Tata Power Share Price Today: Tata Power shares tumbled more than 4% in early trade on Thursday after the company lost its challenge against a $490 million arbitration award in Singapore linked to a dispute with Kleros Capital Partners over a proposed coal project in Russia.
The stock fell as much as 4.18% to hit an intraday low of Rs 349.50, moving closer to its 52-week low of Rs 342.35.
At 9:19 am, Tata Power shares were trading 4.13% lower at Rs 350.25. In comparison, the BSE Sensex was trading largely flat with a positive bias.
The Singapore International Commercial Court has rejected Tata Power's challenge to the quantum of damages awarded to Kleros, as well as the company's claim that the arbitration majority's decision amounted to a breach of natural justice, according to a court order delivered on Wednesday.
The court upheld the arbitral award and also imposed costs on Tata Power, although the amount remains to be determined.
What Is The Dispute?
The dispute dates back to 2013, when Kleros approached Tata Power with a proposal to jointly bid for a Russian coal deposit that it estimated could contain reserves worth around $1.1 billion.
The two parties entered into a non-disclosure agreement in September 2013, which was effective for four years.
However, the relationship deteriorated in 2015 amid disagreements over who would lead the proposed bid and the ownership structure of the project. The partnership eventually ended in 2016.
Kleros subsequently did not participate in the federal auctions for the mine held in Russia in December 2017 and later wound down its operations in the country.
Tata Power, through its Russian subsidiary, eventually bid for the asset after the non-disclosure agreement with Kleros expired and won the mining licence. The company later surrendered the licence after determining that the project was not economically viable.
Why Did Kleros Take Tata Power To Arbitration?
Kleros alleged that Tata Power had breached the non-disclosure agreements by misusing confidential information shared during their discussions and by acting in bad faith to exclude Kleros from the project.
The arbitration proceedings ultimately went in Kleros' favour, resulting in a damages award of about $490 million.
Tata Power challenged the award before the Singapore court, disputing both the quantum of damages and the arbitration process.
The Singapore International Commercial Court has now rejected the company's challenge on all counts, leaving the arbitral award unchanged.
A Tata Power spokesperson did not immediately respond to a request for comment.
Stock Nears 52-Week Low
Following Thursday's decline, Tata Power shares were trading close to their 52-week low of Rs 342.35. The stock's reaction reflects investor concerns around the financial implications of the court ruling and the potential costs associated with the arbitration award.
Out of 25 analysts tracking the company, 15 maintain a 'Buy' rating, six maintain a "Hold", and four maintain a "Sell" rating, according to Bloomberg data. The average 12-month consensus price target of Rs 431.60 implies an upside of 22.7%
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