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| Grid week @Washington DC - 2011 |
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| Participated in ELECRAMA 2010 |
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| Mr. Ajay Dhoot (MD. IMP Powers Ltd.) On CNBC Interview - 17 Sept 2009 |
EQUATIONS OF POWER
IMP was established in 1961 and has two very well established facilities at Mumbai and Silvassa to manufacture the entire range of power and distribution transformers, electrical and digital measuring instruments, testing equipments and test benches. The Company manufactures EHV power distribution equipment, special purpose furnaces, thyristor duty transformers and reactor up to 200 MVA in the 330 KV class. Excerpts from the interview: |
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| Q. |
What have been the thrust areas of the company in recent times? |
| A. |
The company’s thrust areas include manufacturing power transformers of higher rating and KV class, which constitute over 75 per cent of the entire transformers industry. |
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| Q. |
At what rate is the transformer industry expected to grow in India & how will IMP stand to benefit ? |
| A. |
According to a detailed research, the transformers industry has grown at a pace of a CAGR of 25 per cent in the last two years and is likely to grow at a CAGR of 15-20 per cent in the next three years. With the tripling of our installed capacity and state-of-the-art Impulse Testing Equipment & Vapour Phase Drying Equipment, IMP is well poised to take far greater strides on its trajectory of solid & quicker growth. Thus, IMP will reap huge benefits for a long period, while supporting India’s drive to meet the ever-growing need for power. |
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| Q. |
What is the demand and supply situation in the transformer space in India? |
| A. |
As against the estimated annual demand for transformers of around 2,00,000 MVA, the total production available for supply is estimated to be around 1,80,000 MVA. This is as per the Eleventh Plan (2007-12). According to the government’s Power Policy, unveiled in December 2007, around 6,00,000 MW of power would be required by 2032. Even with this addition, the per capita power consumption would be around 1,326 KWH in 2032, which is presently the per capita consumption in China. Considering a thumb rule of 12 MVA per MW of electricity generated, this means additional requirement of transformers to the tune of 72,00,000 MVA in the next 24 years, implying an average yearly need of around 3,00,000 MVA. |
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| Q. |
To which countries/regions do you export your transformers? |
| A. |
IMP exports transformers to many countries including the UK, Australia, New Zealand, Zambia, Kenya, Oman, Qatar, Bangladesh, Sri Lanka, Nepal, Nigeria, etc. |
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| Q. |
What kind of margins does the company report on transformers? |
| A. |
We post an EBIDTA margin of around 18 per cent. |
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| Q. |
At what rate does the company import cold rolled grain oriented (CRGO) silicon steel and how does the company hedge against the currency change? |
| A. |
The prices of CRGO vary between USD 3,200 to 5,000 depending upon its grade. IMP enjoys a natural hedge in terms of its exports. |
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| Q. |
Do you expect the prices of CRGO and other raw materials to go up? |
| A. |
It depends upon the global and Indian market scenario but yes, prices may go up in the future. |
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| Q. |
Is the company planning to get into the manufacturing of transformers of above 220 KV so as to comply with CERC norms of focusing on super critical technology? |
| A. |
We have already manufactured 330 KV rating class transformers for export. For the past many years, IMP has been manufacturing 132 KV and 220 KV rating class transformers. |
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| Q. |
What will be the total investment on expanding from 3,600 MVA to 10,000 MVA and how have these funds been raised? |
| A. |
The total cost is estimated at around Rs. 52 Crore, funded with a mix of investment from private equity funds, promoter’s equity infusion, internal accruals and debts from banks. |
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| Q. |
What would be the value of the contracts after the company upgrades its transformer manufacturing? |
| A. |
IMP Powers is looking forward to achieving a target of above Rs. 300 to Rs. 350 Crore. |
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| Q. |
What are the future plans of the company? |
| A. |
IMP Powers may consider quite a few opportunities at an appropriate time. |
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| Q. |
What about your design capability that is considered critical for manufacturing transformers? |
| A. |
IMP has a very large repertoire of over 5,000 designs data on CAD / CAM facility and a competent in-house design team. This helps in delivering quick design solutions to satisfy the complex requirements of customers. |
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| Q. |
Does the company manufacture its own tanks and do you have an oven for keeping the moisture off the transformers? |
| A. |
Yes, IMP has its own fabrication facility for manufacturing tanks and other parts. The company also has the latest VPD (vapour phase drying) equipment for keeping the moisture off the transformers. |
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| Q. |
Do you manufacture OLTC and RTCC panels yourself? |
| A. |
Yes, and this helps in making our price and delivery time more competitive as compared to others. |
