KPIT Technologies top loser

KPIT Technologies had been hitting a new high consistently for the past couple of days. Even yesterday, it hit a new high at Rs.190.70 and today, it is the top loser on the BSE since the opening bell. Intra day, the stock price slipped over 8% at Rs.174.20.

The company announced yesterday after market hours that its client, Copart Inc has filed a case against its unit, Sparta  Consulting Inc, its 100% subsidiary of KPIT.

Copart had hired Sparta 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.

In retaliation, Sparta has also 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 the Company and its subsidiary, KPIT infosystems Inc, as parties to the dispute.

KPIT said that the company is making this announcement as a measure of abundant precaution and it has made adequate provision against the amount receivable from Copart.

Should KPIT be served and if the Court finds there is jurisdiction over KPIT, KPIT intends to vigorously defend against Copart’s alleged claims, and pursue any available claims against Copart. The matters are pending before a California court.