Power T&DSector Thematic Report

Towers & transmission lines
Conductors/ Cables
Transformers
Power T&D
Sector
Switchgears
Meters
Substations
Akhand Pratap Singh

akhand.singh@axissecurities.in
26 August 2016
Contents
Sector Report
Power Industry
Sector: Power T & D
Page
Executive Summary
Power generation v/s transmission capacity
Bottlenecks in the power transmission
11
Transmission investment
14
Investment in Power Distribution
20
Power distribution reforms and its impact
22
Opportunity for T&D Players
29
KEC International Ltd
30
Kalpataru Power Transmission Ltd
34
Shilchar Technologies Ltd
38
Techno Electric & Engg Co Ltd
42
Voltamp Transformers Ltd
45
Genus Power Infrastructures Ltd
49
Annexure
54
26 August 2016
Executive Summary
Power generation
v/s transmission
capacity
Sector Report
Power Industry
Sector: Power T & D
In last ten years, growth in power generation and transmission capacities was 51.3% and
30.8% respectively. Underinvestment in power transmission infrastructure has resulted in
inadequate power transformation capacity, congestion in the transmission network and lower
inter-regional capacity.
At the end of FY16, Indias power generation capacity, peak demand and inter- regional
B
Bottlenecks in the
power
transmission
power transmission capacity stood at 298 GW, 153.4 GW and 58 GW respectively. Current
inter-regional transmission capacity is inadequate to supply power from power surplus state to
states having power deficit/increased demand. Government's focus is to increase grid
connectivity accompanying with various factors viz. spread of the grid geographically, wide
variation in generation as well as loads on daily/seasonal basis, multi direction flow of
power, open access, unscheduled interchange (UI) and the need for economic dispatch
In 12th Five Year Plan (FYP, 2012-2017) and 13th FYP (2017-2022), investment of Rs 1,800
C
Transmission
investment
bn and Rs 2,600 bn is planned for power transmission sector to improve transmission

infrastructure. In 13th FYP, more focus is likely to remain on intra state transmission
infrastructure which was lagged in last few FYPs. We expect inter-state and intra-state capex
break up of 1:1 for 13th FYP. Power Grid Corporation (PGCIL) would play a key role in
strengthening the existing infrastructure and setting up new lines and substations. PGCIL has
orders worth Rs 1,440 bn which would be executed over the next 4-5 years. As a thumb
rule, ~60-65% spending goes in transmission lines whereas 30-35% orders goes for
substations.
26 August 2016
Executive Summary
Sector Report
Power Industry
Sector: Power T & D
Power distribution is the final and most crucial link in the electricity supply chain and the
D
Investment in
Power Distribution
weakest one in country. The sector has been plagued by high distribution losses coupled with
theft of electricity, low metering levels and poor financial health of utilities due to under
recovery. Due to poor financial health, the distribution companies were not able to undertake
corresponding investments in infrastructure augmentation. The Aggregate Technical &
Commercial (AT&C) losses of the country are 22.7% which are one of the highest in the
world. To control AT&C losses, an investment of Rs 3,060 bn is planned in 12th FYP to
improve the distribution network.
Government has come out with several reforms in power distribution sector which include
E
Power distribution
reforms and its
impact
schemes like Ujwal Discom Assurance Yojana (UDAY), Deendayal Upadhyaya Gram Jyoti
Yojana (DDUGJY), Integrated Power Development System (IPDS) etc. UDAY scheme aims for
turning around of state electricity boards (SEBs) and paves the way for capex by SEBs
whereas focus of DDUGJY and IPDS is to improve urban distribution infrastructure and rural
electrification.
Huge planned investment in Indian power Transmission and Distribution (T&D) sector and
F
Opportunity for
T&D Players
other parts of the world including Africa, middle east etc would drive the order book position
of key T&D players. The major segments which are likely to be benefited are transmission and
distribution lines/towers, transformers, substations, switchgears, capacitors, conductors and
meters. The beneficiaries which we like are: KEC International, Kalpataru Power, Shilchar
Technologies, Techno Electric, Voltamp Transformers and Genus Power
26 August 2016
Power Transmission from power plant to end user
Sector Report
Power Industry
Sector: Power T & D
Transmission and distribution sytem
RTU: Remote terminal unit ( micro controller based)

LBS: Load break switch
Power generation v/s transmission capacity
26 August 2016
Transmission capacity growth lagged from generation capacity growth

Power generation capacity growth
In previous ten years, power generation capacity increased 2.3x
(In GW)
400
300
200
100
0
6th FYP 7th FYP 8th FYP 9th FYP 10th FYP11th FYP12th FYP
(till Apr
2016)
Source: CEA, Axis Securities
Power transmission capacity growth

Transmission capacity increased 1.7x
(In '000 ckm)
400
300
200
100
0
6th FYP
7th FYP
8th FYP
9th FYP 10th FYP 11th FYP 12th FYP

(till June
2016)
Sector Report
Power Industry
Sector: Power T & D
Power transmission constraints

In the last 10 years, power generation capacity
increased by 2.3x, whereas transmission capacity
increased by 1.7x which resulted in deficiency in
power
transmission
capacity
(inadequate
transmission capacity, not matching the generation
capacities and load requirements).
Grid infrastructure investments have lagged behind
investments made in the power generation
sector, due to which many thermal power projects
face constraints in evacuation. This limits the
possibility to transfer electricity from surplus states
to those with acute power shortages and
consequently limits growth in power generation
from existing capacities. There is insufficient interregional transmission capacity between west and
the north and between the west and the south.
New corridors are planned to increase interregional transmission capacity between these
regions by the end of 12th FYP.
26 August 2016
Power Industry
Power generation capacity
Sector: Power T & D
Indias power generation capacity doubled in last ten years
Coal resources and power demand needs T&D network

augmentation
Indias power sector has progressed immensely since 2003, with major
achievements in all segments
Installed Power generation capacity
In MW
6th FYP
7th FYP
8th FYP
9th FYP
10th FYP
11th FYP
12th FYP (till Apr 2016)
42584
63636
85795
105045
132329
199877
302833
250,000
200,000
150,000
100,000
50,000
Gas
Diesel
Nuclear
Hydro
FY16
FY15
FY14
FY13
FY12
FY11
FY10
FY09
FY08
FY07
FY06
0
FY05
% of thermal
% of
capacity
generation
(thermal)
(thermal)
% of power
demand
North
14%
24%
24%
31%
West
18%
40%
38%
30%
South
9%
19%
19%
27%
59%
15%
15%
12%
East &North East
300,000
FY04
% of coal
production
Fuel wise capacity break up
Coal
Sector Report
There is huge disparity in location of coal

resources, installed capacities and power demand.
The major capacities are set up in regions where coal
production is low while demand is from other region.
The western region has highest installed power
generation capacities while southern region has been
the largest driver of peak demand growth in the last
10 years. There is a need to increase the inter regional
power transmission capacity in order to transmit power
from power surplus region to deficit regions.
Others
26 August 2016
Power Industry
Concerns with Power Distribution Sector
Sector: Power T & D
Weak Financial Performance of SEBs:
Under recoveries resulted in Huge losses for discoms
DISCOMs have remained the weakest link in the Power

sector value chain due toHigh Aggregate Technical Commercial (AT&C) losses
(national average of ~22-23% in FY14)
2)
Lack of tariff hikes to pass on incremental cost
resulting in low cost recovery, low metering levels

