Greens plans to open facilities in India, Brazil
Greens Holdings, a mainland maker of equipment that enhances the operating efficiency of power generating plants, plans to set up facilities in India and Brazil to circumvent import tariffs and better serve local customers.
The company, whose 'economiser' product was first patented in 1845 by its original founder, British iron-master Edward Green, will, however, still use its production facilities in Shanghai and Jiangsu province to serve India and Brazil to reap the maximum cost advantage.
Its economiser product is a heat-exchanging device fitted to a boiler which saves energy by using the exhaust gases from the boiler to preheat the cold water used to fill the boiler. The device saves fuel consumption in power plants.
'We want to leverage on China's production efficiency and seven-day working environment,' said company chairman Frank Ellis. But at the same time, he added, it was necessary to set up facilities in India and Brazil to escape import duties of up to 30 per cent, fulfil local content requirements, and better meet customer needs.
Through various acquisitions over the decades, Edward Green's business is today part of Hong Kong-listed Greens Holdings, controlled by Ellis, a 62-year-old British engineer.
In India, Greens Holdings was eyeing the vast growth potential of the electricity market, while Brazil's big offshore oil and gas drilling market was targeted for its marine boiler products, he said.
The firm last week posted a 14.8 per cent year-on-year rise in first half net profit to 35.70 million yuan (HK$43.44 million) as sales grew 87 per cent to 478.8 million yuan. India accounted for 20 per cent of sales, compared to 68 per cent from the mainland and 9 per cent from Europe.
Gross profit margin slid to 23.7 per cent from 33.6 per cent, due partly to lower margins of newly-launched wind turbine tower products and the effort to penetrate into the India market by sacrificing some margins.
Higher contribution from businesses where customers provide their own materials also served to lower margins for waste heat recovery and boiler components products. Waste heat recovery refers to the production of electricity from recycling waste heat generated in places like power plants and cement plants.
Chief financial officer Matthew Crewe said the company had 380 million yuan of uncompleted orders at the end of June. It has a six-year project in Xinjiang that gets power from waste heat generated by a coal coking plant, but Xinjiang's overhaul of the coal industry meant the plant was operating only at just over one-sixth of its expected volume.
Group financial controller Kelvin Ho said the project would break even if the waste heat volume doubled from current levels.
Greens Holdings year-on-year profit increase, to 35.70 million yuan, after an increase in sales of 87 per cent