Linde India Ltd. – A Case Study by a Newbie!

Reading the older annual reports for the company. Some notes:

Information from Annual reports (2019, 2020):

• Linde India Limited, formerly BOC India Limited, is a member of Linde Plc. and one of the leading industrial gases company in India.

• Linde India has the largest sales and distribution network in the country giving it a wide geographic reach and placing them close to the customers in any part of India.

• Has more than 20 operating sites in India

• Primarily produces Oxygen, Nitrogen and argon

• Company has maintained a really good CSR and has necessary public relations.

• Through the ITM Linde Electrolysis (ILE) joint venture, Linde is one of the world’s leading suppliers of PEM electrolyzer technologies (proton-exchange membranes), which means that its customers can rely on end-to-end, integrated green H2 solutions.

• First company in the segment to take orders online

• Company has two major segments – Gases and related products and Project engineering.

• Gases and related products:

  • Range of customers:
    • Healthcare – Oxygen
    • Application technologies
    • Packaged gas
    • Looking to venture into
      • Steel
      • Fertiliser
  • Threats faced by the company:
    • Slow down of Indian economy
    • Downtrend in Automotive sector
    • Increase in costs

• Project engineering:

  • “The Project Engineering Division (PED) comprises the business of design, engineering, supply, installation, testing and commissioning of Air Separation plants and related projects on turnkey basis” – Infrastructure development for delivering and holding gas.
  • The Division’s order intake during the year 2020 stood at Rs. 6,640 million
  • a large value order from HPCL Rajasthan Refinery Ltd. for setting up a “Compressed air & N2 plant package” at their green field refinery site on turnkey basis at Barmer, Rajasthan
  • Also received orders from Praxair India and IOCL
  • As on 31 December 2019, the Project Engineering Division’s third-party order book stood at over Rs.6,300 million.
  • As on 31 December 2020, the order book position of PED for third party projects stood more than Rs.11,000 million.

• Outsourcing of gases requirement under a ‘Build Own Operate’ (BOO) type of supply scheme opportunities mainly in steel and refinery sectors.

• At the beginning of the year 2020, the Company had one joint venture in the gases business viz. Bellary Oxygen Company Private Ltd., which operates an 855 tpd Air Separation Unit at Bellary, Karnataka for supply of gases under a long-term gas supply agreement to JSW Steel Ltd.’s works at Bellary.

• Opportunities

  • The Government of India’s commitment to boost economic growth by investing in infrastructure development, as per the recent budget estimates is a a major opportunity
  • The Government has unveiled multimillion-dollar National Infrastructure Pipeline (NIP), with projects spread across 18 States over the next five years up to 2025
  • The sectors such as energy (24%), roads (19%), urban development (16%) and railways (13%) will account for around 70% of the projected capex. It is estimated that to achieve a USD 5 trillion economy by fiscal year 2025
  • The demand for steel would further the demand for gas at concerned areas of production.
  • Directionally moving towards a scrappage policy on Passenger Vehicles older than 20 years and Commercial Vehicles over 15 years is also expected to boost replacement demand in the automobile sector.
  • Healthcare sector, which has been India’s fastest growing businesses, and which offers high employment opportunities looks very promising.This is expected to give a fillip to the growth of the medical gases and pharma sector in the country, both of which augur well for the gases industry.