Dec 01, 2016 06:29 PM IST IST | Source: Moneycontrol.com

HCC to get 75% arbitral award amount Rs 2000cr, shares spike 15%

Hindustan Construction Company (HCC) shares surged 15.5 percent in early trade Thursday after the company received confirmation of arbitral award amount from government companies.

Moneycontrol Bureau

Hindustan Construction Company (HCC) shares surged 15.5 percent in early trade Thursday after the company received confirmation of arbitral award amount from government companies.

"HCC has received communication from NHPC and NHAI regarding arbitral award payment. This communication clears the way for HCC for receiving close to Rs 2,000 crore within 4 to 6 weeks," the Mumbai-based construction company said in its filing.

NITI Ayog has given the SOP (standard operating procedures) for release of payment for timely implementation. HCC has been asked to reconcile the award amount within 7 days and thereafter open escrow account and submit bank guarantees within 30 days for recovering the amount.

This communication came in the backdrop of the government setting into motion the process to release 75 percent of arbitration amounts against margin free guarantee in situations where awards have been given but have been contested by the concerned authorities.

In September 2016, the cabinet committee on economic affairs chaired by Prime Minister Narendra Modi had cleared several measures proposed by NITI Ayog to revive the construction sector such as easier norms for faster settlement of disputes between contractors and government departments, and partial deposit of funds by government agencies in form of arbitration awards.

As of September 2016, HCC has arbitration awards for Rs 3,427 crore.

Further claims worth around Rs 4,173 crore are in arbitration process, the company said, adding about 70 percent of these cases were at initial stage of arbitration process and the company has already given consent to transfer these cases under new arbitration act, which mandates decision within 12 months.

At 09:22 hours IST, the stock was quoting at Rs 38.30, up Rs 4.10, or 11.99 percent on the BSE.

Posted by Sunil Shankar Matkar

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