Mumbai: Hindustan Construction Co’s unit Lavasa said India’s environment ministry acted “without jurisdiction” when it demanded reasons not to close its town building project, in a move that could delay the unit’s initial public offering.
In a lengthy statement issued on Monday, Lavasa said the ministry was acting under pressure from political activists.
“You have chosen to act at the instance and behest of (activist) Medha Patkar and others in haste and in a high-handed arbitrary manner,” the statement said.
Lavasa, which is 65 percent owned by HCC, was planning a Rs 2,000 crore ($437.9 million) IPO. It issued its draft prospectus in September and got regulatory clearance earlier this month.
“The effort through the show cause notice appears to be to stall the IPO of Lavasa,” the statement said, adding Lavasa had planned to open the share offer end-November or early December.
“It is difficult to believe that your Ministry was ignorant of this IPO,” the statement added.
The country’s increasingly active environment ministry issued the notice on Friday asking Lavasa to provide reasons why the government should not raze all construction after 2006 in the project, which is building a luxury home development.
The notice came two days after Lavasa was named in a bribes-for-loans corruption scandal in which Money Matters Financial Services allegedly offered bribes on behalf of several companies in exchange for large corporate loans.
Lavasa said last week Money Matters did act as an agent for them, and added that all their transactions were “completely transparent.”
HCC shares fell 4% in Monday morning trade. The stock was the most traded among the major stocks on the BSE with a volume of 4.8 million shares, which was 3.5 times its 30-day average volume.
Failure to satisfy the ministry over its concerns could lead to cancellation of the project.
Environment ministry has already scrapped plans by miner Vedanta to mine bauxite and to expand a $9.5 billion alumina project in Orissa. A $12 billion mill proposed by South Korean steelmaker Posco is also under its scanner.