Economy

Published: Dec 29, 2021
Updated: Dec 29, 2021

ISGEC Heavy Engineering

Aiming for Rs 10,000 crore revenue in 3 years

Maintaining that “ISGEC has made good inroads into booking orders for the FGD segment”, Mr Puri explains, “Order booking has been good for the FGD. We got NTPC orders and will start getting state orders also. We are spending on both technologies for FGD and the coal plants are coming up with all sorts of solutions. I would say the market for air pollution control equipment in coal-based power plants is big and there is almost the entire range of technology to cater to that. FGD comprises 15% to 18% of our current order book.” As regards operating margin guidance for the current year, Mr Puri confirms that “EPC projects will have 7% to 8% and the product business will have 13% to 14% in OPM.”

SUGAR MARKETSHARE

As regards the company’s marketshare, he notes that “in the sugar industry, our marketshare could be around 50% whereas in the distillery sector, we are a new entrant and broadly we should be near 15%.” Speaking on the business outlook and operating margins going ahead, Mr Puri says, “Overall, demand trends are encouraging as the enquiry position is good. About 50% of our order book is from PSU customers which have a price variation clause, and the price increase for some materials can be passed on to the customers. For the other customers, we have fixed price contracts while keeping contingency margins on the cost, but the market is competitive.” The fixed and variable ratio of the current order book is almost 50:50.

In order to enhance ISGEC’s production capacity, Mr Puri says, “We are making a marginal small investment to debottleneck so as to increase production.” He adds, “In the foundry area, we will increase capacity by nearly 50% and also on the pressure parts. Moreover, we have been approved by DRDO for oxygen plants and we have got our first order. We are doing some marginal investment for that as well.” He also indicates that it is relatively easy for ISGEC to get Rs 1,500 crore-Rs 2,000 crore order inflows every quarter.

On the company’s important Cavite Biofuel ethanol plant in the Philippines, Mr Puri says, “We are on track to restart construction of our Philippines plant which is expected to restart by around the first week of October 2021. We continue to think this is a good business and will be profitable to run, though we will keep the option to sell it when it is complete.”

ETHANOL PROSPECTS

Elaborating on the prospects of 2G ethanol, Mr Puri reveals that “we are still looking at the economies of 2G ethanol. However, there are ethanol plants which are going to come up and we are also setting up our own ethanol plant in our sugar factory. This business is likely to be quite profitable and hopefully our plant is going to be commissioned next month.” With regard to entering greener technologies, he says, “We are certainly looking at greener technologies, and are closely monitoring the changing landscape in India and the world over. We are very much aligned to it and we will strike at the right time.”

Concluding, Mr Puri mentions that ISGEC could reach a revenue of Rs 10,000 crore within the next three years. The company reported Rs 5,477 crore in revenue, Rs 507 crore EBITDA and Rs 253 crore PAT on its tiny equity capital of Rs 7.35 crore in FY2021.