3)
90000
769
75000
Losses (Rs bn)
1)
Sector Report
60000
45000
717
641
520
416
30000
15000
Lack of support by the state governments.
Due to the above, the distribution companies have not

been able to undertake corresponding investments in
distribution infrastructure augmentation.
FY11
FY12
FY13
FY14
FY15
Source: PFC, Axis Securities
AT&C losses
In %
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
T&D losses
31.3
30.4
28.7
27.2
25.5
25.4
23.97
23.65
23.04
AT&C losses
34.3
33
30.6
29.5
27.4
26.6
26.35
26.63
25.38
Bottlenecks in the power transmission
Sector Report
26 August 2016
Power Industry
Indian T&D capacity lagged from generation capacity due to under investment
7 MVA/MW
Transformation capacity MVA/MW
Deficit
MVA/MW
2.5
2.0
1.5
1.1
1.2
1.5
1.7
1.9
2.0
2.2
Sector: Power T & D
Lower transmission capacity addition resulted in deficiency in

transmission capacity
Power generation of the country has more than doubled in

last ten years but countrys T&D infrastructure has not
1.0
increased to that pace due to underinvestment in power
0.5
0.0
6th Plan
7th Plan
8th Plan
9th Plan
T&D sector. As a thumb rule, investment in power T&D and
10th Plan 11th Plan 12th Plan

(till)June
2016
generation should be in same proportion (1:1). But Indian

investment
Indian Power transmission capacity has deficiency of 4.8 MVA/MW
stood
at
1:0.45
resulting
in
scheduled
dependency on transmission lines.
Due to inadequate power transmission and distribution
In an ideal situation, power evacuation transformation

capacity should be 7MVA/MW for seamless power
transfer, while in India, it stand at 2.2 MVA/MW
showing huge deficiency of power transmission
infrastructure.
(T&D) infrastructure, power evacuation and Aggregate
At present, the installed power generation capacity of

the country is around 3lakh MW while inter-regional
power transmission capacity is 59,550 MW and is
likely to increase to 68,050 MW by end of FY17.
than the 9-11% losses at global level.
technical and commercial (AT&C) losses are turning out to be

a bigger problem for the system. (AT&C) losses are of the
country are 22.7% of gross electricity generation is much higher
Transmission networks within several States (intra state

power transmission) also have constraints due to which
they are unable to meet the distribution loads in different
areas.
11
Sector Report
26 August 2016
Indian T&D capacity lagged from generation due to underinvestment
Inter regional power transmission capacity stands at 59,550 MW vs

generation capacity of ~3lakh MW
Inter Regional Power Transmission Capacity (MW)
50,000
will need addition of 90,000 ckm of 765-220 kV
14,050
59,550
68,050
12th Plan
Expected
100,000
2.16 Bn units of electricity was wasted in FY16

because of congestion on transmission highways. In
FY15 and FY14, loss due to transmission congestion
was 3 bn Units and 5.3 bn Units respectively.
To transmit power from XIIth FYP additional capacity
126,650
150,000
YTD 12th
plan*
27,750
10th Plan
13th Plan
Expected
The present transmission capacity (inter state) in the

country does not adequately match the generation
capacity. This impacts the market transactions and
creates bottlenecks in the flow of power from power
surplus regions to power deficit regions and between
states.
Sector: Power T & D
11th Plan
Bottlenecks in the present transmission system
In MW
Power Industry
Region wise inter-state transmission capacity

10th Plan
11th
Plan
Addition
in
12th Plan
YTD
12th plan*
12th Plan
Expected
13th Plan
Expected
East- North
3,430
12,130
5800
17,930
17,930
26,730
East West
1,790
4,390
8400
12,790
12,790
21,190
East South
3,130
3,630
3,630
3,630
12,030
billion is planned in the power transmission sector. Of
East- North East
1,260
1,260
1600
2,860
2,860
2,860
this, about USD 19 billion is planned to come from Power
West North
2,120
4,220
8700
12,920
16,920
32,520
West South
1,720
1,520
6400
7,920
7,920
22,320
1500
1,500
6,000
9,000
59,550
68,050
126,650
lines, 154,000 MVA of substation capacity and
End plan
27,350 MW of national grid capacity.

For above mentioned purpose, an investment of ~USD 35
Grid Corporation of India Limited . The remaining USD 16

billion,~46% of the total investments, needs to be secured
from private players.
North-North east
132 kV intger regional
Total capacity (MW)
600
600
14,050
27,750
Source: Planning Commission, CEA, Axis Securities
12
Transmission investment
Sector Report
26 August 2016
Investment of USD 75 Bn in Power T&D over next 5 years

13th FYP investment in power transmission pegged at Rs 2.6 trillion
Over next 5-6 years, an addition of 1,83,252 circuit

kilometers (CKM) of 765-220 kV lines coupled with HVDC
lines, 3,76,117 Megavolt Ampere (MVA) of substation
capacity and 67,100 MW of national grid capacity is
required in order to meet the 13th Five Year Plan targets
Planned investment in power transmission sector over next six

years is around Rs 2900 - 3000 bn, out of that Rs 2600 bn is
planned capex for 13th FYP. In 13th FYP, capex break up
between interstate transmission system (ISTS) and state
transmission systems is likely to be at 50:50.
Rs 1000 bn would be needed for 220 kV and below systems

most of which would be part of state transmission systems.
Power Industry
Sector: Power T & D
In 12th FYP, 60%T&D capex to be spent on distribution infra
In12th FYP, an investment of about Rs 1,120 bn is envisaged by

PGCIL
for the development of inter-state transmission
systems, including development of High Capacity Power
Transmission Corridors (HCPTCs) apart from inter-regional links.
Total T&D investment planned in the 12th Five-Year Plan

is Rs.4,860 billion, of which around 60% is likely to be invested
in power distribution to improve power distribution infrastructure
in order to reduce AT&C losses.
Intra and inter state Transmission capex break up (Rs bn)

Transmission Capex (In Rs Bn)
Power Transmission capex (Rs Bn)

3000
2600
12th Plan
13th Plan
Inter state
1000
1300
Intra state
800
1300
1800
2600
2500
1800
2000
1230
1500
1000
500
Total Transmission capex
457
Investment in transmission lines
0
10th Plan
11th Plan
12th Plan
13th Plan
Investment in sub station

1690
910
14
26 August 2016
Power Industry
Investment in Transmission sector
Sector: Power T & D
Strengthening of transmission network low to high voltage

upgradation
Sector Report
Indian power transmission grid moved over higher voltage
Given the augmentation of higher-capacity units in
Year
Voltage
generation and the need for large scale power
1950
220
1960
220
1970
220
1980
220
1990
400
incrementally moving towards 765kV network.
2000
500kv DC
The 11th Five Year Plan (2007-12) had the target of
2007
765kv Ac
2010
800kv Dc
evacuation, the move has been towards setting up

higher-capacity networks (from 220-400kV to 765 and
possibly to 1,200kv in the future).
The
need
for
network
strengthening
is
imminent, particularly in the distribution segment wherein

the need would be more severe as the national grid is
increasing inter-regional transmission capacity of 32.6

