Heavy Engineering Corporation to begin Rs 1,240cr turnaround plan

Heavy Engineering Corporation Limited (HEC), Ranchi will soon kickstart its Rs 1,240 crore turnaround capex plan that is aimed at revitalising the PSU and quadruple its topline to over Rs 1,600 crore in the next five years.

The modernisation and expansion plan will be funded by a mix of internal resources raised through excess land monetization and debt, the company said.

“We are waiting to get government approval to kickstart the capex plan. We don’t foresee any major delay as we are not seeking any government financial assistance,” HEC chairman and managing director Avijit Ghosh told PTI in an interview.

He said the total capex plan is estimated at Rs 1,240 crore and it would be deployed in phases based on priority sectors over the next few years.

HEC has altered the original turnaround plan submitted by state-owned consulting firm Mecon in 2014. HEC shifted the focus on defence and nuclear energy sector as new strategic focus areas to become a strategic partner for the country in supporting ‘make in India’ effort taken by the Centre.

“We have modified the plan internally and got the same corroborated by the global consultant Ernst and Young before submitting it to the Heavy Industries ministry,”Ghosh said.

HEC at one point was one of the leading suppliers of capital equipment in India for steel, mining, railways and power.

“Due to various constraints like massive manpower and lack of working capital, it is unable to grow its revenue from around Rs 400 crore which is the main reason for losses. With cost minimization and other efficiency efforts had reduced losses from Rs 240 crore in 2015 to Rs 80 crore leve,” Ghosh pointed out.

The turnaround roadmap is of five years by when it has forecasted Rs 1,640 crore revenue.

“Presently, we are an almost debt-free company. We may raise some bank funding but that would depend on cash flow from land monetization and cash flow from other operation,” Ghosh said.

HEC has about 1,000 acres of excess land.