Scomi Engineering hopes to register profit in FY15

KUALA LUMPUR: Scomi Engineering Bhd, which currently has an order book of RM1.4 billion, hopes to return to profitability in FY15 through cost control, operation optimization and improved exposure to the foreign exchange.
"We'll keep an eye on profitability this year," its CEO Kanesan Veluppillai told a press conference after the company's AGM here yesterday.
Over the last four financial years, Scomi Engineering, a 72.33%-owned subsidiary of Scomi Group Bhd, has been in the red with a net loss of RM37.8 million for FY14, mainly due to project delays in Malaysia, India and Brazil, coupled with foreign exchange losses.
However, for the first quarter ended June 30, it posted a net profit of RM42,000 versus a net loss of RM16.48 million in the previous corresponding period.
Currently Scomi Engineering is bidding for a few monorail projects in Thailand, Turkey, India and Indonesia with a tender book worth RM2 billion.
"These are substantial projects, we've been working in Turkey and Indonesia for three (to) four years," Kanesan said, adding that there will be more projects to be called, as more governments conclude their elections.
For India, Kanesan said more states are looking to kick start monorail projects, such as West Bengal, Jharkhand, Andhra Pradesh and Assam, which could offer more opportunities for the group. It is confident of securing a monorail project in Chennai by the first quarter of 2015.
The second phase of its on-going RM1.85 billion Mumbai monorail project is targeted for completion by September 2015.
At home, Scomi Engineering is vying for several monorail projects and also supplying trams to some cities in the country.
"Hopefully some monorail projects will take off…some of them are being considered by the state and central governments, we'll wait for that," he added.
Penang and Johor Baru are two cities that are reportedly studying the feasibility of having monorail systems.
In July, Scomi Engineering announced that it will participate in and provide monorail technology for the Line 18 Bronze subway network of Sao Paulo in Brazil worth RM5.9 billion.
"It is (being finalised), we anticipate sometime next year this project will come on stream," Kanesan said.
When asked on the progress of the Bangalore monorail system in India, he expressed hope the much long-awaited project could be revived in a shorter period of time.
"There is a new state government (in Bangalore), we hope that they will be able to review (the project) and see whether they want to go ahead," he said, adding that the group is constantly pursuing the state government to proceed with the monorail project.
To recap, Scomi Engineering had in November 2009 entered into a joint bidding agreement with Geodesic Techniques Private Ltd to undertake new monorail projects in Bangalore. Five years on however, the project is yet to take off as the local government is yet to give the green light.
On its coach and special purpose vehicles division, Kanesan expects it will contribute stable and sustainable income to the group despite still being at the infant stage.
This segment sees a diversification of Scomi Engineering's core business from the manufacture and one-off supply of vehicles to leasing, maintaining and refurbishing them.