KEC International shares fall over 10%; Management says Power Grid forms 15% of order book

Shares of KEC International extended losses, declining over 10% on Wednesday, November 19, after it issued a clarification regarding the nine-month exclusion from Power Grid tenders, new contracts, saying it will have no material impact on the company.

A day prior, KEC International Ltd. said it had been excluded by Power Grid Corporation of India Ltd. from from participating in the tenders and from receiving contract awards for nine months, starting November 18.

KEC International's clarification

On Wednesday, KEC International said it has achieved an order intake of ₹17,066 crore in the current financial year, so far, up 17% from the year-ago period. Of this, the share of order intake of the Power Grid Corporation is 4% as compared to its share of 27% in the previous year.

KEC International said it currently has an unexecuted order book of ₹39,325 crore, of which the share of Power Grid orders is 15%.

"Based on the robust tender pipeline of ₹1.8 lakh crore and the healthy L1 position of over ₹4,000 crore, the company is confident of achieving its annual order intake target," KEC International said.

The company reiterated that it does not foresee any material impact on its ongoing operations or financial position. It said it is examining various options available to it, including legal recourse, approaching Power Grid Corp to reconsider the matter.

Power Grid Corp excludes firm from tenders, contracts

Power Grid Corp's action is related to an alleged transgression of contractual provisions tied to a matter that was previously communicated to the exchanges on March 24 this year. It said the restriction would not affect any of the existing Power Grid Corp projects that are currently under execution.

KEC International had also informed the exchanges on Tuesday that it is examining various options, including legal recourse and approaching Power Grid Corp to reconsider its decision. It also said it does not anticipate any significant impact on its operations or financial position, citing a strong order book and a healthy tender pipeline.

KEC International added that it upholds the highest standards of corporate governance, ethics and compliance and conducts its business with integrity, transparency and adherence to applicable laws and regulations.

In an interaction with CNBC-TV18 on November 11, KEC International had maintained its 15% growth guidance for the full financial year, adding that it also sees an advantage of declining steel prices.

Shares of KEC International were down 10.3% at ₹701.5 apiece around 2.20 pm on Wednesday. The stock has declined 17.8% in the past month and 41.6% this year, so far.

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