Loan default: Four lenders to auction Hirco’s 1,000 crore Panvel township

Mumbai: Lenders to real estate firm Hirco have put 588 acres of land and even buildings the debt-laden firm owns in Panvel, up for sale. About 380 flats have been sold in the project, which is worth about Rs 1,000 crore. 

    On October 18, TOI had reported that Hirco had defaulted on payments to LIC Housing Finance Ltd, Punjab National Bank (PNB), UCO and Andhra Bank, which had given a loan of over Rs 360 crore to Sunny Vista Realtors, an unit of Hirco. 
    The notice for the electronic auction of land on January 16, 2014, was issued by PNB after the three banks, led by PNB, initiated action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. A reserve price of Rs 805 crore has been fixed. 
    The notice, a copy of which is with the TOI, says that the banks had accepted Hirco's request for the sale of the flats in Hiranandani Palace Gardens and granted a no-objection certificate on the grounds that the entire sale money would be put in an escrow account to be maintained by the banks. The company had failed to do this. 
    A spokesperson for Hiranandani Constructions said managing director Niranjan Hiranandani had dissociated with Hirco three years ago. "As the overseas investors have refused to recapitalize the project firms with the capital needed, the banks have taken this action to protect themselves and their customers. The buyers are protected in Panvel as is clear in the notice." The notice says that any claims on the flats will be settled by the auction purchaser. PNB officials refused to comment. 
    A Hiranandani Constructions spokesperson asserted that the notice has no bearing on the finances of the Hiranandani Group, though it has rung alarm bells in real estate circles. "If the oldest realty firm, Hiranandani, irrespective to its disclaimer about Hirco, is facing financial crisis, it's a sign that correction is inevitable," said a leading banker. 
    Work on Hirco's township projects in Panvel and Chennai, spread across 66 million sq ft, has been stalled for the past few months. HDFC, which had lent about Rs 500 crore to the Chennai project, had earlier warned of attaching the property. 
    Early this year, Tata Finance Capital Services had dragged Hirco to court for defaulting on a Rs 76-crore term loan and demanded its liquidation. A senior executive, who recently resigned from the company, had earlier told TOI that thefirm is mismanaged. "A 1.75-million sq ft commercial building in the Panvel township is 75% complete. It could easily fetch Rs 500 crore," said the executive. Hirco, which is listed on the London Stock Exchange's Alternative Investment Market, was set up in 2006 to invest in residential and commercial complexes. 
    On June 27, chairman David Burton said in the company's half-yearly statement that progress on the developments appeared somewhat subdued with only moderate progress over the last six months. The firm had said in its annual financial statement in September 2012, that the completion of both the Chennai and Panvel projects remained at least a decade away.