Prestige Group to file DRHP

Another builder going for IPO. This is the builder who is constructing Prestige Shantiniketan for last 4 years and there is no sign as when all promised amenities will be ready. SEBI should closely monitor pre-IPO issues and audit post-IPO fund allocation.
* I'll not buy this stock. I can't trust a builder who doesn't have the capability to construct an apartment in 4 years and can't keep the promises which they made to it's investors. Can you trust?


Source - Moneycontrol
Bangalore based realty firm Prestige Estates Projects is planning to enter capital markets with an initial public offering (IPO) of Rs 1,200 crore. The company has filed a draft red herring prospectus (DRHP) with Securities & Exchange Board of India (SEBI).
The company has over 23 years of experience in real estate development. It has completed 142 real estate projects of approximately 27.09 million sq ft. It currently owns development rights for 52.57 million sq ft of developable area, which includes 24.49 million sq ft of saleable area and 9.64 million sq ft of leasable area.
The objects of the issue are to finance ongoing projects and projects under development; invest in existing subsidiaries which investment will be utilized for the construction and development of commercial ongoing project, retail ongoing and retail projects under development undertaken by those subsidiaries; finance the acquisition of land and repay certain loans of company.
For the year ended March 31, 2009, it has reported profit after tax and extraordinary items of Rs 70.73 crore on total income of Rs 916.15 crore. For the period of April-August 2009, its profit after tax was at Rs 66.51 crore on total income of Rs 437.85 crore.
The book running lead managers to the issue are Enam Securities Private Limited, JP Morgan India Private Limited, Kotak Mahindra Capital Company Limited and UBS Securities India Private Limited. Link Intime India Pvt Limited is the registrar to the issue.

Prestige Shantiniketan Liquidity Crunch?

Prestige Shantiniketan was a landmark project in Bangalore and due to these two accidents, I fear that this can also be one of the infamous project in Bangalore. The biggest challenge for Prestige Group will be
1) To settle those legal cases and resume the construction.
2) To keep disgruntled owners of the apartment pleased. With time they may calm down.
3) To keep worried investors at calm will be an uphill task considering the fact that there were investors with deep pockets and people with power.
4) To rebuild the deteriorating Prestige brand.
5) To boost morale of construction workers and their employees. With employee getting arrested and media bashing the Prestige it will be daunting task to keep everyone in high spirit.

I won't be surprised to see Prestige going Lehman way if investors starts pulling back their investment, if banks stops giving further loans and the project construction gets stopped for few months. As it's not a public listed company so their balance sheet health conditions is unknown. Accidents coupled with harsh credit crisis in the market, Prestige can have a liquidity crunch.
It will be interesting to watch how Prestige will be able to wriggle out of this mess. Unfortunately with the current issues apartment owners fate will keep on hanging.

I would like to express my solidarity for the constructions workers who got killed and injured.

Read more news from Mid-Day

After the Prestige Shantiniketan roof collapsed, investors want their money back.

Sources in the group said, after Shantiniketan came crashing down last month, investors in the project, most of them from Dubai, were opting out even though the management was desperately trying to hold them back.

"Apart from the slump in the realty market, this new development has put Prestige under great stress," said a source.

However, Irfan Razack, chairman and managing director of Prestige, said: "The Shantiniketan accident was an unfortunate development. By God's grace, we are marching ahead leaving it behind. Nobody is asking for money back from us. All the customers are with us at this difficult time."

What happened

Tower 'C' of Prestige Shanthiniketan, a township project on a 105-acre campus in Whitefield, crashed on October 23. With the roof of the fifteenth floor leaning, all the fourteen floors of a portion of the tower collapsed.

Sources say there were 17 Dubai-based investors for the project with a major stake an average investment of Rs 30 crore from each. The total cost of the project was estimated around Rs 500 crore and the group was not in a position to return the money owing to the liquidity crunch.

The management has been holding investors' meetings several times but has failed to convince them to stay on so far.

"The options they put before us were not workable," said an investor requesting anonymity. "We will not accept anything other than our money back."

The group is understood to have offered the investors land at Chikkaballapur near the international airport, but the offer was rejected as the land was under litigation.

The market value of the land is around Rs 1.20 crore per acre, but the group is said to have offered it to investors at the rate of Rs 40 lakh per acre. Investors have not agreed.

"Knowing it is disputed property, how can we buy it?" asked the investor. "We have insisted that our money must be returned. Now, they have to take a decision."

Banks including HSBC and ICICI who had paid advance for office space also want their money back.

Zafaer Sait, vice-president, business development, Prestige, denied the news saying it was a rumour. "Like others in the industry, Prestige is also facing problems. I don't think the Shantiniketan case has any impact on our business."

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Prestige Shantiniketan construction accident

There was a second accident at Prestige Shantiniketan site within two weeks. As per the initial report it appears that portion of excavated earth caved in while constructing parking lot. It's unfortunate that poor construction labors got killed in this accident. I'm not sure how Prestige resumed the construction without even closing first accident investigation from BBMP.

If there were no permissions to resume the construction then Prestige Group is in serious trouble now and I empathize with the owners who had invested their hard earned money for a dream apartment which may now get indefinitely delayed due to legal tangles. Though there is a slight relief for the owners that this accident was not due to sloppy constructions in towers or slabs but it's just that loose mud caved in.

