The auditor said that it has significant doubts about the ability of the Lavasa Corporation to continue as a going concern.
Shares of HCC lost around 24 percent intraday Thursday despite management's clarification to exchanges reiterating that Lavasa continued to work closely with lenders for resolution.
"The company and all subsidiaries are in complete compliance with all regulatory needs," HCC told the bourses.
The stock has been under pressure from opening trade as investors were wary of an auditor report regarding its debt situation.
The stock touched an intraday low of Rs 17.75 during the session on Thursday.
According to a report on CNBC-TV18, the auditor for Lavasa Corporation has said that the networth of subsidiaries of HCC has been fully or significantly eroded.
In fact, it has significant doubts about the ability of the firm to continue as a going concern.
Currently, the liabilities are exceeding assets by Rs 2,390 crore.
According to Investopedia, going concern is an accounting term for a company that has the resources needed to continue to operate indefinitely until a company provides evidence to the contrary, and this term also refers to a company's ability to make enough money to stay afloat or avoid bankruptcy. If a business is not a going concern, it means the company has gone bankrupt and its assets were liquidated.
Last month, a report by DNA had indicated that the firm is considering approaching the National Company Law Tribunal (NCLT) owing to challenges faced in raising money for project completion.
Lavasa clarified the process has been slowed down due to RBI's recent notification on Insolvency and Bankruptcy Code (IBC). The slowdown, the firm said, will be until a clarification on the finer nuances of the revised framework are released by the central bank.
"Lavasa is hopeful of a comprehensive solution for its debt recast once the revised framework is deliberated to the satisfaction of al involved," the company said in a statement, adding that the company's top priority is to safeguard the interests of all stakeholders, including the home buyers.Lavasa was been touted to be India's first smart city spread across 25,000 acre in Mugaon and Dasve near Pune, Maharashtra. Under the project, the firm aims to deliver residential units with an overall value of over Rs 700 crore.