Unitech's cup of woe overflows

Unitech once again wears the crown of being the top loser on the BSE currently. Down over 5.5%, the second largest realty company is today looking like a penny stock, quoting at Rs.7.50 levels, with its 52-week low at Rs.6.50. The Rs.2 face value stock’s market cap stands at Rs.2110 crore.

While concern over its high debt remains, the market is now perturbed with the ruling of the National Consumer Disputes Redressal Commission (NCDRC), which has askedthe company to compensate buyers for delay in delivering homes under its Vistas project in Sector 70 in Gurgaon. The project has been delayed by over two years.

The NCRDC has stated that Unitech should offer compensation in the form of simple interest at the rate of 12%, effective 36 months from the date of the initial Agreement till the date possession – when flat is delivered to the original allottees and to buyers who repurchase the flat within one year from the date of initial agreement.

It has also asked the company to not pass on the increased 14% service tax burden onto the buyers, which means Unitech will have to bear that cost. And if Unitech fails to deliver the units for possession as agreed in its letter dated May 27, 2015, it shall pay compensation in the form of simple interest at the rate of 18%, for each day delay beyond the stipulated time.