Lloyds engineering

Annual report review

About the company

It provides a complete package of engineering and infrastructure solutions by carrying out designing, engineering, manufacturing, fabrication and installation.

Its products cover various categories in Heavy Equipment, Machinery and Systems for Hydro Carbon Sector, Oil & Gas, Steel Plant Equipments, Power Plants, Nuclear Plant, Boilers and Turnkey Projects. Its facilities have been approved by various authorities like Industrial Boiler Regulatory Authority, SGS UK, Petroleum and Explosives Safety Organisation etc.

Transformation journey:

From the above snippet, the new promoters are :

1. Working with a growth mindset by getting deeper into customised engineering solutions — Promoters of Lloyds steel, fastest growing steel integrated manufacturing.
2. Entering into technology alliances — Entered into a collaboration with a Japanese company to manufacture around 70–80% loading arm components in India .Acquired the exclusive rights to manufacture and market acid-free steel pickling technology in India.
3. Aggressive capex, catering to multiple sectors.

Historical Financials:

Revenue and EBITDA growth over 3 years

Top priorities:

• We will enter relatively undercrowded spaces of large sectors
• We will focus on the engineering cum fabrication of products being imported into India
• We will enter sunrise spaces within large and mature sectors. We will enter into technology alliances with global leaders and progressively introduce new products into India
• We will seek to enter new industrial sectors, including the potentially lucrative nuclear sector
• We will seek to enter new industrial sectors, including the potentially lucrative nuclear sector and also giving them esops for better retention

Order book:

Order book to be liquidated in 12–15 months. Around 41.78% of the order book comprised orders for the steel vertical.As a bidding discipline, the company bid for projects around an EBITDA margin of 17–18%.

Business segments: — 5 Main business segments

1.Supply to steel sector and ecopickling — 68.46% of revenue

• Co has experience of having worked on a range of products locally and globally (iron ore processing plant components, iron making plant components, steel making plant components, casting & rolling plant components
• Ecopickling — The company entered into an agreement with The Material works Limited (TMW) that was exclusive to India and Bangladesh. The prospects of eco-pickling are relevant to a growing need among steel markets to be increasingly responsible in manufacturing processes; there are 150 pickling lines in the country that could be potentially replaced by ecopickling

2.Boiler business — 12.91% of revenue

• 39.5% of the order book and 2nd largest segment in the company
• The boiler represents the heart of the power plant, influencing its efficiency.
• The generation and use of thermal power in the steel industry are likely to sustain, linking the fortunes of the boiler business with domestic steel production.
• Co sees opportunity in boiler retrofit market — legacy boilers upgraded without being scrapped — that can be addressed by the company and business seeks to emerge as the top three in India across the foreseeable future

3.Hydrocarbon equipment business — 9.79% of revenue

• 3rd largest segment, 10.11% of order book
• The company invested in manufacturing infrastructure and equipment (tube sheet drilling machine) to enhance capability
• Petroleum and petrochemical companies in India are engaged in modernisation and expansion programs, creating new engagement opportunities

4.Naval equipment business — 1.82% of revenue

• 4th largest segment, 5.92% of order book
• The potential of this business is undergoing a substantial shift following the announcement by the Indian navy to supplement and replace its existing fleet seafaring and coastguard fleet.
• Lloyds Engineering is attractively placed to build on its established competence in the supply of critical vessels products like electro-hydraulic steering gear and fin stabilisers

5.Marine loading arm business — 0.65% of revenue

• The company possesses the capability to manufacture swivel joints for small truck/rail loading arms as well as marine loading arms
• The company entered into a technology alliance with TBG Niigata, a Japanese technology company for access to specialised knowhow.
• The company plans to progressively indigenise the components of imported origin (more than 70%). Testing: The company is in the process of manufacturing marine loading / unloading arm with in-house testing capabilities

6.Theme-based construction business

• At Lloyds Engineering, we are addressing a unique combination of urban infrastructure engineering services coupled with aesthetic renewal, enhancing citizen pride and footfalls. The company possesses a track record of having successfully transformed urban Mumbai pockets, creating a showcase for follow-on projects across the country
• Few projects undertaken are Spirit of Mumbai clock tower at Mahim Bandra Junction, Beautification of Sarkhel Kanoji Angre Samadhi & Udyan and Beautification of Sarkhel Kanoji Angre Samadhi & Udyan

Indian engineering market overview

India’s engineering goods are exported to key markets such as the US, Europe, and China. Engineering exports in FY24 rose to $109.31 billion from $107.04 billion.

Steel:In FY2024–25, India plans to increase infrastructure capital expenditure 11.1% year-on-year — to Rs. 11 trillion ($134 million) — that could increase domestic demand for steel.

Nuclear power: Some 23 nuclear power reactors are installed in India. The Government initiated steps to increase nuclear power capacity from 7480 MW to 22480 MW by 2031–32.

Oil and gas: Oil demand in India is projected to register 2x growth to 11 million barrels per day by 2045. The industry is expected to attract US$ 25 billion investment in exploration and production.

Management details:

CFO was last employeed with the group company. Overall the team is experienced with few leaders working with companies like JSPL and IGSEC.

Internal transactions:

Sale of goods to Lloyds was 441 cr and 244 cr respectively out of total sale of 624 and 313 cr respectively which constitutes almost 70.6% and 78% respectively. Their steel segment was near 68%, so safe to assume the entire revenue from their biggest segment came from just 1 customer

Fixed asset addition/disposal.

Company has bought vehicles worth 7.1 cr last year out of total fixed asset addition of 45 odd crs.