
The mercurial rise of the group in those years could be gauged from the fact Ramesh Chandra and sons Sanjay and Ajay, with a net worth of Rs 30,000 crore, were ranked the seventh-richest in the Business Standard Billionaire Club, 2007.
Betting on its growth potential, Unitech made Millennium City Gurgaon its happy hunting ground, and set up the highest number of its residential projects here. Eight of its “sold-out” projects, 18 “completed projects” and 12 “current” projects are based in Gurgaon, informs the company website. Each unit in these projects is worth over Rs 1 crore.
When an economic slowdown hit the world in late 2008, India’s real estate sector also took a blow. Among India’s realty hotspots of the time, Gurgaon was one of the biggest casualties, show data available with PropTiger.com. By 2009, the depression facing the sector had capped the growth prospects of the country’s major real estate players, including Unitech.
While trying to recover from the real estate turmoil, a successful venture in an unrelated field might have proved greener pastures. In March 2009, it closed its deal with Norway’s Telenor to set up a joint venture telecom services company, Uninor, for the India market. But that venture hardly took off and,in fact, added to the pains .
Another jolt shook the group two years later, when Managing Director Sanjay Chandra was arrested in 2011 over his alleged involvement in the Rs 1.85 lakh-crore 2G spectrum scam and Uninor’s licence was cancelled. A high-profile corporate divorce of Unitech and Telenor followed, and it was widely covered by the media through 2011 and 2012.
Things came to such a pass by 2016 that the Chandras had to go without salaries for several months, show company records. Today, the company is sitting on a debt of Rs 6,700 crore.
At close of BSE trading on December 15 this year, Unitech’s shares were priced at Rs 6.6 apiece – what a fall from an all-time high of Rs 547! – and the listed company had a market value of Rs 1,725.66 crore. Today, the jailed MD is finding it hard to arrange even the bail money for his release from jail.
After the Delhi High Court rejected his bail plea in October this year, Sanjay Chandra moved the Supreme Court challenging the order. The apex court has set a condition that Chandra would get a bail only if he is able to deposit Rs 750 crore by the end of December.
The SC on November 20 directed the Tihar Jail authorities to facilitate Chandra’s meeting with his company officials and lawyers so that he could arrange the money, to be used for refunding homebuyers and completing the ongoing housing projects.
Arranging the sum through parleys with his trusted men and investors in the few remaining days would be an uphill task for Chandra, who, until less than a decade ago, was seen as a rising star among the India Inc captains.
How the story has unfolded this year
* March 31: Sanjay Chandra, who had been out on bail in the 2G case, and brother Ajay were arrested by the Economic Offences Wing of the Delhi Police for allegedly duping homebuyers in a Gurgaon project.
* August 11: The Delhi High Court rejected Sanjay Chandra’s bail plea in a criminal case lodged in 2015 by 158 homebuyers who had purchased flats in two ofUnitech’s Gurgaon projects, Wild Flower Country and Anthea Project.
* October 20: Chandra was asked by the Supreme Court to deposit Rs 750 crore with it by December-end as a precondition for granting bail.
* November 20: The SC directed Tihar jail authorities to facilitate Chandra's meeting with his company officials and lawyers to enable him to arrange money for refunding homebuyers and completing the ongoing housing projects.
* December 8: The National Company Law Tribunal (NCLT) suspended all the eight directors of the company over allegations of mismanagement and siphoning of funds, and authorised the Centre to appoint 10 nominees on the board. The NCLT order had come after the Centre moved the panel with a view to protecting the interests of nearly 20,000 homebuyers.
* December 13: The SC stayed the December 8 NCLT order allowing the Centre to take over the management of the embattled Unitech group. It said the government should not have moved the NCLT when the apex court was hearing the matter. The Court also said that no lower courts should take up any coercive action against the company chief for now.CommentQuote0Flag
- Just stumbled upon an old advertisement of Unitech Group that sounds very interesting in the present scenario. They were emphasising on how people took "the long way home" as it took forever to search, find and move into a dream house and how they wanted you to "Take the short way home (with them)!"
Short way home? Looks like they totally misjudged the length and breadth of the "short way" they were talking about.
- After homebuyers, Unitech staffers plan SC move for salaries
GURGAON: As aggrieved homebuyers continue their fight against Unitech in the Supreme Court, some employees have alleged the struggling real estate company has not paid them salaries for months and also defaulted on depositing tax deducted at source (TDS) and provident fund with the authorities.
Around 2,000 employees claim are affected — 1,300 who have left since 2013 and 700 who are still serving in Unitech’s offices in Gurgaon, Delhi, Mumbai and Bengaluru, according to current staffers. Employees claimed total arrears worked out crores. Unitech did not revert to calls, messages or an email sent to their official address.
