Patel Engineering is a prominent player in the hydro power and irrigation space. The company's strength in terms of technology and experience is likely to ensure that it has an edge over competitors in this space. Riding on its experience in constructing tunnels and pump houses for hydropower projects, Patel has also strengthened its position in the irrigation sector.
Its project basket includes tunnels, dams, underground hydroelectric and irrigation projects, water conductor systems, nuclear and thermal power projects, bridges and marine works, highways, and residential and commercial complexes. The company has carved out a niche in underground works in the hydroelectric, transport and urban infrastructure space with its technical expertise in RCC works and micro tunneling.
Patel’s core competence is construction of dams and powerhouses. With the increased focus on enhancing power generation capacity, the company's strength in terms of technology and experience is likely to ensure that it has an edge over competitors. The 11th Five-Year Plan (2007-2012) has envisaged $492 billion for infrastructure spending.
Through its subsidiaries in the US, Patel has access to technology that gives it an advantage to bid for new projects.
The Central government plans to increase power generation capacity by 20,000 MW in the 11th Five Year Plan, and 50,000 MW in the 12th Plan. Currently, Patel has a 22% market share in hydro and thermal power projects. Patel is already a major player in the hydropower space and has contributed to a total of 7,000 MW out of the country’s total Additional power requirement in India will be nearly 70,000-75000 MW in the 12th Five Year Plan (2012-17) under different economic scenarios. Majority of the additional requirement will come from hydro and thermal power, where Patel has significant presence.
According to the 11th Five Year Plan, the government has targeted 10 million hectares under Accelerated Irrigation Benefit Program. Riding on its experience in constructing tunnels and pump-houses for hydropower projects, Patel has also strengthened its position in the irrigation sector. It has now bagged orders for lift irrigation projects in Andhra Pradesh as an EPC (Engineering, Procurement and Construction) contractor.
Entry into EPC has enabled it to move up the value chain and is likely to fetch better
operating margins.
According to Crisil, over the next five years, investment in the roads sector is expected to increase at a CAGR of 24%. During this period, it is expected that investments amounting to US$19 billion would be incurred on roads related projects. Patel has a considerable experience in various segments in building highways, tunnels and flyovers. Recently it has started focusing on annuity projects and BOT projects, whereas earlier it was focusing on cash projects.
Patel’s order book amounts to Rs 5,500 crore comprising multi-purpose power projects, irrigation & water supply and transport & others. Currently the company has L1 status for contracts worth Rs 200 cr and has bid for projects worth Rs 9,000 crore. The order book composition has changed in the favour of high-margin multi-purpose power projects in the last 2-3 years. The company has a very well-diversified order book with the right mix of short as well as long gestation project. Patel has maintained its presence by ensuring balance mix of projects in its pipeline without over depending on single stream of projects.
Sales and NP for year ended 06 – 07 were 1098.9Cr. & 110.1Cr. Sales and NP for latest Quarter 262.2Cr & 35Cr.
On YOY basis NP has increased by 52% & based on quarter latest its increased by 20% Dividend during year ended 06 – 07 was 130%
Jitendra Gala
