Got objection notice from IT dept for GTC land deal: HDIL

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Got objection notice from IT dept for GTC land deal: HDIL

Leading cigarettes producer Golden Tobacco Company (GTC) has called off its land deal worth Rs 70 crore with construction and development major Housing Development & Infrastructure Limited (HDIL). The deal has been called off on account of HDIL’s failure to pay the installment of Rs 30 crore.

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Leading cigarettes producer Golden Tobacco Company (GTC) has called off its land deal worth Rs 70 crore with construction and development major Housing Development & Infrastructure Limited (HDIL). The deal has been called off on account of HDIL's failure to pay the installment of Rs 30 crore. 

In an interview with CNBC-TV18, Sarang Wadhwan, Managing Director of HDIL, speaks about his outlook on it.

Here is a verbatim transcript of an exclusive interview with Sarang Wadhawan on CNBC-TV18. Also watch the accompanying video. 

Q: Can you confirm that this deal is off and what could be the reason? We believe that it's because the IT Department has given you a guideline not to pay. Can IT Department issue that guideline?

A: We have entered a memorandum of understanding (MoU) with Golden Tobacco Company GTC for their 4 acre property at Andheri Marol. That transaction was worth Rs 70 crore odd. When we did a due diligence on the property and remove the public notice, we received an objection from the IT department for recovery of dues from GTC approximately to the tune of Rs 600 crore. They have instructed us accordingly not to enter into any transaction with them further and if any payment has been made to withhold all payments henceforth. So that was one of the reasons why HDIL did not make the payment. Subsequently, GTC has informed us. End of the day we are abiding by the government, the regulators and we will see how that transaction goes.

Q: Is it routine for the IT department to slap a notice like this? These are two independent transactions after all. Where does that leave you? Do you forefeit those Rs 5 crore? Is this deal completely off due to this?

A: We will not forefeit Rs 5 crore. In the regular course of doing a due diligence on property, we do remove a public notice. While do that we receive objections from the IT or from any other government undertaking if there are any dues which are to be recovered from that entity. As far as the transaction goes, we will wait and watch how it pans out. We will not forefeit the deposit but at the end of the day we will recover that.

Q: Golden Tobacco is clearly saying that HDIL will forefeit that Rs 5 crore. If you are saying that you won't do that then in future is there a case of revising this deal because from the time that this deal was struck the prices have moved up?

A: There are conditions precedent to every MoU and agreement that the company enters into. In case of certain liabilities not discharged by the sellers, the agreement can be held accountable end of the day. We will take legal recourse and recover the money.

Q: What do you see as the next step? What do you see as the end game of this?

A: As soon as we receive a clearance from the IT department to go ahead with the transaction, we will go ahead with it. We are still interested in the property at whatever MoU price that we have signed. In case GTC is able to clear off their dues, we will take the transaction ahead.