GW. Only about 85% (27.8 GW) of it could be
achieved by 2012 .
2023e
1200 kv Ac
Upgradation/hybrid/ brownfield expansion of old plants

and planned new capacities would provide opportunities
to companies
15
26 August 2016
Sector Report
Power Industry
Investment in global T&D Sector
Sector: Power T & D
Investment in global T&D market expected to improve

Global T&D capex (USD Bn)
400
369
350
300
284
262
250
234
205
200
150
100
50
0
2005
2008
2011
2014
2018
Source: Crompton Greaves consumer prsentation
India and EMEA to account for 45%-60% of T&D capex in future

16
Sector Report
26 August 2016
Power Grid Corporation (PGCIL) Owns ~90% ISTS transmission network

PGCIL transmission network
PGCIL owns & operates around 1,31,728 ckm of

transmission lines and 213 EHV AC & HVDC Substations with transformation capacity of more than
2,65,663 MVA. PGCIL wheels about 45% of the total
power generated in the country.
PGCIL has planned a capital investment of ~Rs.1,120 bn

for development of transmission system during 12th FYP.
11 nos. of High Capacity Power Transmission Corridors

(HCPTCs) have been finalized to meet bulk power
evacuation requirement of various Independent Power
Producers (IPPs) mainly coming up in resource rich and
coastal areas such as Chhattisgarh, Odisha, Madhya
Pradesh, Sikkim, Jharkhand, Tamil Nadu and Andhra
Pradesh. Implementation of these corridors has been
taken up in a phased manner matching with generation
projects.
At the end of Q1FY17, PGCIL had orders worth

Rs 1,440 bn, out of which orders worth ~Rs 400 bn
have been awarded to vendors and remaining work of ~
Rs1,000 bn to be completed over next 4-5 years.
Companies like KEC, Kalpataru Power, ABB, Alstom
T&D, Schneider etc are likely to be benefited from PGCIL
orders.
Power Industry
Sector: Power T & D
PGCIL has entered into JVs to develop intra-state transmission
State transmission companies are working to improve

their network in order to reduce losses.
Few states like Bihar have formed JV with PGCIL and

other states are likely to follow the same route or will go
for PPP route for improving their infrastructure.
Key beneficiaries
Transmission line/tower and conductor: Most of the players

operating
in
Power
T&D
space
like
KEC
International, Kalpataru Power, L&T, Tata Projects, Skipper

etc are key vendors to PGCIL. In the transmission
line/tower segment, spending in FY16 was reported at Rs
53 bn with KEC International having the largest market
share of 24% in FY16. The business of conductor grew by
20% Y-o-Y to Rs 17.7 bn which is dominated by Sterlite
Technologies and Apar Industries.
17
26 August 2016
Power Industry
Power Grid Corporation to contribute~50% inter-state transmission capex
765 KV transformer order pick up: PGCILs orders for

765kV transformers grew 220% yoy in FY16 but
pricing continues to be weak. Siemens leading
market share at 35% in that segment.
Sub Station: Airinsulated substations (AIS) growth is

driven by Green Energy Corridors (GEC). The key
players to be benefited from growing orders are
BHEL, Techno Electric and Alstom T&D among others.
In gas insulated switchgear (GIS) segment
(765/400kv), Hyosung leads the market. The capex
on GEC is likely to pick up in the coming years and
is expected to be Rs 130 bn.
PGCIL has recently prepared a Green Energy
Corridor Transmission Plan for evacuating about
46,000 MW of wind energy and over 10,000 MW
of solar energy from seven high potential states at a
cost of about Rs. 205 bn. for intra-state transmission
and about Rs. 190 bn. for inter-state transmission
lines.
1400
1120
1200
1200
1000
(Rs bn)
Sector: Power T & D
Plan wise PGCIL Capex
800
550
600
400
200
189
85
0
9th Plan
Source: PGCIL, Axis Securities
10th Plan
11th Plan
12th Plan
13th Plan
1800
80%
PGCIL capex (% of total Transmission capex)

2000
1500
(Rs bn)
Major contributor in power transmission capex
Sector Report
41.4%
1230
60%
61.1%
1000
40%
457
500
44.7%
20%
0%
10th Plan
Source: Axis Securities
11th Plan
12th Plan
18
Investment in Power Distribution
26 August 2016
Power Industry
Investment in Power Distribution sector

Distribution capex (last mile connectivity) to pick up
Sector: Power T & D
Distribution capex
In last 2-3 years, investment in power transmission

has picked up but distribution capex is yet to pick up.
3500
We expect capex for 13th FYP to be higher than the

capex of 12th Five year Plan. We expect huge
opportunities for the companies involved in the
development of T&D infrastructure
2000
In order to improve the power distribution

infrastructure, Government launched two schemes
named Deendayal Upadhyaya Gram Jyoti Yojana
(DDUGJY) and Integrated Power Development
Scheme (IPDS). DDUGJY's emphasis is on feeder
separation in rural areas, while IPDS focuses on
strengthening distribution systems in urban areas.
Erstwhile schemes namely Rajiv Gandhi Grameen
Vidyutikaran Yojana (RGGVY) and Restructured
Accelerated Power Development and Reforms
Programme (RAPDRP) have been subsumed with
DDUGJY and IPDS, respectively.
3060
3000
2500
(Rs bn)
Sector Report
1500
1000
500
1000
420
0
10th Plan
11th Plan
12th Plan
Planned capex under New schemes launched by Government

Scheme
Rs bn (including
subsidy)
DDUGJY (RGGVY subsumed with DDUGJY)
765
IPDS (24x7 power supply in the urban areas)
326
RAPDRP fund carried forward (Now IPDS)(previous fund for

XII and XIIIth Plan)
440
Source: DDUGJY, IPDS , Axis Securities
20
Power distribution reforms and its impact
26 August 2016
Power Industry
Power Distribution Reforms
Sector Report
Sector: Power T & D
UDAY: It empowers DISCOMs with the opportunity to break even in the next 2-3 years. This is through four initiatives
(i) Improving operational efficiencies of DISCOMs; (ii) Reduction of cost of power; (iii) Reduction in interest cost of
DISCOMs; (iv) Enforcing financial discipline on DISCOMs through alignment with State finances.
DDUGJY: The Ministry of Power has planned to provide electricity to 18,500 villages in three years under the
Deendayal Upadhyaya Gram Jyoti Yojana (DUGJY).
Metering: Even after 10 years of the enactment of the Electricity Act 100% metering in most of the states is still not
achieved. Only few of the states such as Assam, Himachal Pradesh, Kerala, Orissa, Delhi, Goa, Tripura, Uttarakhand
have been able to achieve almost 100% metering. None of the states have been able to meter 100% of the
agricultural consumers in the country. Agricultural states such as Punjab and Tamil Nadu are significantly unmetered.
Schemes for Power Distribution reforms

