Scomi Engineering to finish Mumbai monorail by 2H14

KUALA LUMPUR: Scomi Engineering Bhd expects to complete the RM1.85 billion Mumbai monorail project in the second half (2H) of 2014, after the project was plagued by regulatory and property issues that were out of the company’s hands.

The monorail job, awarded in November 2008, was initially targeted to be completed within 30 months.

At its AGM recently, Scomi Engineering CEO Kanesan Veluppillai told The Edge Financial Daily that the company had completed the first phase of the project while  the second phase is progressing well for targeted completion next year.

“Phase one of the project has been completed, with the service trial about to commence this year,” said Kanesan.

The Mumbai monorail project is divided into two phases. Phase one covers 8.9km between Chembur and Wadala, while phase two will connect Wadala to Jacob Circle via a 10.76km rail. Scomi Engineering and its Indian partner Larsen & Toubro commission and run the monorail system for their client, which is the Indian government, but do not handle the fare box collection.

Scomi Engineering and Larsen & Toubro clinched the contract from the Indian government for the design, development, construction, manufacturing, supply, testing and commissioning of the Mumbai monorail system in November 2008. This was the first monorail project in the financial capital of Mumbai.

India’s Freepress Journal recently reported that phase one of the Mumbai monorail has yet to be opened to the public, having missed its Sept 15 deadline. The news report said Mumbai Metropolitan Region Development Authority (MMRDA) officials are still ironing out some issues with contractors of the Chembur-Wadala monorail, days before its commissioning.

“The most important thing is, as far as phase one is concerned, the depot is ready and all cars have been delivered,” said Kanesan.

“The extension of time has been given by the MMRDA and we will claim for the extension.”

According to Scomi Engineering’s latest annual report, civil works of the Chembur-Wadala monorail are ongoing. The government has resolved several major problems affecting the construction, namely the resettlement of residents and security challenges along a highly secured route.

“With construction proceeding at full speed, we are anticipating the commissioning of phase two in the latter half of 2014,” Kanesan said in the annual report.

Scomi Engineering’s financials have been affected by the weakening Indian rupee and Brazilian real. In the first quarter results ended June 30, 2013 (1QFY14), the company posted a net loss of RM16.48 million mainly due to foreign exchange losses resulting from the depreciation in both the currencies.

“We are trying to contain the foreign exchange issues in both Brazil and India. As you know, currencies of both countries have been hit but thankfully, they have recovered. However, we are trying to manage the costs and are going back to the client for the price variations.

“What we are doing now is we are going to contain any further losses through improved operations, cost management and negotiating for further variation orders,” Kanesan said.

Scomi Engineering’s latest income statement showed its total accumulated losses were RM115.05 million as at 1QFY14. Its total equity stood at RM290.71 million and  borrowings were RM509.298 million, mostly short-term ones.

Kanesan said Scomi Engineering’s bids for a monorail project in Chennai, India, and the second line of monorail in Sao Paulo, Brazil, “are still in progress”, with both tenders yet to be closed.

According to the annual report, it is one of only two companies shortlisted in the bidding for the Chennai monorail project, and it expects the Tamil Nadu government to announce the award of the contract by year-end.

This article first appeared in The Edge Financial Daily, on September 30, 2013.



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