2G scam cloud turns darker for Unitech

With the special Central Bureau of Investigation (CBI) court turning down the bail plea of Unitech managing director Sanjay Chandra, who is named in the CBI charge sheet for involvement in the multi-crore 2G scam, there are concerns pertaining to the impact, at least in the short-term, on the real estate business of Unitech, according to analysts.

Chandra, along with four other charge-sheeted business honchos, were sent to Tihar jail immediately after their bail was rejected.

“These developments will certainly lead to projects slowing down in the near term, but there is not going to be a huge impact unless things deteriorate further,” said an analyst.

In the eventuality of cancellation of the telecom licence of Unitech Wireless Ltd, any liability that may emerge will have to be borne by the telecom company and not the realty mothership, said sources.

“The two companies are different entities responsible for their functioning. There is no operational link whatsover between them. Additionally, there will be no impact on the company’s project implementation capabilities owing to these developments. Nine projects have been launched in the last three months and the company has seen robust cash flow through them,” an industry source said.

Unitech in a statement said the developments will not have any adverse effect on Unitech or its real estate business.

“Unitech is managed by a competent set of senior experienced professionals and promoters and will continue to pursue our growth plans,” the company said.

Meanwhile, Fitch Ratings has dropped its coverage on Unitech citing lack of adequate information.

But sources said this is a routine action as the company has not approached the rating agency for the last two years for any rating.

Unitech Ltd is run by chairman Ramesh Chandra and two sons Ajay Chandra and Sanjay Chandra, who are the managing directors.

While both Ramesh and Ajay handle the project launches and implementation, Sanjay—the face of the company—is involved in capital market transactions.

In all, the company is implementing 15.9 million square feet across the country.

Till December 2009-10, the company sold 3.60 million square feet, raking in Rs2,034 crore.
In Noida and Greater Noida, the company generated Rs795 crore from sales of 1.52 million residential properties.

In all, the company has launched 6.15 million square feet till December 2010 across Gurgaon, Noida/Greater Noida, Chennai, Kolkata and other cities.

However, in case of the pre-2009 launch of the company, out of a total of 14 million square feet, it has been able to deliver 9.7 million square feet till date.

In Gurgaon, 5.9 million square feet has been delivered, while 4.4 million square feet is left. In Noida and Greater Noida, the company has delivered an area of 2 million square feet, while a balance of 4.2 million square feet is the balance to be delivered.