It is almost a year since Welspun Infra bought 35 per cent stake in Leighton Contractors, the Australian major’s Indian arm. Since then, order intakes across the construction industry have been extremely slow due to a variety of reasons, including high interest rates and fuel crisis. The company believes the unlucky streak will break this year.
“We expect to see more orders in the second half of 2012,” according to Russel Waugh, managing director of the joint venture. “With the government suggesting that public sector utilities increase output, we are confident of a turnaround.”
In fact, the company expects its revenues to double in the current year from 10 per cent in the last year. “I would say a 15-20 per cent revenue growth,” says Waugh. “We would like the order book to grow in line with the revenue.” It is from the buildings and infrastructure segment that the company expects an increase in order inflows, as power is expected to remain muted in contribution to the orderbook, which currently stands at Rs 4,000 crore.
Last year, a slowdown in decision-making led to fewer orders. “Clearances and simple approvals for projects are not being granted,” Waugh notes. “The construction industry has geared up as per the government’s Five-Year Plan. But the actual outflow is yet to meet the gearing up that the industry has done.”
The company holds interests across oil and gas, aviation, power, ports and water.
The shift to more orders in the infrastructure sector has come in after Welspun came into the joint venture. Before that, a major part of the orders came from oil and gas. In the long-term however, the Australian major with expertise in coal mining, is waiting for the sector to open up, and create opportunities.
Waugh claims that they have been ready for this opportunity for a long time. “We can participate through the coal value chain from mine development plan to delivery stage. We have a lot of environmentally sustainable solutions as well,” he adds.
The company, however, plans to remain a contractor and not develop or own a coal mine. The mining business, because of the extent of involvement in the project, will also yield better returns for the company. “If the mines, which are stuck in the go and no-go issues, come to development, that itself will create a lot of work,” says Waugh. The company also plans to get a pie of the coal mine contracting work from two pit-head ultra mega power projects which come with captive coal mines.
