Hoping for double digit plus growth in FY19: MS Unnikrishnan, Thermax

Talking to ETNow, MS Unnikrishnan, MD & CEO, Thermax, talks about the demand momentum in the industry in India in general, and also highlighted FY19 plans for his company.

Edited excerpts:


We have seen pickup in aggregate demand and industry momentum in India. Is the recovery only a year on year base effect, is it an anomaly or is there genuine and sustainable turnaround in the works that perhaps markets are not catching up just as yet?

We have seen an uptick happening in virtually every industry in the recent past. For instance, if one see automobiles, it is overflowing with orders. Everybody is reporting a capacity utilisation of more than 70%. The government is talking about increasing the steel production from 130 million tonnes per annum to 300 million tonnes per annum. Cement industry capacity utilisations has lifted from almost 60s to 75 plus in some of the low keys. Also. from last year it has been seen that construction story is increasing in the country due to the general improvement in the overall intake of orders.

The next question is whether the recovery is across the board (like in 2003 onwards) or is it selective. Within the country, the expenses and the capacity building is led by the Government of India and we have seen that in the last one year, the road construction has virtually doubled. Awarding on the EPC basis for road contracts have also gone to its all-time high.. Thus, the cement and steel industry naturally will be picking up based on this development. Along with this, automobile will be supporting the steel industry.

In other words, I see a lot of growth potential in these two sectors. Also, some of the core industries have started showing uptick, meaning that the fever will catch on and I am sure investment will come up, thereby making things positive for India in the next couple of years.

One industry which may not do well and has been an important driver for capex and investment is power and we both know that there is a challenge there. UDAY scheme has not been great. Power demand has come down. Private companies are not investing in the power sector. So whatever other industries could gain, the power sector could be a drag. So how do you think the things would equalise?

I am not very hopeful about the conventional power industry especially the coal based power in which ideally investment should happen because despite talking about clean energy, without power I do not think industry can grow. So, yes, I agree with you that there is temporary slackness because predominant part of the power industry even today whether it is related to capacity building in generation, transmission or distribution is within the control of the various state government where most of the balance sheets are challenger. Also, I do not think any banking system will be able to support it any time soon, meaning that there is going to be a drag on the Indian industry especially for those who are dependent on the power sector.

However, what we are not taking into factor is non-conventional and renewable energy side. The quantum of solar projects are now awarded. Though, there have been some returns issue as rates have significantly come down but it is stabilising and has started lifting up. And in the next three to four years, renewable energy will be picking up in the country. One of the companies in Gujarat has already set up a very large capacity for solar panel making. BHEL has set up second capacity and I am expecting two to three more international players to come and set up their capacity in India.

Will you revert to double digit growth with an over 30% jump in your new orders for FY18?

FY18 is a very standard stagnant year for all of us but we tried to make a double digit profit. For FY18-19, I am expecting a growth because our order intake had been substantially better than the previous year. There are orders coming both from India as well as from international markets. We have taken actions to ensure that we reach every part of the world to in take orders. So I am certainly hoping for double digit plus growth in the coming year.