TRF has emerged a pioneer in providing solutions for material handling equipment and processing systems required in infrastructure development. In quest of rapid growth, the last few years have seen the company diversify into automotive applications business with strategic acquisitions and joint ventures.
Despite challenging market conditions, TRF has set ambitious targets, envisaging a five-fold growth in five years to become a Rs. 2,500-crore company by 2013 with its greater focus on material handling and auto applications businesses.
Tata Robins Fraser (renamed TRF in 1984) was established in 1962 at a time when Tata Steel had expanded its production capacity to two million tonnes and started feeling that it required in-house capabilities to take care of it bulk material-handling needs. The company was set up as a joint venture by Tata Steel, Robins Engineers and ACC Ltd. (formerly Associated Cement Companies Ltd.).
The year 2011-12 was marked by a difficult market environment characterized by slowing down of overall economic growth, high inflation impacting costs adversely, foreign exchange volatility and high interest rates resulting in delays in decision making and clients suspending project execution in several instances and almost total choking of the fresh order booking specially during the second half of the fiscal.
The financial results of the company on standalone basis for 2011-12, despite the uncertain economic environment, reflected significant improvement over the previous year with sales at Rs. 802.31 crores (previous year: Rs. 723.58 crores), a growth of 10.88 per cent. The consolidated TRF Group performance also improved, recording sales of Rs. 1,327.41 crores (previous year: Rs. 1,113.56 crores) achieving a growth of 19.20 per cent. During the year, TRF earned foreign exchange worth Rs. 439.32 crores through exports, including deemed exports of Rs. 436.44 crores, as against the previous year’s earnings of Rs. 461.72 crores through exports (including deemed exports worth Rs. 452.76 crores).
Infrastructure sector
The Indian infrastructure sector, in which TRF operates, has passed through a difficult period during the year under review. Key industry indicators like GDP, inflation, interest rates and rupee depreciation reflected adverse trends resulting in monetary tightening. Land acquisition, environmental clearances, shortage of coal and rising imported coal prices continued to be areas of concern. This resulted in a number of planned investments being postponed, both by the private and public sectors.
However, some key initiatives in the Budget for 2012-13 as well as in the 12th Five-Year Plan have given rise to expectations that there would be a turnaround in the infrastructure sector. Investment in infrastructure in the 12th Plan is estimated at Rs. 50,000 billion. The Government had also announced a National Manufacturing Policy with the intent of increasing the share of manufacturing in GDP to 25 per cent within the next decade. With the increased investments in the port, power, steel and mining sectors, the company is expected to make good progress as it operates in all these sectors, while new product development and enhancement continues to be a focus area.
TRF’s in-house R&D facility has been approved by the Department of Scientific & Industrial Research (DSIR) which entitles the company to tax benefits on R&D expenditure. The port & yard equipment business has turned around, and the growth prospects here are very encouraging. TRF’s subsidiaries in the automotive sector continued to register a healthy growth.
York Group
In March 2012, York became a wholly-owned subsidiary of TRF. York grew its business by over 36 per cent during 2011-12, achieving sales of Rs. 335.07 crores (previous year: Rs. 246.18 crores). The market share of York improved in all key markets, including Australia, Indonesia, South Africa, Thailand, China and India. Two new models of axle and suspension were launched at the beginning of 2012. The products were well received, and commercial production of these will commence shortly.
Manufacturing of axles at the new plant in Pune commenced in May 2011. This facility includes suspension assembly, special axles and R&D centre. Axles for hydraulic trailers, which were previously imported, are now being manufactured at the Pune plant. With a view to making suspension products more competitive, the focus is on indigenization and value engineering which would help the company in the next financial year. Efforts to work with and support the customers on application, maintenance and installation continued at the Pune Training Center as well as at various customer sites across the country.
DLT Group
Dutch Lanka Trailer (DLT) became a wholly-owned subsidiary of TRF Singapore Pte. Ltd. towards the end of 2011. The slowdown in the global economy and the consequential decline in International trade and container traffic, adversely impacted DLT sales during 2011-12 as the company depends heavily on sale of ‘port terminal trailers’. Road trailer sales also remained stagnant. Sales at Rs. 126.63 crores were 2.86 per cent lower than Rs. 130.36 crores the previous year. However, in the last quarter of 2011-12, there were signs of improvement in the order book.
During the year DLT had entered into purchase agreements with AP Moller Terminal and DP World, two large port operators. The company also entered into dealership arrangements in Japan and India to market its trailers.
Dutch Lanka Engineering Ltd., a 100 per cent subsidiary of DLT in Sri Lanka, engaged in maintenance, service and trailer manufacture for the local Sri Lankan market, had improved its performance significantly, recording its highest-ever sales since inception of Rs. 21.70 crores against the previous year’s Rs. 14.29 crores, achieving growth of 48.78 per cent and further increasing its market share in Sri Lanka.
Adithya Automotive Applications
TRF Ltd. had entered into a shareholders agreement with Tata Capital Ltd. and Jasper Industries Pvt. Ltd. to form a joint venture company, Adithya Automotive Applications Private Ltd. (AAA), engaged in the business of automotive applications to provide end-to-end solutions through fabrication and machining for vehicles to be used as tippers, load bodies, trailers, refrigerated bodies, etc. 2011-12 was the first full year of operations for AAA. During the year it supplied 3,038 tipper bodies against 1,245 in the previous year. Sales at Rs. 73.73 crores (previous year: Rs. 29.35 crores) increased by Rs. 44.38 crores.
AAA had also completed the first phase of capacity expansion from 10 tippers to 15 tippers per day while the next phase of expansion to 25 tippers per day is underway. The company had delivered the first prototype of SS fuel bowser specially developed and manufactured for the Indian Army. More prototypes are planned in the current financial year.
During the last fiscal, the company had successfully achieved commercial production of a new tipper variant ‘10 cubic meter standard box tipper on LPK 1618 chassis’.
HRIL
The acquisition of Hewitt Robins International Ltd. (HRIL) in 2010 represented a significant progression in the direction of rapid growth and globalization by TRF. HRIL has continued to perform well in difficult European markets, improving its turnover and profitability. However, the European market continues to depend substantially on replacement orders only. HRIL was successful in transferring technology to TRF India and introduced new products in the Indian market.
The road ahead
In order to widen its product mix, TRF has successfully entered into tie-ups and continues to explore further opportunities for collaborations to upgrade its technology. The Operations and Maintenance Service business has been identified as a potential for growth, and a team has been formed to pursue this business.
During the last fiscal the company had also invested in enhancing its fabrication capabilities to cater to the increasing demand. The subsidiaries in the auto application business have also expanded their operations through setting up of manufacturing facilities in India and expanding the existing capacities. The threat of rising costs of inputs without commensurate increase in net realization is being addressed by focused cost reduction measures. While TRF does not perceive any major threats, intense competition and Chinese supplies in the Indian market calls for a different strategy to be adopted in competitive bidding.
The start of 2012-13 had gave some signs of improvement with a somewhat higher level of enquiries for the company. However, any significant change may be towards the year end only, and therefore the focus of Team TRF will be on an aggressive business development drive targeting higher new order bookings coupled with timely, efficient and cost-effective execution of orders and projects on hand.