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RInfra wins Rs 2,950 cr in arbitration against DMRC, to pare debt

As on March 2017, RInfra's consolidated borrowings stood at Rs 15,624.52 cr

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A subsidiary of Reliance Infrastructure (RInfra) has been awarded Rs 2,950 crore in arbitration against Delhi Metro Rail Corporation (DMRC) and it could help the debt-ridden parent firm in lowering its borrowing levels.

On Thursday, Delhi Airport Metro Express Private Limited (DAMEPL), an arm of RInfra, announced that it has been awarded compensation of Rs 2,950 crore by a three member arbitral tribunal in a unanimous decision. The tribunal was constituted from a panel nominated by DMRC.

Of the total arbitration award, Rs 1,900 crore will go towards debt repayment to eight public sector banks.

As on March 2017, RInfra's consolidated borrowings stood at Rs 15,624.52 crore.

"RInfra to receive Rs 1,050 crore that it had invested in the special purpose vehicle of metro line," read a statement issued by the company.

Company's consolidated debt will get cut down by Rs 2,950 crore if entire award amount is paid to RInfra.

"Reliance Infrastructure participated in Public Private Partnership (PPP) model in the metro sector to lead the metro movement in the country through PPP but unfortunately had to terminate the agreement. We welcome the award and hope it will encourage private sector to participate in the nation building process," read a statement issued by RInfra.

As per the order, the award to RInfra has been granted on the basis of termination provisions of the concession agreement where the arbitration tribunal has held termination by DAMEPL as valid. The compensation covers damage as a result of breach by DMRC of its obligations under the concession agreement and material adverse effect on the ability of DAMEPL to perform its obligations under the concession agreement.

If DMRC decides to challenge the order, as per the recent guidelines by Niti Ayog, public sector undertakings should pay 75% of the arbitration award amount against bank guarantee. Therefore, RInfra is expected to get Rs 2,210 crore in case DMRC proposes to challenge the award.

"We are studying the award given by the arbitrators in the airport express line case and will decide our further course of action in the manner after due deliberation," said Anuj Dayal, executive director (corporate communications), DMRC.

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