IVRCL, the company which is constructing the flyover project in North Kolkata that collapsed on Thursday morning resulting in the death of at least 24 persons, has a history of poor performance and alleged inefficiency. IVRCL has been blacklisted more than once in the past for reasons pertaining to efficiency issues and financial irregularities.
IVRCL was blacklisted in 2015 by the Jharkhand Government. The company was facing charges of alleged financial irregularities in execution of a rural electrification project in Jharkhand.
Also, in 2011, the Uttar Pradesh Jal Nigam blacklisted IVRCL for being lax in maintaining quality of materials used in drinking water sewage projects in Allahabad and Kanpur.
Not just that. In 2009, IVRCL was facing investigations by the Greater Hyderabad Municipal Corporation (GHMC) for causing death of two workers by being negligent towards the working conditions. The report said that the state labour department has recommended that the civic body blacklist the firm.
A look at the financials shows that IVRCL’s financials were under stress and it has been facing severe liquidity stress.
Since fiscal year 2012, IVRCL's net sales dropped nearly 50 percent from a high of Rs 7,557 crore to Rs 3,820 crore in fiscal year 2015. Similarly, the company has been posting losses over the last four financials years with accumulated losses standing at Rs 2,192 crore as at March, 2015.
IVRCL’s debt has surged by 91 percent from Rs 1,725 crore in fiscal year2008 to Rs9,386 crore till the end of March, 2015.
IVRCL’s shares too have taken severe beating on the bourses as investors exited the counter fearing more downward pressure. Its stock has plunged over 15 percent in past two days alone and some 38 per cent this year so far.
From a high of Rs 201 in 2007-08, IVRCL stock has plummeted over 96 percent on account of deteriorating profit levels, ballooning debt, pushing down its market cap by 91 percent from a high of Rs 5,353 crore in FY08 to Rs 466 crore in FY16.
The Kolkata mishap raises several questions. Was necessary due diligence done by the state government while evaluating the ability of the company in undertaking the construction of the Vivekananda flyover being built in one of the busiest areas of Kolkata.
As it appears now, both the state government and the company have distanced themselves from the mishap. The 2.2-km Kolkata Vivekananda Road flyover, funded under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), began in 2008 and the construction of the project got stuck midway several times for financial constraints.
IVRCL too have distanced itself from any wrongdoing. “45% of the work was left. One girder missed and the second one fell. It is nothing but God's act. This has never happened before; we are also in shock,” business standard has quoted IVRCL’s K P Rao on Friday.
The important question here is this. Did the state government fail to assess the ability and track record of the company, which has been facing severe financial constraints in the past and the has been blacklisted multiple times for reasons of poor performance.
Did 24 innocent lives pay the price of sheer negligence by the state government?