For quite some time now, it has been a rough ride for Ramesh Chandra, chairman of Unitech, one of India’s largest real estate companies.
Battered by the meltdown in the sector in 2008 and hit by the 2G spectrum allocation scam when it diversified to telecom, Unitech found it difficult to get back on track.
The property company now owes over ₹7,800 crore to more than 16,300 homebuyers in its 61 projects, as submitted by the amicus curiae in the Supreme Court.
What happened?
A week ago, Mr. Chandra was faced with yet another situation, with the National Company Law Tribunal (NCLT) having suspended all eight directors of the company and allowed the government to appoint 10 nominees to the board. Unitech shares surged by almost 20% following the NCLT directive, but dipped again after the Supreme Court stayed the order on Wednesday.
How did he build the firm?
Son of a banker, Mr. Chandra, who is in his mid-70s, studied at the Indian Institute of Technology (Kharagpur). Following a short stint with a Kolkata firm after his graduation, Mr. Chandra, who spent his early years in Uttar Pradesh’s Farrukhabad, pursued higher studies in structural engineering at the University of Southampton in England. He returned to India in 1965 to join a government-run laboratory in Roorkee. Mr. Chandra started exploring opportunities in structural engineering and in 1972, set up United Technical Consultant Private Ltd, a soil investigation company, with his associates. The company went on to be known as Unitech.
By the mid-1980s, the company started acquiring land in Gurugram with real estate emerging as its area of focus. Amid the first wave of economic reforms in the early 1990s, things began to look up. Within three years, between 2003-04 and 2006-07, its revenues recorded manifold growth, crossing the ₹3,000 crore mark, as earlier reported in the media. The group started exploring opportunities in other key sectors. Mr. Chandra’s sons Ajay and Sanjay Chandra had by then taken charge of crucial business responsibilities. By January 2008, Unitech’s share price had hit the maximum of ₹538.25 per unit (it today stands at ₹6.75).
When did his troubles begin?
Within months, a meltdown hit the real-estate market. Coupled with that was the 2G spectrum scam controversy surrounding the then newly incorporated Unitech Wireless. The fast-evolving circumstances and litigation triggered a continual downslide from which the firm’s shares could not make a significant recovery.
In 2011, Unitech launched several projects in Noida, Gurugram and other places. However, delays in the completion of projects and repayments attracted multiple legal actions, with 4,700 homebuyers now claiming refunds to the tune of ₹1,865 crore. The company has been accused of diverting funds.
Facing cheating charges, Mr. Chandra spent a night in Delhi’s Tihar Jail, along with his sons, last year. In March, the Delhi police arrested his sons, the Unitech managing directors, for allegedly cheating buyers in Gurugram. The Supreme Court has directed the company to deposit ₹750 crore for refunds to homebuyers by December-end so as to secure their release on bail.
They are in judicial custody for over four months and allegedly involved in several other cases.
What happens now?
On December 8, the day of the NCLT order, Unitech issued a press release expressing confidence that it would raise funds to complete all housing projects. The company claimed that it had, like other large developers, failed to meet timelines in handing over possessions “because of very tough market conditions in the real estate sector.”
“No doubt, we are entangled in litigation over certain land which the local government has not been able to deliver and our funds are stuck with those local governments. We are, however, making every effort to expedite our recovery proceedings as we need those funds urgently to complete our pending projects,” it claimed.
