labels: industry - general
Saag RR to look at ONGC and Middle East for work-over servicesnews
31 January 2006

Chennai: The Rs15.93-crore turnover Chennai-based Saag RR Infra Limited is entering in to work-over services for the oil and gas industry. The company is looking at ONGC and the oil companies located in Middle East.

Largely a civil and mechanical construction company, Saag RR will get the technology from Saag Drilling and Well Services, Malaysia, that is offering services for Exxon Mobil. The Indian company is a 51-per cent subsidiary of Saag Consolidated Bhd, Malaysia.

According to the R Sriram, managing director, Saag RR, "The Indian work-over services market is estimated at around Rs200 crore. And we are confident of getting a sizeable share of that." He also said that ONGC is in the process of refurbishing its platform and has already awarded the contract for 26 platforms.

Speaking about the subsidiary's new business venture, Anand Subramanian, executive director, Saag Consolidated said, "Nearly 20 months ago we acquired the majority stakes in Saag RR. We have put in place the necessary systems and processes. Now the company is all set to take on new projects."

According to him, the strategy of buying into a listed Indian company (Saag RR is listed on Bombay and Madras stock exchanges) is working out well. "We could have started a wholly owned subsidiary. But we will not get the correct valuation as we are getting now."

The Indian offshore platforms and wells are over 25 years old and require restoration and enhancement. Given the increase in oil prices, oil companies are interested in increasing their production and companies like Saag RR wants to encash this opportunity. Work- over services are paid on day rate basis. "The minimum rate would be $19,000 per day and would go up based on the kind of work," said Subramanian. The Malaysian group owns a rig and also a rig making bed. "In case of need we can assemble a rig at a short time."

Saag RR has a Rs10.50-crore equity base and would need around Rs30 crore for the new business. According to Sriram the company would raise that through a mix of debt and equity.

For the nine month period this fiscal, Saag RR has posted a turnover of Rs18.57 crore and a net profit of Rs1.40 crore. The company has executed construction projects for Hindustan Petroleum, Degremont, Bharat Heavy Electricals, Bharat Earth Movers, Nuclear Power Corporation, National Thermal Power Corporation and others.

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Saag RR to look at ONGC and Middle East for work-over services