KEC scouting for EPC company in US

KEC International is looking at acquiring a mid-sized construction company in North America that specialises in engineering, procurement and construction (EPC) works related to transmission business.

The power transmission solutions provider has aggressively expanded its footprint in North America and Latin America, with the revenue contribution from the two regions rising to 22% from nil in the last two years.

KEC’s revenues from Americas surged after it acquired SAE in 2010. But SAE is a pure product company specialising in manufacturing Lattice Transmission Towers, and to complete the value chain KEC requires a construction firm in transmission business.

Ramesh Chandak, CEO, KEC International, told media, “We are interested in an acquisition and are trying to get a company at the right valuation.” He said the Americas offered lucrative opportunities as the US has proposed to spend over $11 billion in upgrading its ailing transmission network. Also, Latin American countries like Brazil are aggressively improving their transmission networks.

“SAE fuelled our mission of expanding footprint in Americas and today it is contributing 15% to our topline while 7% revenue from Americas comes from sale of KEC transmission towers and other products,” he said.

Moreover, North and Latin America account for 17% order backlog and 15% order inflows in fiscal 2012 for KEC. Its current order book has 45% work from domestic market while 55% from international, mainly Americas and CIS countries. In fiscal 2012, KEC recorded Rs. 6,200 crore order inflow.

Chandak was very optimistic about Americas operations as they provided double-digit margin growth. “Slower growth in traditional markets like South Asia and Middle East is being compensated by gain in Americas,” he said, adding, in fiscal 2012, KEC registered margin of 8.1%, but SAE grew in double digits. He said five years back KEC was purely a transmission player, but in the last fiscal transmission segment contribution reduced to 75% of revenues while power system and cable contributed 10% each, and railway, water and telecom together added 5%.

“By fiscal 2015, at least a third of revenues will come from segments other than transmission Our product expansion along with geographic expansion makes us different from our domestic peers in transmission business,” he said.

Chandak has high expectations from railway division that contributed Rs. 164 crore in fiscal 2012. The division, he said, may show a 100% growth for the next few years. “We have been one of the players selected in the prequalification round of Western Railway corridor. If we could manage to get even one project, it will add substantially to our order book and topline,” he said.

The telecom division of KEC contributed Rs. 75 crore to revenues and water division added Rs. 20 crore last fiscal. Also, its cable business is expected to achieve breakeven this fiscal. The company clocked a meagre growth in net profit at Rs. 209 crore in fiscal 2012 from Rs. 206 crore in the previous one due to high interest rates.

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Mr. Ramesh Chandak – MD & CEO, KEC InternationalKEC International is looking at acquiring a mid-sized construction company in North America that specialises in engineering, procurement and construction (EPC) works related to transmission business.
The power transmission solutions provider has aggressively expanded its footprint in North America and Latin America, with the revenue contribution from the two regions rising to 22% from nil in the last two years.
KEC’s revenues from Americas surged after it acquired SAE in 2010. But SAE is a pure product company specialising in manufacturing Lattice Transmission Towers, and to complete the value chain KEC requires a construction firm in transmission business.
Ramesh Chandak, CEO, KEC International, told media, “We are interested in an acquisition and are trying to get a company at the right valuation.” He said the Americas offered lucrative opportunities as the US has proposed to spend over $11 billion in upgrading its ailing transmission network. Also, Latin American countries like Brazil are aggressively improving their transmission networks.
“SAE fuelled our mission of expanding footprint in Americas and today it is contributing 15% to our topline while 7% revenue from Americas comes from sale of KEC transmission towers and other products,” he said.
Moreover, North and Latin America account for 17% order backlog and 15% order inflows in fiscal 2012 for KEC. Its current order book has 45% work from domestic market while 55% from international, mainly Americas and CIS countries. In fiscal 2012, KEC recorded Rs. 6,200 crore order inflow.
Chandak was very optimistic about Americas operations as they provided double-digit margin growth. “Slower growth in traditional markets like South Asia and Middle East is being compensated by gain in Americas,” he said, adding, in fiscal 2012, KEC registered margin of 8.1%, but SAE grew in double digits. He said five years back KEC was purely a transmission player, but in the last fiscal transmission segment contribution reduced to 75% of revenues while power system and cable contributed 10% each, and railway, water and telecom together added 5%.
“By fiscal 2015, at least a third of revenues will come from segments other than transmission Our product expansion along with geographic expansion makes us different from our domestic peers in transmission business,” he said.
Chandak has high expectations from railway division that contributed Rs. 164 crore in fiscal 2012. The division, he said, may show a 100% growth for the next few years. “We have been one of the players selected in the prequalification round of Western Railway corridor. If we could manage to get even one project, it will add substantially to our order book and topline,” he said.
The telecom division of KEC contributed Rs. 75 crore to revenues and water division added Rs. 20 crore last fiscal. Also, its cable business is expected to achieve breakeven this fiscal. The company clocked a meagre growth in net profit at Rs. 209 crore in fiscal 2012 from Rs. 206 crore in the previous one due to high interest rates.
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