Diversified conglomerate ITC Ltd is planning to exit its joint venture with Delhi-based Logix Estates. The matter will come up for hearing before the National Company Law Tribunal (NCLT) later this month.
“The JV partner had also filed a petition before the Delhi High Court for winding up the JV company, which was transferred to the NCLT,” ITC said in its annual report for FY22.
ITC and Logix’s JV, Logix Developers Private Limited (LDPL), was set up for developing a luxury hotel-cum-service apartment complex at the company’s leasehold site located at Sector 105 in New Okhla Industrial Development Authority (Noida) in Uttar Pradesh. Under the terms of the JV, ITC holds 27.9 per cent equity stake in LDPL and will “provide hotel operating services”, upon its commissioning.
Alternative plans
The Kolkata-headquartered conglomerate, in its annual report, further maintained it was “not interested” in going ahead with “any alternative project plans” as proposed by the JV partner. The same had been pointed out to Logix where it was categorically said, “ITC was committed to developing a luxury hotel-cum-service apartment complex as envisaged under the JV agreement”.
However, the JV partner refused to progress the project and instead expressed intent to exit the JV by selling its stake to ITC, the report said.
“Subsequently, the JV partner proposed that both parties should find a third party to sell the entire shareholding in LDPL,” the annual report mentioned, adding that ITC had also moved to the Company Law Board submitting that “the affairs of the JV entity were being conducted in a manner that was prejudicial to its interest and the JV entity.”
During FY22, the JV company received notices from the New Okhla Development Authority “demanding payments in respect of the aforesaid lease”.
ITC’s investments
As of March 31, 2022, the JV company recorded a net loss of ₹47.58 crore (vs ₹40.28 crore in FY21). It had a negative net worth of ₹195.20 crore in FY22 (vs negative net worth of ₹147.62 crore in FY21).
ITC’s total investment in LDPL was ₹41.95 crore and provisions to the tune of ₹33.45 crore towards diminution in the carrying value of investment in LDPL in the previous years were made. The carrying value of ITC’s investment in LDPL in FY22 was ₹8.50 crore, the annual report mentioned.
The financial statements of LDPL for FY22 are yet to be approved by its Board of Directors.