Chasing small sums with Oriental Insurance: Simbhaoli Sugar

Simbhaoli Sugars has received Rs 55.15 crore as compensation in an arbitration case.

In a release sent to the Indian exchanges, the company said, "The London Arbitration proceedings against the vessel owner/shipping company, the company has negotiated the final settlement with the P&I club of vessel owner at USD 9.8 million inclusive of interest and costs and received the said amount as the compensation for the loss of 22,500 MT of raw sugar due to the vessel sinking MV loannis in July 2009 near South Africa."

The company will however, pursue the legal proceedings for the balance amount of claim filed with National Consumer Disputes Redressal Commission, New Delhi on the repudiation of insurance claim by Cargo Insurers, in an arbitrary manner, according to the release.

In an interview to CNBC-TV18, Sanjay Tapriya, CFO, Simbhaoli Sugar talks about the details of the case.

Below is an edited transcript of his interview. Watch the accompanying video for more.

Q: What exactly you have got by way of compensation and whether it comes in as a one-time payment to you?

A: If you recall two years before, one of our ships carrying raw sugar from Brazil to India when India was in the short of sugar and we were processing the raw sugar sank near the Cape Town in South Africa and we were struggling for the compensation against that loss, which we incurred. Finally that compensation has been given and the settlement has taken place with the ship owners and their P&I club and against that we have been awarded a settlement amount of USD 9.8 million.

That amount has been received by us and the major part of that has already been remitted to India and to our bank accounts. With that, that settlement proceeding is largely completed and a limited small amounts whichever is still left, we are pursuing with the Indian underwriters that is Oriental Insurance company.

Q: What are the small amounts that are left over still from that settlement? Will this amount be booked in a staggered fashion in your books or will it be booked in one big chunk?

A: No, this amount will not be booked to the P&L account because this amount was being shown as a receivable in our books. Definitely it will be a cash flow support to the company. No significant amounts are left to be pursued with Oriental since with Oriental Insurance the matter is partly sub-judice so I am afraid that I will not be able to divulge the balanced amount which we are pursuing with them. The majority of the amount and the entire cost of the sugar which we have incurred with the drowning of the boat we have recovered.