LIC Housing Finance takes over Orbit Corp's Mumbai property

Stress in the real estate industry is growing.

Housing finance company LIC Housing Finance has taken action against two developers-Orbit Corporation in Mumbai and Unitech in Delhi-- for defaulting on loans.

LIC Housing Finance today said it has taken possession of a Mumbai property of real estate developer Orbit Corporation for not repaying loans and in the other case, it has sent notices to Delhi-based developer Unitech for default in payment of loans.

Orbit's total amount outstanding is Rs 95.50 crore including interest, expenses and other charges, LIC Housing Finance said in a public notice. LIC Housing Finance said it had taken possession of a project Orbit Residency Park in Andheri area of Mumbai excluding 155 apartments in the residenital complex.

Pujit R Agarwal, managing director of the company and, Ravikiran S Agarwal, chairman of the company, were the guarantors to the loan.

When contacted, an Orbit spokesperson said :"In the particular property, 150 apartments are out of the purview of possession. So 80% of property are out. Secondly, we are in talks and understanding on repayment of loans. Since time lapsed out, they have taken action. We are also taking actions to safeguard our interests."

In August this year, LIC Housing Finance said Orbit Corporation had defaulted on interest and principal dues of Rs 96 crore to it and declared the account as non performing asset.

According to sources, Unitech had taken a loan of Rs 300 crore from LIC Housing in 2007. The company has repaid an amount of Rs 100 crore so far. The payment for this year was delayed but the company has reached an agreement with LIC Housing for repayment and an amount of about Rs 70-80 crore will be paid in the next two weeks, sources added.

It had received a notice for default in payment in November this year.

When contacted, a Unitech spokesperson said, "Due to our confidentiality agreement with the lender, we cannot comment on the specifics of these media reports. However, our financial results for the current quarter will reflect no pendency with the said lender."

This year, a number of Mumbai developers defaulted on loans as they struggled to repay loans in the backdrop of falling sales.

Early this year, rating agency Brickwork downgraded Mumbai-based Hubtown for defaulting on repayment of interest and principal on Rs 100 crore of non-convertible debentures (NCDs). In August this year, Indiabulls Housing Finance declared Rakeshkumar Wadhawan and Sarang Wadhawan, promoters of realty company HDIL, as loan defaulters.

Their loan accounts have been classified as non-performing assets (NPAs). Then, Tata Capital dragged Hirco Plc’s Hiranandani Palace Garden to court for default on repayment of interest and principal of Rs 100 crore towards NCDs.