THE RISE AND FALL OF THE AMRAPALI GROUP

AMRAPALI GROUPS: INTRODUCTION

Amrapali Groups, once ranked among the country’s biggest real estate giants, the Amrapali Group is
today struggling to pay its dues. The story of Amrapali began with the story of Anil Sharma (55), the
company’s chairman. Born in Patna’s Pandarak tehsil, he studied in a village school before going to
Patna Science College. He then gravitated towards engineering and obtained a BTech degree from
NIT Calicut and an MTech from IIT-Kharagpur. He also obtained a law degree from Patna later.

Sharma served in various positions at the National Thermal Power Corporation (NTPC) and the
National Project s Construction Company (NPCC), and worked briefly in the Hajipur municipality. He
also appeared for the Bihar Civil Services, but did not clear the exam. In 2003, Sharma turned his
attention to the national capital and embarked on his first Amrapali project, called Amrapali Exotica,
under which he delivered 140 flats. In the years that followed, the real estate sector saw rapid
growth and Amrapali was at the centre of it. Sharma steadily built the firm into a giant construction
conglomerate.

THE RISE

At its peak in 2015, the Amrapali real estate group claimed to have had around 50 projects spread
across 24 cities. Its real estate portfolio included the residential Amrapali Sapphire and Amrapali
Platinum in Noida, the Amrapali Empire in Ghaziabad, a commercial hub in Greater Noida, a
township in Jaipur, a multiplex mall in Bihar and an IT hub-cum-five star hotel. the Amrapali group
had expanded into the FMCG sector with its ‘Amrapali Mums’ product line introduced in Bihar, as
well as the entertainment sector with its Amrapali Media Vision that produced the movies, Gandhi
to Hitler, which was premiered at the Cannes Film Festival in 2011, and I Don’t Love You. Its brand
ambassador was then Indian cricket captain Mahendra Singh Dhoni; his wife, Sakshi Dhoni, held a 25
per cent stake in a business venture called Amrapali Mahi Developers Pvt Ltd .

An ad featuring Dhoni as their brand ambassador.

THE FALL: A TIMELINE
Approximately 42,000 Amrapali homebuyers have been fighting for their dream homes which have
been stuck for over 3 years now. At present, more than 2,500 homebuyers have taken the group to
the Supreme Court.

April, 2016: The bubble burst for Amrapali when its brand ambassador Dhoni quit the position in
April 2016 following pressure on social media from residents, who demanded the completion of
pending construction at the group’s Sapphire project in Noida. Sharma had then addressed the
complaints and explained the lack of funds and slowdown in the property market as the reasons for
the delay in project completion. He had also assured the residents that their demands would be met.

July 2017: By then the Yogi Adityanath government launched a crackdown on the group. The firm’s
CEO, Ritik Sinha, and director, Nishant Mukul, were arrested after the company’s labour cess dues
amounted to Rs 4.29 crore. The two, however, were released within 24 hours.

August, 2017: the Corporation Bank announced that it was going to auction an Amrapali office
building in Sector 62, Noida, to recover its dues; this led to further panic among investors and
homebuyers. The bank action came on the back of the real estate major having failed to provide as
many as 27,000 housing units in Greater Noida for three years. The homebuyers also suspected that
the group was siphoning off money as the Noida authority failed to recover around Rs 3,100 crore in
land dues from it.

The committee of three ministers, appointed by the Uttar Pradesh cabinet, presented its action plan.
The panel said that the co-developers will be brought in to complete the delayed projects and
assured home buyers stuck in Amrapali projects not to pay any outstanding amount until flats are
completed. Urban housing minister Suresh Khanna, Industries minister Satish Mahana and state
minister (independent charge) of cane development and sugar mills Suresh Rana were the members
of the committee that helding meetings with hundreds of home buyers that have invested their
hard-earned money with builders such as Amrapali, Jaypee, Unitech among others in Noida, Greater
Noida, Yamuna Expressway and Ghaziabad. The three-member panel had been formed on the
directions of Uttar Pradesh chief minister Yogi Adityanath to address issues being faced by home
buyers. Presenting the action plan in Greater Noida , Khanna gave Amrapali Group one month time
to begin construction and two years to complete the projects.

September 2017: NCLT starts insolvency proceedings against Amrapali Infrastructure.

