Corporate Overview
Savcio Holdings (Pty) Ltd
Savcio are the largest privately-owned electro-mechanical provider of maintenance and repair services for rotating equipment and transformers in Africa as well as supply of raw materials for the electrical and general industry. Savcio have been in operation for nearly 100 years to a broad range of industries including the mining, rail transportation, power generation and distribution, steel production, petrochemical and paper industries.
We are also a leading independent manufacturer and distributor of input materials to the broader South African electrical manufacturing and repair industries. We currently operate two manufacturing facilities, nine repair workshops and 5 distribution centres throughout South Africa. During 2010, we accelerated our market diversification strategy by the acquisition of Hydron Hydraulics and Electrowave in the Oil and Gas sector. These businesses facilitate an integrated turnkey offering by providing maintenance and repair services for hydraulic and electrical systems integration solutions.
We focus on maintaining and repairing medium- to large-sized equipment. Customers in this market segment are focused on minimal downtime of mission critical facilities, reliability of repairs and technical expertise. We believe the combination of our well-located and well-equipped workshops, technical expertise and skilled workforce enables us to successfully undertake a wide range of maintenance and repair services for motors ranging in size from 1KW to 50MW (among the largest motors in use in South Africa) and for transformers ranging in size from 315 KVA to 200 MVA.
These capabilities, together with our strong brand names and reputation for delivering high-quality, reliable service in a timely manner, reinforce our leadership position in the South African maintenance and repairs market. We also operate manufacturing and distribution businesses that supply input materials to our maintenance and repairs business, as well as to the broader South African electrical manufacturing and repair industries.
These businesses accounted for approximately 35% of our revenue. Over the past 5 years, we have invested more than R150 million towards improving our facilities and technical capabilities, including test equipment and VPI equipment, balancing machines, vacuum dryout ovens and conductor strip rolling machines. These investments improve the finished product quality and enable us to differentiate ourselves from lesser-equipped companies.
We believe we benefit from a number of competitive strengths, including the following:
We are the largest privately-owned provider of maintenance and repair services for rotating electrical equipment and transformers in Africa and have been in operation for more than 90 years. Strong customer relationships. We have developed strong, long-standing relationships with our customers by consistently delivering high quality maintenance and repair services. Our customers rely on us for ‘‘mission critical’’ repair service and for our technical expertise.
Our customer relationships are reinforced by our extensive service history database for small, medium- and large-sized electric motors and transformers installed in South Africa and our more than 90 years of operations. Fifteen of our top 20 customers have been customers of ours for more than 20 years. Our customer base includes governmental entities such as Spoornet (the South African government freight rail operator and a division of Transnet) as well as globally recognized companies, such as:
- Mining: Anglo-American (and affiliates), Rio Tinto, Harmony and Goldfields;
- Steel production: Mittal Steel, Highveld and Columbus Stainless;
- Petrochemicals: Sasol, Petronas and Caltex; and
- Paper and pulp: Sappi and Mondi.
Diverse customer and revenue base.
We have a diverse customer base and generate revenue across a wide spectrum of industries and generate revenue from more than 4,200 customers. In addition, our maintenance and repairs business is well-balanced across the industries we serve.
Approximately 30% of our revenue is generated in the mining industry, 23% in rail transportation and 47% across the broader manufacturing and power industries. We believe that the diversity of our customer and revenue base minimizes our exposure to a downturn in any individual industry.
The segments of the industry in which we focus has significant barriers to entry, including the need for technical know-how, significant capital investment and experienced management. Over the course of our long operating history, we have built a proprietary service history database for both standard and custom made medium- and large sized electric motors and transformers installed in South Africa.
This knowledge enables us to reduce maintenance and repair lead times by manufacturing and sourcing critical components required for repairs in advance of receiving failed equipment at our workshops, as well as to more accurately price our contracts. Capital investment is also essential to success in the market segments where we compete, as specialised facilities and equipment (such as cranes and test bays) are required to service the larger-sized equipment on which we focus.
Over the past five years, we have invested approximately R150 million towards improving our facilities and technical capabilities and on expanding our transformer repair facility, all of which differentiate us from our smaller competitors and enhance our ability to service the high-end sectors of our market. We believe that our proprietary service history database and infrastructure, together with our experienced operational management team, create significant barriers to entry.
