Lavasa City to get Rs 1,814 crore upgrade courtesy new developer

The National Company Law Tribunal (NCLT) has approved Darwin Platform Infrastructure Limited's (DPIL)  resolution plan for India’s first private hill station Lavasa which contemplates an investment of Rs. 1,814 crores including a resolution plan amount of Rs 1,466.50 crores to be paid cum  discharged from funds infused over multiple tranches into the corporate Debtor 'by way of cash funding and instruments, being equity, project inflows, loans, advances or a combination thereof'.

These amounts shall be utilised for mandatory payments under the code,  payments proposed to be made to certain creditors including operational creditors and the secured financial creditors of the corporate Debtors, and meeting the working capital and expenditure requirements.

Besides pledging the investment, the approved resolution envisages delivery of fully constructed properties to the home buyers within five years at the actual cost basis.  DPIL has also planned to retain the previous manpower and pledged an amount of Rs 22.50 crore for city maintenance and Rs 70 crore for repairs and infrastructure upgradation.

Lavasa city, located in the hills between Pune and Mumbai, is the brainchild of Nationalist Congress Party president Sharad Pawar and has run into trouble over the years on several counts including environmental degradation of the hill area, rehabilitation issues of villagers from whom land was acquired and both economic feasibility and infrastructure sustainability.

DPIL has emerged as the winning bidder for Lavasa Corporation Limited (LCL)  after the NCLT cleared its resolution plan in a detailed 25-page order. Another major clause in the order is in relation to the treatment of home buyers. The resolution plan envisages the delivery of fully-constructed properties to the financial creditors ( home buyers )  in A class of LCL within a period of five years from the receipt of the environmental clearance on an actual cost basis.

It is proposed that the homebuyers shall pay actual future construction costs to the Resolution Applicant (RA) towards obtaining constructed properties in the project. 

“ In order to provide a transparent mechanism for the construction costs, the RA proposes that it shall constitute a “Construction Cost Determination Committee” of 4 Members consisting of equal representation of FCCA/Homebuyer's representatives and RA’s management team, which shall estimate and approve the actual costs to be incurred for the construction and apportionment of such costs to individual home buyers,” the order said.

Apart from proposing actual delivery of constructed apartments, the RP  also has provided the homebuyers with the following two exit alternatives. The first exit clause is for the homebuyers who do not wish to continue and wait for delivery for the fully-constructed property as proposed, the RP envisages a full and final settlement by payment of 40% of their entire admitted claims within 24 months of the receipt of the EC for Phase 1.

The second exit clause is self construction where it  stipulates that within the contours and permissibility of such activity as per applicable laws, the RP also envisages providing an option to the homebuyers to undertake self-construction of their properties, entirely at their own responsibility including accountability, costs and expenses. Further, for homebuyers who have terminated contracts under RERA (cummulating to Rs. 9.33 Cr), the RP proposes a resolution of the amounts ordered by the MAHA RERA under individual cases by way of payment of INR 4.037 crores within 24 months from the effective date.

Under the Section “Business Plan for Turnaround and  Financial Projections”, the RA has identified the various aspects central to the turnaround of the businesses of the corporate debtors and has proposed the manner in which the RP seeks to ensure obtaining environment clearances, completion of construction, maintaining existing infrastructure, planning and commencement of future development, etc. City Maintenance/ Working Capital

 Further, in order to operate the corporate debtors as a going concern, the RP envisages working capital investment (city annual maintenance) to the tune of  Rs 22.50 Crores  which fully payable within 15 months from effective date  on a monthly basis . The RP also envisages infusions to the tune of  Rs  70 Crores payable within 15 months  towards refurbishment and repairs of city infrastructure and assets.

The resolution plan has proposed retention of all employees of the corporate debtor and usage of their services subject to their availability  under as per new employment terms and conditions, based on their skills and necessity of business. However, as the development work at the site has been closed for over three years, the  RA shall decide and finalise such matters upon acquisition of the corporate debtors.

 (DPIL) was established in the year 2010 and is engaged in infrastructure contracts and services. Currently, DPIL is involved in refurbishing projects and maintenance works. DPIL is part of the Darwin Platform Group, promoted by  Ajay Harinath Singh and is supported by his two brothers, Vijay Harinath Singh and Dr. Balwant Singh. The Group is involved in various industry segments such as infrastructure, refineries, retail and hospitality.

The RP has also listed  the challenges that lie ahead of the successful RA which are the current phase of the project, being phase-I is a part of the overall township comprising 12,500 acres across more than 18 villages. The completion of the present phase itself may take up to 8–10 years.