Homebuyers moved the Supreme Court against an order of the National Company Law Tribunal
(NCLT) that admitted Bank of Baroda’s insolvency petition against Amrapali’s Silicon City project in
Noida. The principal bench of the National Company Law Tribunal (NCLT) admitted an insolvency
petition against Amrapali Infrastructure, filed by Bank of Baroda. The lender approached the tribunal
after the Amrapali group company defaulted on a loan of Rs 97.30 crore. Law firm Cyril Amarchand
Mangaldas’ Bishwajit Dubey had appeared for Bank of Baroda in the case. Tata Capital Financial
Services and Magma Fincorp had also filed separate cases in NCLT to initiate insolvency proceedings
against Amrapali Infrastructure, claiming to be financial creditors to the company.

April, 2018:,Dhoni himself sued the construction group for Rs 150 crore, alleging that he hadn’t been
paid for his position as brand ambassador.
August, 2018: a Supreme Court bench of Justices Arun Mishra and U.U. Lalit, hearing the plea,
warned the directors of Amrapali group that it would sell their properties if the group continued to
delay its projects.

November, 2018: Giving a final chance to embattled firm Amrapali Group and its directors and
promoters to comply with all orders passed by the Supreme Court since May last year, the apex
court on November 20 made it clear to them that they have to make disclosures with regards to all
financial transactions under which homebuyers' money was transferred. The company is responsible
for diversion of homebuyers' money, it said.

December, 2018: In an interim direction, the apex court ordered the attachment of Amrapali's five-
star hotel, FMCG Company, corporate office and malls. The fresh SC directions come after group
CMD Anil Sharma admitted to the diversion of Rs 2,996 crore to other companies for expanding the
business, which resulted in fund crunch for completing housing projects. In an affidavit before the
SC, Sharma had placed all the monetary transactions of 46 group companies and said Rs 5,980 crore
was spent on creating other properties like malls, resorts etc.

February, 2019: SC allowed Delhi Police to arrest Amrapali Group Chairman and two directors.
Supreme Court also directed that their personal properties be attached. The next date of hearing has
been fixed for March 26. The top court said the Economic Offence Wing (EOW) of Delhi Police can
also arrest Amrapali directors Shiv Priya and Ajay Kumar in the case. The three, currently in judicial
custody following petitions by home buyers awaiting possession of their flats totalling 42,000, will
now be moved to custody under Delhi Police.

WHY?

According to lawyers, homebuyers and petitioners, the prime reason behind the delay in delivery of
projects is siphoning off funds. Allegedly, siphoning off funds has been happening since 2010 and
three governments have changed on the state of Uttar Pradesh, but none of them have taken any
punitive action against these real estate giants. They have also not been able to deliver due to
various other reasons like greed, mismanagement of cash flows and the developers’ ability to assess
the condition of the market. According to a report in Livemint, since the developers launched
projects without assessing the need of the homebuyers there is a huge unsold inventory of houses in
the market

Not everyone, however, is blaming the Amrapali group for the real estate mess in Noida. According
to the managing director of a steel firm that supplies to Amrapali group, the Noida Authority, a
statutory body tasked with managing the city’s infrastructure, is equally to blame. The main problem
is that land acquisition is being questioned. The Noida authority acquired land left, right and centre
and gave it to the developers without proper channels or without complying with government
norms,the steel firm MD said. According to him, Amrapali’s funds are running dry because of its
tussles with financial institutions and settlement of various bank obligations. Manoj Kumar, founder
of Hammurabi & Solomon law firm, however, said that the authority alone could not be blamed.
“The Noida authority has nothing to do with it. In most cases, it is the misallocation of funds by the
borrower because the moment they start getting money from lenders, they increase the number of
projects,” Kumar said. “So money meant for project A goes to project B, and from B to C… The
money borrowed from investors is misallocated”. According to Kumar, if the fall of Amrapali group
was due to the Noida Authority’s biased allocation, then other builders in Noida would have suffered
the same fate. “Any public authority, assuming that they are working in a subjective manner to
favour somebody, would be a market condition prevalent for every builder in the market. That
would mean all the builders operating in Noida under the Noida authority except for those who
Noida authority favoured would have perished by now.” (Excerpts from an interview taken by The
Print)