After writing to various government offices, including the Prime Minister’s Office and chief minister’s office, a group of Unitech employees is now planning to move the Supreme Court. “While the apex court has been working towards the interests of the homebuyers hit by massive delays in delivery of several projects, employees like us have been forgotten. We hope the court hears our pleas as well,” said a former civil engineer of Unitech.
The Supreme Court had on October 30 asked Unitech to deposit Rs 750 crore by December-end 2017 to ensure refund to homebuyers. “Some of us even had to endure pressure from the income tax department — notices were sent to us demanding payment of income tax due to the default of Unitech in depositing the TDS,” said another former employee, who served as design engineer at the realtor’s Gurgaon office.
- No Respite For Unitech MD As SC Keeps Mum On Parole Request
Even the best intentions to make something possible would not yield results in case one has to operate from the prison. This has been the case with jailed managing director of the trouble-hit Unitech. On February 16, the Supreme Court (SC) once again maintained silence on his parole request.
The troubled tale
Sanjay Chandra, who is doing time at the Tihar jail in a criminal case lodged against him in 2015 by 158 homebuyers of the company's two projects in Gurgaon, Wild Flower Country and Anthea Project, would have been able to walk free for a while, had he been able to deposit Rs 750 crore with the SC by December last year, where his bail application is pending.
On March 31 last year, Sanjay and Ajay Chandra were arrested by the economic offices wing of the Delhi Police for allegedly duping homebuyers. On October 30 last year, the SC had said that Chandra would be granted bail only after the company deposited money with its registry by December-end. Since his company is still arranging the bail money, Chandra remains in jail.
On February 16, the apex court directed Omshakthy Agencies (Madras) Pvt Ltd, which is negotiating with Unitech to purchase land in Chennai for about Rs 400 crore, to deposit Rs 90 crore by March 31. In the previous hearing on January 29, the SC had directed Omshakthy Agencies to deposit Rs 150 crore by March 31.
Unitech had earlier informed the SC it was in talks with the company to sell two of its land parcels in Chennai for a total of Rs 400 crore — one for Rs 170 crore and the other for Rs 229.45 crore, respectively. He also said the Telangana government “owed” money to the company for payments made in 2007.
No letting go
While he pleased for an eight-week parole on January 29, Chandra cut short the time to 10-15-days on February 16, hoping for some respite. On both the occasions, the SC chose to say nothing on that point.
"I (Chandra) am in jail for seven months. There is an onerous task on me. I (Chandra) am trying my best … The Supreme Court has asked me to give Rs 750 crore for bail. I want to come out (of jail). Give me custody parole. Every buyer does not want to come to jail to meet me," he said in his February plea.
"I have to recover money. These are amounts which I cannot recover because I am in jail. The court may consider granting custody parole for eight weeks," he said on January 29.
The SC had in November last year directed authorities at Tihar to facilitate Chandra's meeting with his company officials and lawyers so that he could arrange money for refunding the homebuyers as well as for completing the ongoing housing projects. It had also said Chandra be granted adequate meeting time to be able to strike deals with prospective buyers.
The SC will now hear the matter on March 5.
What is the update for buyers?
Chandra’s lawyer informed the court that his company has finished building 600 flats in six of his ongoing projects till December 2017. Homebuyers who want possession of flats will have to remove their names from the list of investors who want refund of their money from Unitech.CommentQuote0Flag
- NCDRC asks Unitech to refund over Rs 4.37 crore to home buyer
The apex consumer commission has asked the Unitech Ltd to refund over Rs 4.3 crore to a home buyer after the real estate firm failed to hand over the possession of a property even after four years of the promised delivery date.
The National Consumer Disputes Redressal Commission (NCDRC) directed the realtor to refund Rs 4,37,98,966 to Gurgaon-resident Major (Retd) Jaideep Singh who had booked a house in one of the projects of the firm in 2012. It also asked the realty firm to pay a compensation of Rs 25,000 to Singh.
"The opposite party (Unitech) shall refund the entire principal amount of Rs 4,37,98,966 to the complainant (Singh) along with compensation...," the presiding member of the commission, Justice V K Jain, said.
It directed the firm to pay the amount within three months.
According to the complaint filed by Singh, in April 2012, he had booked a house in one of the firm's projects, Espace Premier Nirvana Country-2, which was proposed to be developed at sector 78 in Gurgaon. The property was supposed to be handed over in 24 months, that is by April 2014.
Singh had paid Rs 1.05 crore directly and the rest through his banker.
The commission noted that the firm was unable to commit any particular date for the completion of the project.
The firm told the apex consumer panel that the project was halted due to circumstances beyond its control. It said that since the availability of the sewerage treatment plants and water from such plants was very limited compared to the requirement, it became difficult to maintain the timely schedule of construction.
However, the commission rejected all claims of the firm noting that it had allowed several other complaints with regard to the same property.CommentQuote0Flag