GMR quits Rs 7,200 crore Kishangarh - Udaipur -Ahmedabad highway project

MUMBAI: Debt-laden GMR Infrastructure has terminated its contract with National Highways Authority of India ( NHAI) for six-laning of the ambitious Kishangarh - Udaipur -Ahmedabad highway, the infrastructure major informed bourses on Monday.

In 2011, GMR Infrastructure bagged NHAI's biggest project, the Rs 7,200-crore Kishangarh-Udaipur-Ahmedabad highway project, by quoting an aggressive premium of Rs 636 crore. The winning bid had raised quiet a few eyebrows with analysts speculating the financial viability of the project given the premium.

GMR had reportedly sent a notice for termination of contract to NHAI due to the latter's failure to get an environmental clearance for the project and to notify the revised toll rate on this stretch being widened from four to six lanes.

The decision would lead to state-run NHAI losing revenue of Rs 636 crore annually, which would have increased 5% every successive year. NHAI is believed to be planning to take actions against GMR for non-compliance with the prescribed procedure for exit from a project.

The Bangalore-headquartered developer of roads, airports and utilities, which has a staggering debt of around Rs 34,000 crore, has decided to go slow on new projects and focus on cash generation and resolving issues faced by its different projects.

Last year, GMR was forced to give up on its $511 million Maldives Airport project after a change of regime in the country. It faced another setback in its global aspiration earlier in 2010 when it had to sell its 50% stake in US-based power generation company InterGen for around $900 million.

Although the company said that the stake sale was intended to increase focus on opportunities in India, sector experts said that it was primarily a fund-raising exercise.