Hirco, a real estate investment firm, disappointed investors on Thursday after its results for the half year ended March 31st showed a further decline in net assets.
Net assets fell to £223.6m from £251.4m at September 30th 2011, which the company blamed firstly on the continuing deterioration in the Indian economic outlook, which has led to considerable weakening of the Indian rupee against the pound, and secondly on the continued slow progress in terms of sales at the projects.
The project companies' net asset positions have declined by £13.5m since the end of September.
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In a statement the group warned: "A return to the growth rates of more recent years with real progress on investments in key areas of infrastructure will be critical to the success of those projects in which we are invested.
"Progress over this half year has been modest and we understand that no commitments have yet been made to launch the next phase of development at either site."
The firm also said that the preference dividend accruing for the half year, which amounts to £33.3m, has had to be provided against in the amount of £25.8m, as the investment in the projects is insufficient to cover the full amount of this obligation. At the year end the accounting basis of the investment will be subject to a full review to determine whether the current method of accounting is still appropriate.
More positively, the company said it has now begun employing the funds raised around a year ago in a bid to recover value in the company.
In addition, the firm has "undertaken substantial efforts" to conserve its capital by cutting costs with recurring operating expenditures for the last six months to less than £0.5m (2011: £2.4m), within the estimates previously given, but warned that "undoubtedly overall costs will increase" as it implements its strategy, although these are set to remain within "appropriate" levels.
Hirco's progress with its projects continues to be "modest", with the projected completion of Chennai phase 1 Residential now delayed six months to March 2015 and the Panvel overall residential completion now projected for May 2015.
The two office buildings at Panvel totalling 1.9m sqft gross continue are still projected to be completed in February and May 2013. No tenants have been secured for these buildings as yet.
The share price, which is down 24% over the past year, was 13.4% lower at 42p by 12:54.
NR
