HCC gets Rs 2,000 crore lifeline from lenders

Ajit Gulabchand-promoted Hindustan Construction Company (HCC) has got a bank guarantee of Rs 2,000 crore from their consortium of lenders post the restructuring under the scheme for sustainable structuring of stressed assets (S4A). This will help HCC seek arbitration awards from the public sector undertakings such as NHAI and NHPC for losses the company suffered due to project delays.

Half of the bank guarantees will be used for HCC's working capital needs.

Praveen Sood, group chief financial officer (CFO), HCC, told DNA Money, "The additional bank guarantees are required to receive the arbitration award from the public sector undertakings. So Rs 1,000 crore will be used as a bank guarantee and the other Rs 1,000 crore will be used for our operations. We have an order book of Rs 20,390 crore and another Rs 3,000 crore in the pipeline."

Post announcing the company's results on May 5, HCC said subsequent to the Cabinet order on arbitration awards, HCC is in receipt of letters from government agencies for release of Rs 1,882 crore. Of these, Rs 380 crore has already been received and the balance Rs 1,502 crore is expected shortly, it said.

A senior banker of the consortium said, "Banks are confident about the company turning around. Already banks have gained as the share price has moved up from the time of the conversion and the order book of the company also gives us a good cushion."

HCC is the first company where the RBI's restructuring scheme S4A was implemented. Under the scheme which got implemented from January 6, the company got its Rs 5,300 crore of debt restructured under the scheme (of this, about Rs 200 crore is the interest accrued for six months when the S4A was being discussed).

About Rs 900 crore of the debt (25% of the debt) was converted into equity which allows lenders to hold 23% stake in the company. About Rs 500 crore has been converted into optionally convertible debentures which will come up for repayment after five years.

Of the total order book Rs 20,390 crore that grew 12.5% over the previous year, the maximum chunk is from transport sector at Rs 12,005 crore, followed by hydropower at Rs 4,419 crore, water and nuclear and special projects with Rs 2,073 crore and Rs 1,893 crore, respectively. In FY17, HCC won orders worth Rs 5,375 crore, which includes IRCON Tunnel in Jammu & Kashmir, safety tunnel for Indian Railways, part of Mumbai Metro civil works, etc.

...& ANALYSIS

• HCC said it has received letters from the government agencies for release of Rs 1,882 crorea
   
• Of these, Rs 380 crore has been received and the balance Rs 1,502 crore is expected shortly