Soma bags Rs 1,100cr hydel project deal

Company forms JV with 2 Russian firms for project

Hyderabad-based Soma Enterprise Limited, an infrastructure development company, has bagged one of the largest civil construction contract in the hydel sector worth Rs 1,100 crore.

The Subansiri Lower Hydro Electric Project, located on the border of Assam and Arunachal Pradesh border, will be the country's largest hydel power plant generating 2,000 mw of power when it is completed in 2010.

Speaking to Business Standard, Rajendra Prasad Maganti, chairman and managing director of Soma Enterprise Limited, said: "The project, which has just began, will be completed in six years. The work is expected to go on full steam from the beginning of next year. We have formed a joint venture with two Russian companies for the project," he said.

According to Maganti the company is also exploring the possibility of projects in Qatar, Sudan, Vietnam and Myanmar in the roads and pipeline-laying segment. "We are ready now to take up international projects,"Maganti said. Soma is also executing a 50-km highway project between Maddur and Mysore in Karnataka. "The Rs 117-crore project will be completed by 2006 and we expect the project to be completed ahead of time," he said.

As on date, the company's order book position is Rs 2,000 crore. By the end of the current financial year, the order book position is expected to cross Rs 2,700 crore, according to Maganti. The company currently has 16 projects in hydropower, roads, irrigation, barrages and tunnels, Maganti said.

The company's turnover for the financial year ended March 31, 2004, was Rs 275 crore. Maganti said that the outlook for this fiscal is Rs 300 crore, adding that from 2005-06, the company is aiming at a turnover of Rs 500 crore.

"There are a couple of road projects and also a site leveraging project for National Thermal Power Corporation (NTPC) in the pipeline," Maganti said.

The company is clear that for asset creation BOT (build, operate, transfer) especially of roads and canals is a source of continuous revenue generation. Continuous revenues could come in the form of toll collections. It is, however, not ruling out other popular sources like real estate in the form of office complexes, residential complexes and malls.

The company is also considering going in for an initial public offer (IPO). "We are in the process of examining the possibility but have not yet decided when we would actually be going in for the IPO," Maganti said.