Azad Engineering Ltd. is developing an independent plant to fulfil the new order from Mitsubishi Heavy Industries Ltd. Whole-time Director Vishnu Malpani told NDTV Profit that the new plant is expected to be ready in the next two quarters.
The engineering and technology solutions provider had on Sunday announced that it won a long-term contract and price agreement from Mitsubishi Heavy Industries that involves supplying highly engineered and complex rotating and stationary airfoils for advanced gas and thermal power turbine engines. The first phase of the order is valued at about Rs 700 crore.
“We are building a plant for Mitsubishi that should be ready in about two quarters. In the next three to four quarters, we should start generating revenue out of the contract we have signed," Malpani said.
“This is in conjunction with the independent plant we are building for them (Mistibushi). They are trying to essentially block our capacity and give us visibility over the next five years so that we can invest ahead of the curve,” he added.
At the same time, some of the products for the Mistibushi contract will also be manufactured at Azad Engineering's existing facility, Malpani said. “Even out of the current facility, we will be doing some production from this contract but largely it will come out of the new plant that we are building.”
On the benefits of the order, he noted, “This order is a significant one, because today as the best cost and quality supplier of critical parts to Mitsubishi, we are in a position where we are catering to the likes of these engineering companies. The market is huge and this (the Mistubushi order win) is the beginning of how we will be able to scale ourselves.”
According to Malpani, Azad Engineering's current wallet share in the total market size is roughly 1%, which the company aims to take up to 5% in the coming years.
Shares of Azad Engineering Ltd. closed 7.6% higher at Rs 1,572.95 apiece at the NSE on Monday, a day when markets were in red. The benchmark Nifty 50 closed 1.27% lower at 23,995.35.
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