India’s leading special steel producers Sunflag Iron & Steel Company informed bourses that an Arbitration Award of INR 900 crore was passed by the Sole Arbitrator Bombay High Court Justice AR Joshi under the Arbitration and Conciliation Actin the matter of arbitration between Sunflag Iron & Steel Company Limited and Lloyds Metals and Energy Limited. After hearing the arguments of both the parties, the Arbitrator has passed an award on 22nd April 2022 that Llovds Metals & Energy is liable to pay INR 900 crores to Sunflag, INR 312 crores on account of refund of advance along with accrued interest and the balance INR 588 crores as full settlement of all other claims.Given the amount being large, Lloyds Metals & Energy proposed to settle the said liability, subject to approval of shareholders and in accordance with applicable laws, by issuing six crores Zero interest Optionally Fully Convertible Debentures which will settle entire liability on the basis of proposed issue price of INR 150. The OFCD would be converted not before 9 months but, not later than 18 months at a conversion ratio of 1:1. This proposal has also been agreed by Sunflag and the company shall commence the process of the proposed issuance of OFCDs and obtain necessary approvals and compliances with respect to the same.Sunflag Iron & Steel Co and Lloyds Metals & Energy Limited had formed a joint venture by the name Surajagarh Metals & Miners Limited to undertake mining activities jointly. The parties executed various agreements since 2004 recording the terms and condition, including their shareholding in the ratio of 60% for Lloyds Metals & Energy Limited and 40% for Sunflag Iron & Steel Co. However, for reasons not attributable to both the parties the said arrangements could not take place and the mining operations could not be commenced. During this period Sunflag had advanced funds to Lloyds Metals & Energy towards the operation and commencement of the mine. In the year 2016, Lloyds Metals & Energy started mining operations with minimal production; however, Lloyds Metals & Energy could not share the iron ore extracted with Sunflag for various reasons.Lloyds Metals & Energy and Sunflag were engaged in discussions to resolve the issue amicably but the same could not be resolved. Sunflag then invoked the arbitration clause as provided in documents and initiated arbitration proceedings. Sunflag Iron & Steel Co sought before the Arbitral Tribunal1. Repayment of the amount paid along with the interest @ 4% + SBI PLR compounded annually amounting to INR 312 crores2. A demand of INR 1433 crores towards right of 40% mineral extracted over the life of entire mining lease period, ie 40% of 75 million tonnes, for30 million tonnes with a margin of INR 2000 (Indian Rupees two thousand) per tonne amounting to INR 6000 crores and when discounted to the present value the same is INR 1433 crores3. 32% of the equity share of Lloyds Metals & Energy considering the net worth of mine is 80% of net worth of Lloyds Metals & Energy and the Sunflag Iron & Steel Co has the right of 40% of the net worth of the mine.Sunflag Iron & Steel Co Ltd started in 1989 with setting up of an integrated steel plant at Bhandara near Nagpur using state of art technology in steel making. Today Sunflag operates a 0.5 million tonnes per annum capacity plant manufacturing high quality steel products including a wide range of special alloy and stainless steels. With a vision and future, Sunflag has recently made investment in ESR/VAR/VIM and ventured in production of high performance material & super alloys for aviation Space, defense, poker sector and medical implants.