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Deadly Kolkata flyover builder involved in Sri Lanka housing
View(s):Indian builder, IVRCL Infrastructure Company, which is at the centre of death and destruction in Kolkata where a flyover being built by it crumbled killing 24 people and injuring scores, has been involved in low-cost housing in Sri Lanka through a subsidiary.
This is believed to be a Maligawatte project for which another contractor, MTD Walkers Plc, completed the piling work in January 2013. During the tenure of the Rajapaksas, the Indian company announced that it was awarded a contract to build more than 4,000 homes for “underserved settlements in the city of Colombo’’.
The project was initiated by the Government of Sri Lanka through its Urban Development Authority, IVRCL Infrastructure said at the time. The company, which is involved in building projects in India including irrigation and water, power, and roads, has dozens of subsidiaries.
IVRCL Lanka Private Limited is its fully-owned operation in Sri Lanka. Five officials of the heavily loss-making Hyderabad-based IVRCL Infrastructure Company were detained on Friday by Kolkata police.
The company described the flyover disaster as “an accident,’’ in a statement, after it was called “an act of God’’ earlier by a company lawyer. IVRCL Infrastructure said in media statement, “The project manager and engineers deployed at the site are highly experienced in constructing large and complex projects.’’
It also said it “grieves over the loss of precious lives and injuries to people’.’
The Bombay Stock Exchange-listed company is headed by E Sudhir Reddy, the chairman and managing director.
The 2013-14 annual report cites his salary as Rs. 10 lakhs a month. He is a commerce graduate the report says. He was born on April 13, 1960.
For the financial year ended March 31, 2014, the company booked a loss of 7.16 billion Indian rupees.
For the nine months ended December, IVRCL Infrastructure reported heavy losses. In that earnings statement, the auditors note that certain creditors have filed winding up petitions against the company.
IVRCL Infrastructure has obligations towards borrowings aggregating 499,469 lakhs of rupees, the auditor notes.
For the financial year ended March 31, 2015, the company reported a loss of 6.72 billion Indian rupees.
“The accumulated losses of the company are more than fifty percent of its net worth,’’ the auditor says.
IVRCL Infrastructure says its philosophy is that “it believes in transparency, empowerment, accountability and integrity in its operations having duly delegated authority to the various functional heads who are responsible for attaining the corporate plans with the ultimate purpose of enhancement of stakeholder value’’.
Company records show that IVRCL Lanka Private Limited has drawn US$5 million as of March 2014, out of a US$ 65 million multi-currency term loan sanctioned by banks. The loan carried interest rate of LIBOR plus margin of 5 percent a year.
“The loan is repayable in one bullet installment at the end of 3.5 years from the first drawdown date,’’ the company says.
In June 2014, the company restructured its debt, following a “reduction in turnover and negative growth in net profit’’.
It has suffered cost overruns in projects because of delays in awarding projects.
IVRCL says there had been setbacks for mobilising long term equity funds into the company by way of equity dilution or stake sale, due to uncertainties the [construction] sector has been passing through in the past few years.
As a result, the ability of the company to meet its repayment obligations/liabilities under the various facilities availed by it were adversely affected, it adds.