MSRDC to take action if Reliance Infra misses Sea Link milestones
Reliance Infra faced rating downgrades as the companies grapple with huge debt and muted cash flows.
Reliance Infrastructure and other companies of the Anil Ambani-led Reliance Group have faced downgrades from rating agencies as the companies grapple with huge debt and muted cash flows. Reliance Infrastructure reported its biggest-ever loss in the fourth quarter of 2018-19 due to impairments and write-offs. Its auditors raised questions about the company’s ability to continue as a going concern.
The financial stress of the group has cast a shadow on the future of the Maharashtra government’s Versova-Bandra Sea Link project – a Rs 7,000-crore job -- that Reliance Infrastructure had bagged last year.
“We will be monitoring the projects on a day-to-day basis, and will take action against them only if they don’t deliver as per the timelines agreed in the contract. As per the contract conditions, they have to complete a milestone (in the project) every six months. There are hefty penalties if they don’t deliver. If they don't perform, then they will have to exit (the project),” Radheshyam Mopalwar, head of MSRDC, told ET.
Reliance Infra has said that it will complete the project in 60 months from the appointed date of June 24.
The Anil Ambani-led Reliance Infrastructure walked out of the 5,000-crore Worli-Haji Ali Sea Link project after two years of dispute with the government. The company, which executed the city’s first Metro line, exited the Mumbai Metro Line 2 (Charkop - Bandra - Mankhurd corridor) project due to non-fulfillment of various obligations by the government. In both the projects, the company was a developer.
Another senior executive from MSRDC told ET that the agency has taken cognisance of the financial stress of the group, but it already has the corporate guarantees and other contractual obligations in place and therefore no action is needed at this point of time.
While the project is financed by the government, as an EPC contractor, Reliance Infrastructure would be responsible for managing working capital and timely execution of the project.
The 17.17 km sea link which will connect Versova, a suburb in Mumbai, to Bandra aims to cut down commute time from over 90 minutes to 10 minutes. The project was originally envisaged in 2012 but faced much delays. Reliance Infrastructure, in a consortium with Astaldi of Italy, emerged as the best bidder for engineering, procurement and construction (EPC) job of the Versova-Bandra Sea Link in May 2018, and signed an agreement with the nodal agency of the project MSRDC in September last year.