Considering and accepting mutual claims of both GKEL and SEPCO, the arbitration tribunal confirmed a net claim of ₹1,005 crore payable by GKEL to SEPCO
Shares of GMR Infrastructure tumbled 5.67% on Tuesday after an arbitration tribunal asked company's subsidiary GMR Kamalanga to pay ₹1,005 crore to SEPCO Electric Power Construction towards project payments, prolongation costs.
At 01:24pm, the scrip traded at ₹25.50 apiece, down 3.59% from its previous close, while the benchmark Sensex advanced 0.77% to 44,414.91 points.
"An arbitration award has been passed in a matter of claims between GMR Kamalanga Energy (GKEL), a stepdown subsidiary of GMR Infrastructure and its project EPC contractor, SEPCO Electric Power Construction Corporation (SEPCO)," the company said in a regulatory filing after market hours on Monday.
While SEPCO had claims on GKEL for project payments, prolongation costs etc., GKEL had made claims on SEPCO towards delays in project execution and towards defect liabilities. In this regard, GKEL had in the year 2014 encashed bank guarantees of about ₹580 crore furnished by SEPCO which amount was utilized towards repayment of GKEL terms loans and consequential reduction of interest burden on the project.
Considering and accepting mutual claims of both GKEL and SEPCO, the arbitration tribunal confirmed a net claim of ₹1,005 crore payable by GKEL to SEPCO. It may be noted that there is an existing provision of ₹1,092 crore approximately in GKEL books towards any such liability, which covers the entire amount of this award and such liability, if any, is non-recourse to GIL and will have no impact on GIL's profitability.
"GKEL is studying the detailed arbitration award and is assessing the legal options as it can challenge the award within 90 days in courts in India," GMR Infrastructure said in a statement.
On a consolidated basis, GMR Infrastructure reported a net loss of ₹750.03 crore in Q2 September 2020 as compared to a net loss of ₹458.50 crore in Q2 September 2019. Net sales dropped 33% to ₹1,199.30 crore in Q2 September 2020 over Q2 September 2019.
From the beginning of the year, GMR Infrastructure gained 22% against a gain of 8% in the benchmark Sensex. From March lows, the stock gained 57%, while Sensex was up 72%.