Lanco Infratech on Monday said that it has settled a litigation initiated by Australias Perdaman Chemicals and Fertilizers against it and its Australian unit Griffin Coal. As part of the settlement,Lanco has agreed to pay Perdaman A$7.5 million (around Rs 42.07 crore) plus legal costs.
Perdaman had filed a claim of A$ 3.5 billion in the Supreme Court of Western Australia,alleging non-compliance of fuel supply pact by Griffin Coal for its upcoming urea plant in the state.
The settlement of the litigation now paves the way for Lanco to bring in strategic investors for the expansion projects at Griffin Coal. The company is looking for a strategic investor as it plans to spend $1.2 billion to expand Griffins mining capacity from 4 million tonnes to 17-18 million tonnes over the next three years.
Certainly,the settlement of this case will help in reviving investor interest in the project, said Nagaprasad Kandimalla,chief executive officer (business development) at Lanco Infratech. When a litigation of this magnitude goes on,investors fear the impact to be of the order of hundreds of millions. But with this settlement those concerns can now be put to rest.
Kandimalla added that the amount given for settlement would have been more or less what Lanco would have spent as legal fees if the case went on for 12 to 14 months.
Lanco has always maintained that Perdamans action was baseless and without any merit, the company said in a statement. If allowed to continue,this case would have taken another 12 to 14 months for the trial and judgment,resulting in significant legal costs and loss of management time.
The purpose behind making this nominal offer was to put an end to this litigation now and move forward with our mine expansion plans. On Thursday,Lancos shares closed 10.37 per cent higher on the Bombay Stock Exchange at Rs 11.60. The settlement was reached on April 26 pursuant to the rules of Supreme Court of Western Australia,which allows for early and cost effective resolution of such claims.