Thermax Not In Favour Of Unrelated Diversification

Mumbai, Nov 6: | Updated: Nov 7 2003, 05:30am hrs
Learning from the operational loss suffered in 2000-01 due to unrelated diversifications, Thermax has drawn up a plan to concentrate on its core areas of business. Thermax vice-chairperson Meher Pudumjee, who will succeed her mother Anu Aga as chairperson next year, shares her personal vision of Thermax becoming a complete solution provider in its area of expertise with that of the company.

Meher Pudumjee
Ms Pudumjee told FE that the companys core competence lies in energy and environment. She was speaking here on the sidelines of The 37th AD Shroff Memorial Lecture, where Ms Aga delivered the main speech on Corporate Social Responsibility. She said that the unrelated businesses included software, which Thermax has now exited.

Further diversifications, if any, will be only into related areas, Ms Pudumjee said.

Industry experts stress on the need for companies to grow, both organically and inorganically. Commenting on the same, Ms Pudumjee said that Thermax was not averse to mergers or acquisitions, but the company would not undertake M&A for the sake of it.

Ms Pudumjee said that Thermaxs problems coincided with the bad patch in the economy. The net profit of Rs 7.15 crore (Rs 2.70 crore) in the first quarter of 2003-04 was primarily due to prudent equity investments, when the stock market was buoyant, she clarified.

Nevertheless, the share price of Thermax on BSE has increased from a 52-week low of Rs 123 on November 12, 2002, to Rs 316 as on November 4, 2003, showing a growth of 157 per cent. This is quite close to its 52-week high of Rs 330. However, Ms Pudumjee said that share price can be only one indicator of a companys performance, adding the company believes in quality production and expertise in the entire supply chain.

Ms Pudumjee said that the ongoing power sector reforms are in the right direction, even as Thermax plans to stick to co-generation and not get into IPP business. Currently, 20 per cent of the companys turnover comes from exports and it has plans for venturing into more countries.