Scheme/policy
Details
UDAY
Debt transfer & SEBs restructuring
Integrated Power Development Scheme
Strengthening of sub transmission and distribution networks, feeder separation, strengthening

of sub transmission & distribution networks including metering at all levels for rural areas
Power system development fund (PSDF)
Installation of protection systems in the power grid
North eastern region power system improvement
Strengthening of the intra state transmission and distribution systems
Source: Power Ministry , Axis Securities
22
26 August 2016
Power Distribution Reforms (Contd)
Sector Report
Power Industry
Sector: Power T & D
Low voltage to high voltage upgradation
Lack of efficiency improvement: In 2014-15, AT&C losses at an All-India level were around 22.7% while global
standards are 9-11%. Bihar, Jharkhand, Uttar Pradesh, Rajasthan, J&K, and north-eastern states have high AT&C
losses due to power thefts. Also, big power consuming states such as Uttar Pradesh, Rajasthan, Madhya Pradesh etc.
have AT&C losses higher than the All India average.
Inadequate and infrequent tariff hikes: The cost of power purchase has increased over the years but the tariff increase
has not been commensurate with the increase in cost of supply. Most of the states which have a positive financial gap
have not increased tariffs for several years.
23
26 August 2016
Sector Report
Power Industry
Efforts for SEB turnaround
Sector: Power T & D
Ujwal Discom Assurance Yojana (UDAY)
75% debt of
SEBs to be taken
over state Govts
in next two years
and issue non
SLR bonds
Future bank
lending
Enabling
quarterly tariff
increase
UDAY
Budgetary
Discipline
Collection
efficiency
Operational
efficiency
Lower cost
of power
Billing
Efficiency
AT&C
losses
24
26 August 2016
Power Industry
Power Distribution Reforms

Ujwal Discom Assurance Yojana
Dicoms are weakest link in the power value chain due to poor
financial health and infrastructure
SEBs losses are about Rs 600 bn annually and have
accumulated debt of Rs 4300 bn.
To resolve distribution sector issues, the government has
launched - UDAY (Ujwal Discom Assurance Yojana) with an
aim to improve financial and operational efficiencies of power
distribution companies (Discoms). It envisages
reducing
interest burden, cost of power and AT&C losses.
13 states have signed agreements with Central Government for
UDAY scheme and seven states have agreed to join the
scheme.
States shall take over 75% of DISCOM debt as on 30th Sep
2015 over two years 50% of DISCOM debts shall be taken
over in 2015 -16 and 25% in 2016-17
States to issue Non SLR bond (increase liquidity) to the
respective banks / FIs holding the DISCOM, debt to
appropriate extent. Proceeds from Bond shall be entirely
transferred to DISCOMs, which in turn shall discharge
corresponding amount to Banks / FIs debt
The transfer to the DISCOM by the State in 2015-16 and 2016
-17 will be as a grant. In case of States' inability to take on
interest burden, the grant can be spread over 3 years and for
states with very high DISCOM debt, this period can be further
relaxed for 2 years in consultation with MoP
Reduction in AT &C loss to 15% in 2018-19
Reduction in gap between Average cost of supply (ACS) and
Average Realised Revenue (ARR) to Zero by 2018-19.
Sector Report
Sector: Power T & D
Participating Discoms to undertake improved operational

efficiency measures in line with the scheme timeline
Expected Date of
Completion
Activity
Targeted Benefit
Compulsory feeder and

Distribution Transformer
(DT) metering by States
Feeders 30th Jun

Ability to track losses at the feeder
2016,
and DT level for corrective action
DTs 30th Jun 2017
Consumer Indexing &

GIS mapping of losses
Identification of loss making areas

30th Sep 2018
for corrective actions
Upgrade or change
transformer, meters etc
Reduce technical losses and

minimizes outages
31st Dec 2017
Smart Metering of all

consumers consuming
above 200 Units per
month
Smart Meters will be tamper proof

and allow remote reading thus
helping reduce theft,
implementation of DSM activities
and consumer engagements
Consumption above 500

Units per month Dec
2017
Others Dec 2019
Demand Side
Management and
efficient industrial
equipment through PAT
(Perform, Achieve, trade)
Quarterly Tariff revision,
Particularly to offset fuel
price increase, to be
permitted
Reduce peak load and energy

consumption; LED alone has
31st Mar 2019
annual saving potential of Rs 400
bn
Periodic Tariff Revision
Necessary changes in
tariff policy by 31st Dec
2015
Comprehensive IEC
campaign to check
power theft
Enhance public participation
Awareness Program
jointly with States up to
31st Dec 2016
Assure increased power

supply in areas of
reduced AT & C Losses
Encourage local participation to

reduce losses
31st Mar 2018
Source: Power Ministry, Axis Securities
25
26 August 2016
Power Industry
Implementation of UDAY scheme by few states

States under UDAY issued bonds worth Rs 1600 bn till July 2016
UDAY bonds worth about Rs1600 bn have been issued

so far (i.e. upto 11th July, 2016) and another about Rs
500 bn bonds are likely to be issued this year
(i.e. FY 2016-17). The process is likely to reduce the debt
and interest cost of SEBs and will pave the way for SEBs
to incur capex to improve distribution infrastructure.
Bonds issued by states under UDAY scheme

State wise debt takeover and bond issuance
under UDAY
FY16
(Rs bn)
Sector Report
Sector: Power T & D
AT&C losses of States adopting UDAY scheme

Participating Discoms to improve operational efficiency by
reducing AT&C losses to 15% by 2019 and to improve billing
efficiency to make SEBs financially viable
States
FY16
AT&C losses (%)
FY16 Billing
efficiency
Uttar Pradesh
32.4
76.4
Rajasthan- Jaipur
27.5
72.5
22
70
23.5
76.5
21
79.3
16.2
84.7
Rajasthan- Jodhpur
Rajasthan- Ajmer
3
Chhattisgarh
Punjab
Jammu & Kashmir
56
49.4
Bihar - North
40
68
Bihar - South
44
62
35
73
Uttar Pradesh
243
Rajasthan
374
Chhattisgarh
8.7
Punjab
99
Jharkhand
Jammu & Kashmir
21
Haryana
28.1
72.7
Bihar
16
Gujarat -DGVCL
9.29
90.71
Jharkhand
56
Gujarat -MGVCL
16
84
Gujarat -PGVCL
22
78
Gujarat -UGVCL
9.82
90.18
17
83.11
Haryana
173
Total
990
Source: RBI Debt management division
10
Uttarakhand
Source: UDAY MoUs - Ministry of Power
26
Sector Report
26 August 2016
Improving billing efficiency through metering & tracking of losses
Power Industry
Sector: Power T & D
Activity
Benefit
End date
Compulsory feeder & distribution

transformer (DT)
metering by states
Ability to track losses

at the feeder and DT
Level for corrective action
Feeders 30th June 2016

DTs- 30th June 2017
Consumer indexing &GIS

mapping of losses
Identification of
loss making areas for
corrective action
30th Sep 2018
Upgrade or change
transformers, meters etc
Reduce technical losses &

minimize outages
31st December 2017
Smart metering of
all consumers consuming above
200 units/month
Smart meters will be

temper proof
and allow remote reading
31st Dec 2017 for

Consumption>
500 units/mth
st
31 Dec 2019 for others
27
Opportunity for T&D Players
26 August 2016
Power Industry
Beneficiary of T&D investments
Sector: Power T & D
Segment wise opportunities

T&D Equipment-wise Demand Projection (In Rs bn)
FY11
FY17
FY22
Beneficiary/major players
CAGR
(over FY17-FY22)
Cables
160
370
700
13.6%
transmission lines &

conductors
140
340
640
13.5%
Transformers
120
300
560
13.3%
Switchgear
90
220
410
13.3%
Rotating machines
60
150
290
14.1%
Energy Meters
20
60
100
10.8%
Capacitors
10
10
30
24.6%
230
560
1050
13.4%
Others
Source: Ministry of Heavy Industries & Public Enterprises , Axis Securities
Sector Report
Cables: KEC International, KEI
EPC &Transmission lines/Towers: KEC, Kalpataru Power, Tata

