Balfour Beatty snags more contracts with Carillion’s collapse

British construction group Balfour Beatty said on Wednesday it won more business following the collapse of Carillion. (Balfour Beatty)
Updated 13 March 2019
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Balfour Beatty snags more contracts with Carillion’s collapse

  • The downfall of Carillion was a constant reminder of how little room for error there was in the industry
  • The impact of Brexit on Carillion’s operations would be minimal

BENGALURU: British construction group Balfour Beatty said on Wednesday it won more business following the collapse of Carillion as it reported a nearly 10 percent jump in full-year profit.
The bankruptcy of Carillion in January 2018 was seen as a watershed for Britain’s construction sector that ended a race to the bottom in terms of pricing of bids for public sector work.
“We have benefited in our order book from Carillion’s collapse but that’s a function of us being a higher quality company and the low-price bidder not being there in the market any more,” said Chief Executive Officer Leo Quinn.
“Leo Quinn has successfully proven that revenue is vanity and profits are sanity,” said George Salmon, equity analyst at Hargreaves Lansdown.
But he added that the downfall of Carillion was a constant reminder of how little room for error there was in the industry.
That point is underlined by the plight of support services group Interserve where shareholders will vote on Friday on a debt-for-equity swap.
Quinn launched a turnaround plan after taking over at Balfour Beatty in 2015, his efforts chiefly involving a sharper focus on winning higher margin projects in its markets.
The company, which builds transportation, power and utility systems, attributed the rise in 2018 profit to its turnaround plan and its more selective approach to contracts.
Underlying pretax profit climbed to £181 million ($238 million) for 2018 from £165 million a year earlier, the company said, adding that margins in the United States and the UK came in above its target in the second half of the year.
The FTSE 250-listed company said its order book rose 11 percent to £12.6 billion at the end of 2018.
Quinn said the impact of Brexit on its operations would be minimal since it was a local business, but it had contingency plans in place to ensure it can continue to deliver on current and future work commitments.


Foreign investors hope India dials back policy shocks after Modi win

Updated 24 May 2019
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Foreign investors hope India dials back policy shocks after Modi win

  • Modi’s pro-business image and India’s youthful population have lured foreign investors
  • After Modi’s win, about a dozen officials of foreign companies in India and their advisers said they hoped he would ease his stance and dilute some of the policies

NEW DELHI: Foreign companies in India have welcomed Prime Minister Narendra Modi’s election victory for the political stability it brings, but now they need to see him soften a protectionist stance adopted in the past year.
Modi’s pro-business image and India’s youthful population have lured foreign investors, with US firms such as Amazon.com , Walmart and Mastercard committing billions of dollars in investments and ramping up hiring.
India is also the biggest market by users for firms such as Facebook Inc, and its subsidiary, WhatsApp.
But from around 2017, critics say, the Hindu nationalist leader took a harder, protectionist line on sectors such as e-commerce and technology, crafting some policies that appeared to aim at whipping up patriotic fervor ahead of elections.

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“I hope he’s now back to wooing businesses,” said Prasanto Roy, a technology policy analyst based in New Delhi, who advises global tech firms.
“Global firms remain deeply concerned about the lack of policy stability or predictability, this has sent a worrying message to global investors.”
India stuck to its policies despite protests and aggressive lobbying by the United States government, US-India trade bodies and companies themselves.
Small hurdles
Modi was set to hold talks on Friday to form a new cabinet after election panel data showed his Bharatiya Janata Party had won 302 of the 542 seats at stake and was leading in one more, up from the 282 it won in 2014.
After Modi’s win, about a dozen officials of foreign companies in India and their advisers told Reuters they hoped he would ease his stance and dilute some of the policies.
Other investors hope the government will avoid sudden policy changes on investment and regulation that catch them off guard and prove very costly, urging instead industry-wide consultation that permits time to prepare.
Protectionism concerns “are small hurdles you have to go through,” however, said Prem Watsa, the chairman of Canadian diversified investment firm Fairfax Financial, which has investments of $5 billion in India.
“There will be more business-friendly policies and more private enterprise coming into India,” he told Reuters in an interview.
Tech, healthcare and beyond
Among the firms looking for more friendly steps are global payments companies that had benefited since 2016 from Modi’s push for electronic payments instead of cash.
Last year, however, firms such as Mastercard and Visa were asked to store more of their data in India, to allow “unfettered supervisory access,” a change that prompted WhatsApp to delay plans for a payments service.
Modi’s government has also drafted a law to clamp similar stringent data norms on the entire sector.
But abrupt changes to rules on foreign investment in e-commerce stoked alarm at firms such as Amazon, which saw India operations disrupted briefly in February, and Walmart, just months after it invested $16 billion in India’s Flipkart.
Policy changes also hurt foreign players in the $5-billion medical device industry, such as Abbott Laboratories, Boston Scientific and Johnson & Johnson, following 2017 price caps on products such as heart stents and knee implants.
Modi’s government said the move aimed to help poor patients and curb profiteering, but the US government and lobby groups said it harmed innovation, profits and investment plans.
“If foreign companies see their future in this country on a long-term basis...they will have to look at the interests of the people,” Ashwani MaHajjan, an official of a nationalist group that pushed for some of the measures, told Reuters.
That view was echoed this week by two policymakers who said government policies will focus on strengthening India’s own companies, while providing foreign players with adequate opportunities for growth.
Such comments worry foreign executives who fear Modi is not about to change his protectionist stance in a hurry, with one offical of a US tech firm saying, “I’d rather be more worried than be optimistic.”