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| Q. |
What about the company’s other valuable assets? |
| A. |
IMP has been our renowned brand for over four decades, highly trusted for its super quality of products by our customers. |
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| Q. |
What is the order book of the company and what are the expectations? |
| A. |
IMP has orders of around Rs. 125 crore and expects to have orders above Rs. 250 crores by September 2009. |
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| Q. |
Do you have approval from a majority of the state electricity boards and leading turnkey EPC contractors? |
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Yes, we have approvals from a majority of the state electricity boards, NTPC, SAIL, NHPCL, PGCIL, BEST, Indian Railways, various business houses and leading turnkey EPC contractors, various renowned consultants as well as many overseas’ customers. |
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| Q. |
What are the company’s debtor days? |
| A. |
You will be glad to know that in spite of registering growth in volume and sales, the debtor days have been reduced from 178 days to around 100 days, indicating good debtor management. |
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| Q. |
What are the other key benefits you enjoy vis-à-vis your peers? |
| A. |
Since there is no sales tax applicable to our unit in Silvassa till 2012, our prices are more competitive. |
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‘IMP will reap huge benefits for a long period,
while supporting India’s drive to meet the
ever-growing need for power.’ |
Ajay R. Dhoot
Managing Director
IMP Powers |
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| Tested 71MVA 330KV Transformer For ZESCO ZAMBIA Successfully ! |
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On 2nd June 2009, the Chairman of the company Mr. R. R. Dhoot dedicated the
state of Art High Voltage, German make Impulse Generator having capacity of
1200 KVJ to the company and thus IMP has added one more feather in it's cap. With the addition of this testing facility IMP has brought itself in
the line of multinational companies.
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With this commissioned the company later tested 71mva 330kv Transformer for Zesco Zambia in front of the Zesco officials successfully! |
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| IMP Power may look at Power Plant Foray |
| Speaking to CNBC-TV18, Ajay Dhoot, MD at IMP Powers said they can look for fund raising in a couple of years. "In a couple of years, we may look at further expanding or diversifying into power plants." He added that they have 20,000 sq ft of land in Kandivali and options are open for looking into it. |
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Excerpts from CNBC-TV18’s exclusive interview with Ajay Dhoot: |
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| Q. |
Take us through you expansion plans. What exactly is your transformer business capacity now and where do you see it 12 months from now? |
| A. |
We have installed a capacity of about 3,600 MVA per annum, which we are expanding to 6,000 MVA. We had done Rs 30 crore expansion and it should be completed by June ’08. |
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| Q. |
Motilal Oswal Venture holds about 14% and Brescon Corporate and Promoters had subscribed to warrants at about Rs 164. Are you looking at further fund raising via this option of giving of stake to venture capitalists? |
| A. |
We are sufficiently funded at present in our expansion programme by Motilal Oswal and Brescon. At present, we do not have any expansion of giving further equity. But if the time demands, maybe in the future, we will look at it.
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| Q. |
What is the promoter holding currently? |
| A. |
Today, we are at 45% and post-equity dilution, after the CCPS is converted into shares, we would still be around 41%.
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| Q. |
You have some land at Kandivali. Do you have any specific plans for that? |
| A. |
We are manufacturing meters in that area. We have about more than 20,000 sq ft in Kandivali, where we are manufacturing meters and going into transducers and electronic meters. Presently, we do not have any plans. But in the future, the options are open and rates are shooting up in real-estate. So, if any good proposal is there, we may look into it. But currently, we are not looking into that.
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| Q. |
Would you be looking at either developing it yourself or divesting it entirely? |
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If any good proposal comes in, we may look into it. But currently, we are continuing manufacturing and production of meters. |
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| Q. |
Are there any fund raising plans?
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| A. |
Fund-raising has just been completed by Motilal Oswal and we are not looking at in the near future. But in a couple of years, we may look into further expanding or diversifying into power plants. We will definitely look into it.
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| Q. |
You have a CAGR of about 55% in your sales. Will you be able to maintain the run rate or better it? |
| A. |
In the last two years, we have maintained a CAGR growth of 45-50%. Definitely, in the next two years also, we are thinking of going at the same levels or maybe even exceeding that, once our expansion plans are over. |
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| Q. |
What is the order book t hat you have at hand currently, in value terms? How much of it is domestic and how much of it is export?
