Hirco Palace Garden’s in Financial Trouble ?
Real estate firm Hirco seems to be in a major financial trouble. The company has defaulted on payments to lenders for two large Rs 1,000 crore township projects in Panvel and Chennai. The projects are now under threat of a takeover by banks, reported The Times of India today. Hirco, listed on the London Stock Exchange’s Alternative Investment Market (AIM), was set up in 2006 to invest in residential and commercial complexes. It has more than 66 million sq ft of development in the two township projects being built by its subsidiary, Hiranandani Palace Garden. Both the Panvel and Chennai projects are a joint venture with Hiranandani, one of India’s premier residential developer. According to the report, work on the project in Panvel, outside Mumbai, which is spread over 300 acres, has been stalled for the past few months. According to the report, work on the project in Panvel, outside Mumbai, which is spread over 300 acres, has been stalled for the past few months. Earlier this year, Tata Capital Financial Services had dragged Hirco’s subsidiary Hiranandani Palace Gardens to the court for defaulting on a term loan of Rs 76 crore. Tata Capital even demanded liquidating the Hirco arm and said that Hiranandani Palace Gardens is under financial stress and unable too meet creditor liabilities. The Tata petition requested the High Court of Bombay to appoint a provisional liquidator over Hiranandani Palace Gardens pending a hearing to appoint a liquidator and demanded that Hiranandani Palace Gardens be ordered to deposit Rs 82 crore plus interest in the court. The petition also alleged irregularities in connection with obtaining the loan from Tata and that the management should not be allowed to carry on its business any further as that will inevitably result in incurring further debts with no reasonable expectation and/or capacity to repay the same. The TOI report further pointed out that HDFC had advanced around Rs 500 crore in two tranches to the Chennai project jointly promoted by Niranjan Hiranandani and his daughter Priya, who stepped down from the Hirco board in December 2010. Ironically, Niranjan Hiranandani has even offered to buy out parent Hirco and has in the past claimed that he has nothing to do with Hiranandani Palace Gardens ever since he stepped down from the board. In October 2010, Hiranandani’s estranged daughter, Priya, had reportedly filed arbitration proceeding against her father and brother Darshan, claiming that they had violated a business association agreement involving commercial rights to real estate projects. The father and brother, however, made a counter claim, alleging that the fight caused them to lose out on business opportunities. In December 2010, Hiranandani had resigned as Chairman of the AIM-listed firm citing corporate governance issues, while his daughter had ceased to be the director on the Hirco board from September that year. HDFC has already classified the first tranche as a non-performing asset and will classify the second tranche similarly.If Hirco fails to pay up, HDFC will attach the Chennai property estimated to be worth several times the loan. Clearly once the property is attached it would be auctioned off. But given the slump in the market, it is likely that Hiranandanis may bid for it at lower valuation.
Read more at: http://www.firstpost.com/business/hirco-in-deep-trouble-co-defaults-on-2-major-township-projects-1180143.html?utm_source=ref_article