Tata Projects, the engineering, procurement and construction arm (EPC) of Tata Group, expects the energy business to contribute 35% of its revenues in the next two-three years, up from 25% currently.
The company plans to achieve this through growth in business from oil and gas, power, metal and other segments, as well as through an increase in business from group companies and overseas expansion.
“As a business unit, it (energy) contributes about 25% to our revenues and each of them like oil and gas, metal, transmission and distribution, they all would become equally placed within that,” said Rajiv Menon, chief operating officer, energy and industrial, at Tata Projects.
Tata Projects is also into building advanced semiconductors. The company posted a profit after tax (PAT) of Rs 120 crore on a revenue of Rs 5,412 crore in FY24.
Menon said it is part of the company’s strategy to have a mix of oil and gas, power, metals, transmission and distribution; a mix of EPC, alternative contracting business and so on; and a mix of business coming from group and external companies. On a CAGR basis (compounded annual growth rate), the company is expecting a growth of 10%, he said.
Menon added that the company is looking to increase the share of group companies in their business. The share of Tata companies in the firm’s business has been 5%.
Tata Projects works with Tata Power on transmission and distribution projects and with Tata Steel on select steel units. It is now looking to partner with group companies for the semiconductor business.
“Those one or two opportunities could increase the share by a big extent, but we are doing business with group companies on an arm’s length basis,” Menon said.
Menon said the company is exploring the overseas markets to expand their business in T&D and oil and gas sectors. “We are completing a couple of projects in Abu Dhabi in the oil and gas segment and we are also evaluating a few other geographies to see how we position,” he said.
“We have done well in transmission and distribution internationally. We are trying to take the lessons learned and get into the into Middle East (West Asia), Africa and Saarc countries,” he added.
Menon further said both traditional and renewable sources of energy are required to mitigate the rising power demand in the country.
“We need to have a mix of both thermal and renewable. Renewable has to get into round the clock (RTC) to be a reliable source. Both will co-exist until we transition to renewable mode, but it cannot happen overnight,” he said.
Tata Projects competes with companies such as Larsen & Toubro, Sterling & Wilson, Bharat Heavy Electricals, and others. The power EPC market is growing at a CAGR of 21.9% to touch $45.36 billion by 2029, according to consulting firm Bluewave Consulting & Research.