McNally eyes Mongolia, South Africa, Indonesia

McNally Bharat Engineering Co of the B M Khaitan Group has set its sights on new global markets such as Mongolia, South Africa and Indonesia to set up coal washeries and mineral and material beneficiation plants.

The leading engineering company involved in providing turnkey solutions is also in talks for participation in a copper beneficiation plant with Konkola Copper Mines, a subsidiary of Vedanta Resources, the largest mining and metal company in Zambia.

McNally Bharat has been advised by consultants KPMG to drive its future plans with aggression through joint ventures, strategic partnerships and collaborations for a targeted turnover of Rs 7,000 crore in the next 5 years.

Srinivash Singh, managing director, McNally Bharat Engineering, told DNA Money, “We expect a 50% growth in turnover this year at around Rs 2,500 crore. Through CMT (Coal & Mineral Technology), which we acquired, we are now scouting for projects in South Africa, Zambia and Mongolia. In Mongolia, we are pursuing aggressively and there are encouraging reports of teams which have just visited the country.”

“In South Africa, we have a subsidiary company and we plan to expand there. We are also planning to get into copper beneficiation with Konkola Copper Mines of the Vedanta Group.

Indonesia is also where we want to set up coal washeries. We are also taking up power projects in Indonesia and Bangladesh,” he said.

As part of its plans to spread its presence overseas, the company is setting up a branch office in China, and Russia and strengthening its presence in Australia.

While it is betting a significant portion of its topline to come from turnkey power projects, projects in steel, metals and mines would contribute to the bottomline. McNally is also eyeing new areas like oil and gas and cement.

“In the last two months, we have got a lot of tender enquiries in the non-critical areas in the oil & gas segment of almost Rs 500 crore. We have participated in an EPC tender of the Cement Corporation of India in Assam,” Singh said.

Analysts at Fullerton Securities in a recent report said, “We believe the company is best placed in terms of order backlog along with earnings and revenue visibility. We also believe the future triggers of subsidiary listings and good acquisitions could have a good shareholders value. We expect the revenue to grow at a CAGR of 39% to Rs 1863.5 crore for FY09-FY11. The company has a de-risked business model.”

As far as peer comparison is concerned, the analysts said, “We believe the topline and bottomline would improve drastically in the coming years…the company has a strong clientele base with most of them being PSUs.”