look news india
There was a stir in the Indian infrastructure sector when the National Highways Authority of India (NHAI) took very strict action regarding the country’s famous and strategically important Lucknow-Kanpur Expressway project. PNC Infratech Ltd, the main promoter company constructing this project, has been banned for the next three years due to ignoring the rules and serious flaws in the road construction. The direct impact of this administrative and regulatory action has been seen on the financial health of the company and its performance in the stock market. In the stock market trading, the company’s shares have fallen to their new lowest level of 52 weeks, due to which there is an atmosphere of great disappointment and concern among the investors.
This entire development is linked to the construction work and quality of the much-awaited Lucknow-Kanpur Expressway (also known as Awadh Expressway). According to the information received, within a few weeks of the inauguration of this expressway, there were serious complaints of subsidence and structural failure in some parts of the road. Seeing the seriousness of the situation, when the technical team of senior experts from IIT Kharagpur went to ground zero and investigated, a shocking truth came to light. The investigation report revealed that during the construction of the road, very weak and non-standard plastic clay was used in its base. Due to this huge technical mistake and use of substandard material, the layers of the expressway started sinking as soon as heavy vehicles passed by. In view of this serious threat to public safety, NHAI has without any leniency taken this disciplinary action against its concessionaire company Avadh Expressway Private Limited and its main promoter company PNC Infratech.
Under this strict step taken by NHAI and Ministry of Road Transport and Highways (MoRTH), PNC Infratech has been completely banned for a period of three years. After coming under the ambit of this ban, now this company will not be able to participate in any form in the bidding for new road and highway projects conducted by NHAI, Ministry of Road Transport or any of their other executive government agencies across the country for the next three years. However, in the official clarification given by the company to the stock market, it has been made clear that this new restriction will not affect its existing projects which are already in progress or on which work is going on. Despite this, the closure of avenues for obtaining new future orders has posed a major crisis to the company’s business model, as a large portion of its total order book depends on government projects.
The most intense and negative impact of this strict decision of the government authority was seen on Dalal Street i.e. the stock market. During the week’s trading session, there was such huge selling pressure in the shares of PNC Infratech Limited that the stock directly hit a huge lower circuit of 20 percent. After this big fall, the company’s shares fell straight to its lowest level of Rs 140.32, which is also its lowest level in this entire year i.e. 52 weeks (52-Week Low). This stock, which has been facing market pressure for some time, has suffered a major blow to investors as it lost one-fifth of its share in a single day. Analysts believe that unless the company gets relief on the legal front or the situation is completely clarified, investor confidence in this counter may remain weak.
Reacting to this entire development, PNC Infratech management has said that they are closely studying this decision of the regulatory authority. The company is considering all available legal remedies against this unexpected and drastic action to challenge this ban and minimize the financial loss. On the other hand, this case has also served as a stern warning to other construction companies working on large infrastructure projects across the country regarding quality and compliance. Till the repair work of the expressway is completed and safety standards are restored, the situation regarding traffic and toll on this route remains challenging for the public, which is expected to have a direct impact on the quarterly financial results of the company in the coming days.