Emaar MGF bailout plan to fetch Rs 350cr profit: Reddy

NEW DELHI: A day after the urban development ministry asked Delhi Development Authority (DDA) to confiscate Rs 183-crore bank guarantee furnished by Emaar MGF, the developer of the Commonwealth Games Village, minister Jaipal Reddy defended the bailout package extended to the real estate firm.

The minister said DDA that piloted the bailout plan could make a profit of Rs 350 from the buyback offer announced by the developer. “Though I was not consulted, I would stand by the buyback scheme. Though it was a desperate arrangement, DDA will make a profit of more than Rs 350 crore... a return of 50% in a year,” Mr Reddy told reporters.

In 2009, the developer had approached DDA for a bailout package on the ground that recession had sapped the company of required capital to complete construction of the Village. DDA entered into an agreement that involved the state agency buying 333 apartments from the developer.

The minister, however, maintained that he was not consulted over the bailout package. “I was not consulted on the issue,” he said.

On Wednesday, his ministry had directed DDA to invoke the Rs 183 crore guarantee on the ground of defects in the construction of the Village. A DDA report had said that defects were detected in the basement and lift pits. It also said that the developer did not install required number of hydro-nuematic pumps, water proofing of terrace and fixtures for balconies.

Emaar has contested the charges. “The Games Village has been built to the highest standards of quality and design. The Village was handed over to DDA and the Organising Committee after a inventory of full facilities and assets in June 2010,” a statement from Emaar said.