Macneill Engineering, a ₹65-crore material handling and services company, is diversifying into making polypropylene bags and also actively considering a foray into water transport. At the same time, to strengthen its core business, MEL plans to set up a unit in Assam for the production of platform trucks and e-rickshaws in this financial year.
Pradeep Churiwal, Managing Director and CEO of MEL, said, “In order to finance the Assam project, modernising the existing Joka plant and to infuse working capital in the post-modernisation period, the company will come out with a ₹30-32 crore initial public offering (IPO) at the SME segment of NSE in February 2019.”
Churiwal aims to make MEL a ₹550-crore company by 2030; ₹300 crore could come from services and ₹250 crore from sales.
Currently, MEL does not have debt with banks and is run mostly on internal resource generation, which leads to constraints at times. The cash-flow should improve with the capital infusion.
Polypropylene bag plant
MEL has decided to set up a Polypropylene (pp) bag plant at an investment of ₹8 crore in Paradip, Odisha, through a special purpose vehicle (SPV) which will supply its entire production to IndianOil. According to Churiwal, 60 per cent of the project cost will be funded through a bank loan, and the rest through internal accruals.
Incidentally, MEL also has a five-year, ₹28-crore contract with IOCL, Paradip, for the entire operation of materials and plant handling.
MEL is also seriously mulling entering the water logistics sector. A proposal exists to ship IOCL products on the Paradip-Chennai, and Paradip-Trichy routes, said Churiwal.
MEL is exploring the possibility of getting a small cargo ship to transport polymer from Paradip. The company anticipates that water transport can be initiated by middle of the next year. The entry into water transport may be new for MEL, but logistics is not new to the company. It is already in the warehouse business. IOCL has been keen to find a partner who could invest in the water logistics sector as this would lower IOC’s cost of transportation, Churiwal said. On the other hand, for MEL, it would be a committed business.
Upcoming Matia plant
The company has decided to set up a unit for the production of platform truck and e-rickshaw on a 1.5-acre plot in the industrial growth centre of Matia, in Goalpara district of Assam, at an investment ₹6 crore. This plant would be commissioned before March 2019.
The platform truck is mainly used in the railways, defence, and power sector. The Matia plant could end up producing 720 e-rickshaws and 300 platform trucks.
MEL has two other manufacturing units, in Joka and Dhulagarh.
In Joka, the production capacity of e-rickshaws and forklift trucks are 1,200 and 900 respectively. However, the utilisation of the forklift production is approximately 33 per cent; only 300 are produced in the only shift there is. There could be two shifts from next fiscal.
The e-rickshaw unit, commissioned in August, hopes to make 300-400 units in the remaining months of this fiscal. This plant was set up in 2002.
MEL is also producing about 900 hydraulic hand pallets and 18-24 reach trucks under the Macneill brand name.
In 2010, MEL ventured into services sector. The company began providing forklift with manpower to IOCL (Panipat), BHEL (Bhopal) and ITC (Guntur).
In 2010, ₹20-crore worth of forklifts were sold and ₹5-crore worth of machinery was put into service. Half of MEL’s production was consumed by the company itself, by deploying them in the services sector. In 2017-18, services earned the company ₹33 crore, while sales lagged behind with ₹17 crore.
According to Churiwal, the sales division has started picking up in the GST era, and in 2018-19, it could touch ₹25 crore. Revenue from services could go up to ₹45 crore. This translates to a growth of 40 per cent over the previous year. The boost in sales could be mainly coming from forklift and e-rickshaw.
Churiwal hopes MEL can do business of ₹100 crore in the next fiscal, 2019-20, a marked increase from the ₹70-crore turnover expected in 2018-19. Both sales and services would bring in ₹50 crore each in 2019-20. This, however, does not take into account the revenue from water logistics, as MEL would like to assess the situation after IOCL’s Paradip plant achieves stabilisation.
The writer is a freelance journalist