To foray into solar, biomass, geothermal energy: Thermax

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To foray into solar, biomass, geothermal energy: Thermax

In an interview with CNBC-TV18, MS Unnikrishnan, Managing Director of Thermax Ltd, spoke about his outlook for the company.

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Excerpts from Midcap Radar on CNBC-TV18 Watch the full show » RELATED NEWS Hold Thermax, says Mohindar Thermax, U.S. Babcock & Wilcox in JV pact ALSO READ See latest News about Thermax See previous management interviews See what other Experts & Brokerages are saying about Thermax Thermax BSE | NSE 31/05/12 Are Mutual Funds betting on Thermax?

In an interview with CNBC-TV18, MS Unnikrishnan, Managing Director of Thermax Ltd , spoke about his outlook for the company.

Here is a verbatim transcript of an exclusive interview with MS Unnikrishnan on CNBC-TV18. Also watch the accompanying video.

Q: We understand that you are planning forays into solar, biomass and geothermal sources of energy. Is this a new vertical that you are entering as part of your general energy business? What kind of revenue prospects do you see in FY11 for this segment and the company as a whole?

A: We already have a vertical created for solar. We are specialising in solar thermal energy not the solar PV. A good number of our small capacity boilers and absorption chillers do consume very expensive light diesel oil. A typical hotel or a hospital, if they can have solar concentrators kept on the roof of the hotel, it has got a pay back without any subsidy maybe within four years time.

So this is a segment that we are entering into solar. Already into solar this is the one which we want to run up. Second, we are currently setting up 250-KW solar thermal power plant on behalf of the Government of India, Department of Science and Technology, as a part of Rural Electrification Programme started by the country in a village near Pune.

So here the entire research and development (R&D) technology development manufacturing supply and reaching the power to the pumps of the farmers been done Thermax and it will run by the company for five years because it's not only creating technology. It is also in terms of how we run and demonstrate and make it workable by the village community of India.

Q: You are exploring a foray into geothermal energy as well. There were some developments that came out in the Budget where there have exempted duty on heat pump that is use to tap geothermal energy. What kind of savings and costs would this result in for you? How much are you looking to explore into this entire geothermal energy vertical?

A: As of today there is not a single geothermal plan working in the country. So promotion of import of the components needed for geothermal energy that the government has declared the concession. Geothermal has two applications--one is heat pumping which will go into any heating application and the pay back of that will depend upon how much is the temperature of the hot water steam that you  will get from underwater.

Q: Would you be foraying into this space very soon?

A: We already have a block located by the State of Maharashtra for Thermax for trial and development based on which we will be setting up the plant, which is geothermal plant or electricity plant.

Q: When we last heard you order backlog was about Rs 5600 crore. What is the order book currently at? Since you are getting these new orders from the government, what kind of revenue growth are you looking at in FY11?

A: I am not giving guidance but certainly it will be substantially large because we have had an order booking at least 20% more than the previous year which will enable to grow better.

Q: You have increased your exposure to higher megawatt boilers in the last couple of quarters. What kind of incremental margins are you seeing from that? You have to about 500 mw boilers of-late. What kind of incremental revenues and margins are you getting from these?

A: Revenue growth is making at least 25% over and above what we have done in a normal energy area. So energy is going at a fast rate. Margins are not going to be more than the previous in fact higher the capacity of the boiler, the margins are under pressure. However, we are trying to maintain the margin.