Bengaluru-based real estate developer Embassy Group plans to sell some assets to bring down its total debt by one-third over the next two quarters, group chairman Jitu Virwani said, rejecting reports that put the group’s debt exposure at ₹19,940 crore. He said Embassy has “substantively and meticulously” addressed all the observations made by the income tax department and the National Company Law Tribunal (NCLT), which, through a recent order, withheld the merger of Indiabulls Real Estate with some of Embassy Group entities. Virwani said Embassy Group will challenge the NCLT order. Edited excerpts of an interview with ET’s Sobia Khan.
The NCLT has withheld the proposed scheme of merger, considering the objections raised by the income tax department though it dismissed the minority shareholder’s apprehensions regarding the deal. What is your take on it?
Firstly, objections by this minority (0.003% stake) shareholder have been dismissed by NCLT itself and he has been so far unsuccessful in all the other forums. Also, As regard to income tax claims, the income tax department had no objection regarding the merger as far as their interest was adequately protected, which was supported by an affidavit and undertaking from Embassy to the department.
There have been some reports that Embassy Group has a debt exposure of ₹19,940 crore. Could you please clarify?
The information is factually incorrect. For instance, one of the projects has bank debt of ₹220 crore, however, the articles state the same as ₹700 crore. They have not taken facts in entirety in arriving at their conclusion, which provides a skewed perspective. Also, Embassy Group’s total net debt is ₹8,800 crore, which includes debt jointly held with the respective investors and partners.
Could you share the current outstanding debt of NAM Estates? How do you plan to bring it down?
Current debt position of NAM Estates (consolidated) from banks and FIIs is ₹5,200 crore and is backed by majorly completed OC-received residential inventory in its luxury and premium projects, which is being sold currently at higher than our initial assumption/forecast. Also, the land parcels and the finished residential inventory is worth approximately ₹10,000 crore. We are also looking at selling some assets to bring down the total group debt by one-third over the next two quarters.
There have been some concerns on valuation and that the merger would hurt shareholders of Indiabulls, as it would give Embassy shareholders an unfair advantage. What is the Embassy Groups view on that?
The merger is expected to create one of India’s largest listed realty development companies with a strong presence in west, south and north India. The valuation was carried out by 2 independent, reputed valuers, and also backed by a fairness opinion issued by a Sebi-registered category I merchant banker. All the observations made by NCLT and the income tax department have been substantively and meticulously addressed by Embassy on record.
