GMR Infrastructure tumbled 4.73% to Rs 25.20 after an arbitration tribunal has asked company's subsidiary GMR Kamalanga to pay Rs 1,005 crore to SEPCO Electric Power Construction towards project payments, prolongation costs.
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).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 Rs 580 crore furnished by SEPCO which amount was utilised 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 has confirmed a net claim of Rs 1005 crore payable by GKEL to SEPCO. It may be noted that there is an existing provision of Rs 1092 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 post trading hours yesterday, 23 November 2020.
On a consolidated basis, GMR Infrastructure reported a net loss of Rs 750.03 crore in Q2 September 2020 as compared to a net loss of Rs 458.50 crore in Q2 September 2019. Net sales dropped 33% to Rs 1,199.30 crore in Q2 September 2020 over Q2 September 2019.
GMR Infrastructure is a leading global infrastructure conglomerate with interests in airport, energy, transportation and urban infrastructure.
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(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)
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