Top businesses of Delhi NCR have not paid billions of dollars of debt

Once worth billions of dollars, Amrapali, Bhushan Steel, Jaypee Infra and Unitech are insolvent today. They took massive debt to build…

Once worth billions of dollars, Amrapali, Bhushan Steel, Jaypee Infra and Unitech are insolvent today. They took massive debt to build their businesses, but could not service the debt. Even the solvent companies like Tatas and Ambanis are under huge debt.

Amrapali had collected nearly INR 12,000 crores from the home buyers. They have yet to deliver more than 40,000 flats. In 2008 Unitech had assets worth $ 3bn. Their unpaid debt is INR 6300 crores, and they have to deliver 16,000 homes to buyers. Bhushan Steel borrowed INR 47,000 crores from banks, which became non performing assets. Jaypee Infratech owes INR 10,000 crores approx. to its creditors, and more than 20,000 flats to the buyers.

Economist Ajay Shah writes, “ Zombie firms is used for firms which ought to have been liquidated through a bankruptcy process, but are kept alive artificially by banks and/or taxpayers. Zombie firms hamper productivity, as they use labour and capital that could be better utilised by other management teams. Zombie firms also adversely influence the recovery by hurting the profit rate of healthy firms. As an example, the presence of a large zombie airline in India is harming the profitability of all efficient airlines…”
 
 Insolvency and liquidation of such firms is painful in the short term, but positive in the long term. The new real estate businesses will not enter the market to cheat customers. Government is making sure that the home buyers are able to get the flats they had booked.