 "Supertech: Tumultuous days after a boom")
The journey hit a roadblock on April 11, with the Allahabad high court ordering demolition of two new towers in its Emerald project, Noida. The judgement was passed on a petition from the Emerald Court Owners Residents Welfare Association, which alleged approval and construction of the towers was "in complete violation of the UP Apartment Acts".
Supertech and Arora were earlier in the news for building the tallest structure in North India, the Supernova mixed-use development with 80 floors. And, for tie-ups with international names such as Disney, Armani and Yoo Worldwide for high-end luxury residences. Now, Arora, chairman and managing director, is busy calming buyers of apartments in the two towers and talking to legal experts on whether to challenge or file a review petition to the HC order.
The company had cash reserves of Rs 542 crore but liabilities of Rs 3,228 crore at the end of 2012-13, according to documents from the Union ministry of corporate affairs. It grew to a company with revenue of Rs 1,874 crore in 2012-13, from Rs 218 crore in 2007-08, on the back of a real estate boom.
The company maintains all approvals were in place for the construction. The HC told it to refund money to the buyers with 14 per cent interest compounded annually.
Sanjay Sharma, managing director, Qubrex, a consultancy firm, says: "The loss will only be of imaginary profits, which they must have taken into account. It is a big developer; even if the order is implemented, there won't be much impact, as they have invested only a part of buyers' money in the construction and they will be able to refund with the portfolio they have."
There are 857 apartments in the Apex and Ceyane towers in Emerald Court, of which 600 were sold. Subsequent to the order, the towers have been sealed by the Noida Authority. "We have collected about Rs 180 crore from the buyers and the construction cost is Rs 90-100 crore in these two new towers. We have given buyers the option of taking apartments in our other projects, as well as refunding. The buyers' money is safe with us," said Arora.
Another expert says money collected from buyers is normally routed to other projects and the company must be earning profits from sale of apartments in its other projects, so refunding won't be a big problem. "It would just mean less profits. The matter had impacted sales for only one or two days but has normalised. There will not be any major impact on sales or the brand," Arora added.
Ashutosh Limaye, head, research and real estate intelligence, Jones LangLaSalle India, says: "With such incidents, brands take a beating and sales drop. There won't be any immediate impact on prices but only on sales."
But it would be difficult for buyers or investors in the projects to exit at a good appreciation value. A set of buyers in these towers are planning to move court to make them a party in the case. Those who bought only for investment seem happy, though, with a refund. Supertech has about 40 ongoing projects worth Rs 14,000 crore, at Gurgaon, Noida, GreaterNoida, Uttarakhand and Bangalore. It has a little over 75 million sq ft under construction across the residential, commercial and hospitality segments. It also recently launched a university in Uttarakhand.