|
Rolta India Sees Power Projects As Growth Engine
MUMBAI (Dow Jones): Rolta India Ltd. expects the energy sector to be its next growth engine as it plans to join partners to bid for large power projects. The company, which gets 60% of its revenue from geographic information systems, will carry out engineering design work for these projects as part of consortiums, said the company's chairman and managing director.
"We have positioned ourselves in the infrastructure space. For the power plants we are in the process of talking to large vendors setting up large projects," Chairman Kamal K. Singh told Dow Jones Newswires recently.
Gains from its expanding engineering design segment are already trickling in, with the company expecting a 39% increase in net profit for the current fiscal year ending June 30, 2006. Mr. Singh said that based on work in hand, the company expects revenue to be above INR 5.50 billion and net profit at about INR 1.25 billion for the current fiscal year. The company had reported revenue of INR 4.25 billion and net profit of INR 902.2 million in the previous year.
The engineering design business accounts for about 30% of revenue, and Mr. Singh expects revenue from this segment to rise 29% this fiscal year.
Mr. Singh said the company would leverage on its joint venture with Stone & Webster Inc. of the U.S. to provide engineering services to refinery, petrochemical and power projects. Stone & Webster provides engineering, procurement and construction services to the power generation and infrastructure markets.
"I will not be surprised that this joint venture would be able to take almost a couple of billion dollars worth of projects," said Mr. Singh, without giving any details and clarifying that he wasn't giving any specific time line guidance.
Rolta will be taking advantage on an expected jump in infrastructure spending in India to sustain its strong economic growth. DSP Merrill in a report estimated the country would spend $ 37 billion to $ 38 billion annually until the year ended March 31, 2008 on infrastructure, with power projects accounting for 30% of the expenditure. It added spending on urban development could be about $10 billion to $12 billion a year.
Among its current projects, Mr. Singh said Rolta is providing engineering and instrumentation services to state-owned Nuclear Power Corp. of India Ltd., for some power projects. The instrumentation work alone is worth INR 50 million.
"Stone & Webster Rolta, in the current year should be doing engineering work of about INR 150 million to INR 200 million," said Mr. Singh, adding there should be a "quantum jump" in the years ahead. He expects orders to triple or quadruple every year once the joint venture starts winning large turnkey projects. Last financial year, the venture's revenue was about INR 50 million.
GIS Business To Also Grow Rapidly
Mr. Singh said the company's core geographic information systems business, which surveys and maps the features of an area, will also continue to grow.
"We believe that there are almost 5,000 towns and cities in this country that need to use these technologies to enable them to really modernize," he said, adding that the government's mapping policies are likely to change in the future, making it much easier for private players to bid and undertake civilian projects.
Mr. Singh said most of its GIS work is for the government, while telecom companies in India and abroad are also major customers.
He said the company continues to win projects in the Middle East from several states, including a $5-million job last week to generate complete geographic data in an independent state that he declined to name. The work involves complete end-to-end mapping involving assimilating geographic data taken from airplanes.
"We should be expecting more growth in this (segment), more than 22% (this fiscal year)," said Mr. Singh.
GDR Issue Proceeds To Fund Growth
He said the company was debt free and its planned future expansion budgeted at $100 million would be funded by the recent issue of Global Depositary Receipts.
Mr. Singh said half that money would be for domestic infrastructure and to add more employees. "We are adding another 300 people, which will take our total staff strength to 3,000 by end-June," said Mr. Singh, adding, "we will add 1,000 people every year, taking our total staff strength to 5,000 in the next 18 to 24 months."
The other $50 million would be used for expanding its international presence, including acquisitions and joint ventures of about $25 million to $30 million.
|
