Post 2G, DB Realty finds its projects scrapped, delayed

On the face of it, these projects have nothing to do with the DB group's troubles in the telecom sector. DB Realty has also insisted from day one that it has no direct or indirect shareholding in the telecom business and that the 2G probe will have no impact on the company or its projects, even though its managing directors Shahid Balwa and Vinod Goenka were arrested in February and April respectively and its Chief Financial Officer Asif Balwa, in March.

But government officials, industry sources and analysts say it is too much of a coincidence for DB Realty's dipping fortunes not to be connected to the telecom probe. A combination of some funding slowdown, cancellations of bookings due to fears of delays, apprehensions about the impact of the 2G probe on the group and the fear of allegations of wrongdoing have are all believed to have hurt the Rs 3,200-crore company's projects.

The scrapped projects include DB's plan to redevelop 35 acres of Mumbai's infamous red-light district of Kamathipura. It was supposed to come up next to another DB project — a seven-acre area where the company is constructing a 63-storey luxury tower with swimming pools, health club, squash courts, spa and meditation centre.

The state government was even considering granting a special project status for Kamathipura redevelopment. But that was before February, when the 2G scam hit DB. "The Kamathipura project has lost its momentum due to the issues involving DB Realty," said local MLA Amin Patel. The government, which had even appointed an Officer on Special Duty to survey the buildings, hastily shelved the project, officials said.

A fortnight ago, the Pimpri-Chinchwad New Town Development Authority (PCNTDA) cancelled DB Realty's Joint Venture township project in Sector 12, Bhosari, Pune. The project was called off 22 months after a letter of allotment was issued amid local politicians raising questions about the manner in which this had been cleared.

Maharashtra's Home and Urban Development departments are also currently reviewing their clearances to the company over projects. The Home Department has put on hold its decision to allow DB to commercially exploit the land on which the Yerawada police station stands.

As for the Urban Development Department, two years ago, it had issued a notification to convert a 20-acre No Development Zone in Malad, Mumbai, into a residential complex after DB realty proposed that it would build houses for policemen on a part of the land and use the rest as their sale component. This too has now been put on the backburner. Secretaries of the Home and Urban Development departments said there was "no decision on the matter".

DB had also won a major chunk of the lucrative redevelopment of the Bandra Government Colony and had drawn up plans to build eight premium high-rises. Letters of intent awarding the project to DB Realty and two other developers were issued last year. But the government is now dragging its feet on signing the development agreement that will allow construction to start.

The delays are a far cry from the time when DB Realty's cluster redevelopment proposal near Mahalaxmi racecourse became the first to be cleared by then Chief Minister Ashok Chavan in October 2009 even as 20 other developers with similar proposals were vying for approvals.

The company's own projects are also not faring any better. "A comparison of their quarterly investor presentation shows that most projects will be delayed by six months to a year," said a real estate analyst.

According to this comparison, 10 of their 13 ongoing projects, accounting for a massive 33.5 million sq ft of developable area, are behind targets set by the company last year. In fact, certain projects such as Orchid Turf in Mahalaxmi, Orchid Corporate Park in Andheri, Orchid Crown in Dadar and Orchid Views in Mumbai Central are staring at a two-year delay.

No shareholding in telecom: DB Realty

Our results for FY2011 are a clear indication of the traction the company is receiving in the market today and the progress on our key business parameters. Even in a sluggish environment, we have posted commendable figures with an overall 35 per cent growth in revenue and 19 per cent bottomline growth year on year. Our expanding portfolio consists of 25 projects mostly focusing in and around Mumbai... Some of our projects might see a minor delay due to the current regulatory approval environment being faced by the realty sector. We would like to once again reiterate the fact that there is no direct or indirect shareholding of DB Realty Ltd in the telecom business. Thus the ongoing 2G investigation will have no impact on the functioning of DB Realty Ltd or any of its projects.

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