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Institutional Equities
Exhibit 13: Lavasa project -series of events
Date
Development on Lavasa
25.11.2010 Ministry of Environment & Forests (MoEF) issues show-cause notice with status quo ante
28.11.2010 Lavasa replies to show-cause notice to MoEF
30.11.2010 Lavasa files writ petition in Bombay High Court
07.12.2010 Bombay High Court directs MoEF to give a hearing to Lavasa
09.12.2010 MoEF gives a hearing to Lavasa
14.12.2010 MoEF passes an order to continue status quo until final order
22.12.2010 Bombay High Court admits writ petition and directs MoEF to visit Lavasa project
5 -7 January 2011 Expert committee of MoEF and Maharashtra state officials visit Lavasa project
17.01.2011 MoEF passes its final order directing Lavasa to maintain status quo
25.01.2011 Lavasa addresses a letter to MoEF for finding an amicable solution
28.01.2011 MoEF is prepared to consider the matter of giving clearance to Phase-I (2,000 ha)
14.02.2011 Lavasa makes presentation before Expert Committee
31.05.2011 EAC Committee recommended to the MoEF to grant clearance to Lavasa project with certain pre-conditions
27.06.2011 MoEF issues a letter to Lavasa stating the five conditions recommended by EAC
12.07.2011 Lavasa writes a letter to MoEF not accepting the pre-conditions.
Source: Company, Nirmal Bang Institutional Equities Research
We believe the company would get the clearance in coming months (with some pre-conditions) considering
the developments that are skewed towards Lavasa. However, losses due to stoppage of construction and the
pre-conditions that will be attached to project would dent the valuation the company was targeting.
Impact of dispute
Lavasa project incurred a loss of Rs580mn in 1QFY12, of which Rs380mn is interest cost.
The company planned to raise around Rs20bn through the equity route which got delayed. We believe
IPO of Lavasa in near future is least likely.
Issues like pre-conditions, cost over-run and concerns related to future development of the project would
dent the valuation of the project.
Lavasa valued at P/BV of 1x on regulatory concerns
Based on NPV method for Lavasa Phase I and remaining land bank at realisable value contributes Rs
17/share. However, looking at the uncertainty on regulatory issues related to environmental clearance, preconditions
delay in IPO of Lavasa and de-rating of valuation of the project; we have valued the project based
on a P/BV of 1x, which is contributing Rs 9/share to our target price. Financial institutions have invested
around Rs10.5bn through DDCD and CCPS with a valuation of around Rs100bn to Rs 200bn for the project.
Our valuation stands at just 5% of the valuation done by financial institutions.
73 HCC