Mumbai: Hindustan Construction Company (HCC) has put a proposed initial public offer (IPO) for its ambitious Lavasa project on the back-burner for a third time, citing bad market conditions in the realty sector.
The Ajit Gulabchand-led company had originally planned to hit the market with a Rs 2,000-crore IPO in September 2010, but could not proceed with the issue due to unfavourable market conditions.
Then it scaled down the share sale size to Rs 750 crore in 2014, but again failed to complete the process and had said it would tap the primary market by last September.
“Given the condition of the real estate sector, we feel that it is not the right time to file for an IPO and we will wait for the right time. When the sector gets the right momentum we will move the Sebi again or do something about it. We are rethinking over our plan,” HCC Group chief financial officer Praveen Sood told PTI.
He pointed out that approval of market regulator Securities and Exchange Board of India (Sebi) for the IPO of Lavasa Corporation lapsed last November and since the market was not conducive, “we did not proceed then”. He also said that there were hardly any issues from the realty sector in the past year.
Lavasa had initially filed its DRHP in September 2010 to raise Rs 2,000 crore, and had received the Sebi approvals in November 2010. But adverse market conditions forced it to defer the plan. In 2014, however, it again filed moved the Sebi with a smaller issue and planned to raise Rs 750 crore through IPO.
As the second attempt also failed, the company managed to raise Rs 400 crore through a QIP (qualified institutional placement) issue in April last year. HCC, till date, has completed 1,200 residential units in the gated Lavasa City project. In addition, work on 1.5 million square feet of residential, commercial and social development is underway in Dasve and 1 million square feet of residential development is underway in Mugaon with the project.
The HCC Group currently holds a 67.98 per cent stake in Lavasa Corporation, and the remaining is held by Avantha Group (17 per cent), Venkateshwara Hatcheries (8.80 per cent), and Maniar and Family (6.22 per cent).
On HCC’s business, Mr Sood said the company will continue to focus on executing its infrastructure projects.
During 2015-16, HCC secured nine new orders worth Rs 5,764 crore and is the lowest bidder in projects worth Rs 3,701 crore.
“Our total order book stands at Rs 18,000 crore with additional L1 projects taking the total to nearly Rs 22,000 crore. Besides, we are expecting some more projects in the hydel and nuclear sectors among others, given the government plan to invest Rs 2 trillion in infrastructure,” he said.
Mr Sood also said this strong order book has given them a visibility of around Rs 5,000 crore revenue in the current fiscal year, given that nearly one-fourth of the order book is executed every year.
“During the past four years have been on a slide missing orders continuously. This is year, however, for the first time we have seen a significant jump in order inflows. These orders will decide the future of the company,” Mr Sood added.