Saturday, July 31, 2010

Engineers India

Geojit BNP Paribas has recommended investors to ‘Subscribe’ to the follow-on public offer of Engineers India.

“EIL is cash rich company with surplus cash of Rs 1,700 crore as on March 31, 2010 which works out to ~ Rs 50 per share.

Company is offering share @ 18-19 times FY 2011 expected EPS of Rs 15/- and 15-16 times FY 2012 expected EPS of Rs 18/. EIL is expected to grow @ 30-35% for next 3-5 years. Hence, we recommend to “SUBSCRIBE,” the report said.

Engineers India Ltd. is a different kind of capital goods sector play. This is a very high end technology in-house, existing with a player. It is entirely the software that it has with itself. It caters to the oil and the engineering sector. We are seeing a lot of traction in new projects out there. The gas and the oil sector are set to boom in this country and over the last couple of decades Engineers India Ltd. has been doing a good service there. It's a very unique kind of company and going forward I see both top line and bottom line growth very significantly and in the follow through offer that is coming, retail is getting an excellent chance to come in at the stock at a discount.

XL Energy Bags 65.7 cr order.

XL Telecom & Energy today said it has received Rs 65.7-crore export orders for the supply of solar panel from its existing European clients.
The company has bagged one of the order from an Italian company and the other from a company in Czech Republic, both of which are XL's existing customers.


Friday, July 16, 2010

Assam Co, Canoro clash over Amguri

Calcutta, June 14:

Canadian junior oil explorer Canoro Resources and Calcutta-based Assam Co India Ltd have filed law suits against each other in their respective countries over the Amguri oil block in Assam.

The Indian company filed a petition against Canoro in Delhi High Court on May 6; in response, the Canadian company filed a damage suit in the Court of Queen’s Bench, Alberta, on May 17.
Assam Co and Canoro are partners in the producing oil block in Assam where the former owns 40 per cent stake and the latter holds the rest. Canoro also operates the block.
The bone of contention is a financial transaction made by Canoro to obtain C$95 million, or Rs 430 crore, through a mix of debt and equity from an investment firm Mass Financial Corp after rejecting a complete buyout offer made simultaneously by Assam Co. Mass now owns 18 per cent equity in Canoro.
In its petition before Delhi High Court, Assam Co said the deal not only breached the joint venture agreement between Canoro and Assam Co but also violated the production sharing contract (PSC) signed with the petroleum ministry.
Canoro retorted with a damage suit of C$1.2 million saying Assam Co had repeatedly interfered with its contractual relations, including with Mass, and made defamatory statements to financially weaken the company so much that the Indian outfit could either take over Canoro, or the Amguri stake, at a “massively discounted price”.
The oil ministry threw its weight behind Assam Co and slapped a showcause notice on Canaro threatening to cancel the PSC. Simply put, the ministry said the Mass transaction could cost Canoro the Amguri block interest.
Assam Co managing director Aditya K. Jajodia was not available for comment.
Robert S. Wynne, president and chief executive officer of Canoro, defended the deal with Mass and said the transaction did not violate the terms of the PSC. “We have always respected the terms of the PSC and will do so.”
“I have met the ministry officials. We are awaiting a response from the government,” Wynne told The Telegraph. He said it would be “preposterous” to assume that Mass would eventually take ownership of Canoro.
He allayed concerns that Mass was a Chinese company and the eventual operatorship of Amguri in the Northeast would compromise security. “Mass is a Barbados incorporated company, 68 per cent owned by Americans,” he said.
Sources in Assam Co said Canoro declined a superior offer from it while accepting an inferior one from Mass.


Wednesday, July 14, 2010

Engineers India Ltd.

The government will be disinvesting 10 per cent equity in the company from its existing 90.4 per cent holding. How will the issue be priced?

The price band will be decided by a group of ministers a day before the issue opens on July 27. We are a fundamentally strong engineering consultancy that has grown to take up lump sum turnkey (LSTK) projects. Last year, we did business of Rs 2,000 crore and made profit of Rs 440 crore. Our order book position as on March 31 was Rs 6,300 crore and since then we have added more projects, so our book is full for the next three to four years.

What opportunity is the company eyeing?
We are present in upstream, midstream and downstream sectors of the hydrocarbon sector, whether design of the well and process platform, shore connectivity, pipeline, refinery and petrochemicals. We will continue to be focused on this. We will also be looking at projects in the non-ferrous sector.

Are you planning to diversify?
We plan to get into city gas distribution and also provide a broad range of engineering consultancy and EPC (engineering, procurement and construction) services for gas-based fertiliser plants. We have a background for fertiliser plants, so we are looking at designing consultancy, project management and, if there is an opportunity, do a plant as an LSTK project. We had done the Bhatinda and Panipat plants of National Fertilizers Ltd. We have done fertiliser plants in Australia and Malaysia.

Will the company be picking up equity in some of these projects?
In city gas distribution, we will take equity stake as a partner or, may be, go on our own. Since gas will available on a pan-India basis and there will be a lot of opportunity for us for providing engineering consultancy for gas transmission and distribution through pipelines.

How big is your EPC business compared to consultancy?
EPC was earlier 53 per cent but now 60 per cent of our business is from LSTK, while 40 per cent is consultancy.

What kind of expansion are you planning for the overseas market?
Ten per cent of our consultancy business comes from overseas. We are concentrating on consultancy in the hydrocarbon sector and a small bit in aluminium for the overseas business. We are looking more widely at different geographies. We have been working in the Middle East and are looking for more opportunities in Qatar, Kuwait, Bahrain and Saudi Arabia. We will be working in Algeria in North Africa, Sudan and Ghana. In medium to long term, we will also be looking at Brazil and Venezuela.

EIL has been involved with creation of strategic crude oil storage in the country. Would you be looking at similar business overseas?
We are the project management consultants for all the three projects in Visakhapatnam, Mangalore and Padur. Sixty per cent of the work has been completed in Visakhapatnam and work on the other two started early this year and is expected to be over by 2013.

We have formed a talent and knowledge pool for such work. If there are some opportunities overseas in this, we will definitely take it up.

What kind of power business are you eyeing? Are you looking at joint ventures?
We have done captive power plants for refineries and petrochemicals. We have engineering capabilities in gas, thermal and nuclear-based power plants. If there is some opportunity for us in the power sector, we will like to take it up for balance of power (BOP) because whether it is petrochemicals or refinery, BOP remains the same. We are not averse to joint ventures.

Does the company still enjoy a niche or has the competition increased?
There are many companies in engineering and EPC in India but we are the only company that has total in-house capability of engineering and designing in the hydrocarbon sector. We are comparable with companies like Ford, Foster Wheeler and Bechtel. That is the level of our competency. There are currently three petrochemical plants being constructed in the country—Panipat, Dahej and Assam—and all three are being done by us. We have 45 years of a strong base and competent manpower, a strong order book position and a good physical and financial track record.