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In a twist to the tussle between London-based Hirco and city-based Hiranandani group, the Hirco chairman has said its board will write down the company’s £350-million investment in the Hiranandani-sponsored Panvel and Chennai projects.
The two townships have been a bone of contention between Hirco and the Hiranandani group for long, with both involved in legal disputes on the issue. Though Hirco was floated by the Hiranandanis and acted as the family’s investment vehicle, Niranjan Hiranandani had stepped down as the company’s chairman in 2010. “Consequently, as of September 30, 2012-13, we had reported a loss of about £191 million, or 190 pence a share,” Hirco Chairman John D Chapman wrote in a letter to shareholders. “We decided to write down the company’s assets to nil primarily because the Panvel and Chennai residential projects have now been foreclosed and are being auctioned.”
In the letter, Chapman said either Niranjan Hiranandani, promoter of the Hiranandani group and Hirco’s former chairman, or entities associated with him had reportedly bought the Chennai asset and would soon buy the Panvel asset, too, each for a lot less than their last appraised values.
When contacted, a spokesperson for Niranjan Hiranandani said: “With reference to the write-down in the value of the company’s investments in the projects, this is largely the result of Hirco’s misguided reluctance to take the Hiranandani group up on its offer to constructively work together to rescue the projects. In the spirit of cooperation and in the best interests of the hundreds of customers still waiting for their units to be delivered, Niranjan Hiranandani had, on February 25, 2014, wrote to Hirco Plc, making a number of proposals to ensure the projects were delivered, and that Hirco’s investors maintained assets of some value. Hirco Plc completely ignored that letter. As a result, it is clear to Hiranandani that the board of Hirco has lost interest in their investments and is, instead, intent on pursuing a contrived litigation strategy to seek a settlement through commercial pressure.”
Both the Hirco townships have defaulted on payments to lenders. Housing finance major HDFC has put the Chennai property on the block, as the township has failed to pay dues.
In February this year, Hirco said trading in its shares would be cancelled, as it couldn’t obtain information from companies controlled by the Hiranandani family about the status of the family-controlled projects and why these had failed to pay debts.
“Given the lack of transparency in the auction process — we have been told there is a ‘gentlemen’s agreement’ among developers not to bid on each other’s foreclosed assets — it seems unlikely there will be any surplus over and above the value of the bank debt to be used to satisfy obligations to Hirco,” the spokesperson said.
In February 2013, Hirco had sued Niranjan Hiranandani and Priya Hiranandani-Vandrevala for a fraud in Isle of Man in connection with Hirco’s investment of £350 million in the two Hiranandani-sponsored township projects in Panvel and Chennai. When the investments were made, Niranjan Hiranandani and Priya Hiranandani-Vandrevala were Hirco’s chairman and chief executive, respectively.
Recently, Hirco Plc had threatened action against the Hiranandanis.
“Hirco Plc has written to the directors of the Indian project companies, demanding an explanation as to how and to whom the cash collections were disbursed and why the companies were unable to repay their debts. The company has also asked for a forensic accounting examination of the books and records of the Indian project companies,” Hirco said in a statement posted on its website.
SUNK COST
2007
* Hirco invests in preference shares issued by Mauritius entities, which in turn invested in projects controlled by the Hiranandanis
2013
* Feb: Hirco sues Niranjan, Priya Hiranandani-Vandrevala for fraud in Isle of Man
* Oct: Hirco townships default on loan payments
* Dec: Hirco sues Hiranandanis and seeks Rs 2,200 crore in damages
2014
* Jan: Hirco threatens action against Hiranandanis
* Jan: HDFC puts Hirco’s Chennai township on the block
* Feb: Hirco shares’ trading suspended on London’s AIM
* Mar: Hiranandani reportedly highest bidder in auction to sell Hirco’s Chennai township
* Apr: Hirco chairman’s letter says the company has written off its investments in Panvel (Maharashtra) and Chennai townships
