At its peak, the group, which has been hauled to Supreme Court by more than 2,500 homebuyers, claimed to have nearly 50 properties spread across 24 cities.
New Delhi: Once ranked among the country’s biggest real estate giants, the Amrapali Group is today struggling to pay its dues.
On Wednesday, the Supreme Court directed the Debt Recovery Tribunal to sell the unencumbered commercial properties of the real estate firm. The proceeds, the court ruled, would go to the government-run National Buildings Construction Corporation Ltd (NBCC) that would take over and complete Amrapali’s stalled projects.
So where did it go wrong for construction giant that once boasted of former Indian cricket captain Mahendra Singh Dhoni as one of its brand ambassadors?
At its peak in 2015, the Amrapali real estate group claimed to have had around 50 projects spread across 24 cities. Its real estate portfolio included the residential Amrapali Sapphire and Amrapali Platinum in Noida, the Amrapali Empire in Ghaziabad, a commercial hub in Greater Noida, a township in Jaipur, a multiplex mall in Bihar and an IT hub-cum-five star hotel.
Its brand ambassador was then Indian cricket captain Mahendra Singh Dhoni; his wife, Sakshi Dhoni, held a 25 per cent stake in a business venture (that never took off) called Amrapali Mahi Developers Pvt Ltd.
Its founder and chairman-cum-managing director (CMD), Dr Anil Sharma, an IITian from Bihar, went on to become the president of the president of the CREDAI-NCR, the apex body of builders and developers in India. Sharma, a one-time National Thermal Power Corporation (NTPC) employee in Bihar, moved to Delhi to dabble in the real estate market in 2002.
His first project was in 2003 in Noida. Sharma steadily built the firm into a giant construction conglomerate. He even tried his hand at politics, contesting the 2014 Lok Sabha elections on a JD(U) ticket from Jehanabad in Bihar, but lost.
By then, the Amrapali group had expanded into the FMCG sector with its ‘Amrapali Mums’ product line introduced in Bihar, as well as the entertainment sector with its Amrapali Media Vision that produced the movies, Gandhi to Hitler, which was premiered at the Cannes Film Festival in 2011, and I Don’t Love You.
Now, however, it seems the group’s grandeur was just on paper. According to the balance sheet accessed by ThePrint, the group’s tangible assets went up from around Rs 30.4 crore (304,274,099) in 2011 to around Rs 299 crore (2,991,156,994) in 2015.
The firm, though, listed as ‘nil’ the number of properties produced between 2011 and 2015, which means that there were no property projects completed in that period. There was also an insignificant increase in the inventories through these years, indicating that the asset generation could have been only in terms of land. Its long-term loans and advances in 2015 stood at around Rs 218 crore (2,180,798,227), which were funded by long-term borrowing from banks and equity inclusions.
ThePrint reached out to Amrapali group’s representatives, as well as Amrapali counsel Gaurav Bhatia, but they were not available for comment.
At present, more than 2,500 homebuyers have taken the group to the Supreme Court.
The bubble burst for Amrapali when its brand ambassador Dhoni quit the position in April 2016 following pressure on social media from residents, who demanded the completion of pending construction at the group’s Sapphire project in Noida. Sharma had then addressed the complaints and explained the lack of funds and slowdown in the property market as the reasons for the delay in project completion. He had also assured the residents that their demands would be met.
But by July 2017, the Yogi Adityanath government launched a crackdown on the group. The firm’s CEO, Ritik Sinha, and director, Nishant Mukul, were arrested after the company’s labour cess dues amounted to Rs 4.29 crore. The two, however, were released within 24 hours.
In August 2017, the Corporation Bank announced that it was going to auction an Amrapali office building in Sector 62, Noida, to recover its dues; this led to further panic among investors and homebuyers. The bank action came on the back of the real estate major having failed to provide as many as 27,000 housing units in Greater Noida for three years. The homebuyers also suspected that the group was siphoning off money as the Noida authority failed to recover around Rs 3,100 crore in land dues from it.
In September 2017, 107 homebuyers moved the Supreme Court against an order of the National Company Law Tribunal (NCLT) that admitted Bank of Baroda’s insolvency petition against Amrapali’s Silicon City project in Noida.
In March 2018, the Uttar Pradesh Power Corporation Limited (UPPCL) snapped the power supply to four Amrapali high-rises — Silicon City, Platinum, Zodiac and Princely Estate – in Noida over pending power bills amounting to over Rs 5 crore.
In April, Dhoni himself sued the construction group for Rs 150 crore, alleging that he hadn’t been paid for his position as brand ambassador.
On 8 August, a Supreme Court bench of Justices Arun Mishra and U.U. Lalit, hearing the plea, warned the directors of Amrapali group that it would sell their properties if the group continued to delay its projects.
“The real problem is that you have delayed giving possession of homes. Don’t try to play smart or we will sell each and every property of yours and render you homeless,” the bench said. “You (directors) will have to look for your houses like you are making others wait for their homes. We will sell each and everything of yours.”
On 6 September, the apex court sought an explanation from CMD Sharma over alleged discrepancies in the assets he had declared. The court pointed out that while Sharma declared assets Rs 847.88 crore during the 2014 elections, his affidavit to the court in 2018 claimed his assets had reduced to Rs 67.09 crore.
Stuck in the middle
Not everyone, however, is blaming the Amrapali group for the real estate mess in Noida.
According to the managing director of a steel firm that supplies to Amrapali group, the Noida Authority, a statutory body tasked with managing the city’s infrastructure, is equally to blame.
“The main problem is that land acquisition is being questioned. The Noida authority acquired land left, right and centre and gave it to the developers without proper channels or without complying with government norms,” the steel firm MD said.
“Once the acquisition was challenged, it did not stand the test in court, due which firms had to formally settle them. This is what stopped work for two years.”
According to him, Amrapali’s funds are running dry because of its tussles with financial institutions and settlement of various bank obligations.
Manoj Kumar, founder of Hammurabi & Solomon law firm, however, said that the authority alone could not be blamed.
“The Noida authority has nothing to do with it. In most cases, it is the misallocation of funds by the borrower because the moment they start getting money from lenders, they increase the number of projects,” Kumar said. “So money meant for project A goes to project B, and from B to C… The money borrowed from investors is misallocated”.
According to Kumar, if the fall of Amrapali group was due to the Noida Authority’s biased allocation, then other builders in Noida would have suffered the same fate.
“Any public authority, assuming that they are working in a subjective manner to favour somebody, would be a market condition prevalent for every builder in the market. That would mean all the builders operating in Noida under the Noida authority except for those who Noida authority favoured would have perished by now.”