Australian major busy country’s third-largest HVAC player
Norfolk to treble India sales in 3 yrs

Rabin Ghosh. Mumbai
Australia-based Norfolk Group, a major player in the mechanical, electrical, and plumbing (MEP) space, has lined up massive expansion plans outside its home turf – Australia and New Zealand.

To begin with, the A$1800 millions company’s mechanical division, which is worth A$300 million, has acquired an 85% stake in the country’s third-largest heating, ventilation, and air conditioning (HVAC) player Trans-American Air Conditioning.

“India is a high-growth market. We are looking at tripling our revenues here over the next three years. So we will have 900 people and have four to five new offices,” David Rafter, chief executive, mechanical, Norfolk, said.

Trans-American Air-conditioning, now renamed Norfolk Mechanical India, is a Rs 10 crore (net of equipment sales) company with clients such as the Essar group. Owing to its size, it couldn’t bid for large projects like airports, which require large upfront investment in manpower and other related infrastructure.

“Now that we are part of a larger group, we will be bidding for larger projects and also enter into MEP projects, something we couldn’t do earlier,” Farhan Pettiwala, managing director, Norfolk Mechanical India, said.

The retail and construction boom would see an explosion in the HVAC space. Other sunrise sectors for the division are special economic zones (SEZ) and cold storage.

According to brokerage house ASK, a quarter of the total investment in sectors like organized retail, IT parks, entertainment hubs, hospitality and airport goes towards MEP work, of which HVAC is a big component. ASK expects Rs 17,250 crore worth of MEP/HVAC contracts to be awarded over the next five years.

Voltas is the market leader with over a third of market share, followed by Blue Star. Norfolk now is the third-largest player but has a huge gap between itself and Blue Star.

Both the companies would leverage on each other’s relationship to win orders. Rafter said a lot of Australian property developers, who are their clients, are coming to India and hence Norfolk would be their natural choice.

Similarly, domestic companies like the Aditya Birla Group, has substantial business interest in Australia and hence the group would bid for their projects.

Pettiwala said the company was looking to better its services to projects revenues to 60:40 from current 50:50 so as to enjoy better margins and sustain long-term relationship.

The Indian arm is also exploring possibilities to act as its Australian parent’s knowledge-processing outsourcing arm by designing entire projects out of India for its parent, therby helping cut costs.

Business interests

Norfolk’s mechanical unit has acquired an 85% stake in domestic heating, ventilation, and air conditioning (HVAC) firm Trans-American Air Conditioning

Trans-American Air-conditioning has been renamed Norfolk Mechanical India

Norfolk also plans to hire 900 people and open four to five new offices