Construction companies says IL&FS group companies had pushed them into trouble, and now they are on the verge of collapse
The IL&FS crisis has reached the door of Prime Minister Office as five flagships road projects' contractors have written a letter to IL&FS Chairman Uday Kotak and marked it to the PMO for recovery of more than Rs 2,000 crore dues against IL&FS Transportation Network Ltd (ITNL) and IL&FS Engineering & Construction Ltd (IECL), the subsidiaries of IL&FS.
Construction companies said IL&FS group companies had pushed them into trouble, and now they are on the verge of collapse. ITNL allegedly failed to honour the dues of these 10 construction companies, which were hired to execute five highway projects.
The letter, seen by DNA Money, shows that five projects, including Kiratpur-Nerh Chowk Expressway, Amravati-Chikhli Expresssway, Z-Morah Tunnel, Chenani-Nashri Tunnel are stuck at different stages of completion.
"These projects were under execution at various stages of completion by these contractors. It is understood from them that a gross amount of Rs 2321.02 crores is due to pay by ITNL against invoices already raised for works completed as well as certain claims raised by them within the provisions of contract agreements," the letter said.
On November 10, on behalf of 10 construction companies, National Highways Builders Federation (NHBF) has sent a letter to Uday Kotak, chairman, IL&FS, PMO, Ministry of Road Transport, and National Highways Authority of India (NHAI).
These companies are not in a position to take out their plant and equipment and deploy it elsewhere for commercial use and relocate their workforce on other projects, because these projects are suspended but not terminated.
"All these companies have been intimated that their works are put in suspended state. They have not actually terminated", the letter said.
NHAI as the principal employer has awarded certain highway projects to ITNL and IECC under PPP Mode (public-private partnership). Further, ITNL and IECC awarded EPC (engineering, procurement and construction) contracts to the small and medium construction companies for the execution of the highway projects.
These construction companies failed to pay the dues of their employees who are stuck at the project sites. Some of the construction companies have taken loans from NBFCs and banks on the basis of ITNL and IECC guarantee to execute the projects. Some of them are facing National Company Law Tribunal (NCLT) proceedings. However, on October 15, 2018, National Company Law Appellate Tribunal (NCLAT), had restricted banks and financial institutions from setting off any amounts lying with any creditor in any account of IL&FS or its group companies.
"We have not received any response yet, but hopefully the issue will be addressed in next board meeting of IL&FS," P C Grover, the director general of NHBF told DNA Money.
Attempt to contact IL&FS through email did not elicit any response yet.
However, on December 2, in its second progress report, IL&FS said, "Any resolution of the IL&FS Group is made more challenging on account of the complexities pursuant to multiple layers, varied interests of various stakeholders, diverse businesses with varied age, scale and market positions of these businesses. This is particularly true of ITNL, where in addition to the overseas business, its Indian operations are also spread across the country and are in different stages of completion resulting in different asset classes and disparate revenue streams."
STUCK IN LOGJAM
- Ten contractors of the five flagship highway projects have petitioned Uday Kotak, chairman, IL&FS and PMO for recovery of their dues
- ITNL allegedly failed to honour the dues of these 10 companies hired to execute five highway projects
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