Companies

GMR evaluating options on arbitration award to subsidiary

Our Bureau Hyderabad | Updated on November 24, 2020 Published on November 24, 2020

Following an arbitration award on a GMR Infrastructure Limited subsidiary, GMR Kamalanga Energy Limited (GKEL), the company said it 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.

The company in a regulatory filing with BSE has informed that an arbitration award has been passed in a matter of claims between GKEL and its project EPC contractor, SEPCO Electric Power Construction Corporation.

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 2014, GKEL had encashed bank guarantees of about ₹580 crore furnished by SEPCO. This 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 ₹1,005 crore payable by GKEL to SEPCO.

The infrastructure company arm had made a provision of ₹1,092 crore 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.

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Published on November 24, 2020
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