“T&D industry likely to see $75 bn investment in 5-7 years”
Sharan Bansal, Director, Skipper Ltd, also speaks about the scope for IoT in making smart grids a reality, in an interview with Monica Chaturvedi Charna...
India is set to extensively boost transmission line infrastructure and to accommodate enhanced solar capacity. How is Skipper gearing to leverage this opportunity?
India’s T&D industry is estimated to see a planned investment of $75 billion in the next 5-7 years and Rs 1 trillion worth of transmission projects to come up for bidding in the next 12-18 months. In addition, the green energy corridor, feeder separation and smart cities will be strong demand drivers.
The MNRE has taken several steps to fructify the PM’s dream of clean energy. The largest renewable capacity expansion programme in the world is being taken up by India. The government is aiming to increase the share of clean energy through a massive thrust on renewables.
The target of 175 GW by 2022 including 100 GW of solar is visionary, and we consider this a good opportunity as it will require efficient evacuation infrastructure. With solar tariffs plunging to historic lows as much as Rs 3.0 kwh, India has become a hotbed of the next solar revolution. Development of an efficient power transmission network through Green Energy Corridor project is a must to attain these goals.
Your comments on UDAY and its outcome?
The power distribution segment has been the Achilles heel on account of the inability of power discoms to purchase power due to their weak financial position. This aspect is being addressed with the Ujwal Discom Assurance Yojana (UDAY) scheme and the financial health of discoms is expected to improve.
The government had launched the UDAY scheme to provide a permanent solution for a financial turnaround and revival of distribution companies (discoms). The scheme is expected to help discoms save around Rs 1.8 lakh crore in the next three years. The UDAY scheme will bring relief through savings in interest costs, reduction in technical and commercial loss, and lower cost of power purchase. Power generators would also benefit as they were under stress because of the weak power demand from discoms. The scheme improves the utilities’ ability to purchase power and enable them to sign long-term purchase agreements. Plant load factor of coal-based plants is expected to improve because of all this.
The success of UDAY is critical for India’s ambitious clean energy programme to combat climate change, revival of stranded thermal projects, the health of banks that have lent Rs 4.3 lakh crore to discoms and the government’s vision of supplying affordable and accessible ‘24×7 power to all’. In a year’s time, the scheme has received overwhelming participation of 27 states. The scheme has played a significant role in the revival of the discoms in the chronically inefficient states. Many states have reduced the gap between the average cost and revenue.
Is there any dumping happening from China in the transmission towers segment? If yes, how is the domestic market dealing with it?
With the domestic market providing reasonable growth opportunities, Chinese manufacturers are
unlikely to hamper the Indian market. In such a scenario, companies with a sustainable competitive advantage like diversified product profile and geographical reach are better placed to manage growth and maintain margins. However, several industry stalwarts and independent organisations have expressed concern time and again over the presence of Chinese firms in view of sensitivity in the power sector.
Which segment is highest revenue churner for Skipper – towers and poles, tower accessories, solar structures or tower EPC and why?
The engineering product segment – manufacturing of T&D structures and poles makes about 88 per cent of the total revenue of our business. This is because Skipper is predominantly into the manufacturing of towers with a business experience of more than 3 decades. Skipper is not only amongst the largest players in the country but also a renowned global player exporting to 20+ countries. We have the unique advantage of producing 100 per cent of our prime raw material - mild steel and high tensile angles, in-house. Skipper’s inherent advantage due to its logistics also gives it the opportunity to manufacture towers at the lowest possible cost and to participate and win export orders across the world. The tower EPC is relatively a new business, where we have already executed a couple of major projects from PGCIL, UPPTCL and RRVPNL.
What are the opportunities and challenges in the tower EPC business? What is Skipper’s core strategy to overcome competitors?
India’s GDP is rising at a better pace and also expected to do so for a much longer period. EPC power projects are undoubtedly an essential driving force for such massive developments, and India is on the path of reducing the gap between urban and nonurban areas by equally distributing infrastructure expansions. Just as any business has its own set of challenges, so does the EPC vertical. A couple of challenges that we face on a regular basis are:
The availability of land route corridor for installation of large towers for carrying EHV and UHV power lines are getting reduced every single day due to expansion.
The size of land availability with owners itself getting reduced due to multiple partitions in family. This causes hardships to land owners for permitting to install heavy towers on their land.
The increasing level of awareness of landowners as they agitate to allow installation of EPC towers and demand very high compensations (for crops as well as land).
Significant increase in the cost of manpower and non-availability of bottom line experienced physical workforce on account of increasing literacy levels in India.
The younger generation in India, which constitutes more than 35 per cent are looking for soft, closed areas and environment friendly jobs.
Total quality management is the key piece of the puzzle that the company strives to master so that it may be used as a strategic arsenal to move forward. By doing so, we stand to have an even better shot to position ourselves as a winner in our industry. In spite of being a fresh entrant in the EPC business, our aim is deliver our best in whatever selected projects we undertake. A few points which keeps us ahead from our industry peers would be: Being amongst the largest EPC tower manufacturers and our cost effectiveness gives us the required edge to be competitive among the top EPC tower business contractors. Being a backward integrated company, the company has the capacity to deliver projects in the shortest possible time period in case of design changes, proto testing, etc. We feel this is a severe challenge to many participants in the EPC sector.
Quality manpower for both designing and delivering the projects on time. Availability of all required tools and regular addition to it as a strategy gives a perfect edge to the company to be a notable player in the EPC tower business. The company has a reputation for making timely payments to all its stake holders. Quality and safety of working personnel are 2 most crucial factors that distinguish our company from the rest.
How do you intend to optimise on programmes such as Smart Cities and Smart Grids?
Grid management through smart grids, grid stability, connected devices and Internet of Things (IoT) will be important to reduce the high incidence of T&D losses. Similarly, smart cities will involve use of clean energy, quality and reliable power, advanced water metering and management methods, green buildings and smart homes, which are energy efficient and safe.
Our design team creates customised towers as per requirements of the client to fit in the smart mode. Monopoles, which is our speciality are fast becoming one of the most popular structures in the wireless communication and transmission industries. Adding towers in urban areas has become difficult in recent years due to more stringent zoning laws and lack of available land. It make the process longer and more expensive. Since monopoles require smaller footprints and are aesthetically more pleasing, wireless carriers and power T&D companies in India are expected to increasingly turn to these structures to be deployed in densely populated areas.