Hindustan Construction Company announced that HCC Concessions (HCON), the infrastructure development arm of HCC Group, concluded its conciliation with NHAI for all disputes concerning Baharampore-Farakka Highways (BFHL) and Farakka-Raiganj Highways (FRHL).

The SPVs entered into settlement agreements with NHAI for a comprehensive closure of all outstanding disputes and claims between the parties.

BFHL will receive Rs.405 crore while FRHL will receive Rs.854 crore from the NHAI; FRHL will release the settlement proceeds and further sums to HCC Group per the existing contractual understanding with FRHL's buyer, Cube Highways & Infrastructure II Pte (Cube), as detailed below.

Besides part use of funds for NHAI project completion and an exit to the Xander Group, who hold a 14.55% share in HCON, a substantial portion of funds will be received by HCC as a settlement of their cost claim.

As a further consequence of this conciliation, Cube will release Rs.233 crore withheld as part of HCON's sale of FRHL and also require to share a significant portion of FRHL's growing revenue for the remainder of the concession's 20 years. With 100% construction completion being achieved at FRHL, toll rates will increase -70% in FY22. Additionally, up to Rs.100 crore is further payable by Cube in 2023, contingent on traffic projections being realised.

BFHL's closure of disputes with NHAI facilitates the required liquidity in the project to accelerate completion of a much-delayed Bypass, which along with the SPV's strong free cash flow from toll operations, frees HCON to monetise this Rs.2,000 crore mega project earlier than planned. Despite the impact of COVID-19 and partial tolling, BFHL clocked revenues of Rs.168 crore in FY21, a 16% jump over FY20. On final completion, a toll increase of 67% will further generate material free cash flow.

BFHL and FRHL are among the largest Public Private Partnership (PPP) projects in the country. They encompass 200 Km of Bengal's main artery, NH-34, and pass through major towns such as Baharampore, Farakka, Kaliachawk, Malda, and Gajol, besides being the only link over the river Ganges in the region.

FRHL was sold to Cube Highways & lnfrastructure II Pte (Cube) on 22 September 2020, at an enterprise value of Rs.1,508 crore.

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Net profit of Hindustan Construction Company declined 46.90% to Rs 118.58 crore in the quarter ended December 2020 as against Rs 223.31 crore during the previous quarter ended December 2019. Sales rose 2.23% to Rs 2405.51 crore in the quarter ended December 2020 as against Rs 2353.15 crore during the previous quarter ended December 2019.

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Net loss of Hindustan Construction Company reported to Rs 78.98 crore in the quarter ended December 2020 as against net profit of Rs 222.22 crore during the previous quarter ended December 2019. Sales declined 14.15% to Rs 814.28 crore in the quarter ended December 2020 as against Rs 948.47 crore during the previous quarter ended December 2019.

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Hindustan Construction Company will hold a meeting of the Board of Directors of the Company on 9 February 2021.

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