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Engineers India Ltd-II: Company has to wean itself away from monopoly orders
Feb 13: EIL is doing well even as the LTSK and consultancy business elsewhere faces severe pressure because of sharply lower investments in the face of low oil prices
8A lot of EIL's success however is based on monopoly oil sector orders from public sector Indian companies
8A perusal of the list of LSTK and consultancy orders bagged by EIL in the last nine months will show the preponderence of public sector orders, particularly in the refining sector.
8Many projects have been bagged on single tender nomination basis
8This is not to say that EIL does not have the expertise or the experience to do these projects but being a public sector company, it has a natural advantage as oil companies find it easier to place an order on the engineering major to avoid going through usually combative competitive process.
8The management's biggest challenge is to wean the company away from monopoly orders. For example, overseas business makes up only 16% of the total orders
8Then again, attempt to diversify are showing slower results. Hydrocarbons still make up 95% of the total orders, with infrastructure projects making up just 4%
8Fertilizers and metals make up just 1% and 0.5% of total business respectively
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