Tuesday, February 9, 2010

India’s L&T looking at property development JV

By Habhajan Singh
Larsen & Toubro Ltd (L&T), India’s largest engineering company which has invested more than US$225 million (RM771.75 million) in Malaysia over the last three years, is looking at striking a partnership in the area of property development with a local corporation this year.
L&T chairman and managing director A M Naik said it is now in talks with a Malaysian company to jointly develop property projects in India.
Naik, who is in Malaysia on an official visit, declined to name the company as the talks are in an early stage. At the same time, he said L&T’s joint venture with SapuraCrest Petroleum Bhd had just received a barge for an oil and gas (O&G) project.

"In the first week of March, we are taking over the new vessel for offshore installation," he told reporters in a press conference in Klang yesterday.

Naik said Petronas has given a contract worth US$35 million annually for the next five years to the JV, adding that it will be for an initial three years.
"We will be very busy for the next five years with this initial investment of US$175 million between the two sides," he said.
In April 2007, offshore O&G gas services provider Sapura-Crest had announced that it had formalised plans with L&T to form a JV company in India with L&T to build, own and operate a heavy lift cum pipe laying vessel.
The JV was part of the long term strategy for SapuraCrest that had in the earlier two years prior to the announcement been on an aggressive regional expansion drive, it added.
Last month, Naik told reporters in Mumbai that the L&T and SapuraCrest JV had bagged orders worth US$500 million to undertake installation of platforms and pipelines in offshore.

On the operations of the barge, Naik said it would spend 60% of its time in Indian waters and 35% in Malaysian waters, and the remainder time transiting between the two countries.
He said the barge would be deployed on the Petronas project from March 15 onwards, adding that "this season it will work with Petronas, the next season it will move to India".
When Prime Minister Datuk Seri Mohd Najib Razak visited India recently, Naik said he had a one-onone meeting with Najib for some 45 minutes, after which L&T had handed over to its JV with SapuraCrest a US$75 million contract "as a starting job" for the new barge.

Naik also outlined the company’s aggressive expansion plans for Tamco Switchgear (Malaysia) Sdn Bhd, a switchgear gear manufacturer which is its largest investment in Malaysia to date.
In October 2007, L&T signed an agreement to pay US$108 million to acquire the company in auction in what was billed as L&T’s first big cross-border acquisition, which was completed by April 2008. Naik expects the switchmakers revenue to rise US$300 million by 2013, from a revenue of around US$105 million when it took over the company.

(This story appeared in The Malaysian Reserve on 10 Feb 2010. The Malaysian Reserve is a daily business/finance newspaper published out of Kuala Lumpur, with a sectoral page on Islamic finance on Mondays, edited by Habhajan Singh)