Thermax has no problem being seen as a conservative company: M S Unnikrishnan

At a time when the entire utility industry is smarting from a slowdown, Thermax has managed to hold itself together rather well, albeit at the cost of its topline and order book. The company is focussing more on internationalisation and roping in more foreign customers to beat the gloom at home, M S Unnikrishnan, managing director and chief executive officer, Thermax, told Promit Mukherjee. Excerpts:

Given the government’s recent steps, do you see any sign of revival yet?
Those steps have been watched by the industry and have been taken cognizance in a positive way, but that getting converted into a sentimental reversal is yet to happen. So we are still stuck in a lack of growth and nothing substantial on the ground is happening yet. The industry is not doing well.

What about Thermax? You bagged a big order from Reliance in first quarter...
Reliance was a windfall order. There aren’t any such orders in the offing right now, but the good part about Thermax is its influencing ability on order intakes in the market. The orders can be categorised into two – government-regulated sectors and free sectors.

Regulated sectors include power, steel, cement and oil & gas, which historically contributed the majority of the order book of the company. Unfortunately, these sectors are currently at a standstill in India.

But the free industry – such as pharma, food and food processing, drugs and beverages, alcohol and auto – require small parcels of land and no government regulation for investing. These are still investing and we are getting orders from there. We have approximately Rs 500 crore of order coming in from these sectors every quarter but if you expect us to book big orders that can only happen once the sentiment reversal happen.

What are your expectations of topline and bottomline for the current year?
This year, I expect my results to be lower than last year, but the year after this, we can see some growth for sure in our topline and bottomline.

See, we are in a situation when the industry is in a very bad shape and smaller companies are under severe strain. Thermax is happy if it is known as a conservative company, a company which cannot grow – no problem with that perception. We are a company which can stand by in the tough time and manage itself well.

Are you looking at retrenchments?
We are not retrenching people at the moment. It is very difficult to retain people in tough market conditions, so we want to hold on to them. However, non-performers are always shown the door. What we are doing to beat the slowdown is containing costs wherever possible by reducing consumption – electricity, water, fuel, consumables, etc.

Any other focus area?
Domestic market is not in a good shape but there are international markets which can perform better, where we don’t have a huge market share. Our international operations are just 27% of our total revenues. So, we are working on internationalisation, such as opening more offices, building relationships with newer clients, entering the growth markets which our products can address and having more joint ventures or partnerships to bid and execute projects and orders. The markets we are looking at are South East Asia, Middle East and Africa. Our focus is to increase the value or clocking more numbers in the international market.