Mumbai/Pune: DB Realty informed the stock exchanges on Friday that its proposed R400-crore township project in Pune has been cancelled by the Pimpri Chinchwad New Town Development Authority (PCNTDA), without giving a reason as to why the local body cancelled the project. PCNTDA has refunded the upfront deposit money of R50 crore to the company, DB Realty said. DB Realty will take legal recourse in the matter, terming the cancellation of letter of intent (LoI) after 22 months as arbitrary and illegal. “The company is seeking professional advice for taking steps to challenge the annulment of award of tender as per the legal recourses available to it,” it said.
Shares of the real estate firm fell to an intra-day low of R 80.10 on the BSE on Friday, before closing at R83.20, marginally up from the previous day’s close of R82.60.When contacted, Dilip Band, Pune divisional commissioner & president, PCNTDA said, “The project was canceled because PCNTDA could not take the allotted money from the central government. The project did not go ahead because of litigation and complaints filed by the local MP and some politicians regarding the tendering process and the manner in which the allotment was done. Since there were complaints, no work order was issued to DB Realty’s JV.”
“Moreover, the project could not be completed in the stipulated time of two years and so the Centre cancelled the project. Subsequently, PCNTDA cancelled the project,” Band explained. The central government had given grants of R150 crore under the JNNURM for the project that was to come up in Sector 12 under the category of basic services to the urban poor (BSUP). PCNTDA, in a letter dated June 10, informed DB Realty that the JV for the bidding process for selecting a developer stands annulled and hence, the LoI dated August 25, 2009, issued in the name of the JV stands cancelled, the company said in a notice to the BSE.
The project was to be executed under a joint venture named DB Conwood Man Ajwani Joint Venture. DB Man Realty, a subsidiary of DB Realty, was the special purpose vehicle (SPV) formed by the JV partners to implement the project. The LoI was issued for development of an eco-friendly township at sector 12 at Bhosari in Pune.
DB Realty said the JV partners and the SPV had, from time to time, compiled with the conditions of the letter of intent and was, in fact, awaiting consent from the PCNTDA for execution of the development agreement of the project.
Reports of the township project being cancelled was doing the rounds for over a month now, but the real estate firm had so far refrained from making comments on them.
DB Realty has been in the news after two of the company’s promoters were arrested for their alleged involvement in the 2G spectrum scam. Although the company maintains that its promoters’ telecom business was in their personal capacities and has no relation to the listed real estate entity, company officials do agree that the negative news surrounding the promoters has had an impact on customer sentiment. Cancellations in its projects are in the range of 2-3%, officials said at the time of the fourth quarter results.
Shares of the real estate firm fell to an intra-day low of R 80.10 on the BSE on Friday, before closing at R83.20, marginally up from the previous day’s close of R82.60.When contacted, Dilip Band, Pune divisional commissioner & president, PCNTDA said, “The project was canceled because PCNTDA could not take the allotted money from the central government. The project did not go ahead because of litigation and complaints filed by the local MP and some politicians regarding the tendering process and the manner in which the allotment was done. Since there were complaints, no work order was issued to DB Realty’s JV.”
“Moreover, the project could not be completed in the stipulated time of two years and so the Centre cancelled the project. Subsequently, PCNTDA cancelled the project,” Band explained. The central government had given grants of R150 crore under the JNNURM for the project that was to come up in Sector 12 under the category of basic services to the urban poor (BSUP). PCNTDA, in a letter dated June 10, informed DB Realty that the JV for the bidding process for selecting a developer stands annulled and hence, the LoI dated August 25, 2009, issued in the name of the JV stands cancelled, the company said in a notice to the BSE.
The project was to be executed under a joint venture named DB Conwood Man Ajwani Joint Venture. DB Man Realty, a subsidiary of DB Realty, was the special purpose vehicle (SPV) formed by the JV partners to implement the project. The LoI was issued for development of an eco-friendly township at sector 12 at Bhosari in Pune.
DB Realty said the JV partners and the SPV had, from time to time, compiled with the conditions of the letter of intent and was, in fact, awaiting consent from the PCNTDA for execution of the development agreement of the project.
Reports of the township project being cancelled was doing the rounds for over a month now, but the real estate firm had so far refrained from making comments on them.
DB Realty has been in the news after two of the company’s promoters were arrested for their alleged involvement in the 2G spectrum scam. Although the company maintains that its promoters’ telecom business was in their personal capacities and has no relation to the listed real estate entity, company officials do agree that the negative news surrounding the promoters has had an impact on customer sentiment. Cancellations in its projects are in the range of 2-3%, officials said at the time of the fourth quarter results.
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