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L&T may cancel two highway projects

No Comments Sub Category:Infrastructure Posted On: Apr 23, 2014

Two Maharashtra road projects with a combined cost of about Rs.4,500 crore may be cancelled by L&T as they have turned ‘financially unviable’. The company has also communicated this with L&T. NHAI has directed the company to wait till the polls are over. The projects involve widening of 485 km of carriageway on two highways: Amravati-Jalgaon and Jalgaon-Gujarat/Maharashtra border. Their value was Rs.2,538 crore and Rs.1,968 crore, respectively and have turned financially unviable as the cost has shot up.

L&T was to raise money, design and build the highway and collect tolls from those using the stretches for over 20 years. Key inputs such as bitumen, diesel and aggregates turning costlier and the financials show a very dismal picture. The revenue collected from the toll may be lower than projected due to macro economic factors.

The stock market may view this as bad in the short run but it likely to be beneficial to the company.

Source:  Hindu Business Line

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