Skipper Ltd expects its power T&D business to grow to about Rs 2,400 crore from Rs 1,200 crore over the next three years, Sharan Bansal, Director at Skipper Ltd told CNBC-TV18.
Skipper’s orderbook is worth 2400 crore for T&D business, 45 percent of which comes from export to ‘lucrative and unpenetrated Latin American market’, he said.
The company margins will improve with internal restructuring, expansion in PVC pipes business and increase in export volumes, he said.
Bansal said engineering, procurement and construction (EPC) is a new division which the company has entered into, adding “We take EPC projects on selective basis; only when we get significant margin projects.”
Skipper has reported a standalone total income from operations of Rs 499.94 crore and a net profit of Rs 30.26 crore for the quarter ended Mar '15.
Below is the edited ranscript of Sharan Bansal’s interview with Mangalam Maloo & Reema Tendulkar on CNBC-TV18.
Mangalam: Can you give us a sense of what you expect the revenues to be in FY16 because I believe that your 2019 target is about Rs 3,700 crore on the top line. Would you break it down in terms of revenue growth in FY16 and FY17?
A: In terms of top line our company is into manufacturing of power transmission and distribution (T&D) products where we are one of the largest manufacturers of transmission towers and distribution poles.
This forms about 85 percent of our company’s topline and then of course is our water, PVC pipes business.
In both these sectors we see very healthy growth going forward. In our T&D business we have got an order book currently as on March 2015 of about Rs 2,400 crore. Now that gives revenue visibility of about next 2-2.5 years.
In our PVC pipes, business we are again looking at quite aggressive expansion.
Reema: You do have Rs 3,700 turnover target by FY19, right?
A: That is right.
Reema: Can you walk us through what the outlook will look like in FY16-19 and is there an assumption of an acquisition perhaps which will be contributing to this four year revenue target?
A: Broadly what we are looking at is that our power T&D business which is currently at about roughly Rs 1,200 crore this should grow to about Rs 2,400 crore over the next three years. We have already got a leadership position in this industry right now. The company has strong order book so we are fairly confident of achieving that.
The rest of the topline will come from PVC pipes expansion. Presently our topline is about Rs 100 crore and we are looking at a 10x capacity expansion there so that should take us to about Rs 1,000 crore. That is what the total topline would be made of.
Mangalam: A word on your margins, this year or rather this quarter itself, the last quarter – your margins expanded significantly. We understand that raw material prices were less because of the benign crude prices but what do you think the outlook for margins going forward will be? This expansion, do you expect it to be sustainable?
A: Yes of course. The margin expansion that the company has witnessed is for a number of factors. One is the company is now looking at more and more export markets. In fact out of our order book of Rs 2,400 crore almost 45 percent comes from exports and this is from the lucrative and unpenetrated Latin American market which the company has now entered into. So, that is helping the margins grow.
As well as what we have also done is that we have done some internal restructuring in the company wherein we have closed down certain non-profitable division namely our steel pipes division. So, that has also helped grow the margin significantly.
Reema: What was the contribution of the steel pipes division which you have closed down?
A: In FY14, the topline of steel pipes was about Rs 300 crore. In FY15, it shrunk to about Rs 100 crore and now it will be completely closed in FY16.
Mangalam: A word on EPC business, do you think that will close well because that has been a bit muted as well?
A: EPC is one of our newer divisions. The company is a focused manufacturer for the T&D sector. We take EPC projects on selective basis; only when we get significant margin projects. So, we are not looking to close it down, rather we are looking to increase it but cautiously with the right projects.
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