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Thermax wants its sunny side up

According to reports, Thermax, Pune-based utility major, has a job at hand – It’s working overtime to make its solar business, which it entered 5 years ago, go the profit way by 2014-15.

The going has not been exactly easy for it. The company, which had seen its topline and bottomline shrink last year, is looking at a triple digit topline – more than Rs 100 crore, to be a little specific –  over the next two years. “When we reach a triple digit topline, that is when we will start making profits too,” said M S

Unnikrishnan, managing director, Thermax, during a conference call on Thursday.

Unnikrishnan sounded upbeat about the solar business. His confidence stems from the fact that the company holds the numero uno position in the segment and owns the majority market share through its products, services and engineering, procurement and construction business spread across the entire solar value chain in India and abroad.

“The world over, there are a total of 77 solar photovoltaic (PV) panels, of which 48 are in India and 70% of it is supplied by Thermax,” he said. The trend, he added, is now towards roof-mounted solar photovoltaic panels, where the company is facing stiff competition from American and Japanese players. It had recently won two orders, one each in Bangalore and Chennai with a total size of 32 megawatt each.

Solar is just one side of the story, the company is banking on order flows from sectors like food processing, chemical and textiles which will be instrumental in maintaining its order book position and margins in the next quarter.

But analysts are not yet sticking their neck out. They are highly sceptical of the company being able to maintain a double digit margin growth in light of sluggish development on the power and cement front.

In fact, Unnikrishnan himself admits as much, who said the company has not got any positive cues during its interaction with various cement players. “I am bullish on international markets of South East Asia and Africa from where enquires have been encouraging, and this will help maintain a strong order book,” he said.

Thermax report card sizes up well when it comes to investment. Here, power-infrastructure sectors don’t have much to hammer home about, but Thermax, a leader in energy and environment solutions, stayed a step ahead by improving its orderbook by 21% to Rs 4,859 crore (Rs 4,032 crore in the previous year). In the quarter to March-end 2013, the orderbook stood at Rs 1,155 crore (Rs 809 crore).

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