Australia-based Perdaman Chemicals and Fertilisers Pvt Ltd has taken Lanco Infratech to court seeking compensation of about Rs 16,733 crore (A$3.5 billion) for alleged breach of a coal supply agreement.
Perdaman had signed a 25-year deal with Griffin Coal, acquired by Lanco Infratech last year, for supply of 2.8 million tonnes coal every year. The coal was for Perdaman’s upcoming Rs 18,167-crore (A$3.8-billion) fertiliser and urea project. The project was stuck due to this (breach of the supply agreement), Perdaman Chairman and Managing Director Vikas Rambal told Business Standard. The funding of about Rs 11,474 crore (A$2.4 billion) had also been stuck as various banks, mainly US-based, were refusing to sanction loans due to uncertainty, he said.
The agreement with Lanco was signed in December last year and was worth billions of dollars, he said, while refusing to reveal the exact deal size.
Lanco said so far, Perdaman had not filed a statement of claim in the court explaining the basis of the claim and how it arrived at the amount. If these documents were filed, the company would defend itself vigorously in the court, it said.
The company has already spent Rs 956 crore (A$200 million) from internal resources on the plant, whose annual production will be two million tonnes. The construction was expected to start from July this year and the project would have been completed by the end of 2013 or 2014, said Rambal.
“We have taken resort to legal proceedings against Lanco Infratech as they have gone back on contractual obligations. We had discussions with Lanco but there was no result. This is a breach under the Australian consumer law,” he said.
The Supreme Court of Australia will hear the case on July 27. “There is a unique process in Australian courts. They treat commercial litigation on a priority basis.”Lanco shares fell 9.3 per cent to Rs 22.90 on the Bombay Stock Exchange today. They touched a 52-week low of Rs 21.90 during the day.
Lanco had bought Griffin Coal for Rs 3,375 crore ($750 mn). Griffin has a capacity of five million tonnes (mt). It plans to invest Rs 4,500 crore ($1 billion) to increase the capacity to 18 mt by 2015. The company’s 2010-11 revenue was Rs 5,872 crore, with a net profit of Rs 278 crore.