MONEY TRAIL

The Supreme Court had warned Amrapali group CMD Anil Sharma and its directors over their
repeated “non-compliance” with its orders by not coming clean on alleged diversion of homebuyers’
money for personal gains. As the group failed to provide all documents, the SC entrusted the task to
two auditors —Ravi Bhatia and Pawan Kumar Aggarwal— to conduct forensic audit of all 46
companies of the Group to find out financial irregularities. The court termed the Amrapali group and
its promoters as “biggest liars and worst cheaters” and directed attachment of all properties and
bank accounts of the company The dark secrets of Amrapali’s modus operandi on diversion of
homebuyers’ money started coming out with the auditors making a startling revelation that more
than 200 dummy companies were incorporated by the Goup and its officials to divert funds, some of
which were also transferred overseas in violation of FEMA. They said some of the companies were
incorporated in the name of peons and office boys and crores of rupees transacted in their names.

The auditors said in their reports homebuyers’ money was diverted to at least 112 such companies
and in one case, Rs 140 crore was transferred to two companies whose directors were peons of the
group. They said directors, chief financial officer and the statutory auditors were part of the
syndicate to divert homebuyers’ money and the group failed to deliver the flats because of diversion
of funds. The report also revealed that crores of unaccounted money was invested in various
housing projects that sold flats at “throwaway” prices on paper but received black money in cash
from buyers. The auditors said in some cases flats worth lakhs of rupees were booked at the rate of
Re 1 per square feet. After the SC threatened to send him behind bars for not “coming clean”, the
Amprapali CMD had admitted before the court diversion of Rs 2,996 crore in other companies for
expanding his business, resulting in financial crunch for completing housing projects. The group said
its 15 companies received Rs 11,573 crore from homebuyers and it raised additional Rs 4,040 crore
from financial institutions and foreign direct investment. Referring to the balance sheet till 2015 and
raw data available thereafter, the group claimed to have invested Rs 10300 crore in those housing
projects.

CONCLUSION:

Amrapali homebuyers on Friday said they would stop paying their home-loan instalments if the
government did not release “stress fund” to finish the stalled housing projects. The decision comes
after the Supreme Court(SC) directed the Delhi Police’s Economic Offences Wing to arrest Anil
Sharma, chairman and managing director of Amrapali Group, Shiv Priya and Ajay Kumar, directors of
the group. According to the National Buildings Construction Corporation (NBCC), which conducted a
survey following an SC directive in 2018, a commercial project and 15 housing projects were started
by Amrapali in Noida and Greater Noida. The firm needed to finish 46,575 units in the 15 projects
and required Rs 8,550 crore to deliver them, the survey revealed.

A recent survey also said that Rs 3,853 crore could be raised by recovering Rs 3,883 crore from
buyers who needed to pay the remaining cost of the flats and Rs 2,609 crore could be raised by
selling unsold flats. “The NBCC can start construction and finish work but it needs funds for the
same. Why can’t the government release a package and help us in getting the flats. A committee
comprising of members from the central and state government has already advocated for a stress
fund to be provided to revive the stuck projects. If the government does not do this, it means that it
is not serious in helping buyers,” said Abhishek Kumar,member, Noida Extension flat owners’
welfare association. “If the government will not help us and the Supreme Court’s final order on
March 4 doesn’t help us in getting the flats, we will begin a protest to demand stopping home loan
repayments to banks,” said Vijay Gupta, a homebuyer of Centurion Park project, Greater Noida.
Homebuyers also demanded that the government ask banks not to demand home loan instalments
until the flats are delivered, failing which they can be declared defaulters. “If they will not pay home-
loan, the bank will term the buyer as a defaulter. Not paying home loan instalment will affect buyers’
profile because no bank will give him a loan in future. The bank cannot wait for a court’s decision in
such cases. If a person has taken a loan, he has to pay it back as per rules,” said Jitendra Ojha, senior
manager, Kotak Mahindra Bank, Noida. (Excerpts from an interview to TOI)

Puravankara and Godrej Properties are among six companies that have expressed interest in
submitting resolution plans for Amrapali Silicon City, a group firm of the debt-ridden developer. Only
if the government and the various stake holders take stringent measures will the home buyers get
what they had been promised for.