Simon Carves, Punj Lloyds’s UK subsidiary, has received a decision in adjudication proceedings initiated on 22 December 2008, regarding the termination, by SABIC UK Petrochemicals, of a contract originally awarded in 2006. The adjudication decision has been received and is in favour of SABIC. Simon Carves is disappointed with the initial decision, the company will now proceed to the next stage of dispute resolution.
Rs2.1bn of auditor qualifications have already been written off but Rs2.2bn of performance guarantees encashed have been classified as recoverable from clients. At this point we do not know if Punj Lloyd will write this off in 4QFY09/FY10, or continue to maintain the same in its books. We had already written off both these amounts as exceptionals in our FY09E numbers.
Expect Punj Lloyd to report sales of Rs30bn (up 28% YoY) and Recurring PAT of Rs1.36bn (up 16% YoY) in 4QFY09E. FY10 and FY11 EPS are epxtec to be flat at Rs 12.