IL&FS engineering arm loses Rs 374-crore Gujarat metro contract

The Gujarat Metro Rail Corporation on Thursday terminated the contract awarded to IL&FS Engineering & Construction citing project delays and awarded the same to J Kumar Infrastructure.

The Rs 374.64-crore contract was to build four stations and lay a 4.6-km viaduct for the metro project in the city. Due to financial constrains at the parent group, the company had stopped the work since September 2018.

The corporation has also decided to en-cash the bank guarantee given by the IL&FS group company.

The IL&FS Group is being run by a government appointed board after it began defaulting on debt payments from late August last. The group and its 348 subsidiaries owe over Rs 94,000 crore to the lenders.

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The corporation said it had given a number of notices to the company to finish the work by the March 2018 deadline, but due to the cash crunch, they were not able to complete the work as per the schedule.

"We have terminated the contract of IL&FS Engineering & Construction. They were to build four stations and a 4.6-km viaduct for the Ahmedabad Metro at a cost of Rs 374.64 crore," corporation said in a statement.

The company was served numerous notices since October 2017 for not meeting the deadlines and by end-September 2018 the contractor stopped the work unilaterally, it said.

"A final show cause notice was given in November 2018 and today (Thursday) we decided to terminate the contract," the statement said, adding the company had neither performed satisfactory in accordance with the terms and conditions of the contract and nor was in a position to continue the work, therefore contract termination.

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The statement further said the corporation has awarded the balance work to J Kumar Infrastructure and has also started to encash the bank guarantee of IL&FS.