Punj Lloyd - Slowly Becoming A Behemoth

Punj Lloyd To Build Nuclear Plants With GE & Westinghouse

Punj Lloyd Limited (PLL), a global EPC services provider in energy and infrastructure domains, has recorded consolidated income of Rs 5206 crore and consolidated net profit of Rs 196.03 crore for the financial year 2006-07. This is against consolidated income of Rs 1716.60 crore and net profit of Rs 54 crore for FY 2005-06.

Punj Lloyd acquired 100% stake of Sembawang Engineers & Constructors during the year, which contributed Rs 2155.20 crore to revenues, Rs 42.40 crore to EBITDA and Rs 28.6 crore to net profit.

On a consolidated basis, EBIDTA (Earnings before interest, depreciation, taxes and amortisation) for the fiscal was Rs 489.70 crore as against Rs 222.90 crore in the previous fiscal. The EBITDA margin in FY07 was 8.71 %.

The basic and diluted EPS for FY07 stood at Rs 7.44 and Rs 6.91 respectively for Rs 2 paid up share. The board of directors have recommended a dividend of 15% for FY07, subject to the approval of shareholders.

For the fourth quarter ended March 2007, the consolidated revenues stood at Rs 1719.91 crore, while consolidated net profit stood at Rs 88.49 crore.

The order backlog (unexecuted value of orders as on date) as of March 31, 2007 stood at Rs 15,943.90 crore, of which Punj Lloyd (excluding Sembawang) contributed Rs 11,039.40 crore and Sembawang contributed Rs 4904.50 crore.

Punj Lloyd Chairman, Atul Punj commented, “the group has made rapid progress up in the value chain, with average ticket size of the order increasing manifold. This enables us to manage large projects without commensurate increase in resources, enabling higher margins in the process. Our order book now has an increased component of engineering and procurement services, as against largely construction contracts at the beginning of the year. The petrochemical and pipelines domains have a larger share in the order book as compared to civil construction projects. Large number of oil & gas discoveries in India is expected to give a boost to the orderflow. Our experience in setting up first world scale bio-ethanol plant in UK will also help us capitalize tremendous opportunities.”

Order book update

Punj Lloyd Group has an order backlog of Rs 15,943.90 crore. This is the unexecuted value of orders on the corresponding date plus new orders received till date.

Punj Lloyd on a stand-alone basis has recorded robust growth in its order book during the year. It is significant to note that after the acquisition, Sembawang and Simon Carves have also started contributing to group’s order book. The order backlog for Punj Lloyd (excluding Sembawang) stood at Rs 11,039.40 crore. The new order bookings in FY07 for Punj Lloyd including Sembawang stood at Rs 10,210.60 crore.

In terms of geographical contribution, the company’s current order backlog comprises of 40% of the orders from South Asia, 23% from Middle East, 4% from Asia Pacific and 2% from Caspian region and 31% from rest of the world.

From the application perspective, of the Company’s total backlog on 31 March 2007, 31% represents pipelines; 4% represents tankages, 17% represents infrastructure and 17% represents process plants and Sembawang contribution 31%. The composition of these contracts is reflective of Punj Lloyd’s endeavour to focus not solely on backlog additions but to create a high quality and diversified backlog of projects.

Punj Lloyd expects a robust order book and an increase in revenue contribution from overseas in the current fiscal. PLL has undertaken challenging projects in different fields across the globe. The company has managed to receive repeat orders from the refineries, power and energy sectors. It has proved to be a leading project executor to public sector undertakings as well as private sector companies. Some of the big customers in the domestic and international markets include NTPC, GAIL, Jindal Power, NHAI, BPCL, ONGC, RIL Bechtel, British Petroleum, Shell, Qatar Petroleum andKuwait National Petroleum Company.

In FY07, PLL acquired Singapore-based Sembawang Engineers & Constructors (earlier known as SembCorp Engineers& Constructors) and its UK-based subsidiary, Simon Carves. This acquisition would enable the company to acquire pre-qualification in new verticals of infrastructure sector like airports, jetties, MRT/LRT (Mass Rapid Transit system/Light Rail Transit system), tunneling and sewerage and EPC capabilities in petrochemical domain. The acquisition would also cement company’s presence in South East asia and Middle east and give access to new countries like UK, China, Iran etc. Acquisition of Sembawang has started resulting in new order flow from specialized fields. Simon Carves has been engaged by Ensus group to design and construct world’s largest wheat based bio-ethanol production facility in UK.

To Build Nuclear Plants

Further, Punj Lloyd is in talks with General Electric and Westinghouse Electric to jointly build nuclear power plants in the country, chairman Atul Punj said.

“We are in talks with manufacturers like GE, Westinghouse to partner with them on construction of nuclear plants,” he told Reuters on Friday on sidelines of a news conference. “The areas where we do not have significant qualifications are nuclear plants,” he said.

Since a civilian nuclear cooperation deal was signed by India and the United States in 2005, several US nuclear technology firms have expressed interest in partnering Indian companies to set up nuclear power plants. “This is just a step ahead in the company’s value chain, and given its execution skills, it does not surprise me,” said Jonas Bhutta, an analyst with HDFC Securities Ltd.

GE India’s outgoing head, Scott Bayman, joined Punj Lloyd’s board as an independent director from Friday, the company said.

Punj said the company, which earns more than 50% of its revenues from outside the country, was aggressively looking for opportunities in the infrastructure and power sectors. “Whether it is gas, thermal, nuclear or hydel (hydroelectric) we are looking at all the different segments in the power space,” he said.

Punj Lloyd would raise Rs 500 crore in the year to March 31, 2008, to help meet its order backlog, and had marked another Rs 500 crore for capital expenditure.

Shares in the company ended up 2.2% at Rs 220.95, not far off a record hit of Rs 224.88 hit last December, Punj said the company had formed a joint venture with a private firm to offer drilling rigs to the Indian exploration industry, aiming to meet some of the global shortage of rigs.

“Starting with onshore (rigs), we expect to migrate to offshore at a later date,” he said, adding the company’s initial investment would be Rs 40 crore.

The joint venture would compete with offshore services players such as Aban Offshore and Shiv-Vani Oil & Gas Exploration Ltd, Punj said.