New Delhi: Hindustan Construction Co. Ltd (HCC) plans to partner with European companies in the engineering and design space as part of its plans to transform itself from a construction company to an integrated infrastructure player.
To facilitate its partnerships, the company proposes to set up two special purpose vehicles, or SPVs (companies created for a specific purpose), in Europe.
“We may set up two more SPVs in Europe for partnerships. We need to have companies in Singapore, Mauritius, Amsterdam and Switzerland. We will also need to pick up engineering companies in Europe for which the discussions are on,” said Ajit Gulabchand, chairman and managing director, HCC. He declined to comment further on the acquisition plans. The company already has one SPV, HCC Singapore Enterprises Pte.
HCC wants to enter sectors such as power, roads, ports and airports through its subsidiary HCC Infrastructure. It does not want to remain a construction company and has formed a development group headed by Cordell W. Hull, the former chairman of Bechtel, to help it become a full-fledged engineering, procurement and construction, or EPC, firm and also to chart out a growth plan for HCC Infrastructure. “The group has begun working for the last four months and it will take another five months for the things to firm up,” Gulabchand added.
“Availability of certain skill sets is very limited in the country today because the demand is high. This is the reason why many companies will find acquiring companies which have these skill sets easier,” said Amrit Pandurangi, who heads the infrastructure practice at audit and consulting firm PricewaterhouseCoopers. He added that it was a good thing HCC was trying to acquire such companies.
HCC currently has an order book position of Rs9,300 crore and aims to increase this to Rs25,000 crore by 2012. It expects to end 2007-08 with revenues of around Rs3,000 crore and an order book of around Rs12,000 crore.
In another development, HCC plans to bid for the construction contracts for two underground crude oil storage sites in Mangalore (1.5 million tonnes per annum, or mtpa) and Podur (2.5mtpa ) to be awarded by the Indian Strategic Petroleum Reserves.