An executive at Housing Development & Infrastructure denied market speculation of financial trouble that had pounded its shares this week, saying the property developer was "very comfortable" with its debt repayments.
HDIL shares sank 22.7 percent on Thursday, after already falling 20.4 percent in the previous two sessions. The losses, triggered when the company said its vice chairman and co-founder cut his stake in the firm by more than half, has wiped Rs 1,950 crore from HDIL's market value.
Other property developers also fell on worries they may have debt problems, with Unitech losing 7 percent. Infrastructure developer IVRCL slumped 19.8 percent.
"There have been lots of rumours in the market about bankruptcy and defaults, which we totally deny," said Hari Prakash Pandey, vice-president of finance at HDIL, on a conference call with investors.
"We are very comfortable with the debt repayment schedule and we are as per schedule," he added.
Vice Chairman Sarang Wadhawan had sold 5 million shares worth Rs 57 crore in secondary markets, reducing his stake to 0.99 percent from 2.19 percent, the company said on Tuesday.
The company is 37 percent owned by its founders including Wadhawan, with 98 percent of their shares pledged with banking and financial institutions, or used as collateral for loans or working capital.
Pandey said the company had to meet immediate debt and principle repayments, as well as a final tranche of the payment for a land transaction in Mumbai, prompting Wadhawan to sell his stake.
"We took certain decisions which have not gone down very well with our shareholders, and the promoters have assured that there will not be any further sale of shares," Pandey said.
A slowdown in home sales in Asia's third largest economy, caused by sticky inflation and high interest rates, is putting pressure on property developers who loaded up on debt during India's real estate boom of 2006/07.
Pandey said HDIL faced an average cost of debt of 13.25 percent.
The company is trying to convert short-term loans into long-term and is also trying to cut debt through cash flow, Pandey said. Its debt is down Rs 200 crore to Rs 3,470 crore as of the end of December, he added.Copyright Thomson Reuters 2013