MUMBAI: Investors of Hirco Plc, a company listed on London's Stock Exchange's sub-market AIM, are raising serious questions against the firm's erstwhile chairman Niranjan Hiranandani and then CEO Priya Hiranandani-Vandrevala.
At the time of listing, Hirco, the investment vehicle for Hiranandani's two township projects raised £350 million in 2006 and later borrowed $160 million from domestic banks as construction finance and investors are seeking explanation on the usage of these.
"Where has all the money gone? We are worried now," questioned Hirco chairman John Chapman. "We are talking about at least £600 million (over Rs 6,000 crore) including funds raised in 2006, accrued interest, bank borrowings and sales to Indian homebuyers."
As part of the agreement, Hirco Plc's investors that are holding preference shares were expected to receive 12% annual interest on their investments.
Apart from assured accrued interest, Hirco was expected to get 60% share of profits earned from these two township projects in Panvel near Mumbai and Chennai, said Peter Barge, senior non-executive director, Hirco Plc.
Both Panvel and Chennai townships comprise over 100 million sq ft of developable space. Currently around 8% of the total developable area is under development with the remaining 92% to be developed in the future.
"We have not received a single penny till date. Lots of international investors are watching this now. Investment into India has gone down and this sort of experience is also a factor responsible for this," Barge said.
In response to ET's detailed query, Bipin Gajra, Hiranandani Group's spokesperson said, Niranjan Hiranandani has not been associated with Hirco plc for almost three years. The current directors have been managing the affairs at Hirco plc and its subsidiaries, since his resignation as non-executive chairman of Hirco plc in late 2010.
"All monies that were invested into the project companies by Hirco Plc have been put in towards projects in Panvel and Chennai until his time. The Hirco entities invested in the projects in 2007," he said.
Hirco Plc has refused to do anything to recapitalize their projects even though they raised £20 million in the last 12 months and has stated in court that they are the ultimate beneficial owners of the projects. This money would have been more than sufficient to put the projects back on track, Gajra added.
According to a Hiranandani spokesman, the developer has offered to buy out these projects from the Hirco subsidiaries but this was not taken up by the Hirco entities.
However, according to Hirco directors, Hiranandani has not made any formal offer for this. "We have met Mr Hiranandani many times.
He has been gracious, but we don't get to see any money. We are not the developers, we are financiers and we have already done our job," Barge said. Hirco's current management is also not certain if the available information about these projects and monies is correct.
"A lot of information has been reported back (from India to London) but we have no ways to ascertain if that's true," Barge said. Earlier in February, Hirco moved court in Isle of Man against Niranjan Hiranandani and Priya Hiranandani-Vandrevala over alleged fraud. Hiranandani and Hirco are also fighting an arbitration case in Singapore.
According to a Hirco Plc's filing in March, progress on Chennai and Panvel projects continues to be modest and remains at least a decade away from completion.
As on December 2012, 1,689 of Chennai's 2,665 available residential units and 2,556 of Panvel's 2,968 available residential units had been sold, the report said.
"We estimate that approximately Rs 12.2 billion in cash has been collected from the Panvel and Chennai residential sales though we have no visibility as to when any cash will be returned," adds the report.