Despite the lull in engineering, procurement, construction and commissioning (EPC) sector for a long, Pune based Fabtech Projects & Engineers, an EPC company has bagged orders worth Rs 7.34 billion from various private and public sector companies in oil and gas sector.
The order book also includes Rs 1 billion export order from Dangote Refinery in Nigeria. The company eyes Rs 20 billion turnover in the next five years. Last year, it has clocked a turnover of Rs 7.30 billion.
To name a few, Oil India Limited (OIL) has awarded Fabtech a contract of Rs 4.33 billion for constructing Secondary Tank Farm (STF) at Duliajan. It has received order of Rs 720 million for supply of 'electrical penetration assemblies' Nuclear Power Corporation of India (NPCIL) and Rs 2.15 billion orders from various refineries for mounded bullets for bulk storage of LPG. Last year, it has completed Rs 4.50 billion order for IOCL Paradip refinery for setting up intermediate storage tanks.
Explaining its strategy for sustaining in downturn, R A Rupnar said: "We have kept our expenses and overheads very minimal. We restricted our headcount and while executing the projects, we prefered local talent of respective areas. It helped the company to reduce costs. Plus, we have some engineering expertise of EPC business which others do not have." "Going by the order book and if the market conditions are favourable, Fabtech is planning an IPO in the next 2-3 years," says Rupnar.
The company is also looking at export market and recently bagged Rs 1 billion order for supply of static equipments from Nigeria-based Dangote Refinery. The company is also bidding for a Rs 10 billion order for the same company and expecting to bag it in the next two months. However, its domestic orders contribute large portion (around 90 per cent) of its total business.
The company has bought 15 acres of land near its existing plant at Vasuli near Chakan and set up its second facility with the investment of Rs 700 million. It is further investing Rs 600 million for the expansion of this facility. India's EPC market witnessed consistent changes over the last few years with solid growth in project size and complexity, increasing private clients and entry of several foreign players.
However, it is facing key challenges like the growth in revenues is not truly reflective in the bottom line. This is primarily due to significant cost overruns, regulatory bottlenecks and aggressive bidding positions taken by a few of market players.