The Company has a Board approved Risk Management Policy and has a robust risk management framework. According to the risk management framework, all possible risks, which the organisation is faced with, have been identified and categorized based on severity of the risks. Apart from prescribing a risk owner for each risk, clear mitigation measures have been specified to manage the risk. A structured risk management system helps in the formulation of effective mitigation measures to minimise the impact of risks and to define risk limits.
The Company’s business relates to manufacture and sale of steam turbines which fall under capital goods industry and is closely linked with the economic activities in the country as well as the sectors wherein the Company’s products are used. As a result of the strategic move to diversify the geographical market of its products, the Company has been able to lower its dependence on the domestic market and accordingly, percentage exports in turnover during the year has gone up from 30% in the previous year to 42%.
Some of the major risks being faced by the Company are described here below:
A slowdown in economy directly impacts the demand of capital goods, including the products of the Company. Further, over dependence on any market/s may adversely affect the performance of the Company if the concerned market gets sluggish due to internal factors.
In the last 3 years, due to the slow-down in the economic activities, the domestic market has declined / remained stagnant which had considerable effect on the demand of the Company’s products. However, in order to reduce the over dependence on the domestic market, the Company started focusing on marketing its products in the global market and in the FY 15, the contribution of exports to the total turnover was 42%. The Company is in the process of further extending its footprints in the global market to lessen the risk of over dependence on certain countries / regions. The Company has also set up international structures to be in the proximity of customers so that it acquires in-depth knowledge of market trends and is able to capture all opportunities.
It is important to provide support to the customers to keep the products trouble free and to attend to break-downs in the most efficient manner. Without such service support, the Company may not be able to win the confidence and secure orders from customers.
Like in the domestic market, the Company is replicating its service model, offering its service for preventative maintenance of its products and strengthening its service capabilities to attend to urgent situations in a timely manner internationally. The foreign subsidiaries recently set up by the Company will help in achieving such objectives apart from securing more aftermarket service orders. In due course, the Company may also own, directly or indirectly through joint ventures, service workshops in the regions of high customer density to provide services to customers.
The Company operates in the engineered-to-order capital goods industry where product efficiency, critical product features and overall life cycle costs play an important role.
The Company vigilantly studies, analyses and forecasts market trends and customer preferences and accordingly develop its R&D programmes. The Company has a vibrant R&D department which undertakes new product development and improvements within the shortest possible time and at optimal costs. The Company has well structured systems to validate its technology prior to commercial use. The Company imparts technical training at its in-house learning centre for all levels of engineers to expose them to latest technology.
The Company faces competition from steam turbine manufacturers of international repute in the domestic and international markets. This may compel the Company to quote aggressively and impact its margins.
With a view to mitigate this risk, the Company provides value proposition to customer with products which meet the benchmark efficiencies at a competitive price and shorter delivery time, without compromising on margins.
In view of export of product to several countries in various continents, there is a risk of various types of claims from customers towards under performance of product and third party claims if the laws of that country are not fully conformed to.
The Company has strict quality control procedures which ensure that all the products supplied to the customers must meet the contractual parameters. It is ensured that the contracts with customers clearly specify the obligations of the Company. In addition, the Company takes appropriate insurance policies to cover all such risks.
Triveni Turbine Limited
12-A, Peenya Industrial
Area, Bangalore, Karnataka
- 560 058, India