Punj Lloyd advances on bagging project overseas

The 300 KTPA plant, due to start up in the first quarter of 2010, is to be built at Saudi Kayan Petrochemical Company’s petrochemical complex at Al-Jubail Industrial City, Kingdom of Saudi Arabia, and will incorporate technology from Basell GmbH.

The letter of intent is on the basis of a fixed price for contractor’s services and a conversion to a lump sum Engineering, Procurement, Construction (EPC) price, once detailed engineering is sufficiently defined.

Simon Carves is a petrochemical giant with as many as 125 years of experience in successfully delivering plants safely, on time and within budget, to international customers. This project is the 39th high pressure polyethylene plant of to be executed by Simon Carves, Punj Lloyd’s subsidiary.

Recently, Punj Lloyd, along with its offshore engineering arm, PT Sempec Indonesia, a wholly-owned subsidiary, secured an offshore platform project – Heera Redevelopment Project – on an engineering, procurement, construction (EPC) basis from ONGC. The Heera field is located about 80 km west of Mumbai, in the Arabian Sea. The project is scheduled to be completed within 16 months.

The order backlog for the group stands at Rs 11,201.74 crore, and is representative of unexecuted orders till 30 September 2006, as well as all new orders received till date. The company was also awarded a letter of intent for 2,66,000 cb phase III expansion of the bulk liquid products terminals by Horizon Terminals, UAE. The value of the project is Singapore $ 49.65 million.

Punj Lloyd had fixed 6 April 2007 as a record date for splitting the existing shares of Rs 10 each into five equity shares of Rs 2 each.

Punj Lloyd also set up a new engineering services outsourcing firm, Simon Carves India, as a wholly-owned subsidiary. It will initially cater to the group’s engineering requirements. Gradually, the subsidiary will also compete for outsourcing contracts from other companies. Engineering Services Outsourcing (ESO) holds tremendous potential because of robust growth across Europe, Asia and US, leading to significant development in the engineering services sector, the company said.

Reports indicate that India has the potential to garner around 25% of the global ESO pie, worth around $50 billion by 2020. Currently, the ESO market is worth around $15 billion, with India garnering a healthy 12% share, the report added. We have a BUY rating on Punj Lloyd with a price target of Rs 1,400.