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HDIL Tanks 22%, Co Denies Trouble

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Falling for the fourth day in a row, shares of realty firm Housing Development and Infrastructure Ltd (HDIL) slumped nearly 22 per cent on 24 January 2013 after its vice- chairman and MD Sarang Wadhawan sold 50 lakh shares through stock market. The plunge has wiped Rs 1,950 crore from HDIL's market value.

Shares of the company tanked 21.81 per cent to Rs 75.25 on the BSE. At NSE, the scrip crashed 21.97 per cent to Rs 75.10. In the past four trading sessions, the stock had lost nearly 38 per cent. HDIL had on 22 January said Sarang Wadhawan has sold 50 lakh shares for about Rs 57 crore through stock market.

An executive at Housing Development & Infrastructure Ltd denied market speculation of financial trouble that had pounded its shares this week, saying the property developer was "very comfortable" with its debt repayments.

Other property developers also fell on worries they may have debt problems, with Unitech Ltd losing 7 per cent. Infrastructure developer IVRCL Ltd slumped 19.8 per cent.

"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.

The company is 37 per cent owned by its founders including Wadhawan, with 98 per cent 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 per cent.

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 347 crore as of the end of December, he added.