Bengaluru: Lavasa Corp. Ltd, which is building India’s first mountain city near Pune, has struggled to find directors for the past few years, forcing the debt-laden company to name junior employees, including a receptionist, to its board.
Things took a turn for the worse last month when all the three Lavasa directors—Sharad Naik, Edna Maclaine and Deepak Shah—resigned, according to two people directly familiar with the development.
They, however, continue to be employed at parent Hindustan Construction Co. Ltd. Naik is in HCC’s administration department, Maclaine works as a receptionist and Shah oversees chauffeurs of senior executives, the two said on condition of anonymity. Mint could not ascertain if new directors were named.
Lavasa, which owes lenders more than Rs5,000 crore, admitted last month to finding it difficult to find directors.
“The company has made efforts to appoint independent directors on the board. However, due to the existing financial crisis in the business operations, the company could not appoint them,” Lavasa said in a filing to the corporate affairs ministry in May.
Interestingly, none of the senior executives of Lavasa, including chief executive Praveen Sood and deputy CEO Ravindra Singh, are on the board. Both were appointed to their current positions in May 2017. While Sood is also group chief financial officer of HCC, Singh runs the daily operations.
Even HCC chairman and managing director Ajit Gulabchand is not on the board of Lavasa. “No senior executive wants to be on the board of Lavasa given the uncertainty that the firm is facing. As a result, the promoters are forced to appoint some of the most junior employees for a year, after which they step down and another set of junior employees are put on the board,” said one of the two people cited above.
Lavasa has fewer than 30 full-time employees today. That compares with the 300 permanent staff and around 10,000 temporary workers it had about a decade ago when the project was launched.
“Due to the prevailing challenging situation at Lavasa, the management team at Lavasa presently is an interim team fielded with HCC Group professionals as the firm is looking to resolve a deadlock arising out of banks not permitting priority lending, which has impacted the project execution,” said a spokesperson for Lavasa. “We are in active discussion with lenders on a resolution plan.”
Spread across more than 10,000 acres, Lavasa was launched as HCC’s largest real estate project in 2006-07.
HCC owns 68.7% in Lavasa while Avantha Realty and Venkateshwara Hatcheries hold 15.7% and 7.81%, respectively. Pune-based businessman Vinay Maniar (6.29%) and Avantha Group founder Gautam Thapar (1.48%) are the other large shareholders.
Lavasa reported a loss of Rs166 crore in FY17, against a profit of Rs269 crore in FY16.