In 2009, a company’s involvement in a massive fraud worth Rs 7,000 crore sent shockwaves through the global corporate community. The chairman of the company, after handing over Rs 700 crore in cash, struggled to account for the money, leading to a series of mistakes and eventually, closure of the company. Experts emphasise the importance of companies having significant cash reserves to weather such crises. Now, with Aurobindo Realty’s MD Sarath Chandra Reddy becoming an approver in the Delhi Liquor Scam, questions are being raised about the impact on the company’s ongoing real estate projects.
Real estate is a sector built on trust. Buyers often rush to book flats in projects launched by companies they trust, sometimes even encourage their relatives and friends. Aurobindo Realty managed to gain the trust of buyers in a short span of time, leading to high sales in their Kohinoor project in Madhapur. The subsequent launch of Regent in Kondapur also saw promising sales. However, the involvement of Aurobindo Realty MD Saratchandra Reddy in the Delhi liquor scam took buyers by surprise, impacting the sales of Regent and Pearl.
In real estate projects, builders typically invest around 30 percent of the total project value before commencing construction. They then rely on loans and sales proceeds to complete the project. However, Aurobindo Realty’s reputation has been tarnished due to the involvement of their key figure, Saratchandra Reddy, in the liquor scam.
Buyers get multiple calls for payments
Previously, Aurobindo did not press buyers for progress payments or follow up on outstanding amounts owed by buyers of flats in the Kohinoor and Regent projects. However, the situation has now changed. Buyers are being constantly pursued for even small amounts owed, leading to frustration. Buyers are left wondering why they are being harassed over sums as low as Rs 5-10 lakh. Notably, Aurobindo Realty employees have been engaging with buyers to address their concerns. This raises questions about the company’s cash reserves, sales performance, ability to sell new flats, and repayment of loans from financial institutions. Major works pertaining to the the company’s Kohinoor project have been completed and internal works have been taken up. However, some buyers have even expressed concerns about the quality of internal works such as plumbing, flooring, electricals, lappam finishing, and flooring in the completed structure of the Kohinoor project.
Does Aurobindo still enjoy government support?
Aurobindo Realty has historically enjoyed good relations with the State government. This was evident when the company acquired land in prime areas of Madhapur to undertake their projects. Reports indicated that government officials provided cooperation and the necessary clearances for the Regent project in Kondapur, without much trouble. However, with Sarath Chandra Reddy’s involvement in the liquor scam, the extent of government support for Aurobindo Realty has come into question. Buyers are anxious about the potential negative impact on the progress of these projects. The real estate sector in the city eagerly awaits the unfolding of the liquor scam’s consequences in the days to come.
Heads likely to roll
With Sarath Chandra Reddy becoming an approver, there is a possibility that several other key figures involved in the Delhi liquor scam will be exposed. This includes uncovering the roles played by influential leaders, when and where the fraudulent activities took place, who got kickbacks and who acted as mediators – Sarath Chandra Reddy is likely to spill the beans on all these aspects of the scam.
