A builder may be losing more than 50% of its margin due to a delay of more than 3 years

We all know how tough it is on a buyer going through the period of delay in possession of a property. People not only loose money (EMI/Interest and Rent loss), this also has a far reaching impact on their health. But, a different aspect of this delay was revealed as part of an under-trial consumer case for a private builder in Greater Noida.

Parsvnath builder last month submitted its P&L sheet in response in front of state consumer forum for a case pertaining to its project called Parsvnath prestige. As per the response, the builder that initially anticipated 40% margin for the project, ended up with less than 20% margin overall due to delay amounting to more than 3-4 years. The increased construction cost, daily wages to labours/contractors, poor sale and higher interests for delayed payment to authorities concerned for approval, all laid to this depreciation of margins.

What however builder’s sheet also pointed out is the extent to which money is siphoned off from residential projects to meet other needs of the builder. Around 80% of the money from residential projects are being siphoned off soon after reasonably selling them off, to commercial  interests of the builder. As a result, project funds become unmanageable and insufficient which turns out to be a major cause for delay.

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It is after all a builder’s own mistakes that leads to delay to the project and its own loss eventually. However, the builder might have very well gained elsewhere due to the siphoned off money at initial stage. It is hence essential for buyers to always go with builders with good track record of timely delivery and to avoid builders with higher grade of interests in non-residential sectors. Logix, 3C are perfect examples of builders with multitude of interests that have delayed their projects beyond expectations.

Comments/Feedback invited.

Last updated: December 20, 2015 at 10:41 am

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