Reliance Infra wins major arbitration award of Rs1,250cr against Damodar Valley Corporation

Reliance Infrastructure
Reliance Infrastructure Ltd. has won a major Arbitration Award of Rs1,250cr against Damodar Valley Corporation (DVC), a Government of India undertaking. A three-member Arbitration Tribunal unanimously gave the award in favour of Reliance Infrastructure on December 21, 2019.

Reliance Infrastructure was the Engineering & Construction contractor for Damodar Valley Corporation's 2 x 600 MW Raghunathpur thermal power project in West Bengal commissioned in 2012.

The Arbitration Tribunal awarded the case in favour of Reliance Infrastructure and directed Damodar Valley Corporation to pay Rs896cr and return the Bank Guarantees of Rs354cr within four weeks or pay additional interest, at the rate of 15% per annum, for any delay in payment beyond four weeks.

Pursuant to the recent Niti Aayog circular, Reliance Infrastructure will request DVC to pay 75% of the Arbitral Award against Bank Guarantee immediately, the company said in the filing.

The proceeds will be used to pay lenders and reduce the debt of the Company.

Reliance Infrastructure spokesperson said, “this award by the Honourable Arbitration Tribunal is a validation of the rightful position of the Company. Indian EPC companies must be paid their dues on time so that they can participate in mega-infrastructure projects without the risk of getting bogged down by working capital issues.”

Stock view:
Reliance Infrastructure Ltd is currently trading at Rs24.25, up by Rs1.15 or 4.98% from its previous closing of Rs23.10 on the BSE.

The scrip opened at Rs23.90 and has touched a high and low of Rs24.25 and Rs23.75 respectively.

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