HCC 'claims' top notch gainer position

The market is thrilled with HCC in an otherwise somber, lackluster day of trading. The stock rose over 15% in early trades to Rs.39.50 and continues to trade over 12% up. Its 52-week high stands at Rs.41.90.

HCC has received communication from NHPC and NHAI regarding arbitral award payment.  NITI Ayog has given the SOP (standard operating procedures) for release of payment for timely implementation. HCC has been asked to reconcile the award amount within 7 days and thereafter open escrow account and submit bank guarantees within 30 days for recovering the amount.

This communication clears the way for HCC for receiving close to Rs 2,000 crore within 4 to 6 weeks.

This communication came in the backdrop of the government setting into motion the process to release 75% of arbitration amounts against margin free guarantee in situations where awards have been given but have been contested by the concerned authorities.

In September 2016, the cabinet committee on economic affairs chaired by Prime Minister Narendra Modi had cleared several measures proposed by NITI Ayog to revive the construction sector such as easier norms for faster settlement of disputes between contractors and government departments, and partial deposit of funds by government agencies in form of arbitration awards.

At the end of Q2FY17, HCC had arbitration awards worth Rs 3,427 crore. Further claims worth around Rs 4,173 crore are in arbitration process. HCC has stated that 70% of these cases were at initial stage of arbitration process and the company has already given consent to transfer these cases under new arbitration act, which mandates decision within 12 months.