Project, Bajaj Electrical, techno Electric etc
Transformers: Transformers & Rectifiers (TRIL), Shilchar

Technologies, Salzer Electronics, Voltamp , ABB etc
Energy Meters: Genus Power, L&T, Landis+Gyr, HPL Electric

& Power Ltd
Conductors: Apar, Sterlite Technologies
Of the total transmission capex, share of transmission

line and sub station is 65:35. Transmission lines capex
includes Tower packages, conductors, cables etc while
sub station includes transformers, switchgears etc.
29
26 August 2016

Stock Data
CMP (as of 25 Aug 2016)
Rs 137.4
No. of shares
25.7 Cr
Market cap (Rs)
3531 Cr
52 week high/low (Rs)
165/ 97.5
Avg. daily vol. (6 mths)
485061
Bloomberg code
KECI.IN
Reuters code
KECL.BO
Sector Report
Sector: Power T & D

KEC International (KEC) is a global infrastructure Engineering, procurement and Construction (EPC) player. It has
presence in power transmission & distribution, cables, railways, water & renewable. Acquisition of US based
SAE Towers Holdings in Sep 2010 helped KEC to foray into North and South America, Canada, Mexico, Brazil
and other neighboring countries.
Investment Rationale
Transmission & distribution: KEC is in the business of EPC of substations, distribution network & electrical balance of
Plant, Industrial electrification and cabling. In India, it has three manufacturing facilities with total manufacturing
capacity of 211,000 MTs. Also Its wholly owned subsidiary SAE Towers has an annual production capacity of 100,
000 MTs spread over Mexico (35,000 MTs) & Brazil (65,000 MTs). In cable business, it has capacity of 35,400 km of
cables (Power, Control, HT, EHV & instrumentation cables).
Huge planned investment in Power T&D sector to benefit KEC: Reduction in capital cost of SEBs led by UDAY scheme
is likely to improve order flow from SEBs. To reduce T&D losses, various SEBs which have joined UDAY scheme, are
likely to come up with tenders to improve the T&D infrastructure. SEBs orders are generally high margin orders in
Price Performance
comparison to Power Grid Corporation which may improve the margins of the company.
190
Solar, Railway and water segment to provide opportunities: Around 15 GW solar power capacities have been
tendered and more tenders are likely to come in coming years due to Governments focus on solar power. KEC is
140
engaged in solar EPC services and expects good orders from solar segment. In railway, total planned capital outlay for
90
railway modernization/infrastructure is Rs 1.2 lakh Cr for FY17 which can offer an opportunity of Rs 10,000 Cr to KEC
International. KEC has an order book of Rs 800 Cr from Railway segment and is L1 in Rs 500 Cr orders.
40
Aug-15 Dec-15
K E C Intl.
Apr-16 Aug-16
BSE_SENSEX
Source: Axis Securities Ltd, Capitaline.
Financial Summary
Y/E March
Sales
(Rs cr)
PAT
(Rs Cr)
EPS
(Rs)
Change
(%)
PE
(x)
RoE
(%)
RoCE
(%)
DPS
(Rs)
FY14
FY15
FY16
8093
8468
8516
72.2
60.4
190.3
2.8
2.3
7.4
-16.3%
215.1%
18.6
5.7
4.8
13.5
15.8
14.5
17.7
0.6
0.9
1.0
* CMP Source: Axis Securities Ltd, Capitaline.
30
26 August 2016
Sector Report
Sector: Power T & D
Investment Rationale (Contd)
Margins to improve: KEC has guided for 10% Y-o-Y sales growth with ~8.5% EBIDTA Margin for FY17. Sales growth is
expected due to sharp pick up in railways and solar orders, while margins are expected to improve on account of
improvement in SAE Towers margins. Margins of SAE Towers are expected to improve from current level of 4-5% to
previous levels of 8-9%.
Cost of debt to come down: Despite increase in debt, interest expense declined. Management expects a further
reduction of interest expense to 3% of sales for FY17.
Working Capital: Net working capital cycle increased from 85 days to 106 days primarily on account of increase in
receivables. Management expects receivables to come down going forward.
Order book provides revenue visibility: The order
Order book Break-up
book of the company stands at Rs 9,450 Cr (1.1x

FY16 sales). Out of total orders book, contribution
of domestic and international orders is 54% and
46% respectively. KEC is L1 at Rs 30 bn of orders
in the domestic market and expect a healthy
traction from the far east market (Singapore,
Indonesia, Thaliland & Malaysia) with Rs 18-20 bn
of bids under pipeline. SAE Towers has an order
Railway, 6%
Solar, 2%
Cables, 5%
SAE, 12%
T&D
(Exc
SAE), 75%
book visibility for next 18 months.
31
26 August 2016
Sector: Power T & D
Profit & Loss A/c (Consolidated)
(Rs Cr)
FY14
FY15
FY16
8016
8575
8507
4199
4527
4129
84
95
72
566
586
642
1880
1891
2088
Selling and Administration Expenses
525
492
496
Miscellaneous Expenses
204
259
319
7458
7850
7745
EBIDTA
558
725
762
Interest
333
376
350
71
88
88
155
261
325
Tax
99
100
146
Deferred Tax
-11
-13
Net Profit
67
161
192
Net Profit after Minority Int. & P/L

Asso.Co.
67
161
192
Extraordinary Items
-5
101
Adjusted Net Profit
72.2
60.4
190.3
Total Income
EXPENDITURE :
Raw Materials
Power & Fuel Cost
Employee Cost
Other Manufacturing Expenses
Total Expenditure
Depreciation
Profit Before Tax
Sector Report
Balance sheet
SOURCES OF FUNDS :
Share Capital
Reserves Total
Total Shareholders Funds
Secured Loans
Unsecured Loans
Total Debt
Other Liabilities
Total Liabilities
APPLICATION OF FUNDS :
Net Block
Capital Work in Progress
Inventories
Sundry Debtors
Cash and Bank
Loans and Advances
Total Current Assets
Current Liabilities
Provisions
Total Current Liabilities
Net Current Assets
Deferred Tax Assets
Deferred Tax Liability
Net Deferred Tax
Other Assets
Total Assets
(Rs Cr)
FY14
FY15
FY16
51
1140
1192
2127
2
2130
20
3341
51
1278
1330
2080
134
2214
21
3565
51
1460
1512
2187
334
2521
26
4058
1352
18
505
3808
144
1234
5691
3882
115
3997
1694
56
107
-51
329
3341
1259
16
476
3853
206
1411
5947
3999
111
4109
1837
56
108
-53
505
3565
1266
12
430
4495
111
1324
6360
3915
98
4013
2347
67
109
-42
476
4058
32
26 August 2016
Sector Report
Sector: Power T & D
Key ratios
(%)
FY14
FY15
Quarterly financials (Consolidated)
Q1FY16 Q2FY16 Q3FY16 Q4FY16 Q1FY17
FY16
Key Ratios
(Rs Cr)
Gross Sales
1903
1998
2035
2530
1763
45
36
1858
1998
2035
2530
1727
20
23
24
29
22
Debt-Equity Ratio
1.6
1.7
1.7
Excise Duty
Interest Cover Ratio
1.5
1.3
1.9
Net Sales
PBIDTM (%)
6.9
6.8
8.8
Other Operating Income
NPM
0.8
0.7
2.2
Other Income
15.8
14.5
17.7
Total Income
1881
2025
2061
2560
1754
5.7
4.8
13.5
Total Expenditure
1737
1866
1898
2336
1599
18.6
PBIDT
144
159
163
224
155
Interest
71
69
68
71
72
PBDT
73
90
96
153
83
Depreciation
29
21
22
22
29
PBT
44
69
74
132
54
Tax
27
25
36
52
23
Reported Profit After Tax
17
44
37
80
31
Net Profit after Minority

