Hindustan Construction Co (HCC) on Thursday expressed its inability to give any time period to shareholders at its annual general meeting, for the resolution of its yet-to-be completed hill city, Lavasa. HCC CMD Ajit Gulabchand told shareholders that Lavasa’s current outstanding debt is Rs 6,500-7,000 crore. However, he declined to provide a timeframe on when the debt-laden project would be completed or even resume construction. “It is a stalled project. We are in talks with banks and potential investors to arrive at a resolution. I cannot say by when this process will be complete,” he said. Gulabchand confirmed shareholders’ comments that L&T Finance is one of the companies HCC has spoken with for a resolution. He also acknowledged a shareholder’s suggestion proposing the sale of individual properties.
Earlier, in an exchange filing in May this year, the company said Lavasa defaulted on dues payable to bondholders and delayed repayment to other creditors, including banks. HCC has invested Rs 943 crore of its own equity in Lavasa. The project was conceived in 2000 as India’s first private hill city with five different towns proposed to be developed across 25,000 acres, on the lines of private developments in the US and elsewhere in the world. Since it was conceived, the project has faced policy hurdles as well as alleged wrong-doing by activist groups. The delays and setbacks marred development, bringing construction work to a halt, leading investors to seek a refund and compensation.
Among the company’s lenders are Union Bank of India, Punjab National Bank, Corporation Bank, UCO Bank, Canara Bank, Oriental Bank of Commerce, The Karnataka Bank, Bank of India and Bank of Baroda. Lavasa had also issued non-convertible debentures to other lenders. Lavasa reported a net loss of Rs 682 crore for FY18, against a loss of Rs 166 crore a year earlier. Besides, the consolidated net loss of its parent HCC widened to Rs 1,090 crore in FY18 against a net loss of Rs 983 crore a year ago.
Earlier this year, the firm’s auditors raised concerns over Lavasa’s ability to continue as a going concern. At that time, the stock had plunged to its lowest level in more than two years. The auditors said the net worth of Lavasa, its subsidiaries, joint ventures and associates has been “significantly eroded”; most of the entities have incurred losses or do not have any operations during the year ended March 2018, the auditors said. The stock closed down 1.3% at Rs 11.84, on the Bombay Stock Exchange (BSE) on Thursday.