NBCC Q2 net profit falls 16% on provisioning for loss in Gurugram project
New Delhi: State-owned NBCC (India) Ltd has reported a 16 per cent decline in its consolidated net profit to Rs 81.90 crore for the second quarter of this fiscal due to provisioning for expected loss in a Gurugram housing project.
Its net profit stood at Rs 97.72 crore in the year-ago period.
The total income, however, rose to Rs 2,129.09 crore during the July-September period of 2023-24 from Rs 2073.89 crore in the corresponding period of the previous year, a regulatory filing said on Thursday.
The company's consolidated net profit increased to Rs 159.31 crore in the September 2023 quarter against Rs 92.87 crore in the year-ago period.
Its total income rose to Rs 4,094.90 crore in the first six months of this fiscal from Rs 3,927.13 crore in the corresponding period of the previous year.
A preferred partner of the government for infrastructure projects, NBCC's 93.22 per cent of business revenue comes from the PMC (project management consultancy) segment and redevelopment works on a consolidated basis.
The company is also into real estate development.
NBCC's profit declined during the September quarter despite a rise in the total income due to an exception item of provisioning of losses of Rs 65.39 crore.
In notes of account, NBCC said that "the group has made an additional provision for expected loss of Rs 6,539.19 lakh against sale of flats/units/interest/cost of stamp duty and registration charges for execution of title deed of flats/units in the favour of group at the quarter and six months ended on September 30, 2023".
The matter is related to its residential real estate project 'NBCC Green View', Sector - 37 D, Gurugram.
NBCC had sold 392 units (255 flats, 126 EWS and 11 shops) out of 942 units and had received a total amount of Rs 210.12 crore, out of which Rs 159.57 crore was recognised as revenue in the previous year and Rs 40.48 crore were booked as advance from allottees till March 31, 2022.
"Subsequently, the buildings in the project exhibited structural cracks. The group received many complaints and representation from some of the homebuyers. Group appointed IIT Delhi to look into the matters," the filing said.
IIT Delhi, in its report dated October 6, 2021, advised that the buildings must be vacated within two months in view of the safety of the occupants and further advised to get the feasibility of repairs re-examined.
Thereafter, a committee of experts from IIT Roorkee and CBRI Roorkee (Central Buildings Research Institute) was constituted for structural assessment of this project in furtherance to the report of IIT Delhi.
"This expert committee opined that no repair/restoration method seems economically viable and safe in the long term. It is recommended to demolish the structure," NBCC said.
"In view of the advice from the experts and considering the safety of the residents, the buildings were evacuated completely with the help of the District Administration under Disaster Management Act," NBCC said.
The company, in its board meeting held on June 21, 2022, accorded the approval to settle with all the homebuyers/allottees by way of buyback of their flats/units by paying the total amount received from the allottees against the sale of flats/units amounting to Rs 210.12 crore and the cost of stamp duty and registration charges paid by them amounting to Rs 9.73 crore.
Accordingly, the offer letter for the buyback of their flats/EWS units/shops was communicated to all homebuyers/allottees through posts and mails.
Further, a review panel of two retired SDGs of CPWD was constituted, which also concurred with the recommendation given by the expert committee.
"In view of the uninspiring response from the buyers against the first and second buyback offer of the group, the Board in its 529th meeting held on August 18, 2023, decided to reconsider the same in order to arrive at an amicable settlement," NBCC said.
Accordingly, the Board of Directors has accorded in-principal approval to settle with all the homebuyers/allottees by way of buyback of their flats/units by paying the total amount received from the remaining allottees against the sale of flats/units amounting to Rs 195.39 crore and the cost of stamp duty & registration charges paid by them amounting to Rs 9.11 crore and simple interest of 6 per cent per annum on the total receipts (excluding stamp duty and registration charges) amounting to Rs 105.79 crore reckoned from the date of receipt of each payment made till the approval date, August 18, 2023.
In addition, Rs 12.24 crore (approximately) is estimated to be incurred towards the cost of stamp duty and registration charges for execution of title deed of flats/units in the favour of the group.
"Accordingly, the group, in its submission to the National Consumer Disputes Redressal Commission (NCRDC) on October 6, 2023, submitted its willingness to refund the entire amount received from complainants with simple interest at 6 per cent per annum from the date of respective deposits," NBCC said.
