IL&FS Engineering Services restructures business strategy

IL&FS Group and SBG to provide IL&FS Engineering Services contracts upto Rs 9,000 crores, over 3 years

IL&FS Engineering Services already has a pipeline order book of Rs 2500 crores from a diverse set of projects

IL&FS Engineering & Construction Company Limited (IL&FS Engineering Services) has reconfigured its business strategy and model to leverage on the ongoing opportunities in the infrastructure space in the country.

IL&FS Engineering Services which is currently under the ownership and management of the IL&FS Group and equity partnership with the Saudi Binladen Group (SBG) has used its unique position of two strong owners to further its own agenda of building a portfolio of domestic and international contracts, with profitable margins.

As per a tacit understanding, the two partners will be providing contracts on arms length basis to IL&FS Engineering Services of Rs 2000 crores each aggregating to Rs 9000 crores over a three year period. IL&FS Engineering Services has already built a pipeline order book of Rs 2500 crores from a diverse set of projects in Buildings, Roads, Railways, Rehabilitation centres and Airports. The current order book comprised the Pune Sholapur project - Rs 900 crores and Gurgaon Metro Rail project– Rs 200 crores, where work is underway.

Recently, SBG has been awarded a Rs 350 crores project in Saudi Arabia for building a Rehabilitation centre at Damam, Saudi Arabia. SBG has won a USD 7 billion airport project in Jeddah. It is expected that a part of this project would be executed by the IL&FS Engineering Services-SBG joint venture Company in Saudi Arabia. SBG has reconfirmed its intent to outsource its construction work to the joint venture. In turn IECC has mobilised a new team to Saudi Arabia to execute these projects.

Mr Saleh Binladin, senior member of SBG has reconfirmed the commitment of Group to IL&FS Engineering Services saying, “IL&FS Engineering Services provides a great platform for our Group for investment, outsourcing of engineering talent and access to the Indian market. We are working closely to provide business and technology in the various verticals of construction being developed by IL&FS Engineering Services.”

On the domestic front, the company is working on a focussed basis to build competencies in five infrastructure verticals, Roads, Buildings (including low cost housing), Power, Maritime and Oil& Gas.

IL&FS Engineering Services has competed and won a few projects in the Building and Roads space, NHAI road projects in Nagaland and Assam, a building project with IL&FS for the Gujarat International Finance Tech (GIFT) city. The aggregate value of these projects would be in the region of Rs 1200 crores.

Building on its presence in the Power sector, it has commenced bidding in the Power sector which envisages the largest investment in the 11th Five year plan. Towards this end it has reached in principle understanding with KVK Energy for providing Balance of Plant construction services. It is expected that the contract would be in the region of Rs 400 crores.

IL&FS Engineering Services is well on its way to rebuild a diversified and profitable pipeline of projects.