Interest & P/L Asso.Co.
17
44
37
80
31
16.9
40.7
37.2
79.9
30.9
ROCE (%)
RONW (%)
Price Earning (P/E)
Price to Book Value ( P/BV)
1.5
1.5
2.1
EV/EBIDTA
6.7
5.6
7.3
Extra-ordinary Items
Adjusted Profit After Extraordinary item
33
26 August 2016

Stock Data
Sector Report
Sector: Power T & D
Kalpataru Power Transmission Limited (KPTL) is a diversified global EPC player in Power transmission &
distribution, cross country pipeline, Oil & gas field surface facilities, Civil infrastructure projects, and railway
projects. Kalpataru Power owns three large fabrication plants for galvanized steel towers. KPTL also hold 67.2%
stake in JMC Projects, an Engineering and construction company.
Rs 258.2
No. of shares
15.4 Cr
Market cap (Rs)
3976 Cr
291/ 60
the consumers. Cognizant of the fact, the Government is trying to address the issue with increased planned expenditure
140734
in the power sector. Capex from PGCIL, SEBs mainly from Uttar Pradesh, Bihar, Tamilnadu, Madhya Pradesh,
Bloomberg code
KPP.IN
Reuters code
KAPT.BO
Pick in T&D investment to drive growth: Inadequate grid connectivity is making energy inaccessible to a large part of
Karnataka are likely to drive the order inflow of KPTL.
We expect that KPTL will be a major beneficiary of the
strengthening of the transmission infrastructure.
Infrastructure development to support JMC growth: In FY16, JMC reported an EBIDTA margin of 8.4% which is likely
Price Performance
to sustain in coming years with revenue growth of ~8-10%. The order book of JMC Projects stands at Rs 6,200 Cr. We
140
expect that economic infrastructure development and construction activities will drive JMC growth.
90
Shubham Logistics: KPTL infused Rs 70 Cr in Q1FY17 in Shree Shubham Logistics Ltd (SSL) through right issue which
resulted in increased stake of KPTL is SSL to 80% V/s 73% earlier. SSL is rebuilding its team.
40
Aug-15
Dec-15
Kalpataru Power
Apr-16
Aug-16
BSE_SENSEX
Financial Summary (Consolidated)

Y/E March
Sales
(Rs cr)
PAT
(Rs Cr)
EPS
(Rs)
Change
(%)
PE
(x)
RoE
(%)
RoCE
(%)
DPS
(Rs)
FY14
FY15
FY16
7090
7198
7327
116.5
119.3
117.5
7.6
7.8
7.7
2.4%
-1.5%
33.7
5.9
5.4
5.9
10.7
10.3
10.8
1.5
1.5
1.5
34
Sector Report
26 August 2016
Sector: Power T & D
Order book Break-up
Strong order book (2x FY16 sales): At the

end of FY16, order book of KPTL stood at
Rs
14,500 Cr (Rs 8,300 Cr KPTL
Infra-Pipeline &
Railway, 9%
Transmission
overseas, 19%
standalone and Rs 6,200 Cr JMC projects

order
book).
Order
inflow
in
Factories & buildings -33%

Infrastructure - 10%
JMC, 43%
FY16
(standalone) was reported at Rs 7,450 Cr,

which is expected to increase to Rs 8000
8500 Cr in FY17. In domestic power T&D
segment, orders from domestic market are
Transmission
domestic, 29%
PGCIL - 14%
SEB - 9%
Private -6%
showing traction due to capex from PGCIL

and SEBs (Tamil Nadu, West Bengal,
Karnataka, Gujarat). Governments thrust
on railways segment is likely to provide
good opportunities to the company. KPTL
has bid railways orders worth Rs 1,500 Cr
in Q2FY17. In international market, KPTL is

eyeing on African market for orders.
35
26 August 2016
Sector: Power T & D
Profit & Loss A/c
(Rs Cr)
FY14
FY15
FY16
Total Income
7169
7257
7196
Raw Materials
3076
2952
2721
24
24
24
452
544
552
2420
2331
2476
471
582
493
80
59
57
Total Expenditure
6523
6492
6322
Operating Profit
646
765
874
Interest
282
373
487
Depreciation
149
168
202
Profit Before Tax
215
224
185
Tax
79
104
152
Deferred Tax
12
-50
124
115
83
-5
-34
122
120
118
Extraordinary Items
Adjusted Net Profit
116.5
119.3
117.0
Power & Fuel Cost

Employee Cost
Net Profit
Minority Interest (after tax)
Net Profit after Minority Interest & P/L
Asso.Co.
Sector Report
Balance sheet
SOURCES OF FUNDS :
Share Capital
Reserves Total
Secured Loans
Unsecured Loans
Total Debt
Other Liabilities
Total Liabilities
APPLICATION OF FUNDS :
Net Block
Inventories
Sundry Debtors
Cash and Bank
Loans and Advances
Current Liabilities
Provisions
Net Current Assets
Deferred Tax Assets
Net Deferred Tax
Other Assets
Total Assets
(Rs Cr)
FY14
31
2069
2099
144
2556
175
2731
5322
2436
670
1766
1292
10
1229
1851
117
1402
4600
2550
98
2648
1951
36
45
-10
312
FY15
31
2186
2217
142
3218
467
3684
6435
4031
827
3204
398
11
1218
2229
138
1428
5013
2274
233
2507
2506
73
82
-9
325
FY16
31
2295
2326
156
2929
413
3342
6325
4684
996
3688
24
11
931
2429
153
1504
5017
2552
294
2847
2170
160
119
42
390
36
26 August 2016
Sector: Power T & D
Key ratios (consolidated)
(%)
FY14
Sector Report
FY15
Quarterly financials (standalone)
FY16
Net Sales
Key Ratios
(Rs Cr)
1149
936
857
1368
1142
15
11
12
13
12
Debt-Equity Ratio
1.1
1.5
1.6
PBIDTM (%)
9.0
10.5
11.7
Other Income
14
14
12
12
12
NPM (%)
1.7
1.6
1.1
Total Income
1178
960
880
1393
1166
ROCE (%)
10.7
10.4
10.8
Total Expenditure
1048
840
774
1236
1023
5.9
5.4
5.9
PBIDT
129
120
106
156
143
33.7
Interest
43
36
26
24
25
0.8
1.6
1.4
PBDT
86
84
80
132
118
EV/EBIDTA
6.3
9.1
7.2
Depreciation
21
21
21
21
20
PBT
66
63
59
111
99
Tax
23
22
20
39
34
43.0
41.0
38.1
72.0
64.5
RONW (%)
Price Earning (P/E)
37
26 August 2016

