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Having transferred the Caterpillar dealership business into a wholly owned subsidiary – Tractors India Private Ltd (TIPL) – earlier this fiscal, Kolkata-based infrastructure equipment player TIL Ltd is planning a major expansion of product portfolio.
The aim is to target the existing customers – primarily of Caterpillar equipment – with a broader range.
The impact is expected in a topline growth of the standalone TIL balancesheet, which had shrunk substantially following the restructuring; less dependence of the group on Caterpillar dealership for future growth and; a potential improvement in group profitability. The full impact of the product portfolio expansion is expected in one-and-a-half years.
The Rs 850-crore company supplies, maintains as well as rent-out equipment pertaining to raw material handling, port operations and power applications.
TIL, in consolidation with TIPL, has posted 34 per cent growth in turnover to Rs 288 crore during the October-December 2010 quarter. The consolidated (TIL and TIPL) profit before tax increased by 81 per cent to Rs 18.6 crore.
According to the Vice-Chairman and Managing Director, Mr Sumit Mazumder, TIL is currently setting up a new factory over 160 acres at Kharagpur - a little over 100 km from Kolkata - to manufacture port equipment in technological collaboration with Mitsui. The new products will be rolled out beginning June-July.
Plans are afoot to set up another factory at Kharagpur to manufacture two different product lines. The West Bengal Industrial Development Corporation (WBIDC) recently allocated 104 acres for the purpose.
“We will add four new product lines in collaboration with several global majors in two factories at an initial investment of close to Rs 200-250 crore to be ramped up to Rs 500-600 crore in the future,” Mr Mazumder said, adding that the new products would be “non-competing” in nature with the existing offerings from Caterpillar.
While the new products are expected to boost the TIL topline by 2012-13, Mr Mazumder is expecting “equipment rental” business to be a major profit churner for the group in the time to come. The business currently contributes 6-7 per cent of the TIL-TIPL consolidated turnover.
“Globally 60-70 per cent of such equipment procured by the project contractors are on rental. This is to avoid the capital expenditure and maintenance issues. The trend is expected to pick up in India in 4-5 years. To make the best of this emerging opportunity, we are trying to increase our range of offerings,” he said.
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