DDA pulled up over Emaar MGF *New Delhi: *The recent announcement by the Delhi Development Authority (DDA) of buying 333 flats in developer Emaar-MGF's Commonwealth Games village for Rs 700 crore has received flak in a study prepared for the Competition Commission of India (CCI). The study, which points to a number of irregularities in the renegotiations, was authored by Clarus Law Associates. In 2007, the DDA awarded the Commonwealth Games project to Emaar-MGF for a winning bid amount of Rs 321 crore to build 1,168 flats in the complex. Under the deal, the developer would sell 768 flats at market prices to generate profits and fund construction, with the remaining 400 flats being sold by DDA at lower rates according to its own process. However, Emaar-MGF was able to sell only 260 flats as demand dipped, severely affecting its construction plans. Early this year, the developer requested DDA to grant a loan of Rs 1,000 crore to continue construction. In response, the DDA made a payment of Rs 100 crore -- to be treated as loan -- for Emaar-MGF to continue development. In May, to bail out the developer, DDA bought 333 flats for Rs 700 crore at Rs 11,000 per square feet, a discounted rate as the market price at that time was Rs 12,500 psf, which included the Rs 100 crore loan. However, the report said that original agreement did not provide any financial assistance to the developer for the construction of the village. In fact, the agreement stated "penalties and indemnification obligation" on the part of the realtor in case it can't complete the project in time. The report questions the DDA's renegotiations for not seeking any revenue share agreement with Emaar-MGF and not imposing penalties; asks why bank guarantees of the developer were not evoked or why Emaar-MGF wasn't told to sell its other assets to fund construction of the project. It also questions the purchase price of Rs 11,000 psf, since a DDA committee had valued the flats at Rs 8,000-9,000 psf. "Effectively, under this renegotiation of the original contract, there is no real detriment or setback to the private developer for failing to discharge its obligations to ensure financing for the project," the report said. بلعربي: اعمار ام جي اف طلبت من الحكومه الهنديه 1000 كرور ما يعدل المليار درهم. و في المقابل منحت الحكومه الهنديه قرضا بقيمة 100 كرور ما يعدل ال 100 مليون و شراء 333 شقه بسعر اغلاء من السوق. و الخطه فشلت بعد رفض المجلس لخطة الانقاذ. DDA pulled up over Emaar MGF (http://www.dnaindia.com/money/report...ar-mgf_1272970)
07-12-2009, 11:10 AM
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