Emaar-MGF: Not bailout, but buyback asserts Jaipal Reddy
22 October 2010
Emaar-MGF, a real estate joint venture between an Indian group and a UAE-based major, which has been at the centre of a row over the construction of its Commonwealth Games Village (CGV) in Delhi, has found a new defender in the form of Jaipal Reddy, the urban development minister.
Reacting to allegations that the Delhi Development Authority (DDA) rushed to the rescue of the beleaguered company, Reddy denied the charges, claiming that it was not a 'bailout,' but 'a buyback arrangement' to enable it to complete its work on time.
DDA paid a whopping Rs760 crores to Emaar-MGF, even though it failed to meet the April 2010 deadline for delivery of the complex, to buyback apartments from the developer. Reddy claims that the state-owned agency has made a 50 per cent profit on this amount in less than a year.
Last year, Emaar-MGF sought intervention from DDA, asking it to buy 333 of the apartments at the CGV for Rs760 crore, as it was facing a financial crunch following the global recession.
Earlier this week, the urban development ministry directed the DDA to invoke the company's Rs183 crore guarantee because of defects in the construction of the CGV. DDA claims defects were found in the basement and lift areas.
But Emaar-MGF has blamed other government agencies, which were also simultaneously working at the games village, of shoddy work, resulting in the deficiencies.