Affordable Housing Projects Will Help Revive Lavasa, Says HCC’s Ajit Gulabchand

The government's push for low-cost or affordable housing will help revive Hindustan Construction Company Ltd.'s Lavasa project, chairman and managing director of the company told BloombergQuint in an interview. HCC is hoping that such projects will revive its real estate development unit.

The government gave affordable housing ‘infrastructure' status in Budget 2017. It also tweaked the area requirements that qualify as affordable housing. Finance Minister Arun Jaitley had announced in his Budget speech that for affordable housing, the carpet area will be counted rather than the built-up area, which includes the thickness of outer walls and the balcony. As a result, the size of houses qualified under affordable housing will go up.

Elaborating on the company's plans for a turnaround of Lavasa, Gulabchand said HCC's debt restructuring is underway after some delay. “One or two banks which were part of the decision took some time to join the restructuring. This should come to some conclusion quickly.” In addition, with a new Banking Regulation Act in the works, there will be a little more discipline to banking decisions which act as a catalyst for the sector, he added.

The company's standalone debt has come down from Rs 5,035 to Rs 43,93 crore. The major reduction in debt will come in the current year once another Rs 1,500 crore is received through arbitration awards, Gulabchand said. The Scheme for Sustainable Structuring of Stressed Assets (S4A) has increased the firm's capital, bringing down the debt-to-equity ratio to 1:1, he added.

Order Book Status

The current order book for HCC stands at Rs 20,000 crore and Gulabchand expects the order book to expand to at least Rs 25,000 crore this year.

The company is working on variety of projects including the Mumbai Metro, Delhi Metro, Bangalore Metro along with other projects in Jammu & Kashmir, North East and other parts of the country.

Staying Away From InvITs

HCC is not looking to raise funds through an infrastructure investment trust (InvIT) anytime soon. “The banks have given us enough converted loan into capital so not looking at it,” Ajit Gulabchand, chairman and managing director of the HCC Group told BloombergQuint in an interview.

Its peer IRB Infrastructure Ltd. on Wednesday launched the country's first initial public offering (IPO) for an InvIT to raise up to Rs 5,040 crore.