Will book revenue in S'pore project from 2013: Sembawang

Punj Lloyd bagged a large order worth over Rs 500 crore from the Singapore government on Monday. Richard Grosvenor, president and CEO of Sembawang Engineers & Constructors, the associate company in joint venture with Punj Lloyds explains that the USD 100-million project is of a plain-vanilla type and the company will start to book revenues from Q1 of calendar year 2013.

Below is an edited transcript of the interview on CNBC-TV18

Q: Can you explain the details of the order and by when you expect execution and booking of revenue to commence?

A: The letter of award (LoA) is being granted to Sembawang, a Punj Lloyd company on December 10. Work will commence in January 2013. It is essentially a USD 100-million, plain vanilla type of project for Sembawang and it is in our home-base of Singapore and we have been appreciated by the government for our ability to deliver quality projects on time and to a budget.

Q: So by which quarter next year do you start booking revenues from the project? What kind of margin profile does this order have?

A: We will be booking revenues from Q1 in calendar 2013 on an emerging-profit basis. I cannot give you the margins, but we are a boutique company that underwrites projects around the world, so we target specific contracts and at the end of the day, we net more than 10 percent.

Q: Where does this take Sembawang's own order backlog size up to and the consequent contribution to Punj Lloyd's order-book?

A: We have got a variety of businesses. At the moment, our coal mines are at break-even and we are not doing anything to change that just at the moment till prices to stabilise. In construction, we are awaiting a potential award in Hong Kong for a significant project.

We have a considerable presence in Hong Kong and it is a market we are looking to promptly penetrate after being present for three years. It takes that long using the three Ps, people, presence, persistence.

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