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| A. |
Today, our order position is at about Rs 145 crore of net sales. About 60- 65% is into going private, wherever the EPC (Engineering, Procurement and Construction) contractors are going and about 25% is going into electricity boards, utility boards, government and balance is export. I do believe that our order book will remain at these levels only, because our realization from local is slightly better than export today.
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India Business Excellence Fund invests Rs. 190 million in IMP Powers Limited |
Funds managed and advised by Motilal Oswal Venture Capital Advisors Private Limited (MOVCAPL), have invested Rs. 190 million in IMP Powers Limited.
IMP Powers Limited (IMP) offers an opportunity to invest in the high growth transformer sector. IMP is one of the oldest player in the power equipments segment with a product portfolio of various types of transformers, industrial meters and testing equipments. Transformers constitute about 95% of its FY2007 sales. The Company has successfully turned around after a bad phase in 2000-2005. Subsequent to the turnaround, it has achieved a CAGR of about 55% in sales over last 2 years. The EBIDTA margins have improved to a current level of 16.6% for FY 07 as against a low of 4.2% in FY 05 because of growth in sales and operational efficiency. Further the company has a very healthy order book position. The Company is undertaking an expansion project with a capital outlay of Rs 280 mn including working capital. The project includes expansion of its manufacturing facilities situated at Silvassa (U.T) from existing 3,600 MVA to 6,000 MVA. The Funds managed & advised by MOVCAPL have invested Rs 190 mn to part finance the expansion project. Brescon Corporate Advisors Ltd., were the financial advisors to the company on this deal. Further, promoters of the company & Brescon Corporate Advisors Ltd have subscribed to warrants to finance the balance of the capex program.
According to industry estimates, the transformer industry has been growing at approximately 25% CAGR for last two years and is expected to maintain this momentum for next 2-3 years. This growth will be driven predominantly by domestic market requirements and partly by exports to the Middle East, Africa, Europe and the United States.
As per the Government of India’s plan, 78,000 MW of power generation capacity will be added in 11th Five-year plan. In addition, improvements in transmission and distribution sector coupled with the replacement demand will also add to the urgent need for transformers. MOVCAPL believes that the IMP’s management has the requisite experience and capability to capitalize on the current growth opportunity in the sector.
As per Raamdeo Agrawal, Chairman of MOVCAPL, ``India is rapidly moving from a USD 1 trillion economy to a USD 2 trillion economy, and the power sector will play a pivotal role in this movement. Companies like IMP which have established a strong brand and goodwill over the last 4 decades, will hugely benefit from this growth in the power sector. The company had been through a difficult phase in the past and it is this experience that will put the company in good stead to capitalize on the current growth momentum.’’
According to Ajay Dhoot, Managing Director of IMP, “We are very excited about the growth prospects of the company, on the back of the growth in the power sector. We have a strong order pipeline and going forward we see it building up faster than ever before. ‘’
Aaditya Dhoot, Joint Managing Director, further adds “The investment from Motilal Oswal will help us in ramping up our capacities to service the bulging order book particularly in the 132 to 220 KV transformers. We believe Motilal Oswal is a partner in the long run and would assist us with their strategic inputs.
About Motilal Oswal Venture Capital Advisors Pvt. Ltd.
Motilal Oswal Venture Capital Advisors Pvt. Ltd. (MOVCAPL) is a wholly owned subsidiary of Motilal Oswal Financial Services Ltd. (MOFSL), a global, diversified financial services group with businesses in securities, commodities, investment banking and venture capital.
MOFSL has launched the India Business Excellence Fund (IBEF), a US$ 100 mn India focused Private Equity Fund which will be managed by MOVCAPL. The latter believes that with the right strategy, management and operational assistance, IBEF's portfolio companies will be able to leverage their existing market position and create significant value over a period of 3-5 years.
Over the last 20 years, MOFSL has been successful in building a comprehensive equity research team, vast distribution network and deep corporate and institutional relationships. These coupled with the experience of successfully managing a business will be leveraged by IBEF to become a financial investor of choice for companies looking for private equity investments. |
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| CNBC-TV18's exclusive interview with Ajay Dhoot (MD – IMP Powers Ltd.) |
| Q. |
What is the current order book situation and the total value of recent orders that you got – USD 1 million from Zambia, Rs 25 crore from Sunil Hitech, Rs 20 crore from GETCO? When do these accrue to your company? |
| A. |
The order book position is placed at a healthy Rs 130 crore. We have received orders from Sunil Hitech, Zambia and from various other state electricity boards. We have also bagged an order from state-owned Power Grid Corporation of India, or PGCIL. We expect another Rs 80-100 crore in orders from various state electricity boards in the next quarter. We should have an order book bank of Rs 200 crore in the coming quarter. |
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| Q. |
Over how long is this entire order book of Rs 130 crore executable and what sort of average margins would you enjoy across the board? |
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We should be in a position to deliver the Rs 130 crores in the next six-nine months because we are looking at a next year turnover of about Rs 150-170 crore.