Stock Data
Sector Report
Sector: Power T & D
Shilchar Technologies Ltd is a transformer manufacturer for Electronics & Telecom and Power Distribution. The
company manufactures linear, telecom and standard line transformers. Its product range includes R-core
transformers, EI Transformers, Ferrite core transformers, Metering CTs, Toroidal transformers, Toroid cores and
bobbins. It serves to MNC players like ABB Ltd, Schneider Electronics, Siemens, Hitachi Hirel, Payton, GE
Industrial, Philips etc. The company also manufactures solar and windmill transformers for renewable energy
sector.
Rs 294.8
No. of shares
0.38 Cr
Market cap (Rs)
112 Cr
349/ 132.5
2599
transformer market by value and account for about 60-65% of the total transformer industry. Distribution transformers
Bloomberg code
SCTE.IN
would account for the remaining 35-40% of the total value of the transformer industry. The Company also manufactures
Reuters code
SELC.BO
Power and distribution transformer market to grow at a CAGR of 10%: Power transformer forms the largest chunk of
solar and windmill transformers for renewable energy sector. We expect that growing demand of transformers will
drive the growth of Shilchar Technologies Ltd. In FY16, distribution & power transformers contributed 89% revenues of
the company whereas Transformers E & T (Including Core & Lamination and Bobbin) contributed ~11% revenues.
Price Performance
240
Implementation of UDAY to drive transformers demand: Around 11 states have accepted UDAY scheme and
190
implementation of UDAY will lead to 1) investment in smart meters and metering at feeder and distribution transformer
140
level, 2) upgradation of distribution transformers. We expect that growing demand will drive the order book of Shilchar
Technologies.
90
40
Aug-15
Dec-15
Shilchar Tech.
Apr-16
Aug-16
BSE_SENSEX
Financial Summary
Y/E March
Sales
(Rs cr)
PAT
(Rs Cr)
EPS
(Rs)
Change
(%)
PE
(x)
RoE
(%)
RoCE
(%)
DPS
(Rs)
FY14
FY15
FY16
100.4
105.9
101.6
4.1
5.7
9.1
10.8
14.9
23.9
39.0%
59.6%
12.4
18.7
21.7
27.3
21.8
24
40.6
1
1.5
2.5
38
26 August 2016
Sector Report
Sector: Power T & D
Financials of the company have improved over the years: In overall revenues of the company, 82% revenues are
contributed by distribution transformer while 10% are contributed by transformer EI segment. Diversified customer base,
varied product applications, and well-spread reach ensure offtake and mitigate product and geographic concentration
risks. EBIDTA margin has improved from 6.3% in FY12 to 14.8% in FY16 while RoNW and RoCE has improved from
2.2% and 10.1% in FY12 to 27.3% and 40.6% in FY16 respectively. We expect that planned huge capex in T&D
segment will drive the earnings of the company.
Export business (27% revenue contribution in FY16): The company exports its products to well known players of the
industry such as GE Industrial, Philips etc which certifies the quality of its products.
Product Range and Capacity

Product
R-Core Transformers
EI Transformers
Ferrite Core Transformers
Metering CTs
Torroidal Transformers
Toroid Cores
Bobbins
Production Capacity
20,000 pcs./month
75,000 pcs./month
500,000 pcs./month
150,000 pcs./month
10,000 pcs./month
20,000 Kgs./month
75,000 sets/month
Range
5VA to 1500VA
0.5VA to 2000VA
For Telecom, Audio & SMPS applications
5-20A; 10-30A; 10-40A; 10-60A
1VA to 5000VA
Concern
Foreign players, especially Chinese and Korean electrical equipment manufacturers, have captured almost one fourth of
Indian transformers market, mainly in EHV and UHV class power transformers, as the products offered by them are
considered cheaper and technologically advanced. Reliance on import for raw materials, specifically electrical steel, is
a major handicap for Indian transformer manufacturers in achieving faster turnaround time as well as lower production
costs.
39
Sector Report
26 August 2016
Sector: Power T & D
Profit & Loss A/c
(Rs Cr)
FY14
FY15
FY16
100
106
102
Other Income
Stock Adjustments
-2
101
109
104
76
84
70
Power & Fuel Cost
Employee Cost
Net Sales
Total Income
Raw Materials
Total Expenditure
91
98
88
Operating Profit
10
11
16
Interest
Gross Profit
11
16
Depreciation
Profit Before Tax
14
Deferred Tax
Reported Net Profit
Adjusted Net Profit
Tax
Balance sheet
Share Capital
Reserves Total
Secured Loans
Unsecured Loans
Total Debt
Other Liabilities
Total Liabilities
Gross Block
Less : Accumulated Depreciation
Net Block
Investments
Inventories
Sundry Debtors
Cash and Bank
Loans and Advances
Current Liabilities
Provisions
Net Current Assets
Deferred Tax Assets
Net Deferred Tax
Other Assets
Total Assets
(Rs Cr)
FY14
4
21
25
20
0
21
0
45
32
14
18
1
10
38
4
7
58
27
3
30
28
0
2
-2
0
45
FY15
4
26
30
6
0
6
0
36
33
15
18
1
9
30
6
8
53
31
4
35
18
0
2
-2
0
36
FY16
4
34
38
0
0
0
0
38
34
16
18
3
9
29
3
8
49
25
5
30
19
0
2
-2
0
38
40
26 August 2016
Sector: Power T & D
Key ratios
(%)
FY14
FY15
FY16
Debt-Equity Ratio
0.9
0.5
0.1
PBIDTM (%)
9.5
9.8
14.9
NPM (%)
3.9
5.1
8.3
ROCE (%)
21.8
24.0
RONW (%)
18.7
Price Earning (P/E)

EV/EBIDTA
Sector Report
Quarterly Ratio
(%)
Net Sales
29
24
20
29
26
Other Income
Total Income
29
25
22
29
27
24.3
Total Expenditure
26
21
18
24
21
21.7
27.3
PBIDT
12.4
Interest
1.3
2.4
PBDT
3.3
3.5
5.2
Depreciation
PBT
Tax
2.0
2.4
1.9
2.8
3.1
41
26 August 2016

