Mumbai: Gammon Infrastructure Projects (GIP) has defaulted on its loan obligations to lenders, due mainly to massive cost over-runs on the Mumbai Port Trust’s (MbPT) offshore container terminal project.
“We stopped paying the principal amount in the January-March quarter, but continue to meet interest payments,” said GIP’s managing director K K Mohanty. “The defaults occurred due to cost overruns at the container project after the MbPT failed to fulfill certain conditions.”
The MbPT container terminal project, awarded in 2007 to a consortium of GIP and Spanish firm Dragados, is yet to start, since the port has not been able to complete dredging of the main navigation channel. GIP had filed a claim of INR3bn ($48m) on the port trust in 2013 for the delay in completing the dredging.
The cash crunch at Gammon Infra throws a spanner in the works of parent Gammon India’s plans to sell its loss-making subsidiary. The parent organisation has itself been in dire straits for several years now, having restructured its debt of about INR135bn in June 2013 under the corporate debt restructuring cell.