Hindustan Construction heads for debt rejig

Cash flows under stress as Lavasa and some road projects have been stuck for over a year

The Rs 4,100-crore Ajit Gulabchand-controlled Hindustan Construction Company (HCC) is headed for corporate debt restructuring (CDR). It had a meeting with lenders on Friday to discuss its restructuring options.

The company had an overall debt of Rs 8,100 crore, including loans of Rs 4,100 crore for itself and Rs 3,000 crore for Lavasa Corporation, at the end of the third quarter.

It has a credit line of another Rs 3,000 crore for its five road projects. Of this, it had withdrawn around Rs 900 crore, said banking industry sources.

Since the Lavasa project and some of the road projects have been stuck for over a year, the company’s cash flows are under stress.

“The company’s cash flows are less than Rs 500 crore. As a result, there is no option but to go for CDR,” said banking officials, adding the company was leveraged five-six times of its net worth.

Bankers also added a consortium of over 10 banks, including state-run banks and private sector banks like ICICI Bank and Axis Bank, had lent to HCC. The next meeting of the company with lenders is expected early next week.

A company spokesperson said, “HCC as a prudent practice regularly engages with bankers to find long-term solutions, so that project execution does not suffer and growth is maintained.”

“Since HCC has a large set of bankers across India, sometimes it becomes necessary to hold all lenders’ meet to address the issues for finding solutions. HCC is focused on improving finances and shoring up balance sheet. The lenders’ meet and follow-up measures are geared in that direction,” the spokesperson added.