Infra Growth Driving Material Handling Industry

December 11, 2010 7:22 am

Tecpro Systems provides turnkey solutions in Bulk Material Handling Systems, Ash Handling Systems, Captive Power Plants and Pollution Control Systems for the Industrial Sectors. Amul Gabrani, Vice–Chairman & Managing Director opines about the material handling business in India and his Company’s growth strategy in an interview with Subhajit Roy.
 
Tecpro Systems Ltd is a leading player in material handling systems. What is your opinion about material handling systems business in India?
The Government of India has significantly increased its spending on infrastructure projects to 7.5% of GDP by way of the Eleventh Five–Year Plan. In line with this estimated investment in infrastructure, the related industries in the power, steel, coal and cement sectors are also projected to witness significant growth. Hence, the raw material supply to these key sectors will substantially increase given the proposed investment for infrastructure projects.
 
Consequently, both private and public sector companies have planned several projects for creation of new capacity and expansion of existing plants. The process of commissioning of these projects is expected to create additional demand for machinery. The continued emphasis on the creation of infrastructure and planned funding of projects augur well for the industry and ensure a steady stream of order inflows for the capital goods companies. According to industry estimates, the material handling for power plants is estimated to be Rs. 18 billion market.
 
As far as we are concern, our current order book stands at about Rs. 5,000 crore which is 3.38 times of our FY 2010 revenues. This provides good revenue visibility for the future.
 
Which are the segments your products are catering for? And which is that one industry segment you see maximum opportunities for your business?
We offer a comprehensive range of services which includes the design, manufacture & sale of material, coal and ash handling equipment and undertake turnkey contracts in both material and ash handling. Our products cater to the needs of the core industries such as power, cement, sugar, port, mining, fertilizers and iron & steel.
 
The maximum opportunity for us arises from the Power Sector. Coal is likely to remain India’s most important energy source for Power until 2031–32 and the Power sector is therefore expected to remain a key market for material handling and ash handling sectors over the next two decades. The high power deficit in the country, coupled with the low per capita consumption of electricity, has led to the power generation targets being bigger than ever, translating into a huge opportunity for BoP players. The 75,200 MW of thermal power capacity planned during the Twelfth Plan period alone throws up a potential BoP opportunity of around Rs. 1,35,360 crore and Tecpro is well positioned to capitalize on this exponential opportunity.
 
Can you give us a brief overview of your material handling product portfolio?
Tecpro Systems is amongst the largest players in India in the material handling sector, specifically in the coal and ash handling segment. For a Coal Handling Plant, Tecpro Systems provides a complete range of services which includes a complete civil and structural work for the entire plant including Ground hoppers, wagon tippler hopper or track hopper and tunnels, crusher house and complete structural supports.
 
We manufacture and supply heavy engineering equipment such as stackers, reclaimers, crushers, screens, feeders, idlers, pulleys and spares for various applications relating to material handling solutions. And these products also find extensive use in core industries like construction, steel industry, cement, mining and quarrying, manufacturing, electricity, gas and water. Therefore, Tecpro is also very well placed to capitalize the growth in these industries. We lend our manufacturing expertise to projects of various natures and supply different types of crushers, including jaw crushers, roll crushers, impact crushers, hammer mill crushers and cone crushers, which are used for crushing the hard materials to reduce their size to meet process requirements.
 
How has foreign collaborations helped your company?
Tecpro has fostered technical collaborations and license agreements with international companies including FAM Magdeburger Forderanlagen und Baumaschinen GmbH, Germany, Maschinenfabrik Liezen und Giesserei GmbH, Austria, PEYTEC Material Handling GmbH, Austria and Won Duck Industrial Machinery Co. Ltd., Korea. The foreign collaborations and alliances provide access to advanced technologies and expertise developed by these companies.
 
What is your target for this fiscal and how did your Company perform during the last three quarters?
In the financial year 2009–10, we have achieved a total income of Rs.1475.84 crore. Our net profit has been Rs.109.64 crore for the financial year 2009–10 as against Rs.50.68 crore for the financial year 2008–09. This has resulted into increase in Net worth of the Company from Rs. 160.10 crore to Rs. 352.18 crore. Over the past 3 years our compounded annual growth rate for revenue and PAT has been 85.47% and 73.26%, respectively. We expect a revenue growth of 35–40% in FY 2011. Our revenue growth over the past few quarters has been consistent and we will continue to tread along a sustained growth path.
 
Where do you wish to see your company in next 5 years?
On an overall basis, the market prospects for the material handling industry appear exciting. It is expected to grow over the next 10 years at a rate which is linked to the growth expected in core industries such as coal, steel, cement, fertilizers, mining, ports, power and petrochemicals. Additionally, the setting up of green field projects and brown field expansions in power, steel and cement sectors provide significant opportunities for larger size contracts. Other sectors like coal mining, sugar, cogeneration and paper are also expanding their existing facilities and setting up new plants. We believe that capacity creation in power, steel, cement, port, sugar & co–generation and paper sectors will be driving growth of the material industry in the coming years. We seek to expand and enhance our presence in our existing business segments by identifying markets where we can provide cost effective, technically advanced solutions to our clients thereby distinguishing ourselves from our competitors.
 
We have established subsidiaries in Singapore and Dubai and we intend to leverage our presence in Singapore, Dubai and Johannesburg to expand into emerging markets such as Africa and South–East Asia.