PNC shares fall 19% over Lucknow-Kanpur Expressway project:Company tells investors ‘we’re not non-performer’; did NHAI provide wrong information?

Shares of PNC Infratech, the company that built the Lucknow-Kanpur Expressway, have fallen sharply after the National Highways Authority of India (NHAI) said it had started proceedings to declare the company a ‘non-performer’. On August 5, NHAI said action was being initiated against PNC Infratech. The company’s share price stood at ₹260.24 at the time. Its shares have since fallen by around 19% in four days. PNC Infratech has now written a three-page letter to the BSE and NSE, saying it has neither been blacklisted nor declared a non-performer. The company said only a show-cause notice had been issued and that its subsidiary, Awadh Expressway Private Limited, was responding to it. This has raised questions over whether NHAI’s announcement referred to an ongoing process rather than a final decision, or whether PNC Infratech is presenting the matter differently to reassure investors. How accurate are PNC Infratech’s claims? Company says 300 metres of road was damaged In its August 6 letter to the BSE and NSE, PNC Infratech said parts of the expressway had been damaged because of continuous heavy rain. The company claimed that around 300 metres of the road had been affected, accounting for less than 0.5% of the expressway’s total length. However, the report says around 600-700 metres of the 63-km expressway has developed stretches of subsidence at different locations. These sections are being dug up and rebuilt. On the 45-km stretch between Unnao and Lucknow, the report claims that damaged or sunken sections can be found roughly every 2 km. In total, problems have reportedly been identified at 84 locations. Company blames rain; technical inspection points to construction quality PNC Infratech attributed the damage to heavy rainfall. However, according to the report, NHAI’s technical inspection found that poor construction quality and problems with the laying and settling of the asphalt layer contributed to the deterioration. Company does not mention possible non-performer status PNC Infratech has said that NHAI has neither blacklisted it nor declared it a non-performer. It maintains that it has only received a show-cause notice. However, on August 5, NHAI Regional Officer Gautam Vishal said official proceedings had begun to declare the company a non-performer. NHAI has also removed four officials from the project over alleged lapses in road construction. They include construction agency project manager Vivek Kumar Gupta, independent engineer team leader Surendra Kumar, resident engineer Yatendra Kumar and current project director Nakul Prakash Verma. Repairs have also reportedly failed PNC Infratech said severely damaged sections had been repaired immediately and work was progressing rapidly at other locations. Under the contract, the company is responsible for maintaining the expressway for 15 years after its construction. However, the report claims that some of the patchwork carried out to repair earlier defects has itself started coming apart. Over the past 24 hours, 14 new locations on the Lucknow-Kanpur Expressway have reportedly developed road subsidence. Experts cited in the report said construction quality had been inadequate and that repair work was also being carried out in haste, potentially worsening the problem. A recent video reportedly showed workers using a fan to dry the road during repair work. Company could bid again after two years An NHAI official said there are different rules governing restrictions on companies. If poor construction quality is established, a company can be blacklisted for one to two years, depending on the circumstances. After the restriction ends, the company can participate in tender processes again. It can also secure a contract if it meets the applicable eligibility requirements. Latest condition of expressway Over the past two days, 14 new locations on the Lucknow-Kanpur Expressway have reportedly developed problems including road subsidence, damaged drains and waterlogging. Near Rawal village, a hole measuring around 6 feet long and 4 feet deep has appeared alongside the divider. Three new patches have been laid on the Unnao-Lucknow carriageway. Patchwork is also under way along around 100 metres of the road at kilometre 39.7. The road has also deteriorated near Israel Kheda on the Lucknow-Unnao carriageway. IIT Kharagpur team completes inspection Engineers from IIT Kharagpur have completed their inspection of the expressway. Professor KS Reddy is expected to submit the team’s report to NHAI headquarters within 12 days. The inspection included videography of the affected sections. Investigators also recorded questioning of PNC Infratech and NHAI officials. The team is also examining whether PNC Infratech made any changes to the original design of the expressway. The findings of the IIT Kharagpur report are expected to provide further clarity on whether the damage was primarily caused by heavy rainfall or whether construction and design-related issues contributed to the deterioration.