KPIT Technologies shed 5.5% at Rs 178.90 at 10:30 IST on BSE after an erstwhile client of a 100% subsidiary of the company made fresh claims for damages on allegations of misappropriation of its trade secrets.
Meanwhile, the S&P BSE Sensex was down 17.91 points or 0.07% at 26,378.86.
On BSE, so far 1.9 lakh shares were traded in the counter as against average daily volume of 95,816 shares in the past one quarter. The stock hit a high of Rs 182.90 and a low of Rs 174.20 so far during the day. The stock had hit 52-week high of Rs 190.70 on 13 June 2016. The stock had hit 52-week low of Rs 85.05 on 25 June 2015. The stock had outperformed the market over the past one month till 13 June 2016, surging 15.28% compared with the Sensex's 3.56% rise. The scrip had also outperformed the market in past one quarter, jumping 33.29% as against the Sensex's 6.79% rise.
The mid-cap company has equity capital of Rs 39.50 crore. Face value per share is Rs 2.
Giving details about the background of the dispute between Sparta Consulting Inc (Sparta), a 100% subsidiary of KPIT Technologies, and Copart Inc, an erstwhile client of Sparta, KPIT said that Sparta was hired by Copart to design a replacement for its legacy Enterprise Resource Planning system. Thereafter, Copart hired Sparta to build the new system between 2011 and 2013. The contract was terminated by Copart "without cause". Under the relevant contractual provision, Copart invited Sparta to provide the amount it was owed for the services performed and completed as of the termination date. Sparta responded to Copart's request with a detailed analysis of the amount it believed it was owed and it requested a response from Copart. Following a dispute between the parties on the amount of fees payable to Sparta, Copart filed a suit against Sparta alleging that it is entitled to seek damages amounting to not less than $50 million for, among other things, breach of contract, fraudulent inducement and negligent misrepresentation. Copart also prayed for other relief such as indirect damages, punitive damages, attorney's fees, etc for an unquantified amount. Later, Sparta filed a suit against Copart seeking damages for, among other things, breach of contract, promissory estoppel and unjust enrichment. Sparta also prayed for other relief such as restitution and legal costs.
Recently, Copart amended its suit to seek fresh claims for damages for, among other things, misappropriation of its trade secrets and has added parent KPIT Technologies and its subsidiary, KPIT infosystems Inc, as parties to the dispute.
KPIT said in a statement that it has made adequate provision in its books of accounts against the amount receivable from Copart. The company further said that it intends to vigorously defend against Copart's alleged claims and pursue any available claims against Copart. The matters are pending before a California court.
KPIT Technologies' consolidated net profit jumped 20.42% to Rs 88.50 crore on 3.4% growth in net sales to Rs 840.72 crore in Q4 March 2016 over Q3 December 2015.
KPIT Technologies is focused on providing outsourcing services using product engineering and IT for automotive and transportation, manufacturing and energy and utilities verticals.
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