Mumbai: An interim decision on a dispute over a 2006 contract has gone against Simon Carves Ltd (SCL), a wholly owned UK subsidiary of engineering and construction company Punj Lloyd Ltd, that could potentially translate into a loss of around £28.5 million (around Rs210 crore).
SCL was awarded the contract by Sabic UK Petrochemicals Ltd to design, build and pre-commission a low-density polyethylene plant in the UK.
Sabic terminated the contract a few months ago, citing performance issues as a key reason. It encashed a bank guarantee of £28.5 million and also declined to clear dues, as a result of which Punj Lloyd wrote off around Rs207 crore in the year to 31 March.
The interim decision has come in the wake of adjudication proceedings initiated on 22 December.
Atul Punj, chairman of Punj Lloyd, confirmed the development. “We will appeal to a higher court in the Sabic case and the legal process should take 12-14 months,” he said, adding that the ruling will impact the company’s net profit numbers. He also said most of the orders from Sabic had already been executed.