‘Realty Mogul’, ‘Power Brand’ and ‘Superbrand’ are the three recognitions listed by once popular real estate firm Unitech on its website. These recognitions, once the symbol of a flourishing real estate business, have quickly diminished. A decline in the real estate sector, rising debt and the company’s alleged involvement in 2G scam caused damage to the business and its image.
Set up in 1971 by IITian Ramesh Chandra, Unitech claims to have delivered over hundred residential projects, many of which still command a premium in the resale market. It has also developed several commercial projects, including malls such as the Great India Place in Noida. “Thousands of families live in Unitech-built homes, work in Unitech-erected offices, drive on Unitech-developed roads and highways, stay in Unitech-constructed hotels, study in Unitech-created schools and unwind at clubs that bear the proud legend — Unitech,” the company website claims.
On March 31, Sanjay Chandra, along with older brother Ajay, was arrested by the economic offices wing of the Delhi Police for allegedly duping homebuyers in a Gurugram project. Sanjay (45), who remains the company’s managing director (according to the website) was also jailed in 2011 in connection with the 2G Scam. A CBI (Central Bureau of Investigation) charge sheet alleged Chandra’s involvement in allocation of 2G spectrum licences. He walked out of the capital’s Tihar Jail in 2012. Unitech had partnered Telenor for a telecom joint venture.
By 2009, the real estate sector had started declining. Unitech had by then bought 14,000 acres of land across the country. To bankroll these purchases, the company planned to raise $1.5 billion by listing some assets in a real estate investment trust in Singapore and another $1 billion from investors. Before the company could make the first moves, the markets went into a tailspin and all plans to raise money got shelved. Unitech ended up with debts of thousands of crores.
The stock price is down from a peak of Rs 547 in January 2008 to Rs 7.29 as of Friday, December 8, 2017. On Friday, the market values the listed entity at just Rs 1,906 crore. With their stake of 17.92 per cent, promoters’ share is valued at Rs 341 crore. The BSE data shows promoters have pledged shares worth Rs 248 crore as of March 2017. Unitech is said to own Rs 7,800 crore to 16,300 homebuyers across its 61 projects. The company is also saddled with a high debt of over Rs 6,700 crore.
The company’s consolidated income stood at Rs 1,795 crore in FY17, leading to a loss of Rs 402 crore. Of the consolidated income, real estate brought Rs 1,206 crore, while the revenue from transmission tower business stood at Rs 357 crore. The property management and hospitality divisions contributed Rs 134 crore and Rs 37 crore, respectively. The Chandras did not take a single rupee as remuneration last year, according to the annual report.
The report also said given ‘depressed market conditions’, the company had focused on project delivery against launch and sale of new projects. “The company is continuously engaging with all the parties concerned — customer groups, banks, local authorities, contractors, etc, to put in place mechanisms to ensure unhindered progress of projects and reassure them of its commitment to delivery,” Chairman Ramesh Chandra said in the report. The firm sold 74 acres of land in June this year for Rs 260 crore.
During FY17, Unitech delivered 5.18 million sq ft of completed area and said 67 per cent of the projects are in handing over/finishing stage across various regions of the country. A total area of 33.16 million sq ft was under development as of March 2017. Despite the adverse conditions, handing over in 56 projects across regions is in progress, the company said. There are multiple cases against the company for non-delivery in various projects.