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Sat 9 Sep 2006 04:00 AM

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Operating profits grow for Punj Lloyd after ME orders

Indian construction giant spies 13-15% growth but net profits are still set to fall after recent acquisition

Indian construction giant Punj Lloyd expects operating profits to rise by between 13% and 15% in the year to March 2007, buoyed by a surge in orders from the Middle East.

But net profits are likely to fall as the company absorbs the cost of its recent acquisition.

The company bought 88% of Singapore-based SembCorp Engineers and Constructors for US $22.3 million (INR1 billion) in June this year. The acquisition will start to contribute to earnings after a year.

“We would like to keep it [net profit] higher but our overall numbers will be lower because of our acquisition,” Atul Punj told Reuters.

The company has picked up a string of deals in the Middle East and North Africa, including a $290.5 million order from Libya’s Sirte Oil company to construct two pipelines, which has been crucial for Punj Lloyd’s entry into the oil-rich African country.

Punj Lloyd also wants to expand its Libyan presence by setting up infrastructure projects from oil and gas facilities to roads and power plants.

Projects in Gulf countries are another key growth area for the company, as it has partnered a member of Saudi Arabia’s royal family to form Dayim Punj Lloyd Engineering Company to undertake engineering and construction jobs in the kingdom.

The company also plans to bid for projects to develop the King Abdullah Economic City, a $26.7 billion industrial and financial centre on the Red Sea coast.

Punj said the company was venturing into construction of strategic oil storage terminals. At present it builds terminals to store liquefied natural gas.

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