Floods may affect Mudajaya’s earnings

PETALING JAYA: Mudajaya Group Bhd’s earnings could be impacted by the floods in India which have affected its independent power producer (IPP) project, analysts said.

According to OSK Research, the floods have caused delays to Mudajaya’s RM3.4bil IPP equipment procurement contract.

“While heavy rainfall during the monsoon season is common, the rain this year has been unusually intense.

“Earlier this year, Mudajaya announced that its IPP job had experienced delays because of protests by villagers at its project site but the issue was eventually resolved,” it said in a report.

Overall, the protests and flooding have caused Mudajaya’s project to be delayed by an estimated eight to nine months, it pointed out.

It added the contract delay involved mainly civil works, which were estimated at 10% to 15% of the contract value.

The Chhattisgarh plant in India is a coal-based power plant with four 360 MW units of modular form equipment.

“Further delays to the plant may affect the group’s earnings for next year, but with the plant to be completed by 2013, the group will have a stable recurring income from the project as they also co-own it,” said a local research house analyst.

It was reported that the plant, when fully operational, might provide a minimum income of between RM60mil and RM70mil to the group.

On the local front, an analyst said the group, with its expertise in power plant design and construction, has a good chance to participate in the 1,000 MW Tanjung Bin extension, which is expected to be worth RM675mil to RM900mil.

OSK Research said there was still jobs flow for Mudajaya and it was targeting some contracts from the West Coast Expressway.