CMRL terminates contract with CCCL for building metro stations

Construction works were not moving forward, with CCCL failing to bring in more money into projects

The Chennai Metro Rail Ltd (CMRL) has terminated the contract with Consolidated Construction Consortium Ltd (CCCL) which was to set up Metro Rail stations in various parts of the City. CMRL officials earlier said that the delay in construction of stations would result in delay in commissioning of the first phase of rail project.

The contract, which was awarded to CCCL in 2010-2011, was for constructing stations in various lines of the project, including in Arumbakkam, Ashok Nagar, Guindy, Koyembedu, SIDCO. According to sources, the total size of the contract awarded to the company was of over Rs 230 crore.

The construction works were not moving forward, with CCCL failing to bring in more money into the projects, said a source. According to reports, CMRL has raised the issue with CCCL and the replies were not satisfactory for them to continue with the contract firm.

A company source said that losing the contract would not affect the company and the CMRL owes it around Rs 90 crore for various works it has executed so far.

The CMRL now has to call for another tender and award the rest of the contract with to the lowest bidder.

It may be noted that in December, 2013, CCCL said that it has applied for Corporate Debt Restructuring (CDR) Scheme to restructure its debts.

As reported earlier, CCCL has informed the exchanges by the end of 2013 that it has decided and applied for Corporate Debt Restructuring Scheme.

Several infrastructure projects including the Chennai Metro has met a delay due to various reasons, which has affected the company's balance sheet, according to industry sources. CCCL owes around Rs 740 crore to the banks and a major share of it is short term loans, till the end of fiscal year 2012-13.

In October, 2013, ICRA has revised the rating on various long term and short term fund based facilities and NCDs to ICRA D.

The report said that these losses combined with the increased working capital intensity have led to higher than anticipated debt levels and inadequate debt servicing capability for the company. The management’s efforts to reduce the debt position of the company through liquidation of its land banks have not materialised, it added.