Mumbai: Hindustan Construction Co (HCC) posted a 46% fall in third-quarter profit, saying several project orders had been deferred in the quarter by its clients due to delays in acquiring land and other clearances.
It said its unit Lavasa Corp has lost about Rs20 million ($430,000) a day since the environment ministry asked it to halt work at the site.
In November, the ministry has asked for construction to be halted at the Rs1.4- hill-side project in Pune, citing violation of environmental norms.
The company is looking forward to talking to the environment ministry for a green signal for Lavasa, Ajit Gulabchand, HCC’s chairman and managing director, told a news conference.
Several top corporations’ Indian projects, including those of South Korea’s Posco and Vedanta, face delays as a proactive environment ministry tightens rules that often bring it into conflict with other government ministries pushing for rapid industrialization.
On 18 January, the environment ministry said it could consider approving the Lavasa project on conditions that included a penalty payment and the setting up of an environment restoration fund.
The company, as of now, does not have information on penalties or the amount the government would want the company to set aside for the restoration fund, Gulabchand said, adding the developer wanted to get the issue resolved through court or dialogue.
“We are approaching MoEF (ministry of environment and forests) for further discussions on this...We look forward to resolve this issue,” he said.
Lavasa’s current debt stands at Rs2,700 crore , its President Rajgopal Nogja said.
The Mumbai-based firm’s net profit for the quarter that ended December fell 46.3% to Rs79.4 million on revenue of Rs1,028 crore.
The company also expects slow progress in the roll out of infrastructure projects due to delay in environment approvals, Ajit Gulabchand said.
Vinayak Deshpande, head of HCC’s construction business, said the company’s order book is expected to be at Rs20,000 crore by end-fiscal year 2011.
“There is a slowdown and that is impacting the order inflow,” Deshpande said adding, the slowdown implied, the order backlog would be under pressure.
Nearly half of HCC’s overall business comes from hydro projects and rest comes from non-hydro projects like roads and others.
Shares of Hindustan Construction Co closed at Rs40.25 on Friday, down 1.53%, in a weak Mumbai market.