The share price of Gayatri Projects jumped 9.5 percent on Tuesday after the management clarified that the National Highways Authority of India (NHAI) has stopped projects with the company only until earlier orders are rectified.
The stock jumped as much as 9.5 percent to its day's high of Rs 35.45 per share on the BSE.
For the March quarter, the company reported a net profit of Rs 18.64 crore as against a net loss of Rs 80.99 crore during the year-ago quarter. Sales rose 49.44 percent to Rs 1,360.10 crore in Q4FY21 as against Rs 910.16 crore during the quarter ended March 2020.
The stock dropped around 14 percent in the last two sessions on reports of NHAI declaring the company a non-performer. It barred the company from bidding on current and future road projects.
Gayatri Projects told the stock exchanges that NHAI officials discovered several flaws in the Varanasi Sultanpur 4-lane project in Uttar Pradesh, where the company was one of the contractors. The company also stated that it had requested an extension of completion date till October 2021.
“The rectification of deficiencies identified has been delayed on account of the second wave of the Covid-19 pandemic. However, the company is engaged in active discussions with the relevant authorities and has raised their objections citing certain technical difficulties at the site. The company will work closely with the authorities to rectify the deficiencies at the earliest and expects the issue to be resolved in the next 2-3 months,” it said in a filing.
Gayatri Projects has told CNBC-TV18 that NHAI has stopped projects with the company only until earlier orders are rectified. In an interview with CNBC-TV18, Sandeep Reddy, MD of Gayatri Projects, said, “The NHAI conducted some independent audits on real sites and found a few cracks, which are not even two percent of the entire length. Therefore, as per the new policy, they stopped us from bidding on new projects till we rectify this and keep it at normal levels.”
“Thus, we cannot bid for new NHAI projects, but our existing order book is of nearly Rs 14,000 crores. We have enough orders for the next three years, and we are quite comfortable. This impacts us probably in the short-term now, next three months or so. But we hope that within the next three months, we will get this reinstated,” he added.