The Hindu Business Line : Cethar Vessels plans Rs 50-cr expansion

CETHAR Vessels Ltd, the Tiruchi-based boiler manufacturer, intends to spend Rs 50 crore on expanding its facilities. The company's Chairman, Mr K. Subburaj, told Business Line recently that orders on hand and the business prospects warranted capacity expansion.

In the current year, Cethar Vessels estimates it would achieve a turnover of Rs 810 crore compared with Rs 325 crore last year.

Mr Subburaj said order booking was robust enough to seek a turnover of Rs 1,300 crore next year.

Cethar Vessels' growth has been powered by the demand from captive power plants. The company is one of the two major suppliers of small boilers in the country, the other being Thermax.

According to Mr Subburaj, Cethar Vessels and Thermax have between them a market share of 70 per cent in the small boilers segment (an area which the country's largest power equipment manufacturer, BHEL, is planning to enter).

Cethar produces a range of small boilers for captive and cogeneration power units and heat recovery steam generators. But now the company intends to enter the market for bigger boilers. "We claim we will be able to produce a `circulating fluidised bed boiler' of 950 tonnes per hour capacity," says Mr Subburaj. A boiler of that capacity will fit a 250 MW power plant.

Cethar Vessels has produced and sold CFBC boilers, but not those as big as 950 tph. So far, the biggest CFBC boiler Cethar has sold is of 175 tph capacity, though "We may be taking an order shortly for a 475 tph boiler".

Mr Subburaj realises the difficulties in marketing a `first time' product and has back-up plans, in case nobody is interested. "If we do not get an order before March, we will ourselves put up a 125 MW power project." The project, however, may be executed jointly with a power company, either in Chhattisgarh or Rajasthan.

He reckons that if Cethar itself puts up a power plant, the project cost will be low — perhaps Rs 3.25 crore per MW — because the boiler is produced in-house.

Overtime, Cethar Vessels plans to be a supplier of boilers for power projects of sizes between 250 MW and 1,000 MW.

Meanwhile, the other company promoted by Mr Subburaj, Cethar Industries Ltd, which is a listed company, has settled with its principal lenders IDBI and SBI for payment of its dues. The company will pay Rs 13 crore and clean up its books.

Cethar Industries is a garments manufacturer, which "fell into bad times because of lack of working capital." Mr Subburaj is considering an option for buying back shares from public and delisting the company.

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