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What’s happening in Aurobindo Realty?
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Clarification sought on the status of the projects
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Then only the buyers’ confidence will get a boost
The designated CBI court has extended the remand for Aurobindo Realty MD, who was taken into custody a month ago, Sharath Chandra Reddy by two more weeks. He figured as the A-2 in the Delhi liquor scam. He used to run the administration of the Aurobindo Realty prior to his arrest. Following his arrest, the Aurobindo firm stripped him of his responsibilities in Aurobindo Pharma Company. The company made it clear that he will continue as director of the company. Not a single statement has been issued relating to the Aurobindo Realty. Why is the firm not updating the investors and buyers about the latest developments? In fact, what is happening in Aurobindo Realty?
Sales nil, investors dull
In the Hyderabad real estate market, several projects have been launched, including at least 40-50 sky-rise structures. Several developers have been trying to sell flats in pre-launch of the projects. Several developers have been selling flats at a price less than that prevailing in the market. Moreover, the Aurobindo Realty sold flats in its Regent project in Kondapur, near Hyderabad, in the name of expression of interest prior to securing RERA permissions. Another realty firm that bought the plot, just behind Aurobindo’s Kohinoor project, in the auction conducted by the HMDA sold the projects in pre-launch event only to pay off the bid amount to the HMDA. There was no realty firm in Hyderabad that did not sell flats in pre-launch events. The Aurobindo Realty has been finding the pre-launch sales a big headache. Till the other day the firm was active in this kind of sales promotion. The price being quoted in Aurobindo Realty’s project in Madhapur is more or less Rs 10,000 per sft. But the flats can be had from the market at a price less than that in pre-launch sales of the realtors.
As the Aurobindo Realty MD’s name figured in liquor scam, investors and buyers are not coming forward to pay attention to the firm’s projects. The investors are worried about the Enforcement Directorate digging deep into the scam to unearth their names. Moreover, the buyers are also not keen to book flats of the firm. The Aurobindo case is a classic example of how difficult it is to earn the credibility of the buyers.
Lost credibility among buyers?
It is not easy even for a big firm to win the trust of the investors back once its loses credibility in the market. It is also not easy to gain a foothold in the market. In the case of Aurobindo realty, neither investors nor buyers are coming forward to book flats. The response from the market to the advertisements inserted by the company is cold. There is a big question mark in the minds of the people how the developer is going to execute the projects – The Kohinoor, The Pearl, The Regent projects of the developer and also the villa projects undertaken in Inavolu near Indresham of Patancheru area. At a time when the MD of the company is cooling his heels behind the bars in Tihar Jail, will the promoters spend from their pockets and complete the projects? Will they adopt another strategy? One has to wait and watch for some more time to come to know the future of the projects.
Private equity investors?
The Hyderabad market has emerged a safe haven for private equity investors. The benefit of the PE funds is to make investments in the projects at one go. Instead of taking interest, they claim their share in profits. As a result, the project gets completed without any relation whatsoever with the sales of units. This would benefit the buyers. Why did the PE funds develop cold feet to invest in Aurobindo Realty? Is it due to the firm’s MD’s name getting fingered in the Delhi liquor scam?
