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Punj Lloyd says unit on last legs
Simon Carves (SCL), the troubled Manchester based subsidiary of Punj Lloyd, is on its last legs, said Atul Punj, chairman, Punj Lloyd group.
Updated : Mar 16, 2018, 04:42 AM IST
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Simon Carves (SCL), the troubled Manchester based subsidiary of Punj Lloyd, is on its last legs, said Atul Punj, chairman, Punj Lloyd group.
“SCL will sink and will only be given minor work in the future,” said Punj during an analyst conference call on Tuesday. He said Punj Lloyd will, however, continue to bid for some projects under the SCL name but the work would be carried out by the Punj Lloyd staff. “SCL is not being allowed to bid for new projects,” said Punj.
SCL is embroiled in a legal wrangle with Sabic Petrochemicals in the UK. The case relates to a contract awarded by Sabic to SCL in 2006 for designing and building a low density polyethylene plant in the UK. Late last year, Sabic encashed SCL’s performance bond worth £28.5 million (about Rs 220 crore) citing delays in the completion of the project.
As a result, Punj Lloyd in December initiated proceedings against Sabic, seeking restitution of the money and compensation for the losses suffered due to the termination of the contract. Lat month, the adjudication went in Sabic’s favour, forcing Punj Lloyd to make a provision for that contested amount, which is part of the loss of £109 million that SCL posted in 2008-09. Punj Lloyd is in the process of appealing against the judgement and the resolution of the case could take 12-14 months.
Punj said the loss includes the layoff costs since there is some ‘serious retrenchment’ underway at SCL. “At the time of acquisition, SCL’s headcount was 550, which is now 300 and we will continue to retrench,” Punj said.
He said SCL would soon shift base to Abu Dhabi from Manchester to be closer to its primary regions of operations, which are Southeast and Central Asia, India, the Middle East and North Africa.
On the company’s capital expenditure plans for this fiscal, Punj said the group would have a replacement capex of $50-60 million and would spend more as and when needed.
For the March quarter, the group posted a consolidated net loss of Rs 253.4 crore compared with a net profit of Rs 119.4 crore in the same period the previous fiscal.
