Even as Hindustan Construction Company (HCC) continues to make annual losses, it has filed an application with the ministry of corporate affairs, requesting an approval for remuneration for its chairman and managing director (CMD) Ajit Gulabchand far more than what is specified under the Companies Act.
As per HCC’s annual report for the year 2017-18, the company has filed an application requesting the ministry to review the amount it had approved. While the ministry had approved `1.92 crore for 2014 and `1.21 crore for 2015, the company is requesting approval to pay out Rs 10.66 crore for each of the two years.
In its annual report, the company said pending receipt of the approvals, an aggregate of Rs 18.19 crore is being held in trust by the CMD. Moreover, for 2015 too, the company has provided for a remuneration of `10.66 crore and has made an application to the ministry, seeking its approval since the amount is in excess of the limits specified under Schedule V to the Companies Act.
Under Schedule V of the Companies Act, the government has defined the monetary limits for remuneration beyond which approval of the central government is necessary. These limits, based on the capital of the company, are applicable to all loss-making firms and those with inadequate profits.
In FY14, the company’s consolidated losses stood at Rs 277.4 crore. In FY15, this narrowed to Rs 159 crore but widened in FY16 to Rs 449.7 crore. In the year just concluded (FY18), HCC reported a consolidated loss of `1,090 crore. The auditors also raised concerns over the company’s subsidiary, Lavasa’s ability to continue as a going concern.
At the company’s annual general meeting held on July 12, Gulabchand informed shareholders that Lavasa’s current outstanding debt is about `6,500-7,000 crore. He also declined to provide a time-frame on when the debt-laden project would be completed or even be able to resume construction.
In a stock exchange filing in May this year, the company had said Lavasa defaulted on dues payable to bondholders and delayed repayment to other creditors, including banks.