Jindal Stainless Ltd and Delhi Transport Corporation (DTC) are on a collision course, jeopardising the fate of the Bus Q Shelter project.
Jindal Stainless Ltd has suspended work after the fist phase because ?the project is not commercially viable? due to lack of enough revenue through advertisements. The corporation has asked the company to start work immediately or its security deposit would be forfeited.
A senior official in Jindal Stainless Ltd told FE, ?We have written to the state government for the revision of the MCD media policy or we shall not commence work. It?s causing loss of revenue to us.?? The media policy allows any outdoor publicity agency to put hoardings at any spot in the national capital giving sanction at local level which hurts the interest of the steel company which has agreement with DTC that revenue in excess of Rs 4.5 crore raised through advertisements on key bus routes from Dhaula Kuan hub to ISBT will be credited into the account of DTC.
The DTC officials say the company has refused to commence the work on the project just after bagging the contract without citing any reason behind the move.
It all began with DTC decided to construct about 1,000 shelters?a steel structure with a modern and aesthetic look with polycarbonate roof?ahead of the Commonwealth Games 2010 on build-operate-transfer (BOT) basis inviting private sector participation.
The Jindals-owned company acquired the contract and completed the first phase of 225 shelters before the due date. As per the conditions of the tender, the contractors had to give Rs 93,800 per shelter a month to the corporation with an escalation of 10% annually. The company was giving Rs 2 crore per month to DTC.
Subsequently, they acquired the contract for the second phase earlier this month, offering to pay Rs 1,05,000 per shelter and was awarded the contract this month. As per the terms of agreement, These shelters would be constructed to design specifications provided by DTC, and would assure revenues to DTC in excess of Rs 4.5 crore per month from outdoor advertising.
Meanwhile, the economic downturn hit India Inc.The companies, pulled up purse strings. The entry of several companies in the arena made the things more difficult for the Jindals.
Besides, the construction of a shelter which involves an investment of about Rs 10 to 15 lakhs, the company has to bear the maintenance cost. It has to give an assured sum of Rs Rs 2 crore a month to DTC. This makes the task more difficult.
The work may be suspended now, but the company officials refuting that the scheme will miss the October 2010 deadline. ?We are waiting for the revision for the policy. Once it is cleared, we shall complete the work much before the schedule.?