Shares of construction companies extended their gains on Friday after the Cabinet approved an array of measures to quickly resolve disputes, pour liquidity and deal with stressed assets. Hindustan Construction Company were trading higher by 9.62 per cent in the afternoon trade (at 1.11 pm). The scrip opened the day at Rs 34.80 and has touched a high and low of Rs 37.90 and Rs 34.05, respectively, in trade.
Patel Engineering shares again hit upper circuit by surging 20 per cent to Rs 64.50 on Friday. The scrip opened the day at Rs 64.50 and touched a high and low of Rs 64.50 and Rs 64, respectively.
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IL&FS Engineering and Construction Company was trading 12.65 per cent up at Rs 54.75 at the same time. The scrip opened the day at Rs 48.70 and has touched a high and low of Rs 57.45 and Rs 48.70, respectively, in trade so far.
Under the new arrangement approved by the CCEA, government agencies would pay 75 per cent of the arbitral award amount to an escrow account against margin free bank guarantee in those cases where the award is challenged. The 75 per cent amount released into an escrow account will have to be spent by the contractor in completing the project and in discharging the dues of bank and other financial institutions.
Patel Engineering on Thursday announced that the Cabinet decision that require government agencies to pay 75 per cent of the arbitral awards is expected to reduce the company’s debt by more than 50 per cent. Similarly, HCC announced that the arbitral awards will result in HCC’s debt being reduced by half.