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Interaction | May 2015

Our current order book position is Rs.2,400 crore

Sharan Bansal, Director, Skipper Limited, talks about their recently bagged order and the company´s viewpoint on the Transmission and Distribution (T&D) sector with POWER TODAY.

First let me congratulate you on securing orders worth Rs 400 crore in T&D segment. Can you tell us more about this latest order that you have bagged and the company´s scope of work?
Skipper Limited is amongst the world´s top 10 largest manufacturers of T&D products. Our products include transmission towers up to 1,200 KV including fasteners and accessories, distribution line poles and monopoles. We´re also one of the only companies in India to be backward integrated for most products that we manufacture. These latest orders are from the Latin American market and are a result of Skipper´s long term alliance agreements with South American TSO. The scope of our work includes design, engineering and supply of towers to key transmission projects in various geographies across Latin America.

Tell us about your current order book position? What could be the share of international orders vis-a-vis domestic in your order book? What is your order backlog?
Our current order book position as on March 2015 is approx. Rs 2,400 crore and has more than doubled from previous year. International orders make up about 45 per cent out of this and the rest are domestic. We expect at least 40 per cent of this order book to be executed in the current fiscal FY16.

T&D is an integral component of an electrical system. How is the market shaping up?
T&D investment in India has been lagging generation investment for the past several years. Without a robust national grid, effective and smooth power evacuation cannot take place. Recently we have seen quite a few new transmission system projects being announced for e.g. Rs 10,000 crore North Eastern Region Power System Improvement Project (NERPSIP) as well as the 800 KV-6,000 MW HVDC Raigarh-Pugalur Transmission project. The tri-furcation of the State Electricity Boards into Gencos, Transcos and Discoms has also been good for the sector and we see transmission activity picking up substantially from the states as well.

What is the manufacturing capacity and what are your investment plans for expansion purpose?
We have already made significant investments over the years to build up our current manufacturing capacity of 175,000 MT per annum. Going forward, we are further growing our capacity by 15-20 per cent every year and this doesn´t require large investments.

How has the industry grown in the last couple of years, and what will be the growth in the next two years? How will this have an effect on the overall growth of your company?
Although T&D sector growth in India in the past few years has been subdued, our T&D division has seen continuous 50 per cent growth for the past three years and now forms almost 85 per cent of our company´s revenues. This has been possible due to increased stress on exports as well as garnering market share from existing players domestically. Going forward, we see this sector growing at least 10-12 per cent annually in India, while Skipper will grow at least 20-25 per cent.

What do you think would constitute the share of the T&D sector within the entire power equipment market share in India?
Ideally T&D investment constitute about 50 per cent of the investment made in the generation sector. However, this has been at a maxi¡mum of 30 per cent till date in India. Hence, there is a need to significantly ramp up investments in T&D to the tune of 1.3 to 1.4 times the generation investment to really catch up. Our company´s market share is approx. 10-11 per cent of the T&D products market.

What is the current capacity utilization of the company´s manufacturing base and going forward, with sector growing, should we expect expansion plans?
There has been an increased stress of 765 KV and 800 KV voltage level lines over the past few years and the national transmission backbone can now safely be said to be the 765 KV lines from the earlier 400 KV lines. This has meant increased stress on engineering and more critical manufacturing. Skipper is amongst few manufacturers in the country with capability to manufacture 1,200 KV towers which are going to be deployed for the first time in India. The offering of transmission monopoles which require significantly less ground coverage compared to lattice towers is also an area where Skipper has a head start over most of its competitors. We are currently operating at about 90 per cent capacity utilization which is one of the highest in the industry. The company has a current gross block of approx. Rs 400 crore out of which over 60 per cent can be attributed towards T&D business.

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