Lavasa discusses 1-yr moratorium with lenders

Lavasa Corporation, a subsidiary of Hindustan Construction Company (HCC) that is building a township near Pune, is in discussions with its lenders for a one-year moratorium on principal repayment on debt.

Lavasa had earlier run into environmental problems, with the ministry of environment and forests (MoEF) asking it to halt
construction at the site citing violations. This also led to a delay in the company's planned Rs2,000 crore initial public offer.

The unit of infrastructure major HCC has a debt of about Rs1,065-1,070 crore, its president Rajgopal Nogja said. The firm is
expecting a formal approval in a month's time.

A consortium of 11 banks led by Union Bank of India had sanctioned Rs1,200 crore in two phases in 2006 and 2008 to Lavasa. ''We have repaid the principal of Rs130-135 crore. We are trying to get a moratorium of one year for the rest of the loan,'' Nogja said.

Currentlt there is a moratorium of 18 months after every disbursement on principal repayment and then a repayment period of five years. The interest rate on the debt is 12.5-13 per cent, Nogja said.

On 14 October the ministry of environment and forests (MoEF) declined to approve the first phase of Lavasa's $31-billion township project.

In November last year, MoEF had asked Lavasa to halt construction at the site citing violations, because of which its Rs2,000-crore initial public offering got delayed. HCC posted a net loss in July-September quarter due to higher interest burden and significant
delays in new infrastructure project allotments.

"We are facing rough weather and this is the best we could do, of course this is also the monsoon period and that has its own share of delays," Chairman and managing director Ajit Gulabchand said in media briefing on 21 October.

The performance of Lavasa Corp continued to be adversely impacted by the MoEF's order to stop work. As a result of the delays
Lavasa Corp is loosing about 20 million rupees a day, the company said in a statement.