Globetrotters encountered KIOCL in connection with building up of a 60mw captive power plant at Kudremukh. The matter is pending since early 1996.

Talking to The Financial Express, Globetrotters chairman Niranjan Shah said, "We have burnt our fingers with KIOCL. We worked very hard for the project and provided 300,000 earnest money which was renewed from time to time at KIOCL request, however, till date KIOCL has failed to obtain their board of directors' approval for the fully negotiated power purchase agreement (PPA). As a result we have lost millions of dollars and suffered injury to our professional reputation and lost time."

Early in 1996, the KIOCL issued an international tender for a power plant at Kudermukh, Karnataka. Globetrotters expended a significant amountof time, resources and energy responding to the tender.

Though KIOCL had indicated that the decision to award contract would be taken within two months of March 7, 1996 due date, no decision was made for 16 months, alleges Shah.

After an extended bid analysis process, Globetrotters Engineering was awarded a letter of intent dated July 10, 1997, to build, run, operate and maintain a captive power plant at the KIOCL's iron ore mine in Karnataka.

Shah alleges that the letter of intent deviated from the industry standards, and was problematic in numerous respects. "Globetrotters spent months negotiating with KIOCL's management, financial advisors, attorneys and engineers. Finally on November 30, 1997, the parties extended into a 165-page PPA. Before our team returned to our offices, KIOCL requested over 100 changes to the PPA," Shah said.

He added that some of the proposed changes threatened the financial viability of the 60mw project. Nonetheless, Globetrotters spent two months negotiating modificationsas per the KIOCL's request. On February 23, 1998, the parties entered into another PPA, this time 140-pages long. "We were asked by the KIOCL to travel to India on short notices and we did so in order to effectuate these agreements," said Shah.

He added that although two PPAs were negotiated and signed, KIOCL failed to obtain board of directors' approval for the PPAs. "Globetrotters also had to work with Nittetsu Shoji Ltd, its financial advisor, in an effort to reach closure. The company had to go far to turn the lead role for the project over to Shoji in a hope that Shoji, a finance company and affiliate of Nippon Steel (a major purchaser of iron ore from the KIOCL), would be able to reach the agreement successfully," said Shah.

Nittetsu Shoji, though experienced, too failed to orchestrate agreement with the KIOCL, alleges Shah. In a letter addressed to KIOCL chairman-cum-managing-director S Murari (dated March 12, 1999), vice-president of Globetrotters, Michael J Paulius mentions, "Globetrottersinvested several years and millions of dollars into the Kudermukh power plant project, only to have its earnest money deposit improperly forfieted by KIOCL, and to incur approximately $2 million in and out-of-pocket expenses and other costs. In addition, through no fault of its own, Globetrotters was denied the benefit of its bargain, to the extent of an additional $5 million."

In total, Globetrotters has been harmed in excess of $7 million, notwithstanding its considerable efforts to complete the power plant project.

"If these issues are not addressed, Globetrotters will be forced to pursue its legal remedies," said Shah.

In a separate letter to the Union steel and mines secretary, AK Basu, (dated September 9, 1998), Shah in a two page missive has said that "In response to KIOCL's inquiries, and in order to provide KIOCL with additional comfort, we added the Nippon Steel Group as the EPC contractor. We formed a new consortium consisting of Globetrotters Engineering Corporation, USA, GEC Power Company,USA, Nittetsu Shoji Ltd, Japan and Nippon Steel Corporation, Japan."