HCC has issued pink slips to 70-80 employees and is in the process of terminating services of another 70-odd people in the coming days
Hindustan Construction Co (HCC) has started laying off employees in the company.
The infrastructure major, which reported Rs 19.7 crore net loss in April-June quarter, is not only reducing headcount in its engineering, procurement and construction (EPC) business but also in the private hill city subsidiary Lavasa Corp.
HCC has already issued pink slips to 70-80 employees (between HCC and Lavasa) earlier last week and is in the process of terminating services of another 70-odd people in the coming days, according to multiple sources familiar with the development.
When contacted by DNA Money, the HCC spokesperson chose not to respond to queries seeking comments / information. Instead, the spokesperson threatened with a legal action for publishing any story on HCC / Lavasa Corp.
"You can choose to publish whatever you like based on your normally incorrect information. We on our part will now take legal action against any defamatory article published against us in the future," the HCC spokesperson said in an email response.
According to HCC's 2017-18 annual report (issued in June 2018), the company had a total of 1,581 permanent employees on rolls as on March 31, 2018. Taking this number as the base, in all 150-odd out of the total 1,581 employees are likely to lose their jobs – nearly 10% of the infrastructure major's total work force.
As per HCC's annual report, its employee cost at Rs 438 crore for fiscal 2018 was up 10.32%. With this move, it could possibly be looking to reduce employee overhead by replacing high-cost employees.
The employee rationalisation exercise has been initiated by HCC a couple of quarters after the company appointed Amit Uplenchwar as the new chief executive officer (CEO) of its engineering and construction business in January 2018. Uplenchwar joined HCC from Adani Ports and SEZ Group replacing Arun Karambelkar, who retired from the company on completion of his 26 year long tenure.
"Among employees who have been asked to leave are high-cost executives with salaries of Rs 3-4 crore annually, employees at sites with no-work or stalled projects, non-performing personnel and those from departments where employee strength can be optimised," said one of the sources.
Additionally, there is a buzz in the company circles that Praveen Sood, CEO of Lavasa Corp and group chief financial officer (CFO) at HCC Group of companies, could be heading out. "Word is that Sood is retiring from the company, in most likelihood," said one of the sources.
DNA Money, however, could not independently verify it.
HCC's private hill city project Lavasa Corp has been fighting for survival as financial stress on the company continues. Ajit Gulabchand, chairman and managing director, HCC, in his chairman's letter published in the 2017-18 annual report, had said that lack of cooperation among lenders, financial stress in the banking system and constantly changing banking regulations has made financial resolution difficult and tardy. "Our focus remains on a resolution in the interest of all stakeholders, and particularly our customers," Gulabchand wrote in the chairman's note.
The HCC management seems to be running out of time though as Lavasa Corp continues to bleed. According to HCC's analyst presentation dated August 8, 2018, Lavasa has submitted its own resolution plan to lenders in line with the Reserve Bank of India's February 12, 2018 circular. "The plan involves substantial recovery by the lenders given the intrinsic value of Lavasa land," HCC said in the analyst presentation.
Sources told DNA Money that HCC may be in the advanced stages of prepping Lavasa Corp to approach the National Company Law Tribunal (NCLT) in the coming weeks and that banking executives (from the consortium of lenders) could onboard Lavasa Corp to pursue the financial resolution process.
This is because on the operational front the ground scenario at Lavasa looks very dismal, sources said. Despite 1% increase (year on year) in footfall at around 2,12,000 for the April to June quarter of fiscal 2019, tourism revenue declined 34% while retail revenue was down 35% over same period last year. Overall, average occupancy at hotels declined 410 basis points year on year and hospitality revenues declined 15% on-year at Rs 8.5 crore.
TIME TO RETRENCH
- HCC has issued pink slips to 70-80 employees and is in the process of terminating services of another 70-odd people in the coming days
- There is a buzz in the company circles that Praveen Sood, CEO of Lavasa Corp and group CFO at HCC Group of companies, could be heading out
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When contacted by DNA Money, the HCC spokesperson chose not to respond to queries seeking comments / information. Instead, the spokesperson threatened with a legal action for publishing any story on HCC / Lavasa Corp.
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