Image Source : Live Law
Power and Instrumentation (Gujarat) Ltd has received a favorable arbitration award amounting to Rs 40.9 million, marking a significant legal and financial milestone for the company. The award, confirmed on September 16, 2025, resolves a long-standing contractual dispute with a public sector client over delayed payments and project scope deviations. The arbitration tribunal ruled in favor of Power and Instrumentation, validating its claims and directing the counterparty to remit the full amount within the stipulated time frame.
This outcome not only strengthens the company’s balance sheet but also reinforces its credibility in executing infrastructure and electrical contracting projects across India. The award is expected to be reflected in the company’s Q3 financials, contributing to improved cash flow and operational momentum.
Key Highlights From The Arbitration Outcome
- Arbitration award valued at Rs 40.9 million granted to Power and Instrumentation Gujarat Ltd
- Dispute involved delayed payments and scope changes in a public sector infrastructure project
- Tribunal ruled in favor of the company after multi-stage hearings and document reviews
- Award includes principal dues, interest, and partial legal cost reimbursement
- Payment expected within 45 days of award confirmation
- Company plans to reinvest proceeds into working capital and project expansion
Background Of The Dispute
The arbitration proceedings stemmed from a contract awarded in 2021 for electrical and instrumentation work at a government-owned industrial facility. Power and Instrumentation completed the project within the agreed timeline, but faced delays in payment due to scope modifications and administrative bottlenecks.
Despite multiple follow-ups and reconciliations, the client withheld a portion of the payment, prompting the company to initiate arbitration under the Indian Arbitration and Conciliation Act. The tribunal, comprising retired judges and technical experts, reviewed contractual documents, site reports, and correspondence before issuing the final award.
Financial Implications And Balance Sheet Impact
The Rs 40.9 million award will be booked as other income in the company’s Q3 FY2025–26 results. It is expected to improve liquidity and reduce short-term borrowing requirements. The company has confirmed that the funds will be allocated toward:
- Strengthening working capital for ongoing projects
- Settling vendor dues and subcontractor payments
- Expanding operations in Maharashtra and Rajasthan
- Upgrading project management and compliance systems
Power and Instrumentation reported a revenue of Rs 112 crore in FY2024–25, with a net profit margin of 6.2 percent. The arbitration award represents nearly 3.6 percent of annual revenue, making it a meaningful addition to the company’s financial position.
Market Reaction And Investor Sentiment
Following the announcement, Power and Instrumentation’s stock saw a modest uptick, closing at Rs 42.80 with a gain of 1.9 percent on the NSE. Trading volumes increased by 3.5 times the daily average, indicating renewed investor interest in the company’s legal and operational resilience.
Analysts view the award as a positive signal for the company’s governance and contract enforcement capabilities. It also sets a precedent for similar mid-sized infrastructure firms navigating payment disputes with public sector clients.
Strategic Outlook And Growth Plans
With the arbitration behind it, Power and Instrumentation is now focused on scaling its presence in high-growth segments such as smart metering, industrial automation, and renewable energy integration. The company is bidding for new contracts in Gujarat, Madhya Pradesh, and Telangana, and aims to increase its order book by 20 percent over the next two quarters.
The management has also indicated plans to enhance its legal and compliance framework to proactively address future disputes and ensure smoother project execution.
Sources: Business Standard, Moneycontrol, NSE India, Equity Insight Terminal
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