Thermax sees good FY11 despite margin pressure

Thermax sees good FY11 despite margin pressure

Mumbai: Energy and environment solutions provider Thermax Ltd sees higher raw material prices puting pressure on margins but expects good revenue growth during financial year 2010-11, a top official said on Thursday. “Raw material prices have gone up, covered for most of the important material in terms of forward booking, but structural steel is not forwardly booked...I am expecting one or two more increases there," managing director M.S. Unnikrishnan told Reuters.

“But that is not going to create any havoc to the balance sheet of a company like Thermax. We will ensure we are plus or minus 100 basis points either way," he added.

Pune-based firm expects FY11 to be a “good" business year and would spend more than Rs100 crore on capital expenditure, which is of routine nature, and will use it for line balancing, Unnikrishnan said.

“Subject to nothing going wrong in the world..., we are heading for a good year," he said, but did not put a number to likely revenue growth for the year.

Thermax will also invest Rs175 crore as equity contribution to its joint venture (JV) with Babcock & Wilcox in the current financial year, he added.

The JV is at a build-up stage and the firm is in negotiations with two state governments to locate a manufacturing facility for super-critical boilers, said Unnikrishnan, but declined to reveal further details.

The company’s other joint venture — with diversified US manufacturer SPX Corp — for making air pollution control systems, would yield “small" revenue in FY11, he added.

The Pune-based firm posted a net loss of Rs15.68 crore in the quarter ending March, as against a net profit of Rs94.331 crore a year ago. However, net sales rose 27% on year to Rs117.1 crore. “The material costs have gone up, which had an impact on the profitability. But, profits in actual numbers...(or) Profit Before Tax (PBT), been the historic high for the company," said Unnikrishnan.

The payment of Rs114 crore towards dispute settlement with .S.-based firm Purolite was charged to the profit and loss account for the quarter ending March, a statement from the company to the exchanges showed.

The firm settled a legal dispute with unlisted Purolite International, after it agreed to pay $38 million in four installments over 2010. The dispute involved a trade-secret issue about Purolite’s ion exchange resin business in US.

At 12:13 pm, shares in the firm were up 1.34% at Rs674.50, in a Mumbai market that was up 0.89%.