Punj Lloyd faces cost overrun on ONGC Hira offshore Platform Project

20 May 2009 Evaluate

Punj Lloyd has indicated that there is a cost overrun on account of variation in steel prices in ONGC’s Hira offshore platform Project. The company has approached the dispute redressal committee of ONGC and hopeful of getting back the additional cost. Cost variation claim filed with ONGC is to the tune of USD 117 million. Though ONGC is yet to agree for cost over run, Punj Lloyd has already accounted for cost overruns.

 

Punj Lloyd’s Order backlog stands at Rs 20803 crore with order intake during fourth quarter ended March 2009 at Rs 1189.2 crore, on a consolidated basis. This order backlog is executable in 24-26 months. The company is hopeful that its overall margin will be upward of 9% for entire order book.

 

Out of the total order backlog, Sembawang’s order backlog amounts USD 1.25 billion and of which the legacy orders (low margin) will be about Rs 250-255 crore.  Sembawang’s margin has improved to 7.7% at project level up from around 0.5% at the time of takeover of the company by Punj Lloyd. The new projects have over 10% of margin and they are earning similar kind of margins to the levels of Punj Lloyd.    

 

On the positive side, Punj Lloyd is confident of maintaining same kind of growth in order intake in current fiscal as well.   The company expects significant number of projects to be finalized in next 6 weeks.   Bids for about USD 5 billion worth is still pending with ONGC for finalization that is expected to be released in the first half of current fiscal. crackcrack

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