Thermax to focus on international markets for better performance

With profits going down consistently for the last few quarters and the domestic power industry still to recover, capital goods manufacturer Thermax is now focusing on expanding its presence in international markets.

Along with China, it is looking at markets like South East Asia, Africa and Middle East. At present, its domestic and international business ratio is 70:30, Thermax aims to take at 35:65 in next few years.

“Over the next few years our focus will be international markets. The domestic power sector will take at least one or two years to gain momentum and then growth will start happening.  Our effort is to minimise the dependency on domestic markets as it has limitations for growth particularly in which Thermax is operating, and we cannot afford to wait for so long,” said M S Unnikrishnan, managing director, Thermax.

The impact of the turmoil in the domestic market was evident on the firms first quarter results, which saw its net profit dip by 17 per cent and topline degrew by 2.7 per cent on a year-on-year basis.

Unnikrishnan also said that the foray into international market will also take time to have impact as different markets has a different business model.

“There is a potential for Thermax products in markets like Malaysia, Indonesia, Vietnam, Cambodia and Nigeria.  However, it will take some time to achieve double digit growth in these markets. Overall, our ratio of products and project basis programmes is around 50:50,” he said.

Unnikrishnan agrees that China has been a tough market, with huge amount of competition from local players. “We are the only Indian company which is delivering projects in China. In this market, our focus is more on technology and application development. Last year, we have sold over 100 units of absorption cooling chillers in China market alone,” said Unnikrishnan.

Thermax has been exporting its products for over a decade now.

It has also managed to increase its export revenue from Rs 100 crore to Rs 1,000 crore in the last 10 years.

But they have realised that only increasing exports will not be sufficient to bring good growth numbers.

The crisis in the domestic market is evident as during FY14, Thermax bagged only one order worth Rs 1,350 crore from a petrochemical company for the design, manufacturing and commissioning of 9 CFBC (circulating fluidised bed combustion) high pressure boilers.  Hence, the order balance is down 5.9 per cent from Rs 6,322 crore to Rs 5,948 crore.