Having hived off its steam turbine division into a separate company, Triveni Engineering & Industries Ltd (TEIL) is not ruling out a similar ‘value unlocking' exercise for its gears and water treatment businesses.

“We would look at unlocking value in these businesses as well. But that will happen only when they develop the scale, markets and technology platforms which we have already built in steam turbines”, the Chairman and Managing Director of TEIL, Mr Dhruv M. Sawhney, told Business Line .

Segmental numbers

For the year ended September 30, 2010, TEIL recorded net sales of Rs 2,259.53 crore, with the contribution – inclusive of inter-segmental revenues – of sugar at Rs 1,641.11 crore, followed by turbines (Rs 564.01 crore), water treatment (Rs 161.03 crore) and gears (Rs 101.44 crore).

But while the sugar segment reported a loss before interest and tax of Rs 22.22 crore, the engineering businesses registered corresponding profits amounting to Rs 130.43 crore for turbines, Rs 21.94 crore for water treatment and Rs 34.53 crore for gears.

Turbine biz

The steam turbines business has, from the current fiscal starring October 1, 2010, been demerged to a new company, Triveni Turbine Ltd (TTL), in which TEIL will hold 21.83 per cent. Further, all TEIL shareholders have been given one paid-up share of TTL for each share held in the former.

While TTL will continue to manufacture steam turbines with up to 30 MW capacity – in which it has a 65 per cent market share, ahead of BHEL and Siemens India – it will also hold 50 per cent plus one share in GE Triveni Ltd (GTL). GTL is a joint venture with General Electric (GE) for manufacturing turbines of above 30 to 100 MW range.

“Under the joint agreement, TTL would be manufacturing these turbines and also marketing them in India. The overseas marketing would be with GE”, Mr Sawhney explained.

Gears and water

But what was the logic behind de-merging steam turbines alone and not the other two engineering businesses as well? Alternatively, couldn't the sugar business itself have been spun off, so as to make TEIL a pure engineering company?

“Steam turbines, gears and water treatment are separate businesses. The idea is to get strategic technology partners for each of these focussed businesses and grow them globally, which will help in truly unlocking value. We have done it in turbines and it would hopefully happen in gears and water too,” claimed Mr Sawhney.

TEIL now manufactures high-speed gears and gearboxes up to 70 MW capacity and 70,000 rpm, where it has an overall market share of 50-55 per cent and 78 per cent in the sub-25 MW segment.

“We have recently renewed our technology license agreement with Lufkin Industries in high-speed gearboxes for turbines and compressor drives. We plan to now enter the niche low-speed gears segment for steel, coal, cement and marine industries”, Mr Sawhney said.

In water, TEIL has a current order book position of nearly Rs 500 crore. Among the big orders bagged include a Rs 160-crore drinking water treatment plant for the Agra municipality using moving bed bio-reactor-cum ultra-filtration technology, and a wastewater recycling project to produce boiler feed-quality water for GMR Group's 600 MW thermal station at Warora, Maharashtra.

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