(Adds more details, quotes, share price)
By Janaki Krishnan
MUMBAI, Sept 10 (Reuters) - Power equipment maker Emco Ltd
<EMCO.BO> expects to clock lower revenue growth than forecast in
2008/09, as anticipated order inflows from a major client did not
come through in the first quarter, a top official told Reuters.
Revenue growth for the year is seen at 35 percent, down from
the 50 percent growth that the company forecast in April, Rajesh
Jain, Chairman, told Reuters in an interview late on Tuesday.
"We were expecting some orders on the transmission line which
we thought would be coming in the first three months. Those
orders have not yet come in. We had factored in certain revenues
coming from there," Jain said in an interview.
This has hurt some of Emco's plans and will lead to lower
revenue in the fourth quarter, he added. Emco follows an April to
March accounting year.
However, operating profit margin would be at 13.5 percent, in
line with the April forecast, he said.
Emco, whose traditional business is making transformers,
switchgears and setting up sub-stations for power projects, is
now getting into power generation through its wholly-owned unit,
Emco Energy, he added.
It will also shortly commence mining and selling coal from a
mine in Indonesia, in which it recently picked up a stake, said
Jain.
POWER FORAY
Emco Energy is setting up a 540 mega watt power plant near
Nagpur at a total cost of 24 billion rupees.
It has tied up funds worth 12.40 billion rupees for the first
phase of the project for generating 270 MW power. The project is
expected to come up by 2010 with about 20 percent funded through
equity, with a likely dilution of stake in Emco Emergy, he said.
The remaining portion of the project would be funded through
debt, of which 30-40 percent would be from overseas, he added.
Emco has also signed a preliminary agreement with Chattisgarh
state government to set up a 600 MW power project at a tentative
cost of up to 25 billion rupees.
This project, an equal joint venture with Kolkata-based Shyam
Group which has interests in steel, cement and power, is at a
preliminary stage, he said adding that land acquisition should
take 6-8 months.
MINING COAL
Earlier this year Emco picked up a 37.5 percent stake in a
coal mine in Indonesia, with coal reserves of 105 million tonnes
and has bagged mining rights for 20 years.
"It (the mine) is getting operational this month and very
soon we will be in the business of selling coal," Jain said,
adding that the benefit will be seen in the next financial year.
The original intent in acquiring the coal mine was to set up
a power project on a coastal site using imported coal. However
the cost dynamics did not work out, Jain said.
"Coal, as such, is a commodity in demand. So we went ahead
and invested in the coal mine," he added.
Shares in Emco were trading up 0.5 percent at 111.95 rupees,
after touching a high of 113.30 rupees in early morning deals.
(Editing by Ramya Venugopal)
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Keywords: EMCO/OUTLOOK