Indian Hume Pipe had some really bad news to announce on Friday after market hours.
Over six months ago, the stock price had celebrated its winning of two huge orders from the Andhra Pradesh Drinking Water Supply Corporation (APDWSC), worth Rs. 701 crore. One, worth Rs.503 crore, was for construction of Drinking Water Supply Projects in Guntur District and another for Rs.199 crore, for work of construction of Drinking Water Supply Projects in Vizianagaram District.
On Friday, the APDWSC informed the company that both the orders now stand cancelled due to change in the policy of the Government, vast changes in the scope of the work and to give effect to the Articles of Association of the Corporation, which include provision of drinking water to urban areas as well.
The company is called upon to raise objections for explanations if any within 15 days from receipt of the termination notices.
The company has said that it will explore legal remedies in accordance with the said Agreements dated 31-01-2019.
It has stated that its order book position as of 20t h May, 2019 was Rs.5,326 crore v/s Rs.3206 crore (YoY) and says that even after cancellation of this order, its order book is comfortable.
The stock price has reacted negatively to this news, opening 2.3% lower at Rs.310.90 and going down almost 7.5% down at Rs.294.80.