Ellenbarrie’s Rs 480 crore BHEL order targets FY29 commissioning

Ellenbarrie Industrial Gases Limited has won a Rs 480 crore BHEL contract for a 1,200-tonnes-per-day cryogenic air separation unit in Odisha, its largest such assignment, with commissioning expected in FY29 after eight quarters of execution. The engineering, procurement and construction project will be handed over to the customer rather than operated by Ellenbarrie.

What does Ellenbarrie’s BHEL contract include?

Ellenbarrie’s Rs 480 crore BHEL contract covers the design, engineering, supply, erection, commissioning and handover of a 1,200-tonnes-per-day, or TPD, cryogenic air separation unit in Odisha. Management said the order was awarded towards the end of September and will be executed over eight quarters, with commissioning expected in FY29.

The assignment is an engineering, procurement and construction, or EPC, contract rather than an owned-and-operated on-site gas supply agreement. Ellenbarrie will construct and commission the 1,200-TPD plant before handing it to BHEL, whereas its on-site business involves owning and operating plants that supply gases under long-term customer contracts.

Management said project revenue will be recognised according to actual progress and applicable accounting requirements. Its stated priorities for the eight-quarter project are disciplined engineering and procurement, achievement of contractual milestones, timely execution, and control of working capital and cash flows.

The contract arrived as Ellenbarrie reported Rs 114.3 crore of revenue from operations in Q2 FY27, compared with Rs 98.7 crore in Q1 FY27 and Rs 89.2 crore in Q2 FY26. The company said the BHEL work will be reported within its project-engineering segment, separately from the core gases business.

Why is the 1,200-TPD order important for Ellenbarrie?

The 1,200-TPD BHEL unit is the largest air separation project Ellenbarrie has undertaken, exceeding the 325-TPD on-site facility commissioned in Durgapur, West Bengal, in September 2026. Management said the order demonstrates its capacity to undertake larger and more complex engineering projects.

The scale matters because management identified coal gasification as a potential source of demand for large oxygen capacity. Coal-gasification projects require substantial oxygen volumes, and management said customers for air separation plants of roughly 1,000 TPD or more seek evidence that suppliers can execute plants at that scale.

Management said the BHEL project could provide that execution credential for future opportunities, including potential owned-and-operated on-site contracts in coal gasification. It described the EPC order as a step toward joining the group of companies able to execute air separation units above 1,000 TPD, while maintaining that the core gases business remains the company’s primary strategic focus.

The project therefore differs commercially from the 325-TPD Durgapur facility. Durgapur operates under a 15-year take-or-pay gas-supply agreement and began commercial operations in September 2026, while the 1,200-TPD Odisha plant will be delivered to BHEL after commissioning.

How could the BHEL project affect Ellenbarrie’s revenue and margins?

Ellenbarrie said the BHEL EPC project will have a lower margin profile than its core gases operations, with management indicating that such contracts typically generate high-single-digit to low-double-digit margins. Management attributed the difference to the EPC model’s use of working capital rather than long-term capital investment in an owned plant.

The contrast was evident in Q2 FY27, when consolidated earnings before interest, tax, depreciation and amortisation, or EBITDA, margin was about 36%, down from about 39% in Q1 FY27. In the gases segment, however, margin increased to about 39% in Q2 FY27 from 38% in Q1 FY27.

Management said Q2’s consolidated margin movement reflected higher transportation costs following diesel-price increases and longer-distance deliveries, as well as higher employee expenses. Annual-increment arrears and the buildout of the project-engineering team added about Rs 1.1 crore of employee expense during the quarter.

Freight costs can be passed through to customers under many long-term contracts, according to management, but the pass-through generally has a two-to-three-month lag. Power represented about 22% of revenue from gas sales in both Q1 and Q2 FY27, management said, although the BHEL order’s engineering revenue will have a different cost structure from gas production.

Which operating assets support Ellenbarrie’s next growth phase?

Ellenbarrie’s 325-TPD Durgapur plant lifted total installed on-site capacity to more than 1,000 TPD when it commenced operations in September 2026. Because commercial production began near the end of Q2 FY27, management expects the first full-quarter revenue contribution from Durgapur in Q3 FY27.

The Durgapur facility’s 15-year take-or-pay structure provides a recurring supply arrangement that contrasts with the finite eight-quarter BHEL EPC contract. Management expects near-term core-gases revenue growth to come from Durgapur and spare capacity at Uluberia 2, a merchant plant commissioned in Q4 FY26.

Ellenbarrie retained its planned capital expenditure of about Rs 450 crore across FY27 and FY28 for merchant capacity additions in north and central India. Management expects both new merchant plants to come online around the middle of the next financial year and start contributing revenue in its second half.

Management said a merchant plant generally takes six to eight quarters to ramp up. It also reiterated longer-term guidance of 20% annual growth in the core gases business, while declining to provide plant-level revenue detail for Uluberia 2 or Durgapur.

For H1 FY27, Ellenbarrie reported Rs 213 crore of revenue from operations, up 23% year on year. Revenue from gases-related products and services rose about 27% year on year in Q2 FY27, showing that the core gases segment expanded before any material project-engineering contribution from the newly awarded BHEL contract.

Conclusion

The Rs 480 crore BHEL order gives Ellenbarrie its largest air separation EPC assignment and establishes a 1,200-TPD execution reference in Odisha. The contract broadens its project-engineering capability, but it has a different economic model from the recurring gases business: it is handed over after commissioning and management expects lower margins than in core gases.

Investors can next watch initial engineering and procurement on the eight-quarter BHEL project, the full-quarter Q3 FY27 contribution from the 325-TPD Durgapur plant, and utilisation at Uluberia 2. Management also expects its north and central India merchant plants to come online around the middle of the next financial year and contribute revenue in its second half.