GMR Power & Urban Infra Settles with NHAI for ₹1,387.21 Crore, Sparking Stock Price Rally

GMR Power & Urban Infra Limited Settlement with NHAI

On June 28, 2024, GMR Power & Urban Infra Limited disclosed an important update to the stock exchanges. This update pertains to the status of claims settlement by their subsidiary, GMR Hyderabad Vijayawada Expressways Private Limited (GHVEPL), with the National Highways Authority of India (NHAI).

Background of the Project and Claims

GHVEPL had entered into a Concession Agreement in October 2009 to construct, operate, and maintain an 181.50 km stretch of road between Hyderabad and Vijayawada on NH-65. However, following the bifurcation of Andhra Pradesh and the creation of Telangana, GHVEPL faced significant revenue losses. Consequently, GHVEPL raised claims against NHAI, seeking compensation for these losses, which were attributed to the change in law.

Amicable Settlement Reached

Although the matter was under judicial consideration, both GHVEPL and NHAI decided to settle the disputes amicably without further court or tribunal intervention. As part of this settlement, NHAI agreed to pay GHVEPL Rs. 1,387.21 crore in two tranches. The project will be handed back to NHAI on July 1, 2024.

Details of the Settlement Tranches

GHVEPL has already received Rs. 850 crore as the first tranche of the settlement. This amount will primarily be used to close loans with its consortium of lenders. The remaining balance of the first tranche, along with the second tranche of Rs. 537.21 crore, which will be received on the Handover Date, will be utilized for further reduction of GPUIL’s corporate debt and investment in other business growth opportunities.

Corporate Background

GMR Power & Urban Infra Limited, headquartered in New Delhi with its registered office in Mumbai, is a significant player in the infrastructure sector. The company is listed on both the BSE and NSE.

Stock Performance

The share price of GMR Power & Urban Infra has surged about 2.5% on Friday. The stock has advanced more than 30% in the month of June.

Conclusion

This settlement is a significant development for GMR Power & Urban Infra Limited as it not only resolves long-standing disputes but also provides substantial financial inflows that can be strategically used to strengthen the company’s financial position and support its growth initiatives.