Hindustan Construction Company (HCC) on Thursday reported a net profit of Rs 234 crore for the October-December quarter of 2019-20 against Rs 9.91 crore in the year-ago period mainly on the back of 'write-back' of Rs 331 crore of provisions.
Total turnover in the quarter under review was at Rs 1,075 crore against Rs 1,102 crore in the year-ago period.
The company also announced a plan to reduce its debt by Rs 2,100 crore.
"The company reported a net profit of Rs 234 crore in Q3 FY20 mainly on write-back of Rs 331 crore of provisions taken in Q4 FY19. On January 10, 2020, the company's lenders initiated a carve-out of about Rs 2,100 crore of debt to a third-party-controlled SPV along with certain arbitration awards and claims in a move that will significantly de-leverage the company and address its asset-liability mismatch," the company said in a statement.
Pursuant to the plan, HCC will have no debt servicing obligations for the next 32 months and interest costs will reduce by at least Rs 240 crore per annum, the statement said.
Loss on completion of the debt asset carve-out transaction is expected to be at least as large as the write-back taken during this quarter, subject to statutory audit, it said adding the transaction will be in the nature of a slump sale and is subject to lenders' final approvals.
Lenders are targeting transaction closure by March 31, 2020.
Arjun Dhawan, Director & Group Chief Executive Officer, said, "We are endeavouring to permanently address HCC's asset-liability mismatch through the debt carve-out initiative plan and via conciliation efforts with our clients. The sale of non-core assets also remains a high priority for the company.''
Order backlog stood at Rs 16,142 crore as on December 31, 2019.
The company said during the quarter the Supreme Court permitted work on the Coastal Road Project in Mumbai to resume.
HCC's share of work in the project is Rs 1,169 crore.
In October 2019, HCC marked the completion of its sixth DMRC contract with the inauguration of the Dwarka Najafgarh Corridor in Delhi.