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Media Release: RNA Corp teaches Exotic Arithmetic to Axis Bank! "One-two-ka-four, four-two-ka-one, my name is Lakhan"

22nd June, 2016: When builder Anil Aggarwal's Skyline Construction Co approached Axis Bank for a project loan for RNA Exotica in 2011, the bankers forgot simple arithmetic. On two separate instances -- in 2011 and in 2013 -- Axis Bank's SME loans division gave loans of Rs 75 crore and Rs 100 crore against hugely inflated mortgages of floor space in RNA Exotica. The flat size was inflated by 500 to 700 square feet per flat, and the number of unsold flats mortgaged was inflated by a couple of hundred flats in 2013. Anil Aggarwal, like Anil Kapoor (you know, the chap who sang, "One-two-ka-four, four-two-ka-one, my name is Lakhan") sang a seductive song to Axis Bank executives, who were more than willing to be seduced.

The late Anil Aggarwal's version of one-two-ka-four sounds like this: "770 square feet flat ka 1299 and 979 sq. ft. ka 1650... My name is RNA Corp! Jadoogar Anil Agarwal said 168 sold flats in 2011, but 66 sold flats in 2013. Numbers mein kya rakha hai? Now gimme your money, sweetheart."  The sweethearts at Axis Bank gave the builder a Rs 75 cr line of credit in March 2011, and beefed it up to Rs 100 crore in March 2013, even as the value of the collateral fell sharply!

RNA Exotica's Flat Sizes are on Steroids:

  • Skyline Construction Co's registered mortgage deeds in 2011 (and 2013) based on inflated and unverifiable figures, viz. 1299, 1650 and 1699 sq. ft. The correct sizes i.e. carpet areas, viz 770 and 979 sq. ft. are readily available through the flats' sale agreements.
  • The sale deed of flat no. D-1903 booked by actor Arif Zakaria shows 979 sq. ft. whereas the mortgage deed shows 1650 sq. ft. So, RNA Corp has represented to Axis Bank that this flat is 671 sq. ft. larger than its actual carpet area! And Axis Bank has unquestioningly accepted this figure as a basis for its mortgage!

This raises the question whether Axis Bank has double-standards – one for people like you and me, and another for people like Anil Aggarwal. Would Axis Bank have sanctioned a loan against our flats if you and I cited Super Built Up area instead of the carpet area?

Axis Bank loan was Supersized while RNA Exotica was Downsized:

  • RNA's Skyline Construction Co.'s March 2011 loan was of Rs 75 crore. In March 2013, Skyline prepaid the RNA Exotica project loan and got the mortgage released, and immediately took a fresh loan of Rs 100 crore. Unsold flats of RNA Exotica were mortgaged to Axis Bank. The 2011 mortgage deed shows the number of sold flats as 168 (2,41,350 sq. ft.), with a table of flat-buyers' names and flat numbers. The 2013 mortgage deed claims that the number of sold flats supposedly dropped down to 66 (i.e. 94,951 sq. ft.). How? Did Skyline sales staff spend two years buying back over 100 flats from investors, instead of selling additional flats? There is no table of sold and unsold flats in the March 2013 mortgage deed.
  • Why this reduction in the number of sold flats? Because RNA Corp, which had gone to town in 2010 claiming that RNA Exotica would be a 48-storey tower, (i.e. 10 floors podium parking, one floor E-deck, plus 37 upper floors) was not getting MMRDA's permission for building that many floors.
  • The March 2011 mortgage deed is based on calcuations of 30 upper floors (i.e. 459 flats, 16 flats per floor). In March 2013, there is reduction of 35 flats. That means roughly two floors less, bringing the total to about 28 upper floors. But is that final? NO!
  • According to a source at MMRDA, RNA Corp in June 2016 has permission to build only 21 upper floors. Frantic efforts are being made by the builder to get this raised to 25 upper floors. Even if such efforts succeed, further reduction of 48 flats will happen – i.e. a total reduction of about 80 flats. The top floor will be 36th floor (i.e. 10+1+25).
  • The falling expectations show in the sale agreements. Whereas Kushan Pritish Nandy's sale agreement registered in October 2014 said 30 upper floors, Arif Zakaria's sale agreement in August 2015 mentioned 25 upper floors!

One two ka four 1

Why Financial Jugglery was done:

In 2013, Anil Aggarwal's big problem was: How to get a higher loan amount sanctioned from Axis Bank against a much smaller mortgage? The solution was: by reducing the number of sold flats, the "stock" of mortgagable unsold flats would appear higher. (So, what is the real number of sold flats? My guesstimate is: if 168 flats were already sold in March 2011, then 100 more flats in the next 24 months @ four flats per month. So, 268 sold flats were falsely declared as 66 flats. If each flat is valued at Rs 1.5 cr on average, the property mortgaged to Axis Bank was worth Rs 300 cr less than claimed!)

If the building is of only 36 floors including podium, what will happen to flats such as these where sale agreements have been registered for flats on the 40th floor etc? Will the investors be compensated by RNA Corp for not delivering of the promised flats after paying money and waiting for several years?

All this financial jugglery for downplaying the risk of RNA Exotica becoming a Stressed Asset! RNA Corp has defaulted on smaller loans from Bank of India and State Bank of India. This auction notice says that RNA Corporate Park defaulted on SBI for Rs 61.50 crore, for which mortgaged land parcels in Palghar district will be auctioned. And this letter from Bank Of India to the secretary of RNA Royal Park, Kandivali, tells a similar story of default and bank recovery proceedings.

