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Pennar Industries eyes Rs 5,000 crore revenue over next 5 years

MUMBAI: With capacity expansion and diversification plans, Pennar Industries is eyeing nearly Rs 5,000 crore revenue over the next five years. 

It plans to 
invest Rs 100 crore a year over the next five years to fund capacity expansion and diversification, company president and chief executive Suhas Baxi told PTI. 

"Given the current economic scenario, one has to explore other opportunities and diversify into different sectors. We aim to garner revenue to the tune of Rs 5,000 crore over the next five years. To achieve this target, we will have to also expand our capacities," he said. 

Pennar manufactures steel-based products for industries such as railways, automobiles, building and construction, pollution control equipment, 
infrastructure and road safety systems. 

"During the last few quarters the railways and automobile sectors, our core business areas, are not doing so well. So we have to look at different opportunities of diversification. We plan to diversify in hydraulics, automation, warehousing and material handling and engineering services," Baxi said. 

The company reported a turnover of Rs 1,274 crore in FY13 and a profit after tax of Rs 45.63 crore. 

Baxi said the company is looking at enhancing existing capacities as well as setting up new manufacturing facilities in the Northern and Western markets. 

Pennar currently has six manufacturing plants -- three located near Hyderabad, and one each at Chennai, Tarapur in Maharashtra, and Hosur in 
Tamil Nadu -- with total capacity of 350,000 tonne per annum. 

"These plants primarily cater to the demand in the Western and Southern markets. We now want to expand our reach out to other markets as well and for this we are exploring opportunities to set up manufacturing facilities in those regions and are ready to invest nearly Rs 500 crore over the next five years for this," he said. 

Baxi further said the company is also considering entering the defence sector. "We want to enter newer sectors and defence is one such where we see huge scope. We are also considering acquisitions for entering into new sectors." 

About how the company would fund the expansion plans, Baxi said, "We may explore options of raising funds through long-term debt, given the fact that long-term debt on the company's balance sheet is very small." 

The company is also considering global expansion and is looking at 
Middle East, South East Asia and Africa. 

"There is huge scope in the infrastructure space in these markets. Exporting our products to these markets will not be cost competitive in long-run. We may have to consider partnering with locals. We expect to come out with a model on this in the next 6 months," he said.