MUMBAI: Mumbai-based real estate developer Orbit Corporation has defaulted on liabilities of 96 crore, including repayment of loan availed from LIC Housing FinanceBSE -5.13 % and the interest on the amount, joining the list of troubled players in the sector grappling with a severe liquidity crunch.
The housing Finance company has classified the account as a non-performing asset and served a recovery notice to the developer known for its premium south and central Mumbai developments. Through a public notice on Monday, LIC Housing Finance also restrained the developer from creating any third-party rights on over 2.40 lakh sq ft across three of its projects that were mortgaged for securing the loan along with hypothecated receivables from seven of its luxury projects.Orbit Corporation defaults on 96 crore loans
Orbit's stock price fell sharply on Monday, with the stock closing at 11.80 on the BSE, down 9.6% over Friday's close.
The company had secured loans from LIC Housing Finance through personal guarantees executed by its directors Ravikiran Aggarwal and Pujit Aggarwal. An email query sent to LIC Housing Finance did not elicit any response.
Orbit had availed a loan of 250 crore from LIC Housing Finance in 2008 and repaid 154 crore until 2010 end, according to the company. The final payment of the entire loan amount was due in January 2013, said the company's CFO Ram Yadav.
"The delay in repayment was because the two projects (Orbit Grand and Orbit Residency Park) for which the term loan secured was stuck in regulatory deadlock since 2011. The deadlock had stalled construction as well as sales and cash flow," he said. According to Yadav, the company received regulatory approvals in May for both the projects. He added that the company would be able to repay the loan of 96 crore in the next few months.
LIC Housing Finance has marked nearly 26,000 sq ft at Orbit Corporation's Lower Parel project Orbit Grand, 1.70 lakh sq ft at project Orbit Residency Park in Andheri and 45,600 sq ft space at Orbit Midtown at Lower Parel for its dues.