Pennar Industries, a multinational engineering company, has announced a rejig of its business operations. The 41-year-old company has decided to divest or shut down non-core businesses and focus exclusively on the five areas of PEB (pre-engineered building), tubes, hydraulics, engineering services, and process and heating equipment.
“We have decided to exit 11 out of the 16 businesses and would like to focus on the five areas, which has huge addressable markets globally. We have already started the transformation journey,” RVS Ramakrishna, Chairman of Pennar Industries, has said.
Quoting different estimates, he said the PEB sector offers an addressable market of ₹43,000 crore, tubes business ₹15,000 crore, hydraulics ₹40,000 crore, engineering services ₹7,500 crores and process and heating equipment vertical offers an addressable market of ₹10,000 crore.
Exit plan
The Hyderabad-based company has already divested from Pennar Enviro and solar modules business. It is also planning to exit its business. The company has chalked out the transformation strategy based on the recommendations by the consulting firm BCG.
“All the units are doing well and making profits. Only, we have decided to have a focussed approach. We have consolidated out 16 businesses into nine and would like to make it five,” Aditya Rao,” Vice-Chairman and Managing Director Aditya Rao, who is the Pennar Industries Founder and Chairman Emeritus, Nrupender Rao, said.
He said the company was already seeing results of the consolidation of the business units. “We have doubled our turnover to ₹2,928 crore in 2022-23 from ₹1,544 crore in 2020-21. This is after divesting the Enviro and solar modules business,” he said.
Focus areas
He said the company was actively looking at acquisitions in the five focus areas. He, however, refused to give any indication on the status of the talks.
Ramakrishna said the company earned 60 per cent of its revenues domestically, with the remaining coming from the North American (35 p.c.) and European (5 p.c.) market.
“We established engineering services office in Germany in 2021 and started manufacturing operations in France through acquisition of Cadnum, an aerospace company,” he said.