Mumbai: Gammon India Ltd shares tumbled by nearly a fifth on Monday after a part of the bridge it was constructing for the Delhi Metro Rail Corp (DMRC) fell, unnerving investors.
The accident killed six people on Sunday morning and prompted the metro chief Elattuvalapil Sreedharan to offer his resignation.
A spokesman for DMRC said government officials had asked Sreedharan to withdraw his resignation, which he did.
“It’s not that great a stock to buy, every now and then something goes wrong,” Shailesh Kanani, analyst at Angel Broking. “There are many better plays for infrastructure.”
An under-construction flyover by Gammon India partially collapsed in Hyderabad in September 2007.
The over-86 year-old company, whose business spans transportation, engineering, hydro power and irrigation, said it would reserve comment until a government committee returned with the results of its investigation into the accident.
“The committee is investigating into the cause. Let the committee come out with a report and then we will comment,” Gammon India’s vice president, R.L. Telang told Reuters over the telephone.
Newspapers quoted Sreedharan as saying the causes of the accident could have been a fault of the design, the contractor or inferior material.
“There is no design fault,” Telang said.
The capital’s shiny metro system was seen as a rare example of how big construction projects can be efficiently completed in India to spur its economic rise. But this is the second accident at the swank metro project, the first occurred in October 2008.
The first phase of the metro was completed in 2005, within a budget of $2.3 billion and nearly three years ahead of schedule.
The second phase, which is expected to cost $4.5 billion and boasts a high-speed airport link beneath the capital’s clogged and at times chaotic roads, is due to open when the city of 16 million hosts the 2010 Commonwealth Games.
“We will still try to complete our deadline but that is not something we are concentrating on just now. The first thing is to get the area cleared up and assess the situation,” Anuj Dayal, the spokesman for the Delhi metro, told Times Now TV channel.
Shares of Gammon India fell as much as 17.5%, but later recovered to close 2.7% up at Rs165.60. The broader market was down 0.77%.