Omaxe Shelves Plan to Develop 10 Lakh Affordable Houses at an Investment of Rs 80,000cr

Realty firm Omaxe has shelved its Rs 80,000 crore investment plan aimed at developing 10 lakh affordable houses across the country over a period of five years. “The project could not take off after the slowdown impacted all the developers in 2008. We tried to develop some houses at some locations… The project is shelved now,” said Rohtas Goel, chairman and MD, Omaxe. In May, 2008, the company had announced an elaborate plan to build 10 lakh affordable houses for low-income consumers across tier II and III cities, at a price ranging between Rs 3 lakh and Rs 15 lakh, over a period of five years. The National Capital-based developer had tied-up with farmers in Gujarat and Maharashtra to acquire land for developing the affordable houses, he added. 

“However, it did not finally materialise,” Goel said. He, however, declined to divulge if the company had put in any money in initiating the project. The 2008-09 global financial crisis had hit the realty sector hard and the same is expected again under the current economic environment. Omaxe had formed a subsidiary, National Affordable Housing and Infrastructure Ltd (NAFHIL), for the low-cost housing project and had also initiated an international design competition, besides publishing advertisements. Later, the company divested 51 per cent stake in NAFHIL to a promoter group firm. The company had initiated dialogues with the state governments in Uttar Pradesh and Madhya Pradesh in February 2008, to implement the affordable housing project. It had also placed a concept plan for consideration before the Union State Minister for Urban Housing at that time.

Goel had said Omaxe would construct 800 million sq ft to develop 10 lakh housing units of size starting from 300 sq ft to up to 1,500 sq ft. About 20,000 acre of land would be required to develop the project. The company had planned to develop 5,000-10,000 housing units at every location over an area of about 100-200 acre. It had said it would sell these units through lottery system and would charge only Rs 100-150 per sq ft as profit. It had identified Indore as the first location for the proposed project with plans to develop 10,000 low-cost homes at a 200-acre township at an investment of about Rs 1,000 crore. It planned to offer the flats, sizes of which would have started from 350 sq ft, for Rs 4-10 lakh. Similar projects were also planned in other locations such as Raipur, Bhopal, Bareilly and Allahabad.

Omaxe Planning to Invest 600cr on Land Acquisition

Realty firm Omaxe is planning to invest up to Rs 220 crore in the next six months on land acquisition. Meanwhile, the company also targets to cut its gross debt by about Rs 225 crore in this fiscal from Rs 1,477 crore as on June 30. It spent Rs 83 crore on land acquisition in the first quarter of the current fiscal. 

“We believe that we will be spending Rs 200–220 crore on land acquisition in next six months,” Omaxe vice president (investor and strategic relations) Sumit Arora said in a presentation. He, however, did not share details such as where and how much land will be acquired. “As far as land acquisition is concerned, in the first quarter the company spent around Rs 83 crore and acquired land majorly at Chandigarh… We have another 50 acres in Chandigarh and we have added some more land at Lucknow,” Arora added. 

Speaking about the company’s debt position, he said: “We have reduced the net debt by about Rs 75 crore on quarter to quarter basis. So, as on March 31, our gross debt was Rs 1,552 crore and today it stands at Rs 1,477 crore.” The company continues to reduce its debt further during the ongoing fiscal, he added. “For the whole fiscal, we are quite confident that we will be able to reduce this number to around Rs 1,250 crore, which will include Rs 227-230 crore of deferred land payments,” Arora envisaged.

After DLF, CCI Likely to Probe Unitech, Parsvnath & Omaxe

Unitech, Parsvnath Developers and Omaxe are likely to face the Director General (DG) investigation in the next one week. The Competition Commission of India (CCI) is likely to order probe on Unitech, Parsvnath and Omaxe based on preliminary investigations which suggest abuse of dominant power by the developers. Several complaints from residents on late delivery of projects and non compliance of agreement by the developers prompted CCI to order the probe, reports ET Now. 

“We have received some complaints from the residents, but these are mainly for delay of the projects and are not the kinds that come under the CCI purview,” said Rohtas Goel, CMD Omaxe. Earlier, CCI had imposed a hefty penalty of Rs 630 crore on DLF Ltd for abusing its dominant market position on a complaint by ‘The Belaire’ association in Gurgaon. The Competition Commission of India (CCI) on Tuesday said the Centre as well as state governments should come out with regulatory frameworks for the realty sector to protect consumers from unfair trade practices.