Triveni announces scheme of demerger of steam turbine biz

Excerpts from Reporter's Diary on CNBC-TV18 Watch the full show » RELATED NEWS Expect 20-25% growth in turbine biz in FY10: Triveni Engg Triveni Eng Q1FY10 net profit up 200% at Rs 72.9cr BSE | NSE 01/01/70 Are Mutual Funds betting on ?

Q: A lot of sugar companies have been telling us that perhaps now is not the right time to invest in sugar so this is going to be next engine of growth is that right?

A: It has been an engine of growth for a number of years. Just as our other engineering businesses have as well. You know that water is growing at about 80% a year and our gear business is growing at 25-30% with one of the highest margins.

Our steam turbine business our net margin today is one of the highest of any turbine company in the world. So this is something that we want to capitalize on and we thought by making it a focused entity it would bring this into much more prominence both for our current investors and new potential investors.

Q: What kind of realization are you expecting in this current season?

A: I feel that the sugar pricing that has come down today is really a very sharp reaction to what is the cost of production now. The cane prices have already being paid by factories especially in UP mean that we really need to go from this Rs 22-23 ex-factory price which is come down from Rs 40-41 back to at least Rs 36-37 and I think that will happen because we are now in a situation where there is no need for any further import.

Our current production is going to be at least 17 million tonne and our consumption is only 22 so this 5 million tonne gap we already have. Next year is going to be at least as much as next year's consumption so the cycle is completely different now. We have no more need to have imports and so that much will be of and so we need a sustainable price so that the farmer is able to grow cane and get paid for it correctly.