Shailendra Roy of Larsen and Toubro said the Rs 5100 crore order from MP Power Generating Company would be completed in 43 months for Unit 1 and 47 months for Unit 2. The company took almost a year to secure this order, said Roy.
The engineering, procurement and construction (EPC) order book for the company currently stands at Rs 16000 crore.
According to Roy now things have started to look a bit better for power market now.
L&T secured a turnkey order for setting up a 2X660 MW supercritical thermal power project at Shree Singaji TPP on a complete engineering-procurement-construction basis from the state utility MP Power Generating Company.
Below is the transcript of Shailendra Roy's interview with Latha Venkatesh and Sonia Shenoy on CNBC-TV18.
Latha: Give us some idea as to what is the total order book, say, year-to-date (Y-T-D) and does it compare much better with last year same time?
A: Power market is very slow; growth is very slow in the Indian market. The manufacturing capacities are only being utilised to the tune of 25 percent. So after a long wait we got this order of Rs 5,100 crore 2x 660 MW super critical thermal power plant. From MP power generating company and this is in extension of one of the jobs for the first phase which we completed and commissioned recently.
With the awarding of this job the L&T credentials in Engineering Procurement Construction (EPC) execution has been established and we hope to get more jobs. As far as the order book is concerned it is roughly Rs 16,000 crore as of now, the order backlog of the order book and along with it we have got two more export job on EPC on gas power plants in Bangladesh. So slowly things are looking better as far as the power market is concerned.
Latha: This Rs 16,000 crore is for EPC alone?
A: Only EPC power.
Sonia: For this particular Rs 5,100 crore order when do you think you could complete execution of this order and what kind of margins would you be enjoying?
A: Margins will be as per the company norms. You have the details of our balance sheets and margins will be in the same vicinity. However, the completion time will be 43 months for Unit 1 and 47 months for Unit 2. It is quite tough, yes, but after doing one of the EPC jobs and commissioning in Rajpura in Chandigarh, we are quite hopeful we will achieve the targets.
In good times we have good pricing but in tight times we should have fine pricing. So margins will be a little lower than in good times.
Sonia: I understand that you had been L1 in this order for almost a year now, have you got all the relevant clearances that are required on land, on mines etc?
A: In August we were declared L1 and it took roughly little more than a year to get us this order and yes, all the clearance were there except for the coal clearance which was hanging in the centre, now that they have cleared it the order has come through.
Latha: How does the order book position look hereon, any visibility at all, is the year looking much better than previous year?
A: Yes, it should look better.
Larsen stock price
On September 05, 2014, at 14:15 hrs Larsen and Toubro was quoting at Rs 1611.20, up Rs 22.20, or 1.40 percent. The 52-week high of the share was Rs 1774.70 and the 52-week low was Rs 687.60.
The company's trailing 12-month (TTM) EPS was at Rs 62.86 per share as per the quarter ended June 2014. The stock's price-to-earnings (P/E) ratio was 25.63. The latest book value of the company is Rs 362.65 per share. At current value, the price-to-book value of the company is 4.44.
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