As Lavasa Corp stares at insolvency, ex employees at receiving end as Hindustan Construction stays unmoved

As Lavasa Corp stares at an inevitable insolvency process, around 240 former employees (including from another subsidiary Steiner India Lavasa Business Unit) are at the receiving end.

Three years after they quit, voluntarily or involuntarily, the former employees of the Hindustan Construction Company (HCC) subsidiary that promised to develop a private hill city near Pune are yet to get full and final settlements despite several assurances by the HCC management of clearing unpaid dues since 2015.

Apparently, the unpaid dues to ex-employees and vendors (amount unknown) are over and above the Rs 3,500 crore debt that Lavasa Corp owes to the lenders’ consortium.

“It’s been over three years now and company has neither cleared our dues nor are they giving any clarity about when they will make the full and final settlement. We have collectively sent them letter and emails, but in vain. They are least bothered and haven’t replied,” a former employee of Steiner India told DNA Money.

When contacted, an HCC spokesperson said in an email response that during the restructuring process, through a process of voluntary attrition, around 35 employees exited from Lavasa since 2015, while in Steiner India Lavasa Business Unit, around 128 employees had resigned in the same period. “Regarding full and final settlements of ex-employees in Lavasa and Steiner India, there is no dispute at all on the dues,” the spokesperson said.

However, former employees have a very different view. They said HCC/ Lavasa management has not cleared gratuity, unpaid salaries, leave encashment, leave travel allowance, etc despite continuous reminders. According to them, the management has been perpetually ignoring their requests citing company policy.

While HCC claims, in its email response, that the ex-employee dues for Lavasa and Steiner India Lavasa Business Unit are around Rs 7 crore, the figure, former employees said, is much higher. Interestingly, according to Note 17 on financial liabilities in HCC’s annual report for 2017-18, dues to employees as on March 31, 2018, stood at Rs 119.33 crore. The figure under the same head, as on March 31, 2017, was Rs 94.33 crore - that’s an increase of 26.50% on-year in financial year 2018.

Explaining the note on financial liabilities, the spokesperson said, “HCC follows the accounting on accruals basis which means that a lot of employee dues like gratuity, PLP, leave encashment, etc. have to be provided for which is not due for payment and forms a major part of employee dues. Also, HCC has been passing through a phase of financial constraints, primarily on account of non-receipt of its bonafide claims due from the clients.”

The employee dues indicated in the HCC Annual Report 2017-18 are on account of accrued benefits and other outstanding employee dues on a consolidated basis,” the spokesperson said. 

On whether HCC/ Lavasa has disclosed the unpaid dues to ex-employees and vendors, the spokesperson said, these outstandings will be communicated to the insolvency resolution professional (IRP) as per the defined process under NCLT.

Former employees have been constantly following up with the company but their wait for unpaid dues has only got longer. And now there is complete uncertainty on the possibilities of their dues getting cleared.

That’s because, just last week, a corporate insolvency resolution process (CIRP) against Lavasa Corp was initiated by operational creditors under the Insolvency and Bankruptcy Code (IBC). Accordingly, Lavasa Corp has been admitted to the National Company Law Tribunal (NCLT) post which the appointed resolution professional (RP) and the committee of creditors (CoC) are to take charge of Lavasa management and work towards implementation of a resolution plan within 270 days.

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“Sensing delays, we began seeking a status from the human resources (HR) department on our unpaid dues. The HR would say that it’s in process and that it will take time due to non-availability of funds and related issues,” said a former employee.

According to ex-employees the lay-offs happened in a batch of over 100 in two phases from Steiner India Ltd, a sister concern of HCC.

Source: DNA Money