Tamil Nadu-based RPP Infra Projects has lost a ₹205.89-crore contract to build the proposed Global Sports City in Chennai after the state government decided to restructure and redesign the project. According to reports from CNBC TV18, the company disclosed the termination to stock exchanges on Thursday, August 27, stating it received communication from the Sports Development Authority of Tamil Nadu (SDAT) on August 12. The contract, awarded on February 18, covered design, engineering, procurement and construction of the sports city and was valued at ₹205.89 crore, including GST. RPP Infra said it had already begun work and incurred expenditure on the project before the termination.
The cancellation stems from the state government's decision to rethink the scale and design of the Global Sports City following a June 16 meeting chaired by Tamil Nadu's Minister for Public Works and Sports Development. As reported by CNBC TV18, after considering the total land available for the project, the government decided that the sports city should be restructured and redesigned to accommodate future national and international sporting events, including events on the scale of the Asian Games. SDAT's termination order, dated July 31, stated the decision was taken under provisions of the contract dealing with cancellation or reduction of works, termination and force majeure. The authority subsequently cancelled the work order and directed the company to stop construction, with the outcome of the meeting communicated to RPP Infra on June 18.
RPP Infra said it had already begun work and incurred expenditure on the project before the termination. According to CNBC TV18, the company is now assessing the financial impact of the cancellation and examining the rights and remedies available to it under the contract. The cancellation leaves RPP Infra with expenditure already incurred on a project that will no longer proceed under the original contract. SDAT's order states that the termination takes effect immediately upon receipt by the contractor. The company has not yet quantified the amount spent on the project or the potential financial hit from the termination.
RPP Infra shares closed at ₹56.91 on Thursday, down 0.47% following the disclosure of the contract termination. As reported by CNBC TV18, the company acknowledged that its disclosure to the stock exchanges came after a delay, attributing this to its efforts to pursue continuation of the project, particularly since work had already begun and expenditure had been incurred. The company had been in discussions with SDAT and made efforts to continue with the project before the contract was ultimately terminated. RPP Infra is now evaluating the financial and other implications of the decision, including whether it can seek remedies under the terms of the work order and contract.
