HCC reports Rs 1,525 cr loss in July-September on impairment charge for Lavasa Corp; total income falls to Rs 994.40 cr
HCC approved a rights issue of up to Rs 500 crore to strengthen company's financial profile and to refocus its efforts on its core construction and engineering business
New Delhi: Hindustan Construction Company (HCC) Ltd Thursday posted a loss of Rs 1,525.23 crore for the July-September quarter, hit by an exceptional loss of Rs 2,011.13 crore due to impairment charges related to Lavasa Corporation.
The company had reported a profit of Rs 11.60 crore during the same quarter a year ago, the company said in BSE filing.
"HCC has written off its entire investment of Rs 1,046 crore in Lavasa Corporation as a matter of prudence pursuant to the admission of its 68.7 percent owned subsidiary into NCLT under IBC," HCC said in a statement.
A wholly-owned subsidiary, HCC Real Estate Limited (HREL), holds 68.7 percent stake in Lavasa Corporation.
The National Company Law Tribunal (NCLT) Mumbai on 30 August admitted an application filed against Lavasa Corporation Limited (LCL) by an operational creditor and initiated the resolution process under the Insolvency and Bankruptcy Code (IBC).
Accordingly, the company has impaired its exposure in both the companies, HCC said.
Besides writing off investments and financial assets of Rs 1,265.19 crore in the two group companies, HCC has also taken over liabilities aggregating Rs 745.94 crore pursuant to settlement agreements with the lenders of LCL, the BSE filing said.
During the said quarter, the company said, its total income fell to Rs 994.40 crore from Rs 1,031.93 crore in July-September of 2017-18 fiscal.
However, its total expenses were lower at Rs 988.78 crore as against Rs 1,014.43 crore in the year-ago-quarter.
The company emphasised that the write-off has no impact on HCC cash flows.
HCC has fully accounted for all of its contingent liability obligations given to Lavasa lenders, including corporate guarantees and put options, it mentioned.
"The sum total impact of all write-offs in the quarter, adjusted for tax is Rs 1,531 crore. Having comprehensively accounted for its entire exposure to Lavasa, HCC expects no further impact on account of its erstwhile subsidiary."
HCC's Board of Directors also approved a rights issue of up to Rs 500 crore to strengthen the company's financial profile and to refocus its efforts on its core engineering and construction business.
Arjun Dhawan, Director and Group Chief Executive Officer (CEO) said, "It was a busy quarter which we sold a material BOT (build operate and transfer) asset, ring-fenced HCC from the potentially adverse consequences of Lavasa's insolvency, kick-started our rights issue process, drew down our fresh operational bank guarantee limits, further deleveraged, and won a marquee contract."
The company's gross debt reduced to Rs 3,616 crore as of September 30, 2018, from Rs.4,072 crore as on September 30, 2017. HCC's order book currently stands at Rs 19,114 crore, the company said.
The company, in a joint venture with Hyundai Development Corporation (HDC), has been awarded a Rs 2,126 crore contract by the Municipal Corporation of Greater Mumbai (MCGM) to build the Coastal Road, it noted.
Shares of the company Thursday ended 3.98 percent up at Rs 12.79 apiece on the BSE.
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