January 2013
The dispute between HS Narula, Chairman, DSC Ltd, and NHAI over the Delhi-Gurgaon Expressway project seems to be easing with the state government planning to takeover the project from Delhi Gurgaon Super Connectivity Ltd (DGSCL), a company promoted by the DSC Group. The Delhi-Gurgaon expressway is the first project to earn NHAI a negative grant, also called a premium. Although, the expressway was to complete in 2005, it finally opened in 2008. Also, there was a cost overrun of over 100 per cent in the construction of the highway, from Rs 548 crore to Rs 1,175 crore. As of March 2010, the debt on DGSCL's books stood at Rs 1,262 crore. If the average interest on the debt was 10 per cent, this debt would result in an annual interest outgo of Rs 126.2 crore. Its annual revenue of Rs 135 crore for 2009-10 was barely enough to cover that. Little surprise then, the company reported a loss of Rs 49 crore for the year. Meanwhile, according to credit rating agency ICRA, the company contracted a new debt of Rs 1,600 crore to retire (possibly high-cost) earlier debt and fund other group investments. So, if DGSCL gets Rs 2,000 crore, it can repay this debt and cut its losses.
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