Chairman of Triveni Engineering Dhruv Sawhney says that they have a significantly higher order book this year than last year. The order book currently stands at Rs 577 crore, which is expected to be executed in the next 10-11 months.
Excerpts from CNBC-TV18's exclusive interview with Dhruv Sawhney:
Your results are inline with analyst expectations but they seem a bit short of your full target of 40% growth. Do you expect the next few quarters to be a bit of a catch-up for you then?
Yes. The sugar business is cyclical in nature. In sugar, the Q1 is never as good as Q3 and Q4, but we had exceptional growth in our engineering business. If one compares it with last year, Q1 engineering has grown by around 90% and we have an order book, which is 70% higher than the total turnover last year.
So we have got extremely strong engineering growth with about a 40% increase in margin rate.
International sugar rates are hardening. We had a 50% expansion in our sugar cogeneration business, which will kick in towards Q4 of FY07. So we see a strong year in both engineering and sugar.
In money terms, how much would that order book stand at and at what period will it be executed?
The order book is at around Rs 578 crore and we are booked till May 07. We have seen extremely good demand from cogeneration in all industries and with the power situation in India today, we are having growth not just in the sugar industry, but also in paper, in non-conventional bio-mass industries and a bit in the steel sector as well.So engineering, both in steam turbine, high speed gears and water treatment is certainly going as per expectations.
In Q1 38% of profit came from your turbine business compared to just 10% in Q1 last year. Do you see this being a trend that so much of your profitability this year will be driven by the engineering side?
The exceptional growth in engineering was something we had forecast a year ago. We have increased our capacity in steam turbine, three fold in the last year and a half and now we are one of the two-three largest manufacturers under 15 mw globally. So we are meeting demand and we are lucky that we expanded our capacity in time.
International demand for turbine is also good. I think the whole power situation for small and medium power units is good, now with crude prices being high.
How soon does the process of demerging the two businesses take place and what sort of growth rate are you setting out for the sugar division in specific?
In sugar, we plan to increase both cogeneration and sugar capacity by 50%. So we expect the season 06-07-sugar production to be about 50% higher than the previous year, and 07-08 will also have a 30% increase on that. So all our three new sugar plants will come in from November to January.
We are putting up a large ethanol distillery of 160 kl size. I think ethanol demand is globally good now. We see a strong growth in capital goods in the power sector.
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