June 15, 2024

The builder of the 21-story environmentally friendly commercial building project in Pimpri Chinchwad’s Wakad area, embroiled in alleged charges of dishonesty and partiality, emphatically dismissed any forms of wrongdoing. He asserted his forthcoming profit as unknown. He explained that the profit could only be determined after a 6-7 year period, based on the state of the Transfer of Development Rights (TDR) market then.

Pimpri-Chinchwad Municipal Commissioner, Shekhar Singh, on his part put up a staunch defense of the much-debated project in the reserved region; however, he chose not to disclose the extent of the builder’s possible gains through the venture by way of Amenity TDR (Transfer of Development Rights).

No Illegality in The Project

Aditya Javadekar, the real estate developer and director of Vilas Javadekar Infinity Developers Ltd, echoed the Municipal Commissioner’s assertions, insisting that the project was devoid of any unlawful elements. “I want to reiterate that there is absolutely nothing illegitimate tied to the project. The project can be scrapped if they wish to do so, but I can assure you there’s no scam whatsoever. Whatever profit I yield from this venture will be mine exclusively, and in case of a loss, I am the one who will bear it. The profitability is indeed ambiguous,” Javadekar conveyed to The Indian Express.

Javadekar stated that he cannot at this point predict the profit margins. He further explained that the gross expenditure for the project amounts to Rs 570 crore, which is what he will be contributing in full. He anticipates the project completion to take around 3.5 years, during which the TDR will be disbursed in stages as the construction progresses. Following project completion, the entire TDR will be disseminated after the ‘defect liability period’ or the warranty phase. This phased-release of TDR allows him to utilize it in his subsequent projects or have the option to peddle it to other builders.

In terms of his investment in the project, Javadekar affirmed that he will be committing an amount of Rs 570 crore based on the PCMC tender and hopes to earn a TDR worth Rs 1,100 crore.

Festive offer

Profit Based on TDR Market

“In a span of 6-7 years, I am predicting a return worth Rs 1,100 crore in TDR. However, this is quite speculative. If we evaluate the value of this amount after 7 years, it could merely range from Rs 600-700 crore, indicating a typical profit margin of 10-15%. This is the standard revenue that any contractor hopes to earn in a 6-7 year duration. It’s akin to the toll collected by contractors over a 20-year period,” he expounded, further adding that the toll contractor constructs the road and recoups the amount over two decades.

The total value of the TDR, he added, hovers around Rs 1,100 crore. However, the figures are not definitive as his ultimate profit will rely on the constantly fluctuating TDR market prices.

“In case I decide to offload the TDR, it would be largely market-driven. Taking into consideration that the sale would occur 7 years down the line, I might choose to sell the TDR at a lower cost or a premium rate. The amount could dwindle to Rs 600 crore if I decide to let it go at a discounted rate, or could skyrocket to Rs 1,500 crore if it’s traded at a premium. Given the volatile nature of the market in a 7-8 year stretch, it’s quite challenging to anticipate the possible profits. The entire scenario is just postulatory… I might land a decent profit or incur losses based on the TDR market situation,” Javadekar articulated.

Javadekar commented, “If the TDR was awarded to me in a lump sum, I could have revealed the profit margins. However, the disbursement of TDR would be stretched over at least a 7-year period.”

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Originally Published: 29-12-2023 at 17:46 IST