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| Edited By: G Seetharaman |Source: DNA |Updated: Mar 30, 2018, 02:36 AM IST
Engineering & infrastructure company Punj Lloyd will likely write off in the fourth quarter a Rs 160 crore claim made by its client Ensus for delay in completion of its project.
This is over and above the Rs 270 crore the company incurred in cost overruns in the second and third quarters.
Punj Lloyd’s subsidiary, Simon Carves (SCL), was contracted to build a bio-ethanol plant for the UK-based Ensus. The project, after being delayed, was commissioned in the third quarter.
Ensus on March 3 levied liquidated damages to the tune of £23.1 million for delays in the completion of the project.
Punj Lloyd, in a statement, said this was a very complex project, being the only one of its size in the world. “The project delay was due to poor productivity and workmanship of the sub-contractors on this project including a nominated sub-contractor,” it said in the statement.
A JP Morgan report dated March 3 stated the write-off of Rs 160 crore would now come in the March quarter results.
A March 4 report from Ambit Capital said that the company shall contest the claim as the delays could be attributed to the sub-contractors.
Company officials were not available for comment on the write-off.
Shailesh Kanani, research analyst, Angel Broking, said the claim by Ensus was expected. “That’s why the stock was not affected, we had factored it in,” he said. Punj Lloyd closed on March 3 on the BSE at Rs 181.55, down 0.9%.
SCL has been plagued by execution delays in some of its projects, including in a petrochemical project in Thailand. The plant, delayed by two months due to design changes, is expected to be completed by June.
SCL is fighting a legal dispute with Sabic Petrochemicals UK after the latter called SCL’s performance bond of 28.5 million pounds over delays in the completion of Sabic’s plant in the UK.
Punj Lloyd wrote that amount off last fiscal.
SCL came into the Punj Lloyd fold when the latter acquired Sembawang Engineers & Constructors in 2006. Given the execution delays faced by SCL, Punj Lloyd is employing its own team in the completion of SCL’s legacy order-book.
