EMCO plans production unit in S Africa

Mumbai-based EMCO, engaged in manufacture and sale of transformers and single-phase electronic energy meters in India, is planning to enter South African market through acquisition or by setting up a manufacturing facility. The company is planning to invest around Rs 50 crore.

Back in India, the company had recently bagged orders worth Rs 720 crore for setting up 18 power substations across the country.

Speaking to Business Standard, Rajesh Jain, chairman and managing director, EMCO, said the company is currently exporting transformers from India to the South African market and the export revenues from these markets are in the range of $5-6 billion.

The company has tied up with South Africa-based Edison Power to form a new joint venture (JV) company EMCO Edison Power. In the new company, which is likely to receive an investment of $20 million (around Rs 100 crore), EMCO will hold 51 per cent equity while Edison will hold the remaining 49 per cent.

The JV will set up the manufacturing unit in South Africa, which will make transformers up to 20 MVA, with the total annual capacity of 2,000 MVA annually. The JV plans to become a reliable power equipment supplier in South Africa and grow in the region through organic and acquisition route.

The JV company will supply the entire range of transformers to South Africa and the neighbouring countries. Apart from the routine contracts, major investments planned by Western Power Corridor (Westcor) and huge transmission and distribution sector capital outlay planned by Eskom in the region will definitely give a boost to the JV and its business.

Speaking about the turnkey electrical substation projects and power grid business in India, he said the company has bagged 17-18 orders for setting up substations in different parts of the country including Maharashtra, West Bengal and Karnataka. Cost of each project will be around Rs 30-40 crore. These projects will be executed in the next 12-18 months, said Jain.

Company’s current order book size is around Rs 1,500 crore and is likely to close deals worth another Rs 300 crore by April 2009, he added.