Artson Engineering Ltd is a sick company taken over by Tata Projects in 2008. Set up by technocrats with experience in the field of petroleum refining, AEL has been in the business of setting up petroleum storage and handling systems.

The company turned sick some years ago after it failed to recover dues from Essar over their ill-fated refinery at Jamnagar.

Despite being unable to take up projects due to nonavailability of funding from financial institutions, AEL boasted an impressive client list including Indian Oil Corporation, HPCL, IPCL, GAIL, Reliance Industries, BARC, etc.

AEL is also a project engineering company offering multidisciplinary design and construction services in the fields of mechanical, civil, electrical and instrumentation engineering. Its expertise include turnkey services in petroleum storage and handling systems, plant utilities, diesel power houses, CPP, energy conservation, waste-heat recovery and noise pollution control systems.

The projects in the company’s kitty include tank farms, petroleum depots and terminals (Oil and Gas), DG set based power plants, fuel handling systems (Power) as well as mechanical equipment erection, civil structure works for industrial plants , composite contracts involving oil refinery turnaround/shut down and residual design and engineering for food processing industry.

AEL’s equipment supply business also managed orders from major power equipment suppliers like BHEL, Siemens, ABB, Alstom and others.

The closely-held Tata Projects expects a number of advantages following the takeover of AEL. Tata Projects which also has a joint venture with Engineers India Ltd (EIL) says it enjoys a number of synergies with AEL.

Tata Projects is in the business of providing infrastructure services such
as Balance of Plants for power projects. It is also in the business of building blast furnaces for steel plants.

AEL’s performance has also seen a quantum leap since its takeover. The June FY10 quarter saw the company’s turnover touch Rs 25.63 cr. as against Rs 7.47 cr. the year before. AEL’s net profit during the same period touched Rs 45 lakhs as against a loss of Rs 1.32 cr. in the corresponding period of the previous year.

On the other hand for the whole of FY08, AEL reported a loss of Rs 4.86 cr. on a turnover of Rs 32 cr.

According to analysts tracking the company, AEL is expected to end the current financial year with a turnover of between Rs 170 to Rs 200 cr.

AEL’s management has indicated that it would aggressively pitch for orders in the coming months from various private and public sector oil companies. Its order book has increased with orders worth nearly Rs 250 cr. in its kitty. Some of these include construction of 4 Crude oil Storage Tanks at Shri Guru Gobind Singh Refinery - a project being set up at
Bhatinda.

The estimated contract value of the order is Rs. 36.70 cr. 62 kms of pipe line at a cost of approximately Rs 17 cr. The project is expected to be completed by January 2010.

Indian Oil and Cairn have placed orders worth Rs 22 cr. each.

Going by the huge investments being made by petroleum companies in India, plenty of opportunities are in the offing for this company. On the face of it Artson Engineering looks like the turnabout story that can grow by leap and bounds.


Edited by shivkumar - 03/Jan/2010 at 10:12am

Not correct to say, Artson has not received any order. They have received some small orders in the current financial year. The company was to have received a major order from the Kuwait government, but so far there is no further information on it.

Since Artson is still under BIFR, bar on granting of contracts by PSUs still in force. Management has indicated that company would come out of BIFR in FY11. This would help it become eligible to bid for orders from bigger players.

FYI order book of Tata Projects, promoter of Artson, is growing at the rate of 147 per cent on a CAGR basis for several years. But then TP is active in many fields while Artson is a niche player in the petroleum pipeline and storage sector.

The info is not available on the BSE/NSE website. I got to know from my sources. Also Tata Projects would be sharing a number of projects with Artson since the latter is a subsidiary. I have written to the company for a hard copy of the annual report.

Those who buy the stock do so in the hope that market cap appreciates!