Shares of PNC Infratech Ltd. experienced a significant decline, falling more than 6% during Thursday's trading session. The sharp drop occurred after the National Highways Authority of India (NHAI) suspended toll collection on a segment of the crucial Kanpur-Lucknow Expressway.
The NHAI initiated action against PNC Infratech, the concessionaire for the expressway project, following the discovery of a road slippage along an approximately 300-meter stretch. This incident prompted the authority to halt all toll charges on the affected corridor until the damaged portion is fully repaired and deemed safe for use.
Toll Suspension and Revenue Recovery
The decision to suspend toll collection is a direct consequence of the detected structural issue. Furthermore, the NHAI has indicated that any toll revenue lost during this suspension period will be recovered from PNC Infratech. This measure aims to ensure accountability and prompt resolution of the infrastructure defect.
PNC Infratech's Response to Slippage
In response to the NHAI's actions and the market reaction, PNC Infratech issued a clarification to the stock exchanges. The company acknowledged that certain isolated stretches of the expressway were affected, attributing the damage to recent heavy and incessant rainfall. It emphasized that the total affected length of 300 meters constitutes less than 0.5% of the entire expressway project.
"As part of the routine maintenance obligations, the concessionaire took immediate actions/measures and repaired/rectified the majority of affected stretches and maintenance works on the remaining few stretches are already underway in full swing."
The company asserted that most of the damaged section has already been repaired, with work continuing on the remaining portions.
Addressing De-Barment Rumors
Amidst reports suggesting that NHAI had labeled PNC Infratech as a "non-performer"—a status that could potentially disqualify it from future project bids—the company firmly rejected these claims. PNC Infratech clarified that it has neither been debarred nor declared a non-performer by the highways authority.
The company confirmed it is submitting formal replies to the notices issued by NHAI. Financially, PNC Infratech estimated the repair costs at approximately Rs 3 crore, which it stated had already been accounted for within its routine maintenance budget. The company reiterated its belief that this issue will not materially impact its ongoing operations or its ability to bid for new contracts.
Toll collection on the Kanpur-Lucknow Expressway will remain suspended until all necessary repairs on the affected section are fully completed to NHAI's satisfaction.