Parsvnath Developers will cut net debt by up to Rs 400 crore and invest the rest on ongoing projects after receiving Rs 572 crore from Chandigarh Housing Board in a settlement of dispute over a realty project.
Yesterday, Parsvnath said it has got back Rs 572 crore from CHB after both the parties agreed to accept arbitration award. Realty firm has surrendered 124 acres to the CHB.
According to company sources, Parsvnath currently has a net debt of about Rs 1,300 crore and wants to reduce it to below Rs 1,000 crore utilising the funds from CHB.
"The debt will come down to three-digits. About Rs 300-400 crore would be used to repay the debts," a sources said.
The remaining amount would be utilised on faster execution of its about 50 ongoing projects.
Sources said the Parsvnath's top management intends to rebuild the image of the group by completing these projects. The company is currently reviewing each and every project to deliver them at the shortest possible time.
Parsvnath also expects to get another Rs 146 crore from CHB. "...Due to a computational error in the Award, the awarded
amount is deficient by about Rs 146 crore. Consequently, the company has already made an application to the sole arbitrator for correction of computational error," it had said earlier.
The company would be entitled to receive a further amount of about Rs 146 crore from the CHB, it had said.
In October 2006, Parsvnath had entered into an agreement with CHB for the development of housing, commercial and other infrastructure facilities on 123.79 acre project located at Rajiv Gandhi Technology Park.
Between October 2006 and April 2008, it had paid Rs 516.53 crore to CHB as bid price towards part consideration payable for the right to develop the project.
However, the agreement was later terminated due to dispute between the two parties. Parsvnath had invoked the arbitration clause in the development agreement.
The arbitrator on January 9 this year upheld the termination of development agreement on January 31, 2010.
