Lavasa to seek 1-year moratorium on Rs1,070 crore debt

Lavasa Corporation, a unit of Hindustan Construction Company (HCC) that ran into environmental issues over its hill city project near Pune, is in discussions with its lenders for a one-year moratorium on principal repayment on debt of Rs1,065-1,070 crore, said president Rajgopal Nogja.

A formal approval for the same should come in a month, he said.
A consortium of 11 banks led by Union Bank of India had sanctioned Rs 1,200 crore in two phases in 2006 and 2008 to Lavasa.

“We have repaid principal of Rs130-135 crore. We are trying to get a moratorium of one year for the rest of the loan,” Nogja said on the sidelines of HCC’s analyst meet on Friday.

The banks are yet to disburse Rs324 crore of the sanctioned debt.
There is presently a moratorium of 18 months after every disbursement on principal repayment and then a repayment period of five years. The interest rate on the debt is 12.5-13%, Nogja said.

He said the repayment of Rs168 crore this fiscal and Rs350 crore in 2012-13 would be eased by the moratorium.

Lavasa’s Rs23,000 crore eponymous hill city project near Pune ran into rough weather last November when the Union Ministry of Environment & Forests (MoEF) asked Lavasa to halt construction at the site citing violations, because of which its Rs 2,000 crore initial public offering got delayed.

The matter has since been contested legally and the Bombay High Court last week reportedly called the MoEF order withdrawing clearances given to Lavasa “ambiguous” and asked the ministry and the state government to decide on the issue by November 16.

Lavasa has so far spent about Rs3,700 crore on the project, for which it has, besides the bank loan, raised Rs1,100 crore through bond issues.

An analyst with a domestic brokerage said the moratorium would be a welcome relief to Lavasa.

“That’ll help them see the next year through and get things back on track,” he said on condition of anonymity as he’s not supposed to talk to the media.

SS Mundra, executive director, Union Bank, said the bank is awaiting clarity from the government before taking a decision on the moratorium.   

HCC posted a standalone net loss of Rs40.2 crore in the July-September period compared to a net profit of Rs12.13 crore in the same period of last fiscal, primarily on account of increased interest costs.

Revenues fell Rs61 crore to Rs838 crore. HCC has an order backlog of Rs16,175 crore.