Real estate developer Emaar MGF Land’s third attempt to raise Rs 1,600 crore through an initial share sale offer has hit a regulatory hurdle. Even after seven months, the Securities and Exchange Board of India has not given nod to Emaar MGF for its initial public offering as the New Delhi-based firm’s role came under scanner for alleged irregularities in developing the Commonwealth Games village, according to persons with direct knowledge of the matter. The joint venture between Indian lender MGF and Dubai’s Emaar Properties had filed its draft red herring prospectus (DRHP) with the capital markets regulator on September 30, 2010.
The V K Shunglu committee, appointed by the Prime Minister to look into issues relating to organising and conduct of CWG held in Delhi last year, has come down heavily on Emaar MGF Construction Pvt Ltd, a unit of Emaar MGF Land. In its second report released last month, the committee has indicted Emaar MGF for failing to meet its contractual obligations, receiving undue financial gains and making unauthorised payments, among other things. The committee headed by the former Comptroller and Auditor General of India (CAG) estimated the total financial favours/loss to the Delhi Development Authority (DDA) by a series of decision taken to support Emaar MGF to as much as Rs 1,244.50 crore.
The committee recommended that the Government of India or DDA may take appropriate action against Emaar MGF for knowingly supplying incorrect information and for its various acts of omission and commission. Separate e-mail queries sent to the spokespersons of Emaar MGF and Sebi on the issue remained unanswered. Among the risk factors in its DRHP Emaar MGF had said concerns regarding the readiness and habitability of the CWG village could expose the company to reputation and financial risk.
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