FreePress broke the story about Punj Lloyd’s subsidiary in the UK starting proceedings against SABIC. The 2 parties have been unable to come to an amicable resolution on the disputed amount, and legal redressal is now sought.
Recall, Punj management had assured investors that it expects a favourable resolution, in response to auditor comments in FY2008 accounts, on the overstatement of revenues on this contract. The company had subsequently managed to recover Rs1B of the original
disputed amount of Rs3B, but the balance had been kept in abeyance.
Now with the entire amount less likely to be recovered, the additional potential hit is to the tune of Rs3.2/share. Punj Lloyd remains vulnerable to prolongation and cancellation of M-E orders, given its high (25%) exposure to that geography.