HCC’s new townships on hold

Hindustan Construction Co. Puts Township Projects on Hold

Given the current market turmoil and its subsequent impact on real estate, Hindustan Construction Company (HCC) has decided to put on hold its planned townships in Pune, Nasik, and Thane.

Reason Behind the Decision

  • High Interest Rates: The current high interest rates are affecting the company's ability to proceed with the projects.
  • Low Liquidity in the Market: The prevailing low liquidity is further exacerbating the challenges faced by the company.

Land Acquisitions Deferred

  • Land acquisitions for these projects have been deferred for now, with only 40-70 acres of land acquired in each project, out of the required 200-400 acres.
  • Total Investment So Far: The company has invested approximately Rs 40 crore in these proposed townships.

Alternative Strategies

  • Joint Development of Townships: HCC is exploring the possibility of joint development of townships, where land owners and the company collaborate to develop projects, aiming to reduce cash outflows.
  • Awaiting Market Correction: The company anticipates a correction in land prices due to market conditions, making land acquisition more viable in the future.

Focus on Government Projects

  • Power and Water Sectors: HCC will focus more on government projects in the power and water sectors to insulate itself from the current market uncertainty.
  • PPP Projects: The company will proceed with caution on PPP (Public-Private Partnership) projects or BOT (Build-Operate-Transfer) projects, citing high interest rates and short concession periods.

Quotes from Ajit Gulabchand, Chairman and Managing Director, HCC

  • "One will have to wait and watch how the situation unfolds. Lower interest rates, greater liquidity, and confidence-building measures are needed."
  • "We believe in these times government will step up its direct investments in infrastructure which we will bid for."
  • "Until factors like interest rates and concession periods improve, we will remain cautious about participating in infrastructure projects."

Projects on Schedule

  • Lavassa and IT Park in Mumbai: Despite the hold on township projects, HCC's Lavassa and IT park in Mumbai are progressing as scheduled.