With this, the company has taken a big leap by entering into the EPC business for independent power projects (IPPs). It will compete with well-known EPC companies such as Larsen & Tourbo and BSES-National Thermal Power Corporation combined and other overseas companies. The 100 mw contract was awarded to Thermax through competitive route in which L&T and BSES had also participated.

This is also the first single large order for the Thermax which so far had been specialising in EPC businesses for small power projects. Thermax, for which EPC was comparatively a new diversification, was till now focusing on co-generation power projects. Even for this segment, it was concentrating on small projects of 2-20 mw. Earlier, Thermax had carried out EPC work for 55 mw (2x27) captive power plant of Arvind Mills.

While the companyofficials confirmed that the company has been awarded the new order in the first quarter, they refused to reveal the identity of the power company. ``As per the agreement with the power company, the plans will be revealed only after achieving the financial closure of the power project,'' said officials.

With this order received in the first quarter of this fiscal, order book of Thermax's power division has risen to around Rs 900 crore. However, revenue from these projects will start pouring in only by the next year.

Though the company has been given initial token payment for the contract, actual cost will be given only after power company achieves the financial closure of its project.

Thermax is a diversified company and manufacturers products such as boilers, micro-turbines and water treatment plants. With opportunities for inhouse sourcing of various products, the new contract will help the company's other divisions also.

The company's joint venture with the US-based Babcock & Wilcox has establisheda leadership in the around 30 tph (tonnes per hour) boiler market. The Thermax Babcock & Wilcox, in which Thermax holds 60 per cent equity, controls around 45 per cent market share. These boilers are primarily used by textiles, pharma and chemical processing units.

Meanwhile, the company's scrip on the Bombay Stock Exchange has gained significantly in the past two weeks. The share price has moved from Rs 195 per share on August 3, 1999 to Rs 267 per share on August 20.

The Pune-based company also specialises in water treatment. It manufactures the complete range of water treatment chemicals, boiler feeds, ion exchange resins, anti-scalants, cleaning compound and cooling chemicals.

Insight
Second quarter seen better

The order has already improved sentiment for the Thermax scrip, offsetting the company's performance in the first quarter of 1999-2000, when it posted an operating loss of Rs 6.68 crore against a gross profit of Rs 2.22 crore in the first quarter of the previous year. Thecompany's performance during the second quarter is expected to be better, but even then, the first half results are unlikely to match last year's first half. Much will depend on when the financial closure of the Tamil Nadu power project occurs.

Manas Chakravarty