Thermax To Cut Operational Cost By 20%

As part of a turnaround strategy, Thermax has directed its business divisions and subsidiaries to cut their operational cost by 20 per cent. It has also told them to improve topline growth by 10 per cent in fiscal 2001-2002.

The cost-cutting measures and realignment of businesses are expected to enable the company to post operational profits. The company has also decided to realign its businesses into five groups called special business units (SBU).

The five groups are: boilers and heaters (formed with the merger of process heat, energy systems and co-generation units); absorption cooling; water and waste solutions (consisting of solid waste and waste water treatment); chemicals (ion exchange resins, oil field chemicals, fuel additives and speciality chemicals), and air pollution control (supply of equipment for air polluting industries).

 

The merger of Thermax's business units into five SBUs is expected to bring in substantial savings for the company as they will reduce overhead costs and enable them to bid for projects in a co-ordinated manner.

The on-going integration process is expected to ensure better utilisation of resources and also utilise human resource skills in a better manner.

In fiscal 1999-2000, Thermax posted a net profit of Rs 32.3 crore, while operational loss was at Rs 20 crore. The high net profit in fiscal 1999-2000 was mainly due to other income from investments in mutual funds and to some extent equities.

However, Thermax's income from treasury operations are expected to be substantially lower than the previous year due to sharp fall in investment values and returns from these investments.

Thermax expects to put up a better show in the current year as cost-cutting and other measures, including the closing of loss-making units, are expected to yield results.

Prakash Kulkarni, managing director, Thermax, has been given the mandate to implement the turnaround strategy. Kulkarni took over as managing director of Thermax on July 21 last year, following the exit of his predecessor, Abhay Nalawade.