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Pratibha Industries to Enter Oil & Gas Sector

  • Pratibha Industries, a mid-sector infrastructure company, is planning to enter oil & gas services sector to step up its higher-margin play.This move comes when intense competition is forcing infrastructure companies to work on lower margins. Oil & gas services not only offers high margins but also big-ticket orders, which are important for infra companies as it gives them revenue visibility.Yogen Lal, director, Pratibha Industries, told DNA that the company is devising strategies to tap onshore projects.It has decided to first focus on onshore projects and then gradually shift to offshore projects as the later needs higher investments.
  • The company’s current balance sheet does not allow it to take high capital-intensive offshore projects, Lal said.He said the company is aiming to get orders of at least Rs500 crore by the end of the next fiscal and would bid for onshore projects of ONGC and GSPL in the coming days. Currently, the company has an order book of Rs6,000 crore, which is four times its trailing revenue.
  • “We are not going to acquire any oil & gas assets but will be constructing infrastructure for companies that already hold such assets,” he said.Justifying the move, Lal said the oil & gas services sector is an extension of company’s capabilities in the water business. “The major component in both onshore oil & gas services and water management is pipe link and pipe manufacturing. These capabilities are available in-house, so it is similar to the water pipeline business that we do. The only difference is grades and angles of pipes, which we are capable of developing,” he said.
  • Apart from the pipeline work, Pratibha has the capability to develop gas gathering stations and similar structures that are vital parts of oil & gas sector.Paresh Nautiyal, analyst, Axykno Capital, said currently, the company derives 65% revenues from urban infrastructure, in which more than 50% is contributed by water management services and 35% comes from construction and building sector. Entry into oil & gas sector may change this revenue mix, the analyst said.

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