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Emaar pays most dues; Games village on track

Emaar pays most dues; Games village on track
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First Published: Wed, Jun 03 2009. 09 50 PM IST

 Labour point: The construction site of the Commonwealth Games Village in New Delhi. Rajkumar / Mint
Labour point: The construction site of the Commonwealth Games Village in New Delhi. Rajkumar / Mint
Updated: Wed, Jun 03 2009. 09 50 PM IST
New Delhi: After the Delhi Development Authority (DDA) bailed out real estate developer Emaar MGF Land Ltd by agreeing to purchase 333 flats at the Commonwealth Games Village for Rs700 crore, the civil contractor for the project says that it had received most of the dues that Emaar MGF owed.
Labour point: The construction site of the Commonwealth Games Village in New Delhi. Rajkumar / Mint
On 8 March, Mint reported that the village is unlikely to be completed on time because of alleged delays in payment by Emaar MGF. Ahluwalia Contracts India Pvt. Ltd, the contractor, had then said it had not been receiving full payments from the developer for the past five-six months and that Emaar MGF owed it close to Rs85 crore.
The resumption of payments, which has helped the contractor pay construction workers on the site and double their number, may improve the chances of the project being completed on schedule. The Commonwealth Games are scheduled for October 2010.
The deadline for the completion of the Games village is March. “It is a tough target to meet... We have lost four months because of the delay in payment,” said an official at Ahluwalia Contracts, who didn’t want to be named. “We have to complete the project as per schedule but it is going to be tough unless the fund flow is maintained.”
Emaar MGF has paid Ahluwalia Contracts Rs60 crore of the dues in three portions, the same official said.
“The payments of the construction company are being cleared on continuous basis i.e. as and when bills are raised, payments are being cleared,” an Emaar MGF spokesperson said in response to an emailed questionnaire from Mint.
“The Commonwealth Games Village residential complex is a project of national importance and delivering it on time for the Games next year is of topmost priority for us,” the spokesperson added.
In December, a cash-strapped Emaar MGF requested DDA for a Rs300 crore loan to fund the construction of the project. While DDA denied a loan, the government agency said on 11 May that it would purchase 333 flats at the village for around Rs700 crore to bail out the developer.
Since then, Emaar MGF has released around Rs60 crore of the payment due to Ahluwalia Contracts in three portions. “Some payment continues to be pending...but Emaar has said they will pay us,” the official at the contractor said.
Ahluwalia Contracts has used the funds to make full payments to construction workers at the Games village site. “Our first priority is to pay labourers,” the official said. “Earlier too, we were paying our labourers, but since the payment was being made from our own resources, we could not pay them full wages.”
The number of workers at the site has doubled, as a result, from around 1,500 to 3,000, the official said. In March, the number of workers at the site had fallen drastically, from around 7,000-8,000 to 2,000-2,500, after most changed jobs because their wages had not been paid.
The delay in payments had also affected Ahluwalia Contracts’ ability to procure material such as cement. But now, the vendors have been paid. “We are arranging for more resources and material such as cement, steel, sand and equipment... A substantial quantity of resources has been mobilized,” the official said. “In the last month alone, we have done Rs8-9 crore worth of work.”
Ahluwalia Contracts was spending around Rs20-30 crore every month when work was in full swing. “It will take us a month to hit peak level of work,” the official said.
In June 2007, Emaar MGF, a joint venture between Dubai-based Emaar Properties PJSC and India’s MGF Developments Ltd, won the bid to build the Commonwealth Games Village on 118 acres near the Akshardham Temple in east Delhi. Emaar is building 1,168 flats at the village for athletes and delegates to stay in. These will later be sold to buyers in October-November 2011. Emaar MGF is developing the project in partnership with DDA.
“DDA has expertise in construction, then you have a name like Emaar associated with the project. With both coupled together, the project should get completed on time,” said Shweta Jain, national head of marketing and investment, residential, at real estate consultancy Cushman and Wakefield.
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First Published: Wed, Jun 03 2009. 09 50 PM IST