Whether it was an accident or lapse in the construction process we will come to know after investigation but one thing is sure that both Prestige Group and Owners will have a tough time ahead.

Read below for more news from media.
Source - The Hindu

Bangalore: In a reprise of a tragedy, two labourers died and one was injured at the Prestige- Shantiniketan Township at Whitefield on Monday when mud caved in on them. The police identified the dead as Prasannajit Behara (25) and Sanjeev Dutta (28) and the injured as Kailash Paswan (25).

It was only six weeks ago that a worker died and several were injured when part of the same building collapsed, leading to exhaustive excavation to retrieve the body.

The police said that Monday’s incident occurred at around 5.30 p.m. when construction on the approach to the underground parking lot was going on. It is said that a bulldozer was being used to clear the way when the excavated mud suddenly collapsed, interring Prasannajit Behara and Sanjeev Dutta. The two died of asphyxiation.

Kailash Paswan and others, who were working on the centring near the accident area, rushed to move to safe grounds. In the scramble, Mr. Paswan fell into the pit and injured himself. He was rushed to a hospital.

Commissioner of Police Shankar Bidari, who visited the spot, said: “It seems to be a case of negligence on the part of the construction company and builder. Prima facie, the accident has occurred due to lack of supervision.” A case was registered under Sections 304, 304A and 338 of the Indian Penal Code. Seven people, including vice-president of Prestige Group Ashok Saproo and general manager and project in-charge Muralidhar Rao, were arrested and were later produced before a magistrate.

Prestige Group was not available for comments.

The work at the township was taken up only after the Bangalore Development Authority (BDA) gave the go-ahead to the group. On October 23, the 15-storeyed “C” Tower in the structure collapsed, killing one and injuring four workers.

Upa Lokayukta G. Patri Basavana Goud, who had visited the spot then, ordered an inquiry and held officials of the Police Department, Labour Department, Bruhat Bangalore Mahanagara Palike (BBMP) and BDA guilty of “serious dereliction of duty.”

Read more news Deccan Herald

Two construction workers were buried alive and an equal number injured as earth caved on them at the Prestige Shantiniketan, a township project in Whitefield, on Monday evening.

Sanjeev Dutta (18) and Pranjit Behra (29) from Midnapore in West Bengal were killed while Kailash Paswan and Jagadish have been admitted to a nearby private hospital with injuries.


According to eyewitness, more than half-a-dozen workers were engaged in centring works for the construction of the sub-way and parking lots, connecting various residential complexes. Pits, 18 feet in depth, had been dug up for the works. When the workers were busy in the civil works, a portion of the excavated earth caved in.
A worker had died when a portion of the 16-storyed commercial complex under construction collapsed at the same site on Oct 23.

Heera Nayak, BBMP Joint Commissioner who visited the site said, “we had not given permission to start the works. They have violated the rules. It's a serious offense and we will lodge a complaint.”

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Quality and Safety of Apartment

Prestige Shantiniketan Commercial "C" tower which was under construction collapsed. Whether this building collapse was due to sloppy construction or it was an accident or combination of both we will come to know after government investigation. But this incidence is an eye opener for me or whoever has plans to live in a high rise tower.
I am traveling in a local train, reading newspaper and going to office but I am not able to concentrate on the news that Sensex is down by 1000+ points. There are volley of questions shooting my mind - What should be my next step? What measures should I take before occupying the apartment? The focus has shifted from Children Bed Room Theme and Interior Design to safety.

In next few weeks I will focus my energy on following topics.

1. What are the Quality standards and testing process available in market for construction Industry?
2. What are Quality standards and Testing process followed by Brigade Metropolis?
3. If a Builder claims they are ISO 9001 certified, What does it mean?
4. Who does the testing in Brigade Metropolis? Internal Audit or External Audit?
5. If Internal audit then why not External audit?
6. What was the testing results from Internal/External audit?
7. Can the audit results be shared with the investors? That's again a big question mark whether builder will be transparent enough to provide correct information.
   
8. What are the action taken by Brigade Metropolis from the Internal/External audit?
9. What type of audits are done by Government Authority before issuing occupancy certificate? Any examples where occupancy certificate was denied due to violations? What happened next?
10. What happens if there is a major flaw in the design or construction? Will investors have to accept because building has been constructed or Builder will go back to their design workshop and rectify the problem? Any case study where it has happened?
11. What are the insurance policy available for Fire, Earthquake, any natural disasters or an mankind accident?
12. Which is the nearest Fire Station in Whitefield? Does this Fire Station have the capability to fight fire at 20th Floor?
13. Does every apartment has Fire alerts? Fire Alarm, Water Sprinkler etc
14. What measures should I take for Fire? May be install Fire Extinguisher. Just having Fire Extinguisher may not be sufficient, I also need to learn how to use it.
    

I thought there might be just few questions but this list is growing. I am about to reach office but my journey doesn't stops. I have to research and get answers for so many important open questions. With my background in Software, I may not be competent enough to get all the answers but I am sure readers of my site who may be proficient will help us in the "Discover Safety and Quality Process" and leave expert advice in the comments section.

Stay tuned for more info on above topics.

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