Punj Lloyd eying ABB Lummus; L&T may make enter race
26 Mar 2007
Media reports, meanwhile, said Larsen and Toubro, its
larger rival may also make a bid to acquire the ABB subsidiary.
ABB Ltd, which had plans to sell off its US subsidiary
ABB Lummus Global, meanwhile, said it''s not desperate
to a sell the subsidiary, although it did not rule out
such a possibility in the medium term.
ABB Lummus has bagged big-ticket orders from global oil
majors and has a current turnover of $1billion. Analysts
believe that the subsidiary, which is not core to the
ABB group''s business, is on the block. The company, which
was facing charges under asbestos liabilities in the recent
past, has also come out unscathed.
New-Delhi based Punj Lloyd, the country''s second-largest
engineering and Construction Company after Mumbai-based
Larsen & Toubro, seems to be more interested in acquiring
the ABB subsidiary than L&T.
Punj Lloyd, which listed early last year, has an order
backlog of Rs16, 496.6 crore. The company recently won
a Rs1,300 crore order from ONGC for building an offshore
platform.
A leader in the country in pipelines construction, this
was also its first offshore platform project for Punj
Lloyd. It also makes sense for Punj Lloyd to acquire ABB
Lummus as it can derive benefits of synergy.
Punj Lloyd may have to tap the market with an equity issue
to augment its working capital requirement to service
its burgeoning order book.
Analysts say that L&T with its market clout could
provide tough competition to Punj Lloyd. But, as things
are, L&T has enough in hand in terms of project execution
and pending orders and may not want to risk making a big-ticket
acquisition at this juncture.
Punj Lloyd subsidiary Sembawang Engineers and Constructors
has bagged a Rs542 crore order from Bahrain''s state-run
Riffa Golf and Residential Development company (RGRDC).
Sembawang has entered into a joint venture agreement with
G P Zachariades
to execute the RGRDC project, involving construction of
325 residential villas, Punj Lloyd said in a statement.
Sembawang had earlier completed the Jumeirah Islands development
project for Nakheel Group in Dubai.