Hirco berserko following Indian townships write down

Hirco, a company involved in developing two huge township projects in India, has seen the current market value of the assets plunge by more than half.

For the full year which ended on 30 September 2011 the company reported an an after-tax loss of £273.3m, representing a loss per share of £3.30.

This loss was mainly a "non-cash" accounting adjustment as the directors wrote down the group's asset values following a previously announced revaluation of their developments in Chennai and Panvel.

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In September 2010 the projects were thought to be worth £824m, but following an assessment by commercial property adviser CBRE in September 2011 the assets were valued at just £342m.

While the economic backdrop has been difficult the company has been busy cutting costs, sacking staff, renegotiating contracts, closing the US office and moving all admin functions to the Isle of Man. These cost savings are expected to amount to £2m per year.

That won't be enough to calm investors though, especially as the Chairman of the company, David Burton, reminded shareholders that the overall development time-lines for the projects have lengthened considerably and what Burton calls "the upstreaming of cash" is unlikely for the foreseeable future.

The stock dropped 11.2% by 9:29am. Over the past 12 months it has fallen 15.6%. Since 2007 the shares have fallen 87.7%.

BS