Reliance Infra hits blocks

Reliance Infra is not doing too well today morning. It opened weak at rs.422 and went on to hit an intra day low at Rs.417 and is currently hovering around the same levels.

The stock has slumped after a news appeared in the media that the company is planning to exit from projects worth Rs.20,000 crore. Blaming it on inordinate delays by the Govt agencies to fulfill the project commitments, the company has put on hold four mega projects - Mumbai Metro line 2, Mumbai Sea Link extension project, and two ultra mega transmission projects. The company has decided to not start construction till it gets all the clearances though none of them seem to be coming through in the immediate future.

The company had begun work on the Mumbai Metro line 1 project without approvals but later it faced many delays, bringing the work to a stop while it had started paying interest on the stalled project. It has suffered a cost over run in the project – up from Rs.2,200 crore planned earlier to Rs.4,500 crore .