Business

Monday November 19, 2012

Scomi Engineering to bid for two more Brazil monorail projects worth RM7.7bil

By SHARIDAN M.ALI
sharidan@thestar.com.my


SEB’s Mumbai monorail going through the testing and commencement phase recently. The company expects an announcement on its bid for another project in India early next year. — Bernama SEB’s Mumbai monorail going through the testing and commencement phase recently. The company expects an announcement on its bid for another project in India early next year. — Bernama

PETALING JAYA: Scomi Engineering Bhd (SEB) is expected to bid for two more monorail projects in Brazil with a combined contract value of between US$2.5bil (RM7.7bil) and US$3bil (RM9.2bil) in the first half of next year, according to a source familiar with the matter.

The source said SEB stood a good chance of clinching one of the two projects due to its track record, supported by its rolling stock manufacturing facility in the country.

SEB had a few months ago started work on a RM2.7bil monorail project in Sao Paolo, where the company's portion of the project is about RM600mil.

SEB has partnered Montagens e Projetos Especiais SA for a monorail manufacturing facility in Brazil.

The source said more than half of the contract value of the two new monorail projects would involve civil construction works and as such SEB would most likely have to partner a Brazilian civil construction company.

In monorail projects, SEB is more focused on overall system integration as well as engineering, design, system interface and manufacturing of the rolling stock.

<B>Kanesan:</B> ‘We are also keen to participate in projects in Kerala and Delhi worth US$600mil and US$800mil respectively.’ Kanesan: ‘We are also keen to participate in projects in Kerala and Delhi worth US$600mil and US$800mil respectively.’

“One of the two upcoming monorail projects is also located in Sao Paolo, while the other one is located in another city,” the source said.

Scomi group chief operating officer of transport solutions Kanesan Veluppillai told StarBiz that the group was working hard to ensure that it won the projects.

“Actually, there are about five projects in that region worth around US$8bil (RM24.6bil) to US$10bil (RM30.7bil) to be tendered out over the new few years,” he said.

On SEB's bid for the RM5bil, 57km monorail project in Chennai, India for which the company has been shortlisted Kanesan said the outcome might be announced early next year.

SEB has partnered Infrastructure Leasing & Financial Services Ltd (IL&FS), one of India's leading infrastructure development and finance company, for the project. SEB's portion of the project is expected to be around 60% to 70% of the total value.

If SEB managed to get the job, it would be the company's second monorail project in India.

It had secured a RM1.85bil contract for a development in Mumbai with consortium partner Larsen & Tuobro in November 2008. SEB's portion of the job is about RM785mil.

Kanesan said that for the Chennai project the company was also offering operations and maintenance services, giving the company a new avenue for stable and recurring income.

“Besides this, we are also shortlisted to bid for a 20km line in Thane together with our partner IL&FS for a contract worth US$800mil (RM2.46bil).

“We are also keen to participate in projects in Kerala and Delhi worth US$600mil (RM1.84bil) and US$800mil respectively, where we have been invited to bid as well,” he said.

Locally, Kanesan said SEB was scheduled to deliver the first batch of four-car trains for the KL Monorail to Syarikat Prasarana Negara Bhd before the year-end.

SEB's current rail order-book stands at RM846mil. It is the only Malaysian brand that has made it to the international league of integrated suppliers of monorail system along with Bombardier and Hitachi.

And although the number of contracts has been on track, the subsidiary of Scomi group still faces challenges as SEB posted a net loss of RM7.9mil for its first six months ended June 30, against a net loss of RM1.6mil a year earlier.

Kanesan admitted that the environment was challenging, adding that SEB was working hard to improve its margins.

“Previously, our margins were affected by foreign exchange loss, higher execution cost and marketing.

“We are trying to localise our operations as much as possible, including financing and doing a little bit of cautious hedging for our secured project procurement.

“We are also spending less on marketing compared to when we first started, as we have already carved a name in the global rail development market,” he said.

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