SBI is struggling to recover an amount of Rs 61.5 cr by auctioning land plots that turned out to be under CRZ, and therefore valued at a fraction of the original projected values. Will the one-two-ka-four loan transaction of RNA Exotica and Axis Bank have a similar ending? Wait and watch.

This story is based on inputs from RTI activist Sulaiman Bhimani 

(9323642081, sulaimanbhimani11@gmail.com).


Krishnaraj Rao



 Links of articles related to RNA Corp. Misdeeds



A guest post by Vijay Panjwani, Advocate Supreme Court of India from Gandhi Darshan, Delhi.

A beautiful cool sunny spring morning in the calm of Gandhi Ashram, Raj Ghat, Delhi can turn anyone into an environmentalist. It was 9.30 AM a full 30 minutes before start time. Taking the opportunity walked around in the vast open ground. In one corner is the Khadhi and Village Industries Commission [KVIC] North Zone Office with a compact Conference Hall. At another point is Indira Gandhi Open University [IGNOU] office and seminar rooms. The ground is surrounded by boards with poems from great poets and book extracts of well known authors. Faiz, Kedarnath Agrawal,Munshi Premchand are all over.

The seminar room was big and commodious for 200 Ganga activists, civil society leaders and swamis in all hues and shades of saffron clothing united in the goal of saving ganga river.

Most speakers emphasized that if ganga lives then only pollution issues would follow. The danger is to its very existence. There is widespread tunneling going on in the Himalayas coercing the river to change course. Seminarists want a stop to tinkering with the main current and the natural flow of the river to produce electricity. Electricity is necessary but other ways should be found to generate.
Interlinking of rivers came under critical discussion one speaker grand daughter of the Mahatma Gandhi Mrs Tara Bhattacharya questioned the wisdom of opposing a very sane project to reduce flood and drought conditions and demanded that someone should explain how it is harming the ecology. There was no response to a perfectly valid query.

The question of dangers to Ganga are connected with dangers to Himalayas. Some thought is needed on the efficacy of smaller dams and small dams. Why few large dams and not many smaller ones. These issues are to be explained anew through documentaries and short films and the internet by the I&B ministry. A small 50 seater permanent film theatre at Rajghat and Gandhi Darshan Complex would provide this information to tourists coming from all over India and abroad.

Like the Dandi March against salt tax the organizer Mrs Rama Rauta pitched for a similar agitation for clean air and water. It was on 12th March that the Mahatma launched the salt agitation for that reason each year at Gandhi Darshan the Save Ganga activists meet but with increasing frustration. The lament was that media ignores them, government is indifferent, public unaware, lack of funds, and local agencies only interested in starting treatment projects but deep into matters unrelated to regulating waste waters. A strong demand was made for declaring Uttarakhand a fragile eco-sensitive state. The ‘separation of river and sewer’ would help to reduce pollution load. It is also said that treated water to be put to other uses and not released in the river. Very laudable objects. Nothing new but definitely a reminder that alls not well in the Himalayas.

Admittedly PM is a busy man. In such a scenario it would be practical to appoint a vice-chairman in the Ganga Authority from amongst them. Businessman Rajneesh Mehra of A2Z group stressed on more sewage treatment plants but ignored the maintenance part. Most STPs on the Ganga banks are mal-functioning. There are many reasons and not just diversion and siphoning of funds.

‘Pay and pollute’ regime is promoted by an environmentalist like Padma Shree Miss Sunita Narain Director CSE an NGO registered by late Mr Anil Agarwal. Such a line is followed by CSE in permitting use of diesel combustion engine for passenger car/suv and other light vehicles. But such a policy overlooks the subsidized rates of diesel [for the rich] and the enormous amount of carbon emission into the atmosphere contributing to global warming and climate change. Such warming causes the Himalayan glaciers to melt more than acceptable summer standards.

The principle of ‘Pay & Pollute’ tilts in favour of the rich. It means if you have money you can pollute. This is what India is arguing against the developed west and Miss Sunita Narain supports it in international conferences in USA and other countries. Is there a contradiction when CSE says passenger car diesel engines should pay Rs 80,000 more as a one time carbon tax ? Those who cannot afford to pay that excess over normal price would be deprived of use of subsidized diesel. Diesel in India is subsidized to help the small and marginal farmer and also the goods transport sector. The subsidy was never meant for Sports Utility Vehicles [SUV]. SUV is usually a tall four-wheel drive heavy bodied luxury 8 seater with high ground clearance and costs around Rs 1.7 million [17 lakhs]. Followwing its success now two-wheel drive SUVs are also available and many more would be introduced this year. Respectable Tata group has surrendered to market forces. It is mass producing diesel cars for every pocket starting with 1.25 lac rupee Nano mini [wef july 2012].

Captains of industry have adopted corporate responsibility duties and one of them is to reduce and prevent future pollution load. Highly paid managers attend 5 star hotel [mid-day meal] luncheon meetings and discuss methodology of containing pollution levels. As a role model Sir Ratan Tata can simply stop manufacturing diesel car engines. The central government can issue a notification banning such manufacture and import. The Supreme Court would in all likelihood uphold the validity of such a notification.