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Mudajaya targets RM1b jobs

KUALA LUMPUR: Mudajaya Group Bhd is expecting to add another RM1 billion worth of jobs to its order book over the next 12 months, according to its managing director Ng Yin Loong.

"We are currently bidding mostly for power plants, some hospital contracts and other works such as the LRT extension packages," he said after the company AGM.

He added that for the LRT project, Mudajaya was looking specifically at subcontract work for the stations.

Mudajaya's order book currently stands at around RM5 billion, according to joint managing director Anto Joseph. Mudajaya had recently been awarded a letter of intent by CMC Machiplex Sdn Bhd for the detailed design and construction civil works for the Manjung power plant extension worth RM720 million.

"That amount should be enough to sustain us over the next two to three years," Joseph said.

He added that Mudajaya had bid for a build-and-operate highway project in India, which is potentially worth RM3.5 billion.

"The tender for the project closed last week and it is now up to the Indian government to evaluate the bids. It is an extension of an existing highway located outside Chennai," Joseph said.

Currently the crown jewel of Mudajaya's order book is its project in India, a 1,440 MW coal-fired power plant in Chhattigarh. In addition to being the contractor, Mudajaya is also playing the role of an independent power producer.

According to Ng, the first phase of the plant is due to come on stream during the middle of next year, with the second phase following some six months later.

"For the first phase, the delivery of equipment has already been substantially completed. Now we are at the erection stage, which is the civil works," he said.

Mudajaya ran into some issues concerning the Chhattigarh power project late last year, when a number of delays meant a slowdown in work that was reflected in the company's lower earnings. The reason for the delays ranged from the onset of the monsoon season to protests by villagers in the surrounding areas, resulting in the project being about four months behind schedule.

The power plant was also in the spotlight last year as concerns over accounting policies for the project led to a major sell-down on Mudajaya's shares.

The stock fell from a 52-week high of RM6.10 on July 22, 2010 to a low of RM3.75 on Dec 10, 2010. It closed at RM4.51 on Wednesday.

For its first quarter ended March 31, Mudajaya saw its net profit decline by 18.5% year-on-year to RM41.2 million from RM50.6 million. Revenue declined to RM223 million from RM239.4 million a year ago.

"The matters in India, however, have been resolved and the situation is slowly returning to normal. As a result, we are expecting to see a better 2Q," said Joseph.

When asked how Mudajaya would buffer itself against the rising cost of steel and other raw materials, Ng said the company normally had a contingent stockpile for instances such as that.

"We also do some hedging, and have strategic alliances with various suppliers in order to help manage cost. We monitor the prices very closely," he said.

Aside from India, Ng said Mudajaya is also looking for projects in Laos, the Middle East and Indonesia.

"However, we are not rushing to enter those markets. We are waiting for, maybe, the economic situation to stabilise before doing so. We have a substantial order book and we are happy with that at the moment," he said.

(From left) Ng, chairman Asgari Stephens and Joseph sharing a light moment at Mudajaya's AGM/EGM. Photo: Lee Lay Kin of The Edge Malaysia

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