Financial Daily from THE HINDU group of publications
Wednesday, Jul 28, 2004
Financial Daily from THE HINDU group of publications Wednesday, Jul 28, 2004 |
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Corporate
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Restructuring Thermax ropes in McKinsey for revamp; plans China, Brazil foray Our Bureau
Pune , July 27 THERMAX Ltd has announced that it has roped in McKinsey for an ambitious transformation process designed to make it a competitive player in the global market place and significantly improve topline and bottomline. The company also announced that it has embarked on a concerted effort to tap the markets in China and Brazil, for which it has already set up wholly owned subsidiaries. `Project Evergreen', the two-year exercise by McKinsey, will work across all levels of the company to double turnover and triple profits in the next three years, the Thermax Managing Director, Mr Prakash Kulkarni told newspersons after the AGM on Tuesday. The company is simultaneously working on evolving into a global organisation with cost leadership, he added. Investments are on the anvil in the shop floor and business development areas, which will help Thermax take strides in the domestic and international markets. Mr Kulkarni said that the company is gearing up to do business in China, the largest manufacturer and consumer of absorption chillers in the world. (China consumes about 50 per cent of the estimated $600 million worth of absorption chillers sold every year.) Phase one of operation will see the company commence exports to China, after which it might consider setting up an assembly unit and eventually a manufacturing setup there. "Everything depends on our performance in the market in the remaining nine months of the current fiscal.'' The company is also looking at China as a sourcing base for a variety of materials, said Ms Meher Pudumjee,Vice-Chairperson. McKinsey, which is a large player in the Chinese market, would also offer them advice on the Chinese foray. The company has already set up offices in Hong Kong and Sao Paulo, Brazil where it is making an exploratory foray, Mr Kulkarni said. Meanwhile, the company's first-quarter sales in the current fiscal have gone up to Rs 124.8 crore from the Rs 77.9 crore in the corresponding previous period. Net profit, however, was marginally down at Rs 5.6 crore (Rs 5.7 crore). The company said that the order booking increased by 76 per cent to Rs 305 crore; it now has Rs 607 crore of orders on hand against Rs 233 crore earlier. Meanwhile, Thermax Energy Performance Services, the joint venture between Thermax and EPS AsiaInc, is on the verge of closure mainly due to lack of market acceptance of the business model, Mr Kulkarni said. The joint venture's gross revenue dropped sharply over the last year. With net worth eroded on the balance sheets and a contingent liability of Rs 23.03 crore arising out of contractual agreements to customers for guaranteed savings, the company has decided to close down the business. "We hope to complete the legal formalities in the next one year,'' Mr Kulkarni said. The company has, in the meanwhile, bought out the minority 40 per cent of the equity stake of Babcock & Wilcox International Investment (BWII), USA, in Thermax Babcock & Wilcox India, making it a wholly owned subsidiary of Thermax. The company will, however, continue to operate under its existing name and pursue the projects business in the domestic and global markets.
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