Thermax to consolidate manufacturing at Sri City plant

Engineering solutions major, Thermax is planning to consolidate manufacturing of chillers at its new Sri City plant in Andhra Pradesh, the company's management told CNBC-TV18.

Set up with an investment of Rs 166 crore, Phase I of Thermax’s plant (its 14th, in all) is equipped with a capacity of 400 chillers. The facility will manufacture vapour-absorption machines comprising chillers, heat pumps and heaters.

The Sri City plant can cater to a large part of the company’s global order book, which averages around 421 large chillers, per year.

“We hope to double our capacity to 800 chillers in a few years’ time,” Meher Pudumjee, chairperson of Thermax said in an exclusive chat with CNBC-TV18.

The plant could see an additional investment of Rs 100 crore in the next three years, corresponding with the company’s proposed capacity overhaul.

"A large part of this increased production would be for newer markets in the US and Europe", Thermax MD and CEO MS Unnikrishnan said in an interview with CNBC-TV18.

“We now hope to target markets in South East Asia, Middle-East and Africa, while the product that we will manufacture from the Sri City plant will help us boost exports to the US and Europe from this plant,” said Unnikrishnan. He added, though, that the company doesn’t expect its market share in India in chillers to rise above the current 85 percent.

“We are hoping to boost our market share in South East Asia from 20 percent to between 35 and 40 percent, and improve our market share in the US and Europe to a pivotal position,” said Unnikrishnan.

Another key reason for the consolidation is the company’s growing need to move chiller-manufacturing from China to India, to contend with the US-China trade war, said Pudumjee.

“Having to pay 20 percent duty on chillers exported to America from China, no longer makes economic sense,” she said, “So, we will be making them in India.”

Pudumjee added that she does not expect industrial demand in India to pick up this year, although smaller consumer industries could hope for some growth.