Explained: Why NBCC's new trouble-shooting role may be troublesome

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If the Indian real estate sector can be equated to the billion-dollar churner Avengers: Endgame, then NBCC (India) Limited could just be Tony Stark. Played by the magnificent Robert Downey Jr., Stark was the one who finally saved the world. India’s apex court and more than 80,000 homebuyers in Delhi NCR, hope NBCC can pull off a similar miracle. 

For the government, Supreme Court and thousands of homebuyers, NBCC appears to be the only answer they have for the real estate crisis that Delhi and the National Capital Region (Delhi-NCR) have faced for close to a decade now. The apex court recently ordered the Enforcement Directorate (ED) to probe the alleged money laundering by realtors in the Amrapali Group case and appointed NBCC the project management consultant to complete the unfinished projects.

The company has already started some minor work valued at around Rs 10 crore in the Amrapali projects in some complexes where people are already living. Over the last few weeks, the “Navratna” company — the label given to public sector companies with a certain degree of autonomy —  has been asked by Supreme Court to revive and complete stalled projects of Amrapali Group and possibly Unitech Group. NBCC, meanwhile, had unsuccessfully bid for Jaypee Infratech’s stalled projects but the National Company Law Appellate Tribunal has called for fresh bids, a process that has to be completed in the next 90 days. 

All of this may underline NBCC’s strengths but realty analysts also suggest that these projects might stretch NBCC too much.

NBCC’s name began floating on social media almost four years back when anxious home-buyers started demanding the government to take over the stalled Amrapali, Unitech and Jaypee Infratech’s projects. Many believed that a government agency would be able to deliver what the companies that actually promised them did not. The belief remains strong.

“We are doing everything possible to make the government realise that NBCC is the right agency,” said Manish Gupta, a homebuyer in the Jaypee Project. According to ANAROCK Research, as many as 220 projects equalling 174,000 homes are completely stalled in the top seven cities alone. Launched either in 2013 or before, most of these projects have been grounded owing to either liquidity issues or litigations.

Almost 66 per cent of these stalled units have been sold to buyers who have been left at the mercy of either the developers or the law of the land. ANAROCK further said that NCR has the largest pile-up of stalled units with 1,18,000 homes spread over 67 projects. Of this, nearly 83,470 units were sold out. 

While trying to bag the Jaypee Infratech project earlier this year, NBCC also said that it would soon share a tower-wise completion plan and ensure the cost of construction, including amenities, is done in the promised price.

The company also planned to infuse Rs 500 crore into Jaypee Infratech — the amount would come from selling the company's assets, including 2,000 acres of land bank and 6,000 unsold flats.

A segment-wise breakup of NBCC’s order book shows that close to 95 per cent comprises project management consultancy (PMC), the remaining five per cent is engineering procurement and construction (EPC) and real estate combined. The total order book is around Rs 85,000 crore.

Some of the business development projects include construction of Mahatma Gandhi Convention Centres in nine African countries for Rs 2,000 crore, AIIMS in Bilaspur, Himachal Pradesh, for Rs 1,138 crore, AIIMS in Deoghar, Jharkhand, for Rs 902 crore as well as a river front development project in Uttarakhand for Rs 750 crore. In FY 2018-19, the company’s topline touched Rs 10,151 crore against a meagre Rs 494 crore in FY 2002-03.

The company also intends to collaborate as a co-developer for project management consultancies on land owned by private firms or government agencies. At the beginning of the year, the company said it targeted minimum growth of 30 per cent. But sources close to the firm say NBCC is finding it difficult to either get requisite permissions for projects or is trying to meet the deadlines of projects it has already started on. 

“NBCC at the moment has a lot on its plate. They have their order book which they need to complete plus now the court wants it to finish these projects. The intention is there, but NBCC does not know if it would be able to allocate resources required for the project, as the return on investment in finishing projects such as Amrapali and Unitech is quite low. It might hurt their topline later,” said a source close to the company. 

Redevelopment projects, specifically Sarojini Nagar, Nauroji Nagar and Netaji Nagar in the capital, which were supposed to be on track are reportedly stalled in the absence of environment clearances. 

Other industry experts remain hopeful. “No doubt, it is a challenging task for any entity to take over the task of completion of the stalled projects. However, NBCC's previous track records indicate that it not only has the required expertise but also the manpower to do so. Also, given that the Supreme Court will pass the order (for NBCC to take over incomplete Amrapali projects) it is very likely that the progress of the projects will be monitored at every step,” said Anuj Puri, chairman, ANAROCK Property Consultants.

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