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Bengaluru/New Delhi: Realty firm Unitech Ltd needs to make arrangements for repayments to its customers and continue construction of its many delayed projects even as both managing directors Sanjay Chandra and his brother Ajay Chandra remain in custody.

The Gurugram-based company, once the second largest developer, next only to DLF Ltd, needs to raise money not just to repay loans of banks and lenders, but also customers, who have booked homes in projects that are still at the land stage.

At stake is Rs7,800 crore that Unitech owes to 16,300 home buyers across 61 projects. Unitech also has around Rs6,733 crore of debt.

In its latest annual report, Unitech says it has earmarked “six unencumbered land parcels to be sold and the entire sale proceeds thereof shall be utilized for repayment of the said deposits".

“The company is making best possible efforts for sale of the land parcels earmarked for repayment of the deposits, but such sale process is taking time due to global economic recession and liquidity crisis, particularly in the real estate sector of India," Unitech said.

The Chandra brothers, along with others, are embroiled in a case of alleged forgery lodged by home buyers of a Gurugram-based housing project. The apex court has asked amicus curiae (friend of the court) Pawan Sree Agrawal to maintain accounts of Unitech’s different projects, home buyers and the extent of refund granted to each of them through a designated website. Unitech has been asked to collate details of the refunds to home buyers. The matter will be heard next on 23 October.

A Unitech spokesperson said chairman Ramesh Chandra is overseeing the company currently. The company didn’t respond to a questionnaire sent by Mint.

India’s real estate sector is undergoing a churn on top of a prolonged slowdown along with protests by homebuyers, following diversion of funds by developers and project delays. Insolvency proceedings have been initiated against promoters of many realty firms including Amrapali Group, after angry customers dragged developers to court for non-delivery of homes.

In Unitech’s Vistas project in Gurugram, more than 1,100 buyers have opted either for a refund or possession, after a long wait.

“All this while, Unitech was only saying that construction will happen. We believe the Supreme Court will take care of the matter now," said Savita Sinha, a home buyer and advocate with the Vistas Residents Association.

Unitech posted a loss of Rs38.39 crore for the quarter-ended June due to lower sales compared to a loss of Rs44.82 crore in the year-ago period.

The annual report said there are delays in the payment of income tax, service tax and provident fund dues. While the focus is on delivery, it continuously grappled with cash-flow and liquidity issues, Unitech said.

“...Cash-flows have been adversely impacted and there were certain delays/defaults in timely repayment of dues (including interest) to banks and financial institutions in respect of term loans and non-convertible debentures. It is submitted that the company endeavors to streamline its future operations and discharge the said liabilities in time," it said.
Its dispute with Life Insurance Corp. of India (LIC), for instance, is pending before the Debt Recovery Tribunal. The dispute is over non-repayment of dues owed to LIC.

In the last hearing, the apex court indicated that it may consider auctioning the properties through a court appointed receiver in the future. Unitech has been trying to sell its land parcels and has raised some money but that isn’t enough.

JM Financial Asset Reconstruction Co. (JMFARC) has provided additional funding of Rs200 crore to revive a few distressed projects of Unitech. The transaction came as part of a resolution post acquisition of Unitech’s loan of around Rs860 crore from housing financing company Housing Development Finance Corp. Ltd (HDFC) last November. In a BSE filing in November 2016, HDFC had said Unitech had not been able to service its loan due to slow sales, thereby adversely impacting construction work.

Anil Bhatia, managing director and CEO of JMFARC, said the company had agreed to provide funding to Unitech as the projects are well diversified, spread over multiple locations and in various stages of construction.

“In the past, we have infused funds into two real estate projects, leading to a quicker turnaround. This experience prompts us to fund distressed assets which can realise maximum value," Bhatia said.

It’s not going to be easy or enough for Unitech, said analysts.

“There will be some hope if the promoters are out on bail. Otherwise it is tough for Unitech to sell land and arrange the money given the conditions," said a senior property consultant, who didn’t wish to be named.

madhurima.n@livemint.com

Bidya Sapam in Mumbai contributed to the story .

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