The tight liquidity scenario is taking a toll on the ambitious expansion plans of the realty companies. Construction major HCC has decided to put on hold its planned townships in Pune, Nasik and Thane. Land acquisitions for these projects have been deferred given the high interest rates charged by banks and the low liquidity in the market.
Further, as a measure to cushion itself from the financial instability, HCC is looking to focus only on government projects in power and water sector, which involve cash on completion while bidding for PPP projects will not be a priority in the current market.
Land required for these proposed townships was around 200-400 acres and senior officials at HCC said that only 40-70 acres of land in each project has been acquired so far. The deferment of the projects comes as the company expects land prices to see a correction due to market conditions.
While the viability aspect may hold some ground, officials admitted that while accessing loans from banks hasn't been a problem so far given the company's track record, there is a possibility of hurdles in accessing liquidity in the time to come because of adverse market conditions.
Meanwhile its profit after tax for the second quarter ended September 30 grew by 71.6% at Rs 19.9 crore, from the corresponding period a year ago. The company's revenues increased by 27% at Rs 689 crore in the quarter under review, from Rs 549 crore in the same period last year.crackcrack
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