HCC lands Rs 2,000 cr NHAI windfall

Two before its board meeting, infrastructure major Hindustan Construction Company (HCC) announced it will receive Rs 2,000 crore as arbitration award payment from its projects with National Hydroelectric Power Corporation Ltd (NHPC) and National Highways Authority of India (NHAI) in the next few weeks.

HCC claims to have received communication from NHAI and NHPC intimating it about the award payment. “Niti Aayog has given Standard Operating Procedures for release of payment for timely implementation. HCC has been asked to reconcile the award amount within seven days and thereafter open escrow account and submit bank guarantees within 30 days for recovering the amount,” read the statement by the company.

It should take around four to six weeks for HCC to receive Rs 2,000 crore. Company officials refused to share the project details.

As on September 30, the company has arbitration awards for a total of Rs 3,427 crore. Additional claims worth around Rs 4,173 crore are in various stages of arbitration process. “About 70% of these cases were at the initial stage of arbitration process and the company has already given consent to transfer these cases under new arbitration act, which mandates the decision within 12 months,” said the release.

In September this year, the Cabinet Committee on Economic Affairs chaired by Prime Minister Narendra Modi had given a nod to proposal of NITI Aayog for settlement of disputes between contractors or infrasturcture companies and government departments. As per the new norms, 75% of the arbitration amount will be paid to the company.

Meanwhile, HCC’s board meeting will be held on Friday, wherein the agenda is to consider issuing of equity shares and optionally convertible debentures to lenders under Reserve Bank of India’s scheme for Sustainable Structuring of Stressed Assets (S4A). The same is likely to be put up before the Extraordinary General Meeting to seek shareholders’ approval.

In a BSE filing, the company also shared that the board would look at offering shares to its lenders representing 24.44% of the expanded capital apart from preferential debentures.

The company, which has a debt of around Rs 5,107 crore, will be bifurcated into two – sustainable and unsustainable of Rs 2,681 crore and Rs 2,426 crore, respectively.

HCC is the first company to quality under the S4A scheme. Consulting firm EY had suggested to restructure the debt and in July the joint lender’s forum led by ICICI Bank gave a nod for the same.