Lavasa write-off leads HCC to ₹1,525-cr loss

Our Bureau Mumbai | Updated on November 01, 2018 Published on November 01, 2018

Mumbai-headquartered construction major Hindustan Construction Company Ltd (HCC) on Thursday reported a net loss of ₹1,525 crore for Q2 FY19, against a net profit of ₹11 crore in Q2 FY18, after it had written off its entire investments in the Lavasa project which was earlier this year taken to NCLT by the operational creditors.

HCC, according to its regulatory filings, has written of its exposure to Lavasa Corporation Ltd (LCL) and HCC Real Estate Ltd, a wholly-owned subsidiary which holds 68.7 per cent in LCL, resulting in an exceptional item of ₹2,011 crore.

“HCC has written off its entire investment of ₹1,046 cr in Lavasa Corporation as a matter of prudence pursuant to the admission of its 68.7 per cent-owned subsidiary into NCLT under IBC. The write-off has no impact on HCC’s cashflows. Furthermore, HCC has fully accounted for all of its contingent liability obligations given to Lavasa lenders, including Corporate Guarantees and Put options,” the company said .

It added that a substantial majority of these obligations, amounting to ₹943 crore, has been restructured for ₹514 crore at benign, non-cash interest rates, repayable at the end of March 2023, thereby resulting in immediate savings to the company.

“The sum total impact of all write-offs in the quarter, adjusted for tax, is ₹1,531 crore. Having comprehensively accounted for its entire exposure to Lavasa, HCC expects no further impact on account of its erstwhile subsidiary,” HCC said.

Order-book improves

Despite a financial crunch driven by uncertainties over the insolvency resolution process of Lavasa, as well as large debt, HCC managed to secure new orders, taking its total order-book to ₹19,114 crore, it added.

HCC has also managed to reduce its debt to ₹3,616 crore as of September 30, 2018, from ₹4,072 crore as on September 30, 2017, after divesting entire stake in Farakka-Raiganj Highways to Singapore-based Cube Highways and Infrastructure II Pte for ₹372 crore.

Published on November 01, 2018
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