Punj Lloyd: Marching Ahead At Brisk Pace

Submitted by: Abhishek Tripathi Rushank Joseph Sandeep Singh Tanu Puri

Punj Lloyd Group: Introduction

Global US $ 1.8 billion EPC conglomerate

International offices in 20 countries.

Providing services in: Energy, Infrastructure and Defenses.

Declared Infrastructure Company of the Year at Essar St CNBC TV 18

Present across: Middle East & Africa, Asia Pacific, South Asia, The Caspian, UK, China And Europe. Rich multicultural manpower from over 37 nationalities. Equipment assets worth US $ 400 million.

Punj Lloyd: Overview

Founded in 1989
22 years of professional excellence Active in hydrocarbon and infrastructure sectors. Revenues (Group) for Year ended March 31, 2011 -US $ 1,810 million

Order Backlog as on March 31, 2011 US $ 5,041 million

Employees- 25,025

Case Highlights
PLL- Started its operation into construction

Moved to Hydrocarbons, Infrastructure and Services.

Growth- Revenue is distributed for Domestic as well as Abroad operations. Debt of Rs.800 crores for expansion

Raised private equity, private consortium and public issue Rs. 500 crores.
Plan to enter Hydel, Sea ports and airports.

SWOT Analysis
STRENGTHS Strong resource base- Equipment base, Financial Capacity, Manpower. Ability to organize additional resources at short notice. Excellent track record Global Presence Association with leading oil and gas majors. Highly competitive in terms of cost with its competitors. Strong IT aided analysis Strong communication network ISO 9002 and ISO 14001 company Impressive safety record WEAKNESS Weak presence in Power sector Pressure vessels fabrication Qualification

 OPPORTUNITIES Upcoming Expansion in grass root projects in refinery sector

Market to take off in LNG & LPG sectors Additional oil storage being planned by the Government Infrastructure sector, in India, opening with emphasis on : -Water and Sewerage -Roads -Ports Major pipeline network planned in India and Bangladesh New market areas available, like Africa & Central Asia.
THREATS

Entry of foreign companies in Indian market Low bidding by non organized sectors in small and medium sized projects PSU does not appreciate value added in terms of modern management techniques& scientific project execution. Unstable economic and political scenario in the region.

Questions From The Case

Q1. Critically analyze the growth strategies adopted by Punj Lloyd. Discuss the major factors that contributed to its success.

The growth strategies adopted by Punj Lloyd are: Dividing the company into SBUs Taking Government projectsDelhi Metro Rail Project GAIL ONGC Oil & Gas Projects78% of its total revenue

Turnkey telecom solutions Broadband services- Spectranet Bagging International ProjectsTurkey, Qatar, Oman etc. Contributes 56.28% of its total revenue IPO in 2005 (raised Rs. 500 crore) High Operating MarginsApprox. 19% (2004-05) Equipments worth Rs. 100 crores

Q.2 Punj Lloyd identified foreign market as a major focus. Discuss the pros and cons of this approach. PLL entered the foreign markets by taking up contracts work for the global oil majors like BP, Shell and Total.

Pros:
Cost Advantage:- High operating margin(19%). High potential market access : Turkey, Qatar, Oman, Georgia Indonesia etc. Good brand image.

Cons:
Initial financing.

May loose out on the domestic scenario.

Setting the target segment.

Conclusion:
As of 2006, the company has a backlog of projects worth Rs 3700 crores. According to the scenario explained in the case: The company should increase its public lending The company should increase its workforce The company should hire more equipments Else there can be a penalty on delay of project deadlines.