Difficult to find buyers for asset monetisation: HCC

Sitting on a debt pile of over Rs 12,000 crore, infrastructure firm Hindustan Construction Company (HCC) said it is finding it difficult to get buyers for its asset monetisation plan.

The company is keen on monetising its non-core assets to generate cash and repay debt.

"To accomplish this (retire debt), the company has sold operating buildings and some land parcels. However, this has been a more difficult task in the current environment where there are hardly any buyers of infrastructure assets, especially those which are under development," HCC's Chairman and Managing Director Ajit Gulabchand said in the annual report of 2015-16.

Monetisation of large investments — such as the toll-road projects under HCC Infrastructure — will take a longer time, he said.

"In a different vein, the efforts of HCC Infrastructure to effect stake sale have been limited by contractual obligations imposed by the National Highways Authority of India (NHAI)," Gulabchand said.

NHAI's contractual obligations require 51% stake to be withheld for a period of two years post-COD (commercial operation date), for which it has postponed a 100 per cent monetisation effort in these projects, he said.

The infrastructure division of the company has monetised two projects that have completed the final leg of their development life cycle.

These include the Dhule-Palesner highway (NH 3) where HCC Concessions closed sale of its 60% stake to Sadbhav Group for Rs 204 crore in October last year and the Nirmal annuity project, where stake was sold to Highway Concession One, an IDFC managed entity, in December 2015 for Rs 64 crore.

The proceeds from these stake sales were primarily used to repay debt and contribute to equity for project SPVs, the company said in the report.

Gulabchand also said that the progress of monetisation might be uncertain, going forward.

An improvement in the overall infrastructure climate can make potential buyers eager to purchase parts of Lavasa or HCC Infrastructure at attractive prices. But if there is insufficient tailwind for India in general and infrastructure in particular, such buyers will be hard to find, Gulabchand said.

However, the company will do its best to maximise the process of monetisation and thereby reduce the burden of past debt, he added.

In fiscal 2012-13, the company had availed of a corporate debt restructuring (CDR) package with a consortium of its bankers.

HCC had reported a net profit of Rs 84.97 crore in 2015-16, while its turnover stood at Rs 4,191 crore. The order book grew by 25.4% at Rs 18,123 crore, excluding L1 contracts worth Rs 3,701 crore.