Punj Lloyd Ltd., India’s third- largest engineering company, is counting on peace in war-torn Libya to help revive 17 percent of its orderbook and sustain profit for a second straight year as growth slows at home.
The company, backed by Warburg Pincus LLC, plans to resume work next month in the North African nation where it has $800 million worth of projects, Chairman Atul Punj said. It aims to begin drilling in Sirte Basin for Waha Oil Co. starting July and resume construction of a road and upgrading a township in Tripoli after elections, Punj said.
Projects in Libya may help boost revenue by as much as $500 million in the year starting in April 2013, Punj said. Overseas contracts may “soon” account for 80 percent of sales of the builder as the weakest pace of expansion in almost a decade in India prompts the company to look for more business abroad.
‘Perfect Storm’
In February 2011, Punj Lloyd plunged in Mumbai trading after the chairman said projects in Libya may be disrupted because of the unrest. A month later, the company said it evacuated most of its employees from the country.
“It was a perfect storm,” Punj, 54, said in an interview at his headquarters in Gurgaon near New Delhi. “Now we’re seeing movement in each one of the areas.”
Punj Lloyd fell 2.4 percent to 46.8 rupees at the close of trading in Mumbai yesterday. The stock has dropped 34 percent in the past year compared with a 30 percent fall in the BSE India Capital Goods Index.
The builder renegotiated contracts for four projects after the new Libyan regime took over, Punj said. On some of the contracts, the company agreed to cut the royalty fee it receives from local partners by half to 1 percent, he said.
Punj Lloyd may not be able to revive all its projects in Libya. The company is no longer counting another $1 billion of orders won in the country by its Singapore-based unit Sembawang Engineers & Constructors Pte. because of lack of progress.
(Source: Bloomberg)
