>THERMAX: Subsidiaries impacted by cost over-runs, competition

> Increase in working capital: Working capital in FY12 continued to remain higher than the historical trend on weakness in order inflows and increase in receivable days. Receivable days were at 84, in line with the highest levels in the past 10 years. Customer advances days declined to 47 (from 69) as order inflows in FY12 were at Rs 40.3bn, down 24% YoY. However, absolute cash and cash equivalents were comfortable at Rs 7bn (33% of the consolidated BS).


> Projects business expected to remain weak: The management expects the power business to continue to be weak in FY13E and FY14E as order inflows are likely to be weak in H1FY13E; however, the commentary on the Boiler and Heater business is relatively positive on account of expected revival of captive power plants. To counter the decline in power projects business, the company has increased focus on the power services business, but the scale is fairly small.


> Subsidiaries impacted by cost over-runs, competition: The main subsidiaries which reported a loss in FY12 were: 1) Thermax Instrumentation – construction arm of the power division – loss of Rs 104 mn on cost over-runs, 2) Thermax Zhejiangabsorption chillers in China – loss of Rs 70mn on high competition, 3) Thermax B&W – a JV for supercritical boilers – pre-operative expenses. However, Danstroker grew ahead of expectations in a challenging environment in Europe.


To read report in detail: THERMAX
RISH TRADER