DELHI: Life Insurance Corporation of India (LIC) has taken "notional possession" of a slice of real estate major Unitech's 350-acre land parcel in Noida after the company failed to repay a part of its nearly Rs 150-crore loan from the country's largest insurer.
In a 'Notional Possession Notice' issued, LIC cautioned the public against dealing with the land parcels in sectors 96, 97 and 98 in Noida, which is prime property along the expressway that connects the Delhi suburb with Greater Noida. Bankers said "notional possession" is a step short of taking physical control of an asset, although the property remains under the company's charge. The property can be handed back to the company once the accounts are settled.
The company has not cleared a part of the dues, prompting LIC to issue a demand notice on November 26, 2013, asking the company and its guarantors - including the promoters, Ramesh Chandra, Sanjay Chandra and Ajay Chandra, and group companies - to repay the dues within 60 days. But, with the amount remaining overdue, the insurance company took "possession" of the property on March 7 as part of the land had been offered to it as a collateral when the company took the loan.
When contacted, a UnitechBSE -1.93 % spokesperson said that the company was in the process of clearing its dues to LIC. "The company has already initiated steps to ensure that necessary payments are made to Life Insurance Corporation of India by March 31, 2014. As per our earlier statement, there will not be any pendency reflected in Unitech's financial results and/or financial statements, due at the end of this fiscal," the spokesperson said in response to a detailed questionnaire.
While real estate companies have been hit hard by the slowdown in the market, which has also slowed down the pace of increase in prices, Unitech's problems have been compounded by its forays into multiple businesses, including telecom.
In fact, Sanjay Chandra is facing criminal charges related to the 2G scam and the group had to exit a joint venture with Norway's Telenor after the Supreme Court cancelled licences issued to Unitech.
Over the past few months, Unitech has sold several assets, including hotels and special economic zones, to pare its debt burden. The company had taken loans at rates of up to 18.25 per cent, according to its latest annual report.