From a small-time broker to a big developer having 75 million sq ft under construction, R K Arora has come a long way since last 19 years when Supertech was incorporated.
The journey hit a roadblock on April 11 with the Allahabad High Court order for 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".
Once in the news for building the tallest structure in North India - Supernova project, a mixed-use development having 80 floors and which stands at 300 meters, to tie-ups with international names such as Disney, Armani and Yoo Worldwide for its high end luxury residences, R K Arora, chairman and managing director, Supertech is now busy calming buyers of apartments in the two towers and talking to legal experts deciding whether to challenge or file a review petition the Allahabad High Court order.
The company has cash reserves of around Rs 542 crore but liabilities of Rs 3,228 crore at the end of 2012-13, according to the documents from ministry of corporate affairs. It grew to a company with revenues of Rs 1,874 crore at the 2012-13 from Rs 218 crore in 2007-08, riding on the back of a real estate boom.
The Supertech brand has already taken a hit, and it might suffer a huge loss in profits if the order is executed, experts tracking the sector say. Though, the company maintains that all approvals were in place for the construction. It was told to refund money to the buyers with 14 per cent interest compounded annually by the Allahabad High Court.
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, and even if the order is implemented, there won't be much impact as they have invested a part of buyers' money only in the construction and they will be able to refund buyers with the kind of portfolio they have."
There are about 857 apartments in Apex and Ceyane towers in Emerald Court, out 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 around Rs 90-100 crore in these two new towers. We have given buyers the option of taking apartments in our other projects as well for refunding. Buyers money is safe with us," Arora said.
Another expert adds that the money collected from the buyers is normally routed to other projects and the company must be earning profits from sale of apartments in such other projects, so refunding won't be a big problem.
"It would just mean less profits. Only for one or two days the matter had impacted sales but it has normalised. There will not be any major impact on sales or the company's 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 people - buyers or investors - in the projects to exit at a good appreciation value. A set of buyers in these towers are planning to move the SC, too, to make them a party in the case. Those who bought only for investment seem happy with a refund.
Supertech has about 40 ongoing projects worth Rs 14,000 crore, at Gurgaon, Noida, Greater Noida, Uttarakhand and Bangalore. Supertech has a little over 75 million sq ft under construction across residential, commercial and hospitality segments. It also recently launched a university in Uttarakhand.