Gammon India has come in for another day of drubbing on the stock markets in the wake of the double mishap on the Delhi Metro line that it was involved in.
There is a pattern that is being played out here: the first time there was a mishap on the company's worksite the stock tanked more than 17 per cent only to recover most of it, but still ended up in the red by over 4 per cent at the end of the day.
The next day there was another mishap when the company was trying to remove the debris when three cranes came crashing down in a synchronous manner and that has made investors more jittery, and ensured the stock plunged again, this time by 7.61 per cent.
Opening at Rs 173.55, the share never went up during the day. It hit its lowest point at Rs 149.60.
The accident-prone company has raised questions galore, not just about its capabilities and capacities to withstand these major disasters, but also about the impact on the infrastructure sector as a whole, since safety aspects are now going to ensure most new infrastructure projects get delayed till every nitty-gritty is not taken care of to ensure the highest safety standards are implemented in public projects.
It may be recalled that the Prime Minister Manmohan Singh had said a special committee will give fast clearances to infra projects costing over Rs 150 crore so that delays are not faced. Indubitably, delays are going to get exacerbated due to Gammon India being mishap-prone.
The case of Gammon India is curious indeed. The company was censured by the Securities And Exchange Board of India in December 2006, when it, as well as its Chairman Abhijit Rajan, was barred from trading by the market regulator. The ban was for one year, regarding a rights issue where it was alleged that Gammon India funds were used to subscribe to its own rights issue, through another company called Reliance Silicones, which opened for subscription in 2001.
SEBI had also ordered Gammon India not to sell or transfer its stake in Gammon Infra, that had filed for an IPO with SEBI. This ban was for three years.
Gammon India is a Rs 23.45-billion listed company and considers itself to be 'Laying the foundation for perfection', and it has had a lot of time to do so, with a history going as far back as 1919, when it claims to have laid the foundation for the Gateway of India -- it also says that it was the first to use the pre-cast reinforced concrete method in India on that project.
A transport engineering specialist, Gammon India projects include building bridges, flyovers, highways, roads and railways. Its orderbook in 2009 stood at Rs 8,000 crore.
Controlled by Chairman & MD Abhijit Rajan, with a 31 per cent stake in its total paid up capital, it was founded in 1922 by British engineer John C Gammon -- the family relationship is still intact in the form of Chairman Emeritus Peter Gammon.
Gammon India had recently announced that it had generated a profit of Rs 140.4 crore on a turnover of Rs 3,657 crore (2008-09).
What is noteworthy is that Gammon India has a subsidiary, Gammon Infrastructure Ltd, a build-operate-transfer specialist. Gammon India controls some 75 per cent stake in it. The curious part is that Gammon Infra is bigger than Gammon India on the bourses. While the market capitalisation of Gammon Infra is Rs 1,721.59 cr, that of Gammon India is Rs 1,448.51 cr.
Gammon India stock closed on the BSE at Rs 153.00 (-7.6%) .
Gammon Infra closed on the BSE at Rs 119.00 (-0.1%) .