The decision of the GVK Group, operators of the Bangalore International Airport, where the GVK group is at the helm with a 43 per cent stake majority stake, to redo the runway just around four years after it was laid, and to invoke a warranty clause against Larsen & Toubro who did the original job, has occasioned much comment.
L&T was one of the shareholders in Bangalore International Airport Ltd when it was formed. It exited with multifold returns within 18 months of operations having started, after investing a little over INR 55 crore for a 17% stake. This was acquired by GVK during late 2009.
And, L&T also laid the runway. Neither side would explain what the problem was or why it felt matters had reached this stage. BIAL refused to spell out the warranty details, saying contractual agreements could not be shared or discussed. L&T said it had no comment to offer on individual contracts.
Invoking the warranty clause in an infrastructure project is rare, say industry analysts. A senior analyst tracking infrastructure projects at a global brokerage told Business Standard said that “Resurfacing happens (on average) once in five years, depending on the movements and a number of other factors. It is a little strange that this airport has to take up maintenance within four years.”
10/03/12 Steelguru
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