DNA Exclusive | Half of delayed Noida projects bankrupt

It's clear now that more than half of delayed and defaulted housing projects in Noida and Greater Noida just cannot be revived because of a huge financial deficit. According to a draft audit report commissioned by the UP government, on an average Rs 100cr to Rs 500cr shortfall has been found in 'project health' -- especially those of 3C, Logix and Amrapali builders.

In Noida, out of 14 audited projects, nine have no way out of coming back on track, whereas in Greater Noida, 18 projects have no scope for revival.

The draft audit report, seen by DNA, reveals that out of 39 delayed and defaulted housing projects, 27 projects are in huge deficit, which blocks any potential of a revival plan (also, most of these projects are beyond bailout possibility). After the scrutiny of cash flow and physical verification of the projects, the government-backed audit team has analysed the viability of projects. They found that builders not only have diverted the money to other projects, but also have inflated the expenses. Experts privy to the matter told DNA that most of these builders have shown inflated overhead expenses like salary, advertisement and branding costs.

Shakti Nath, chairman and managing director of Logix Group has questioned the findings of the draft audit report. In response to a query by DNA, he said, "All our projects are going on at a full speed. A lot of apartments have been delivered or being delivered. No project is stuck as we have funds to finish. The audit report is wrong and we have sent a reply to Noida authorities".

Another builder, not wishing to be named, said, "It is true that we are in a crunch and have not used the buyers' money as it should be, but to some extent the politicians are also responsible as they get directly or indirectly benefited."

More than three lakh home-buyers are waiting for their dream home in Delhi NCR, most of them in Noida and Greater Noida. Builders have collected the money from banks and buyers, but spent and diverted that in other projects.

The decision to audit delayed housing projects was taken after a hue and cry by home-buyers who booked their flats years ago, in Noida and Greater Noida.

In August 2017, Chief Minister of UP Yogi Adityanath ordered an audit of the financial viability of these housing projects. The Noida and Greater Noida authorities appointed Currie & Brown, a consultant, to audit the massively-delayed housing projects. In November 2017, Currie & Brown started to investigate the cash flow management of builders.

The draft audit report of the first phase has been submitted to the UP government.

A source who is privy to the audit process said, "We are looking at how we can make mitigation and strategy so that those units which are near completion can be speeded up and delivered. Wherever developers are stuck and need help or hand-holding, the authorities will do that".