- 07 Jun 2023
- ICICI Securities
Arbitrator directs Thermax to repair gas turbo generator at customer’s plant at own expense
THERMAX - 3111 Change: 32.25 (1.05 %)News: Thermax has been directed by an Arbitral Tribunal to repair and reinstate two gas turbo generators (GTGs) at a customer’s plant at the company’s own cost and expenses under the defect liability clause. The arbitrator also allowed the customer’s claim on additional expenditure on power and directed the company to pay Rs173.72 crore with interest along with Rs 95 lakh as arbitration cost to the customer. The arbitrator dismissed other claims and counter claims made in the matter. Thus, the award would have an estimated total financial impact of ~Rs 250 crore on Thermax.
Views: This will negatively impact Thermax as it will have to bear ~Rs 250 crore of outflow. Though Thermax is in the process of challenging the award before the appropriate appellate authority, if that also goes against the company then it need to take a hit of Rs 250 crore, which is ~56% of FY23 PAT.
Impact: Negative