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| Q. |
Is it for FY08? |
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Yes, because we are a June year-end company and will be closing in June ’07. So, from July to June, we will be executing the entire order in about six-nine months.
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| Q. |
Regarding the tract of land that you have in Kandivali West, what is the area that you own, the plans that you have and will the development be undertaken under IMP Powers or under some subsidiary? |
| A. |
The developments will definitely take place under IMP Powers. At Kandivali, we have about 20,000 sq ft right now, where we are making meters but the transformers are made at Silvassa.
We have gone into digital meters in Kandivali, we are going into digital KWS meters and will shortly also be going into transducers.
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| Q. |
How soon will the 20,000 sq ft development at Kandivali take place and what kind of development could we be looking at? |
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We already have land there. We were basically in Kandivali and from there, we shifted to Silvassa. We have ongoing working unit there. Our workers and the entire team is there. |
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| Q. |
Are you saying that you are not going to be making that into a residential or a commercial space? You are not going to be either leasing or selling that land? Your own unit is going to be operating there?
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| A. |
Yes, presently because the demand is there and we will be definitely continuing with our products.
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| Q. |
What is Stressed Assets Stabilization Fund? Is that a promoter-driven company or a local investor? |
| A. |
That is a part of IDBI. Two years ago, we had taken the CDR route and that is why the IDBI loan converted into Stressed Asset Stabilization Fund. |
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The shares of transformer companies are in demand with most shares like Indo Tech Transformers, Bharat Bijlee and Voltamp Transformers touching 52-week highs. Within this segment, the share of IMP Powers Ltd. (IMPPL-Code:517571-Rs.121) is recommended for decent appreciation in the long-term. IMPPL is into the lucrative transformer manufacturing, the demand of which is constantly on the increase. The Government has set itself vision of “Power for all by 2012’, which will entail an investment of Rs. 11,50,000 cr. in power generation, transmission and distribution leading to a huge requirement for transformers. IMPPL was established in 1961 and has two well-established manufacturing units at Mumbai & Silvassa manufacturing entire range of electrical measuring instruments, testing equipments, distribution & power transformers.
Its satisfied clientele includes all the state electricity boards, railways, and public and private sector undertakings. IMPPL can manufacture HV & EHV power transformer up to 220kV Class to 150MVA. The total installed capacity is 3600 MVA. Backed by continuous in-house applied technical research and use of best quality raw materials have enabled it to comply with the latest exacting standards, both national and international. Its products are sold in Southeast and Middle East Asia, Africa, New Zealand and Australia. Exports during FY06 have pole vaulted three times to Rs. 20 cr. from Rs. 6.5 in the earlier year.
During the year ended 30 June 2006, its sales have advanced by 54% to Rs. 67 cr. Net profit was Rs. 3.7 cr. against net loss of Rs. 5.7 cr. in the 15 months ended 30 June 2005. During Q3FY07, while sales advanced by 50% to Rs. 27 cr.. Its net profit jumped by 99% to Rs. 2.4 cr. For the nine months ended 31 March 2007, although sales have surged by 55% to Rs. 72 cr., net profit moved up by 123% to Rs. 5.9 cr.Its equity capital is Rs. 5.9cr. and with reserves of Rs. 13.4 cr., the book value of the share works out to Rs. 33. The promoters hold 45% in the equity capital. Non –promoter corporate holding is 9.5%. Stressed Assets Stabilization Fund has acquired 12.6%. The domestic institutions hold 6% leaving 26.9% with the investing public. IMPPL continues to invest in expansion. During FY06, it invested Rs. 3 cr., taking gross block to Rs. 42 cr. IMPPL has been able to reduce its borrowings to Rs. 66 cr. from Rs. 72 cr. in FY05.
