We are bullish on the Latin American market: Devesh Bansal, Skipper

In a chat with ET Now, Devesh Bansal, Director, Skipper, says the company will venture into the international space also and almost 50 per cent of revenues in the T&D space is expected to come from Latin America, parts of Europe as well as Africa. Edited excerpts


ET Now: We were looking at the transmission tower players. Your market share in the power T&D business is about 15 per cent and a lot of people are now starting to look at you as a major player. What is the outlook on how the business will shape up for you? Do you plan to increase your market share substantially in the year ahead? Will you go slow and how would the numbers look like for you as a company?

Devesh Bansal: The market in India for the T&D space is definitely expanding substantially. The government’s focus on the sector has really helped the sector look at very optimistic growth going forward and Skipper obviously is one of the leaders in the sector, especially in the transmission and distribution space. So our tower manufacturing capacity of close to about 2 lakh tonnes this year would make us one of the largest players in this industry and looking at the bullishness of the sector we are definitely very optimistic about seeing very high growth numbers going forward.



ET Now: Challenge for the transmission sector is that there is only one large customer and that happens to be Power Grid. Is that a challenge or is that an opportunity because when you are dealing with one large customer if you deal well with that customer that also is a gold mine?

Devesh Bansal: Definitely Power Grid is the owner of most of the transmission utilities in the country and with the introduction of private players like Sterlite and Adani into the bidding process, the market will see more and more large players coming in. But as a company, it might just sound a little risky to be focused on only one customer on the domestic front. So as a policy, the company will venture into the international space also and almost 50 per cent of our revenues this year in the T&D space is expected to come from international business in geographies as far apart as Latin America, parts of Europe as well as Africa.

ET Now: You have exposure in Africa, Asia as well as South America. Give us some more details. Which geography do you think is going to be contributing the maximum to your revenue size going forward?

Devesh Bansal: In the international space, one of our largest customer base is in Latin America and that is a market which much like India is seeing very high investments into the infrastructure space especially in the power infrastructure space. So we are very bullish about the Latin American market as well as markets like Africa. But then, Latin America would be less penetrated as compared to let us say an African market. So if we were to place our bets, we would definitely look at the Latin America market very bullishly, going forward but that is not to take away from the African or the European markets.
ET Now: The numbers for the first nine months are out. So we can look back and say how FY16 has moved for you. You have done a growth of about 20 per cent plus which is much better than what you have guided earlier. You had guided for a growth of about 15-20 per cent, you are growing at about 21-22 per cent. So can I safely assume that for FY16 you will comfortably surpass your guidance?

Devesh Bansal: The volume growth of the business has been over 20 per cent till now and we actually expect that to be more or less consistent going forward. However, because of the fall in commodity prices wherein the prices are passed on to the end customers because of the escalation, de-escalation clauses that we have in our contracts, the value growth has been slightly lower than 20 per cent. So the value growth might just depend on how the commodity prices play out in the future. But the good thing is that at least our margins are more or less protected irrespective of how the commodity prices move.

ET Now: So I have a couple of questions firstly on the plastic pipes business. If I am not wrong, while you have increased your capacity by 5x until FY15 from the current 12500 tonnes, you are planning to take it up to 41,000 tonnes by the first quarter of FY17. Give me a timeline by when this capacity will go on stream and does it mean a substantial increase for your top line?

Devesh Bansal: So the plastic pipe is specifically the PVC pipe. It is one of the areas where we are looking at very high growth in the future. We were at about 12,000 tonnes approximate capacity till last year. Already in this year, we have added three more plants in Ahmedabad, Secunderabad, near Delhi as well as in Guwahati and the fourth plant in Hyderabad is expected to be commissioned somewhere in April or May of the next financial year. That would take our capacity up to about 40,000 tonnes per annum and definitely we are looking at extremely robust growth in this business going forward.

ET Now: In T&D business, if your capacities go up from 12.5 to 40 by the first quarter of FY17, would your overall consolidated topline growth go northwards of 20 per cent or even 25 per cent because both the divisions are starting to kick in?

Devesh Bansal: The capacity utilisation in the first year of expansion may not be near 100 per cent. So while our capacities will be close to about 40,000 tonnes, we do not expect it to be fully utilised in the coming year but there will definitely be a growth. I would still expect about 15-20 per cent of growth to be on the safer side because PVC is still a smaller division of the company. About 85 per cent of our revenues currently come from T&D business so while we enjoy a very good low base effect in the PVC business, we do not expect it to contribute in a substantial manner to the overall corporate number at least in the coming year or so.

ET Now: You have sufficient cash on your books for all the new plants that you were talking about. Won't you have to raise any funds?

Devesh Bansal: Most of the expansion that we are doing is either from internal accruals or from debt. We do not have any plans of raising any fresh equity going forward.