Orbit Corporation, which had defaulted to some lenders, has said dues to the tune of Rs 528 crore are in the process of being restructured. This includes an amount of Rs 87 crore due to LIC Housing Finance since 2013. Having borrowed at anywhere between 16-26%, Orbit’s overdue interest bill at the end of March was Rs 262 crore.
The real estate firm, which operates primarily in the luxury segment, posted losses of Rs 102 crore in FY15, which widened to Rs 157 crore for the six months to September. The firm’s total debt at the end of March, 2015 was Rs 950 crore whereas net sales were just Rs 135 crore. The company’s share price on the BSE traded at a low of Rs 7 apiece.
Major lenders to the company include State Bank of India (SBI), Union Bank of India (UBI), LIC, Axis Bank, LIC Housing Finance and Edelweiss. Barring Axis Bank, which it must repay next year, the company has defaulted on payments to all other lenders. In late 2013, LIC Housing announced it was taking possession of the firm’s Andheri project in lieu of the dues, bringing to light the financial crisis at the firm. FE could not immediately verify the updated status of the amounts that are in various stages of restructuring.
On August 6, FE had reported that in order to recover its dues, a consortium led by SBI demanded a one-time settlement from the company. Orbit’s CEO and managing director, Pujit Aggarwal, had told FE he was “open to clearing dues as a one-time payment with SBI, UBI and LIC HF so long as there was a clear offer on the table”, indicating there was some disagreement between him and the banks on negotiations over the one-time payment. Aggarwal, however, had refused to divulge any details about the proposal he had submitted to SBI.
The company has been badly hit by the slump in the luxury residential segment, which is its mainstay. Data from PropEquity shows unsold inventory of over 6,000 apartments in Mumbai priced over Rs 5 crore. South Mumbai, which houses all but one of Orbit’s projects, has been among the worst hit areas. In the past six months, the company has managed to report barely Rs 5 crore in sales; its best performance in the last two years was in Q2FY15 when it recorded sales of Rs 40 crore, translating into sales of fewer than 10 apartments.
With the outlook for the property sector still negative, chances of the firm’s prospects recovering soon appear. In September, ratings agency Moody’s observed that “property developers will continue to face challenging operating environment over the next 12 months — including weak cash flows, flat sales and stagnant prices.” A November report published by CRISIL noted t the combined debt of 25 real estate companies of Rs 30,000 crore faces a refinancing risk over the medium term.
One lender, who did not wish to be identified, told FE that come March, Orbit’s troubles will become bigger as banks and financial instututions pursue recoveries more aggressively towards the close of the financial year. Banks might scout for a partner for some of the firm’s projects. Developers who are financially weak but have marquee assets have been willing to enetr into joint development agreements (JDA). Companies such as DB Realty, Hubtown and Sumer Group joined hands with Radius Developers earlier this year to get projects off the ground.
* Having borrowed at anywhere between 16-26%, Orbit’s overdue interest bill at the end of March was Rs 262 crore
* The real estate firm posted losses of R102 crore in FY15, which widened to R157 crore for the six months to September