By Philip Wen
LEIGHTON Holdings has bolstered its continued strategic push into Asia with the win of two construction contracts in India.
The contracting giant signed a four-year $US500 million ($A597 million) contract to help build a nine-kilometre, two-lane road tunnel in Jammu, in the country's north-west, and a $US45 million agreement to widen Vizag Port in the east.
The managing director of Leighton India, Russell Waugh, said the wins reinforced Leighton's reputation as a pre-eminent contractor in the country, leaving it well placed to benefit from increased project activity in the fast-growing country.
''The Indian market presents enormous opportunities for Leighton, and we are well positioned with a strong mix of international experience and local knowledge to capitalise on the pipeline of projects coming forward over the coming years,'' Mr Waugh said.
Despite moving into India six years ago, growth has been slow and Leighton India remains a minor contributor to the group's total revenue. But after its tentative start, Leighton is now hoping to more than double its existing work in India to reach $US2 billion by 2015.
The new deals, which were foreshadowed by chief executive Wal King last month, come two weeks after Leighton agreed to sell a 26 per cent stake in its Indian business to Indian steel giant Jindal. The sale is expected to be completed in August.
Mr King said the strategic partnership with Jindal was very important in taking the Indian business to the next stage.
Growth in India will complement Leighton's efforts in Asia, with operations particularly focused on providing contract services to the rapidly growing mining industries of Mongolia and India.
A Patersons Securities analyst, Graeme Carson, said having Jindal as a domestic partner would facilitate Leighton's desire for fast growth. ''They haven't rushed in and made massive acquisitions and put their balance sheet on the line, but … now that they have got a partner it is a signal they are placing themselves strategically,'' he said. ''Partnering with someone domestically [Leighton] will have a presence and that's very important both politically and operationally.''
With around 85 per cent of its revenue generated in Australia, Mr Carson said Leighton's continued expansion into Asia was a sensible strategy to achieve rapid growth. ''They're going to have some hurdles along the way because you're operating in a different environment, but I think the strategy makes sense,'' he said.