Transformers And Rectifiers India Expects Recent Acquisition To Improve Margin

Transformers and Rectifiers India Ltd. is expecting a 30 basis points rise in margins following its acquisition of Posco Poggenamp Electrical Steel, according to Managing Director Satyen Mamtora.

On Nov. 13, Transformers and Rectifiers India had announced that it had acquired a controlling stake in Posco Poggenamp Electrical Steel Pvt. by making a strategic investment in it.

The investment will optimise the supply chain management, improve operational efficiency, and expand market presence of Transformers and Rectifiers, particularly in the growing energy and infrastructure sectors, the company stated in a stock exchange filing.

Gujarat-based Posco Poggenamp Electrical Steel manufactures and processes cold rolled grain oriented steel lamination as well as built up cores for the power and distribution transformer and reactor sectors. CRGO electrical steel is a critical raw material for any transformer and reactor, comprising a significant part of the input cost.

“This acquisition is a major milestone for TARIL towards the 100% backward integrated company in time to come,” the company said.

While talking to NDTV Profit about the benefits of the acquisition, Mamtora said, “There should be a 30 bps increase in the margin.” However, he didn't give a specific timeline.

Elaborating on the acquisition's benefit, Mamtora said, “This is a major milestone for our company, as CRGO contributes to 30% of our raw material. With this, not only will we be able to explore our own production for transformers, we will also be able to sell the remaining excess capacity of the CRGO production unit in the market.”

“We have been in talks with several companies and also some motor manufacturers for EVs which are also showing their interest in buying their CRGO from us,” the top executive added.

Mamtora revealed that Transformers and Rectifiers is eyeing more inorganic growth to increase its manufacturing capacities.

“We are in process of making some three more inorganic growths to increase our manufacturing capacity of transformation and other ancillaries also. We have been expanding backward integration in manufacturing, wherein we will do about 4,000 tonnes of material conversion per month,” he said.

According to the top executive, the end goal was to hit Rs 3,500-crore revenue by FY26 and aim for $1-billion revenue in the next three years.

The strong growth, which will support the revenue target, is coming from various sectors, he added. “The demand is coming from Indian EPCs, electricity boards, national grids. The demand is also coming from Europe, Africa, and the US,” he said.

Shares of Transformers and Rectifiers India Ltd. closed 1.82% higher at Rs 921.1 apiece on the NSE on Tuesday. In comparison, benchmark index Nifty 50 closed 0.28% higher at 23,518.5.