Sources close to the management say this is just the beginning of the road for IMPPL as it witnesses growing demand for its transformers and meters. With the bright prospects of the power industry, IMPPL is in the process of enhancing its production in coming years. Besides, IMPPL is sitting on huge land at Kandivli (W) in Mumbai. If it decides develop into residential/commercial complex, it will fetch crores of rupees. IMPPL expects to garner target sales of Rs. 110 cr. for the ensuing year ending 30 June 2007 with a bottom line of about Rs. 8.5 cr., which will give an EPS of Rs. 14.5. Riding on the boom analysts expects sales of Rs. 150 cr. in FY08 with a net profit increasing to Rs. 12 cr. (EPS Rs. 20). The shares of IMPPL are currently traded at just Rs. 106, discounting its FY07E only 7.3 times and FY08E of Rs. 20 by just 5.3 times. The industry average P/E of the electric equipment industry currently rules firm at over 30. The shares of the peers, IndoTech and Voltamp Transformers are quoted at a P/E of 14 and 18 on their earnings of Rs. 24 and Rs. 38 for FY07 respectively. Thus the shares of IMPPL are going cheap and with a reasonable P/E of 12. Investment in this shear is likely to fetch decent appreciation of about 65% (Target Price Rs. 174) in 6 – 9 months. The 52-week high/low of the share has been its 126/55. |
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IMP Powers Ltd – Success Story Continues…….. |
IMP POWERS LTD. leader in the manufacturing of Transformers and Meters has announced spectacular financial results for the quarter ended 31st March 2007 on 25th April 2007.
The Company has reported net turnover of Rs. 27.04 crores for the March quarter showing an impressive increase of 50% from the corresponding quarter of previous year . Exports of the Company has gone up by 46% to Rs. 6.17 crores as compared to corresponding quarter of previous year.
Net profit after tax for the quarter has shot up to Rs. 2.39 crores registering a substantial rise of 98% compared to corresponding quarter of preceding financially year.
Sales for 9 months ended 31st March 2007 has increase by 55% to 72.25 crores and the Net Profit after Tax has shot up to Rs. 5.90 crores registering substantial increase of 121 % as compared to corresponding 9 months of preceding financial year.
Recently, the Company has received a single order worth Rs. 20 crores from Gujarat Electricity Board and the Orders in hand of the Company stands at healthy Rs.100 crores. .
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IMP Powers Adds Another Feather In Its Cap |
IMP Powers Ltd. engaged in the manufacturing of Power and Distribution Transformers has added another feather in its Cap by manufacturing and dispatching the 100 MVA 230kv class Transformer for Rajasthan Rajya Vidyut Nigam. The Value of this one job is nearly 4 Crores.
IMP POWERS LTD. leader in the manufacturing of Transformers (Power & Distribution) and Electrical Measuring instruments and Testing Equipment) has announced spectacular financial results for the quarter & Half year ended 31st Dec. 2006 on 20th January 2007.
The Company has reported net turnover of Rs. 25.97 crores for the December quarter showing spectacular increase of 67% from the corresponding quarter of previous year . Exports of the Company has doubled to Rs. 9.51 crores as compared to corresponding quarter of previous year.
EBITDA for the quarter has increased to Rs. 4.43 crores(58% increase) as compared to corresponding quarter of preceding year .Net profit after tax for the quarter has shot up to Rs. 2.18 crores registering a magnificent rise of 137% compared to corresponding quarter of preceding financially year.
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IMP Powers Ltd. – Continue to March Ahead! |
IMP POWERS Ltd. a leader in the manufacturing of Transformers (Power & Distribution) and Electrical Measuring instruments and Testing Equipment) has announced on 16th October 2006 financial results for their first quarter ended 30th September 2006.
The Company has reported net turnover of Rs. 192.4 millions for the first quarter (out of which 27% is export turnover) registering a commendable 48% increase with respect to corresponding quarter ended 30th September 2005. The Company caters to Public Sector , Private Sector and also it has dominance in Exports.
Net profit after tax for the quarter is Rs. 13.2 millions and has zoomed up by 140% from the Net Profit of the corresponding quarter last year. The Orders in Hand is at a healthy Rs. 1120 millions.
The Company has also acquired additional land in Silvassa for proposed backward integration project of the Company in its Transformer Division.
The Company is also benefiting from projects under the Rajeev Gandhi Gramin Vidyut Yojana and APDRP schemes through various contractors like Areva,Reliance Energy,Siemens Kalptaru, IVRCL, SaPIC, NCC etc. The Company is also approved in PGCIL who is acting as a nodal agency under the various schemes launched for the above projects.
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