Sanghvi Movers to invest Rs 500 cr

Hopes to keep operating margins at 72%-73%

MUMBAI: Sanghvi Movers, India’s largest crane rental company, aims to maintain operating margins in the 72-73% range over the next couple of years on the back of high demand and a shortage in supply, company officials told analysts recently.
The company plans to invest

Rs 500 crore over the next two years to acquire high-capacity cranes, which would be pushed for specialised services such as setting up of nuclear plants, refineries, and power stations, as India spends more in creating infrastructure.

Pune-based Sanghvi Movers operates a fleet of 284 medium-to-large hydraulic and crawler cranes with capacities ranging from 20 tonnes to 800 tonnes. Last fiscal it acquired 34 cranes, of which 20 were used ones and 14 were new, for Rs 220 crore.
Chandrakant Sanghvi, chairman and MD, said this year, dependence on windmill sector will fall to 35% from 47%. In FY07 the sector accounted for 73% of Sanghvi Movers’ revenues.

“Next year, the windmill sector revenue is going to be around 35%, refineries will be around 5%, power sector would be 30% (17% last year) and oil and gas would be 10% (3% last year). We expect revenue of around 4% to 5% from the metro rail sector,” he said.

Suzlon is the company’s biggest customer, accounting for 38% of the company’s revenues. Sanghvi said the company has renewed its contract with Suzlon for two years and at a price increment of 15%-17% for the first year and 7% for the second year. It enjoys price escalation clause only for the windmill sector and in others operates in a fixed price model. The engagement time frame for other sectors is also lower.

Sanghvi said the company has postponed its plans of expanding the crane rental service overseas by a year or two. It would consider such plans only in FY10.

The company is looking at adding two to three depots every year at Rs 2.5-4.0 crore investment per depot. It currently has nine depots, which typically are spread across three to five acres of land and hard-surfaced to house and service cranes.

g_rabin@dnaindia.net