Our trade names are recognised as leaders in the markets they serve and are associated with reliability high-quality and technical expertise. LH Marthinusen was founded in 1913 and is associated with advanced electrical engineering and our ‘‘total services solution,’’ while our Reid and Mitchell brand, founded in 1940, is associated with high-quality service and a deep knowledge of DC motors. The Wilec brand was established in 1970 and is associated with ‘‘one-stop-shopping’’ for all input materials. We believe the strength of our trade names helps to distinguish us from our competitors.
Our operational management team has significant industry experience. Our top 10 managers have an average of 19 years experience in our industry and an average of 16 years service. During their tenure, our annual revenue, EBITDA and EBITDA margins have consistently increased.
It is increasingly important for South African businesses to have strong black economic empowerment, or BEE, credentials in order to acquire procurement contracts from public and private sector customers. A BEE scorecard has now been specified by the South African government and is now widely used within government-owned entities, such as Transnet and Eskom, in their procurement process.
A number of industries, including mining and petrochemicals, have adopted their own scorecards and the government has indicated that it intends to make its BEE scorecard applicable to both public and private sector procurement. To date, we have been BEE-accredited by Transnet, Eskom, Decti and Empowerdex. Our BEE credentials enhance our ability to win contracts as well as differentiate us from many of our competitors.
We are the largest privately-owned provider of maintenance and repair services for rotating electrical equipment and transformers in Africa and have been in operation for more than 90 years. Our business is organised into two segments: repairs and services and replacement parts.
Our repairs and services segment is divided into the following business units: maintenance and repairs, supply of input materials (Wilec) and the manufacture of electrical conductors (Transwire). The following is a breakdown of our primary products and services.
Maintenance and repairs business
This business is the most significant contributor to revenue. In one year we undertook more than 28,000 maintenance and repair work orders, ranging from repairing 1000W motors to rewinding 8MW mine winders. In addition to the traditional maintenance and repair services described above, we are focused on increasing the value-added services we provide to our customers. We have recently introduced the following value-added services:
- installation of equipment for remote monitoring of production levels and condition of draglines.
- on-site condition monitoring of equipment using infrared thermograph, vibration measurement and analysis, laser alignment, oil analysis and filtering and testing;
- total motor maintenance contracts to monitor key operating characteristics, such as vibration levels and insulation levels, and to more proactively undertake preventative maintenance in order to minimize down time; and
- digital speed control and circuit breaker protection upgrades of electric motors.
Packaged together, we refer to these services as our “total services solutions”
Supply of input materials (Wilec)
Through our Wilec business, we are a leading supplier of input materials to the electrical manufacturing and repair industry in South Africa. We act as a ‘‘one-stop shop’’ supplier of a wide variety of wire and insulation products, including magnet wire, copper and aluminum strip, insulation materials for both high and low voltage machines and VPI resins and impregnating varnishes. We also market a comprehensive range of quality self-adhesive tapes and coated and bonded abrasives. Our products have applications in the mining, transport, power and manufacturing industries.
Manufacture of electrical conductors
Through our Transwire business, we manufacture a complete range of magnet wire and shaped conductor products for both local and international customers and are one of the leading manufacturers of magnet wire in South Africa. Our products have applications in the manufacture and repair of electrical motors and transformers, the electrical automotive industry, the lighting industry and the electronic industry.
We also manufacture products for the transformer manufacturing and repair industry, including paper covered products as well as insulation components. Approximately 10% of our total revenue was generated by our electrical conductor manufacturing business unit.
We operate two manufacturing facilities, nine repair workshops and 16 distributions centres throughout South Africa. Our workshops have significant crane capacity; large loading and unloading bays; electric motor stator burnout ovens; conductor rolling, annealing and covering equipment; coil manufacture and winding equipment for motors and transformers; VPI and resin impregnation facilities; machine and fabrication facilities; curing and drying ovens; high speed balancing equipment; coil regeneration and storage; automated electric motor full load test equipment; and transformer dynamic and static test equipment. In order to meet the quality standards required by our customers, particularly in the heavy industrial and mining industries, all of our workshops have obtained the ISO 9000 quality accreditation. Click on the (link) button below to see a summary of our workshops:
In addition to our workshops, our Wilec business has distribution facilities in Johannesburg, Cape Town, Durban and two other locations ranging from 300 to 7,500 square meters. Wire manufacturing is done at our Transwire plant in Olifantsfontein Johannesburg, which is leased. We also lease 300 square meters in Bruma, Johannesburg as our corporate offices. We believe that our facilities are suitable for our current business and adequate for our present needs.
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