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Formulating business strategy -- Thermax to retain Boston Consulting

C.R. Sukumar

HYDERABAD, Sept. 6

THERMAX Ltd, the Rs. 498-crore company that has of late initiated measures to focus on its core competency areas of conserving energy and preserving the environment, has decided to retain the international management consulting firm, Boston Consulting Gr oup (BCG), to advise the company in formulating strategy, business portfolio and if required, its organisational structure.

According to the highly-placed Thermax sources, Boston Consulting was also mandated to review the company's current operations and to suggest remedial action to improve the bottomline.

While BCG submitted its report a few weeks ago, the Thermax board has accepted most of the recommendations. ``To assist the company in implementing the recommendations, the management has decided to retain BCG for another six months. This is expected to significantly improve the company's performance.''

One of the major recommendations of BCG was to give a sharper focus to the company's core businesses and to exit from non-core businesses. Pursuing some of the BCG recommendations, Thermax is currently in the process of hiving off its fan division. The c ompany has also closed down one of its joint ventures with Japan-based Fuji Electric - Thermax Fuji Electric Ltd (TFEL) - which was in the business of transmitters and monitoring systems.

``This was done largely due to the unprecedented rise in the value of the yen and fast technological obsolescence. Moreover, Fuji Electric was restructuring its businesses worldwide. Thermax is also undertaking a series of initiatives to sharpen its focu s on its core business in accordance with the recommendations of Boston Consulting.''

Both the partners - Fuji Electric and Thermax - have revised their strategies and decided to amicably dissolve the joint venture as of March 31, 2000. The name of TFEL has now been changed to Thermax Instrumentation Ltd. Consequent to the dissolution of joint venture with Fuji Electric and transfer of Fuji's shares to the company, Thermax Instrumentation has become a wholly-owned subsidiary of Thermax.

Further, according to sources, Thermax has also found a buyer for Thermax Systems & Software Ltd (TSS) and also signed an MoU with the buyer. To boost its international operations, the company has recently acquired the UK-based ME Engineering, a well-est ablished boiler company belonging to the BIB group. ME's technology, products and services are complimentary to the core energy businesses of Thermax, which is expected to strengthen the company's position in international markets.

``With all these changes, Thermax would be able to focus its energy and attention on its core competency, which continues to be conserving energy and preserving the environment. Now, there is clarity and confidence in the minds of the people within the o rganisation to realign themselves, get back to the core strengths and capabilities, consolidate and improve the efficiency of some of the old divisions, and move on to the growth path for some of the newer ventures,'' sources said.