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Our Bureau

Pune , July 18

Thermax Ltd's UK subsidiary ME Engineering has discontinued its packaged boilers and heaters business owing to mounting losses. The company is also in the process of winding up operations of Thermax Energy Performance Services Ltd (TEPS), a joint venture with EPS ASIA, operating in the energy audit space and has foreclosed all major contracts with a view to mitigating its losses, according to Thermax's annual report for 2005-06.

ME Engineering's decision to exit the business was prompted by significant cost overruns, delays in completion of four large projects, a depressed market for the product in the UK and Europe combined with the prospect of sustained investment and focus required to achieve critical mass and resource constraints, the annual report said.

The decision would help reallocate resources into the core waste heat recovery and related business to create long-term sustainability, said the report. The decision to wind up TEPS was based on the company's belief that the business was unlikely to turn around since the business model did not find acceptance in the market and adequate technical/financial support was not forthcoming from the joint venture partner.

Meanwhile, Thermax Europe, the wholly owned UK-based subsidiary which steers Thermax's absorption chiller business in Europe, witnessed a fall in turnover to GBP 1.8 million from 1.9 million in the previous financial year. The subsidiary has now been given charge of front ending its packaged boiler business in the UK and EU countries since April 2006.

The company is, meanwhile, revisiting its strategy and business model for the Brazilian market too where high gas prices and steep import duties have teamed up to keep demand depressed. Thermax do Brasil Energia e Equipamentos ltda, Brazil, is in the business of sales and service of absorption chillers and has executed two orders, the annual report said.

Thermax Inc, US, its wholly owned subsidiary, which steers its business in North and South America, witnessed total revenues increase to $ 12 million from $ 8.2 million the previous year. The report said that its chemicals business grew over 47 per cent to $ 8.2 million and revenues from absorption chillers grew 53.4 per cent to $ 3.7 million. It said high oil and gas prices kept the demand from the co-generation market in California subdued during the year.

The company's wholly owned subsidiary, Thermax Engineering Construction Co Ltd, which executes engineering construction projects mainly of a captive nature, has seen revenues rise over 63 per cent to Rs 74.1 crore from Rs 45.40 crore. Profit after tax went up from Rs 0.9 crore in the previous year to Rs 1.3 crore, the annual report said.

Thermax Hong Kong Ltd, its wholly owned overseas subsidiary set up last year to tap the China market, has also tasted success and has already sold four absorption chillers in the country, according to the report. The subsidiary had decided to set up a servicing base in China with an existing representative office in Shanghai.

More Stories on : Restructuring | Overseas Investments | Engineering

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