Energy-focused industrial supplier Austro has beefed up its board ahead of what CEO Paul Mansour hopes will be a period of accelerated growth, designed to elevate the company from its current status as a “micro cap” on the JSE to a “small cap”, with a market capitalisation of more than R1-billion.

The company, which assembles back-up diesel power generators at a 30 000 m² facility in Alberton North, Gauteng, recently announced several high-profile board appointments, including former Eskom chairperson Mpho Makwana, former Eskom CFO Paul O’Flaherty, former Development Bank of Southern African CEO Paul Baloyi and Nopasika Vuyelwa Lila, who is CFO at Eskom Pension and Provident Fund.

Austro, which also supplies equipment to the wood industry, recently underwent a major corporate realignment, with private company Ricophase, together with a number of concert parties, among them Mansour himself, increasing their holding in the company to 37%.

Mansour tells Engineering News Online the company is focusing increasingly on energy opportunities, the market for which has expanded as South Africa’s supply-side constraints have come to the fore in recent years. However, it also sees growth potential in the rest of Africa, where construction sites, data centres, telcomunication tower operators and retailers often require back-up solutions to sustain operations.

South Africa’s electricity fragilities were highlighted again on February 20, when Eskom declared an emergency as the power system came under severe strain, owing to a series of unplanned trips at a time when a number of units were out for planned summer maintenance.

Mansour expects system stress to continue even once the first new baseload generation begins entering the system through the commissioning of the giant Medupi and Kusile power stations, owing to investment backlogs in the distribution sector, which is being blamed increasingly for localised blackouts.

The company is currently supplying around 120 MW a year of back-up capacity, which it manufactures in-house, apart from the engines and alternators, which are sourced from leading international suppliers. But it has capacity to materially increase throughput.

The company also has temporary-power offerings for the marine, infrastructure and event markets, which are seen as having solid growth potential, with strong demand for temporary power having emerged from developers of renewable-energy projects, which are under development across the country.

Mansour is particularly keen to enable Austro to service the infrastructure market, where billions of rands are still set to be invested in the coming five years on power, transport and water projects, as well as a range of social infrastructure programmes in the education, health and municipal milieus.

The high levels of local content in its generators are perceived as providing an important advantage in the sector, where the localisation requirement is rising. But to take fuller advantage the company will need to bolster its black economic-empowerment (BEE) credentials and is, thus, considering its options as to how to give effect to this.

Mansour believes a solid growth momentum was established in 2013, when the 360-employee company increased revenue by 20% to R502-million, with the energy-linked businesses contributing around R344-million. Adjusted earnings before interest, tax, depreciation and amortisation rose 25% to R29.6-million and the company reported a net profit of R7.2-million.

But the aspiration is to accelerate further through a combination of organic and acquisitive growth and to raise the company’s market capitalisation, which has increased from R200-million a year ago to around R600-million, to in excess of the R1-billion level.

“It’s not ideal being listed on the JSE as a micro cap, so one of our immediate goals is to initially graduate the company to the realm of being a small cap, which will at least ensure that we get onto the radar screens of some of the institutions,” Mansour concludes.