HEC in talks with Siemens for traction; IPO likely next year

Government-owned Heavy Engineering Corporation (HEC) has started talks with Siemens for importing electric traction, while actively pursuing opportunities to bag railway orders in the electric engine segment. It is looking forward to enter the nuclear power segment and plans to hit the capital market next year.

GK Pillai, chairman and managing director, on the sidelines of a CII session said that HEC’s partnership with Siemens depended on its scope for getting railway orders and a clear picture was expected to emerge in six-eight months. The company was intending to source traction from Siemens and would itself make the base body of the engine.

?With Siemens, we are open to forming a joint venture or could also look at other options for a viable tie-up. We are also in touch with the railway ministry,? Pillai said.

HEC is expecting a turnover of Rs 700 crore in 2010-2011 against Rs 490 crore in 2009-2010. The company aims to achieve a turnover of Rs 2,000-3,000 crore in another two- three years with an eye on the business opportunity in the nuclear power segment.

In fact, HEC has started reporting profits from 2006-07. It plans to hit the capital market once it registers profit for the fifth consecutive year in 2010-11. In 2009-10, the company registered a profit of Rs 26.93 crore.

?We are making special forging for the nuclear power segment,? Pillai said, adding that HEC has started talks with the Nuclear Power Corporation and the department of atomic energy for tie-up and was even open to forming joint ventures.

According to Pillai, the company currently uses only 30% of its capacity but is looking forward to utilise the balance by entering new segments like nuclear power and railway engines.

Currently, HEC manufactures coaches for Delhi Metro and is also trying to tap orders for upcoming metro projects in Bangalore, Ahmedabad and Jaipur. It is in talks with an Italian company for a tie-up in coach manufacturing ?but talks are at a preliminary stage,? Pillai said. He said the Rs 285-crore order to set up a coal washery was expected to be completed in the next 16 months.

Pillai said the company was no longer interested in a merger with HMT-MTL. In April this year, HEC had proposed to form a team for due diligence but there has been no development since then. However, the company has planned an investment of Rs 500 crore for technology upgradation so that it could match the requirements of the new verticals it was entering into.