Kolkata: Turnkey industrial constructions firm McNally Bharat Engineering Co. Ltd is in talks with a Vietnamese company to explore possibilities of jointly building a power plant in the South-East Asian country.
“Talks are at a very preliminary stage. Our people should be visiting Vietnam in the first quarter (of the next fiscal year) to take things forward,” chairman Deepak Khaitan said.
If the plans of McNally Bharat—which also manufactures power plant equipment—to produce electricity materializes, it would be the first such venture in a new business in many years by Kolkata’s Khaitan family.
“We can manufacture almost everything that goes into a power plant,” Khaitan said. “Running a plant isn’t going to be difficult.”
The Khaitan family, which has business interests in tea and engineering, acquired Union Carbide’s battery business in India in 1994. The family, which entered almost all businesses through acquisitions, has for the past few years been selling its stakes in what it considers non-core companies and legacy assets such as idle real estate across India.
In October last year, the Khaitans entered Vietnam when their tea company McLeod Russel India Ltd bought tea gardens there. “We found the government there extremely supportive... Vietnam is a mini-India story. The country is building roads, bridges, power plants,” Khaitan told Mint. “We see a lot of opportunities in the infrastructure sector there.”
McNally Bharat is eyeing Vietnam to set up its first power plant because it expects securing coal there wouldn’t be difficult. “Eventually, at some point, we plan to set up a power plant in India, too,” Khaitan said. “But here it is far more difficult to get land and coal linkage.”
McNally Bharat, which earned a revenue of Rs550 crore and a net profit of Rs16 crore in the nine months to December, expects its full year sales to go up to Rs1,700 crore in the next fiscal starting 1 April, its chairman said.
In tea, too, the group has plans to expand in Vietnam, which produces 140 million kg of tea a year. “We have headroom to scale up production at the plantations that we have bought. Also, most tea gardens in Vietnam are owned by the government, so there could be opportunities to buy more gardens there,” said Khaitan, who is also the vice-chairman of McLeod Russel—the world’s biggest tea planter.
Vietnam is on the same latitude as Assam, where McLeod Russel has most of its gardens. “The terrain and the climatic conditions there are the same as in Assam. So, we know what to do...we just need to improve the quality of tea that’s produced there (in Vietnam),” Khaitan said.
The entire produce of its gardens in northern Vietnam, which is expected to be around 4 million kg a year, would be sold abroad under the McLeod Russel brand. Eventually, some of it could be imported to India.