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Industrial and medical gas-maker Linde India looks to consolidating in the country as growth is expected to come from sectors like automobile and ancillary segments, steel and fabrication sectors. Growth is also expected from Cryogenic solutions – used mostly for spice grinding and food processing.
According to Moloy Banerjee, Managing Director, Linde India, the company will look to improve in overall operations and margins this year with sufficient increase in the investments in previous years. The return on capital employed (ROCE) has been hovering around 7 per cent for 2017.
Between 2007 and 2013 Linde had invested around Rs 2,500 crore for setting up air separation units (ASUs), debulking units, and cylinder filling sites. “There was a slowdown in economy and the ROCE got affected,” he told the reporters on the sidelines of the 82nd AGM of the company.
Moloy Banerjee, Managing Director, Linde India. Photo: Debasish Bhaduri
Asked about cap-ex, Banerjee said the company makes an enabling investment to the tune of Rs 50 crore every year; but, maintained that 2018 will be the year of improvement in operation. “We have brought on stream a number of assets. With the economy picking up the focus will be on improving operational efficiency of these assets and on making them profitable,” he said.
Linde reported a standalone turnover of Rs 2,132 crore for FY17; while it reported a net profit of Rs 19 crore. The company follows a calendar year for accounting purposes.
Growth areas
There has been a pick up in sectors like steel, fabrication since the second half of 2017, Banerjee said adding that the merchant and packaged gases saw a near 10 per cent growth in 2017 with distributor channel sales and higher liquid Argon (specialised gas) sales in stainless steel and automobile sectors.
“Initially, there could be some short-term effect in steel sector with so many companies being up for sale at the NCLT. Acquiring companies could look at integration before expansion plans are rolled out. But, in the long term we do not expect much of a hiccup here,” he said.
The other big bet is cryogenic solutions particularly grinding of spices at low temperatures; and cryogenic freezing solutions for food processing. It has already set up a food lab and training centre in Andhra Pradesh. Orders are expected to come in soon, Banerjee said.
Merger with Praxair awaits CCI nod
Linde AG’s merger with US-based PraxAir is awaiting regulatory clearances. According to Sanjiv Lamba, Chairman, Linde India, of the 24 countries whose regulatory authorities have been approached, only 10 have given the clearances, so far. “We are awaiting clearances from the CCI (Competition Commission of India) and some other regulatory authorities,” he said.
The merger is expected to be completed by the end of 2018, he added.
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