Stock Data
Rs 637
No. of shares
5.7 Cr
Market cap (Rs)
3631 Cr
418/ 630
18669
Bloomberg code
TEEC.IN
Reuters code
TEEC.BO
Price Performance
140
120
80
60
Sector: Power T & D
Techno Electric & Engg Co Ltd (TEECL) provides engineering, procurement and construction (EPC) services (90%
revenue contribution) to all segments of power sector. It also has presence in renewable energy generation (163
MW wind capacity , 10% revenue contribution) and transmission project under PPP model.
100
Sector Report
Strong execution skills: TEECL operates specifically in the substation segment of transmission EPC and has very good
execution track record. It completes most of the project before specified time. Due to its execution capability, the
company has won Best Performance Award for two consecutive years (FY13 and FY14) from PGCIL.
Efficient working capital management: Working capital of the company for FY16 stands at 64 days as against 85-105
days of leading T&D EPC players. KEC International and Kalpataru Power owns manufacturing facilities which results in
higer inventories while TEECL has advantage in that term. In the next two years, working capital of the company is
likely to improve due to reduction in receivables primary from Patron project.
Cost control : Companys light asset lean structure helped in controlling the overhead cost. Also it never has more than
20 open sites at a time which helps in managing the cost efficiencies. Expenditures (excluding raw material) have
reduced from 11.6% in FY14 to 9.7% and 8.3% of sales in FY15 and FY16 respectively.
To exit from wind generation business: According to management, the company is looking to exit from renewable
energy business. The company sold 45 MW capacity in FY16 at a value of Rs 215 Cr (Rs 4.8 Cr /MW valuation).
Considering the same valuation, the remaining wind power assets have value of Rs 778 Cr.
Transmission BOT assets: TEECL owns two operational transmission BOOT projects namely Jhajjar KT Transco (49%
stake) and Patran (100% stake). Transmission BOOT projects have pre fixed revenue streams guaranteed by states,
hence earnings volatility is low.
40
Aug-15 Dec-15 Apr-16 Aug-16
Techno Elec.
BSE_SENSEX
Financial Summary
Y/E March
FY14
FY15
FY16
Sales
(Rs cr)
PAT
(Rs Cr)
EPS
(Rs)
Change
(%)
PE
(x)
RoE
(%)
RoCE
(%)
DPS
(Rs)
709
794
109
86.3
92.5
99.0
15.1
16.2
17.3
7.2%
7.1%
36.7
10.9
10.7
10.3
9.4
10.4
11.8
3
4
5
42
26 August 2016
Sector: Power T & D
Profit & Loss A/c

Total Income
(Rs Cr)
FY14
FY15
FY16
730
809
1192
436
497
813
29
27
30
EXPENDITURE :
Raw Materials
Power & Fuel Cost
Employee Cost
28
26
36
25
19
21
Total Expenditure
521
576
907
Operating Profit
210
233
285
Interest
51
47
46
Gross Profit
159
185
239
Depreciation
67
60
50
Profit Before Tax
92
125
189
19
49
Tax
Deferred Tax
89
106
141
Minority Interest (after tax)
Profit/Loss of Associate Company
88
105
141
Extraordinary Items
13
42
Adjusted Net Profit
86
93
99
Net Profit
Net Profit after Minority Interest & P/L

Asso.Co.
Sector Report
Balance sheet
Share Capital
Reserves Total
Minority Interest
Secured Loans
Unsecured Loans
Total Debt
Other Liabilities
Total Liabilities
Gross Block
Less: Accumulated Depreciation
Net Block
Investments
Inventories
Sundry Debtors
Cash and Bank
Loans and Advances
Current Liabilities
Provisions
Net Current Assets
Net Deferred Tax
Other Assets
Total Assets
(Rs Cr)
FY14
11
826
837
19
540
68
608
51
1515
1340
271
1069
4
187
12
206
48
94
360
129
5
134
227
1
-1
30
1515
FY15
11
903
915
20
473
93
565
18
1518
1349
328
1021
4
135
6
345
25
109
485
149
14
163
322
1
-1
37
1518
FY16
11
1003
1015
0
383
129
512
10
1537
1111
286
825
0
155
38
496
112
212
857
300
17
316
541
1
-1
17
1537
43
26 August 2016
Sector: Power T & D
Key ratios
(%)
FY14
FY15
FY16
Debt-Equity Ratio
0.8
0.7
0.6
Total Asset Turnover Ratio
0.5
0.5
0.7
PBIDTM (%)
29.6
27.3
20.9
NPM (%)
12.5
11.8
9.0
ROCE (%)
9.4
10.4
11.8
10.9
10.7
10.3
Price Earning (P/E)
7.6
22.0
22.7
0.8
2.4
3.0
EV/EBIDTA
5.7
11.9
12.2
RONW (%)
Sector Report
Quarterly Number
(Rs Cr)
Net Sales
200
249
317
326
268
Other Income
29
17
11
Total Income
231
259
334
337
279
Total Expenditure
154
171
281
275
200
PBIDT
77
89
53
61
79
Interest
12
10
11
PBDT
65
79
44
50
70
Depreciation
12
12
12
14
13
PBT
54
68
32
36
57
Tax
16
21
38
47
28
29
48
Net Profit after Minority

Interest & P/L Asso.Co.
38
47
28
28
48
17
-1
20
47
29
27
48
Deferred Tax
44
26 August 2016
Sector Report
Sector: Power T & D
Rs 778.4
No. of shares
1.01 Cr
Voltamp Transformers is a manufacturer of 1) Oil filled Power and Distribution transformers and 2) Dry type Resin
Impregnated (In Technical collaboration with MORA, Germany) and Cast Resin Transformers (In Technical
collaboration with HTT, Germany). The company has two plants located at Makarpura and Vadadla (Vadodara)
with cumulative manufacturing capacity of 13000 MVA. Its customers include refineries, government and semigovernment projects, fertilizer plants, industries, state electricity boards etc.
Market cap (Rs)
786 Cr
962/ 621
33941
Bloomberg code
VAMP.IN
Reuters code
VOTL.BO
Stock Data
Price Performance
190
140
90
40
Aug-15 Dec-15
Volt.Transform.
Apr-16 Aug-16
BSE_SENSEX
At the end of FY16, order book of the company stood subdued at Rs 239 Cr (4,642 MVA), equivalent to around 6
months of revenue. According to management the company is selective in taking orders and prefers customers with
good credit quality to manage working capital efficiently. Most of revenue of the company comes from projects
business.
Operational leverage: Due to operational leverage, margins of the company have improved from 7.9% in FY15 to
11.7% in FY16 while earnings (adj) have grown 63% Y-o-Y to Rs 36.3 Cr. Government has come out with various
reforms to reduce the losses of SEBs and to turn them profitable. Implementation of these reforms will lead to
transformers demand pick up which will drive order inflow of transformer manufacturers. Capacity utilization of the
company in FY16 stood at 71% which is expected to improve on account of various reforms and manufacturing growth.
Generally the execution period of the transformers orders is of 3- 4 months. We expect revenues of the company to
reach to Rs 750 Cr by FY18E from Rs 563 Cr in FY16.
Solar park to create demand: In the solar park, transformers are required as part of the power evacuation system. Stepup generation transformers (33KV) would be needed at each power injection point in the solar park from where power
would be transmitted to the nearest substation, which will have a step-up transformer (220 KV) , which will raise voltage
to higher levels for feeding into the power grid. The company hopes that roll-out of solar power parks can create
enough demand.
Financial Summary
Y/E March
FY14
FY15
FY16
Sales
(Rs cr)
PAT
(Rs Cr)
EPS
(Rs)
Change
(%)
PE
(x)
RoE
(%)
RoCE
(%)
DPS
(Rs)
445
517
563
21.0
22.3
36.3
20.8
22.0
35.9
6.2%
62.8%
21.7
5.0
5.2
7.8
6.6
5.8
10.8
10.0
10.0
12.5
45
26 August 2016
Sector Report
Sector: Power T & D
Due to expected demand pick of transformers, rebound in industrial capex, operational leverage opportunities leading
to margin improvement, we are positive on the stock. Voltamp is a debt free company with cash and equivalent to
Rs 221 Cr (equivalent to Rs 219/share).
Concern
Raw material price volatility: Around 33% raw material cost is contributed by CRGO steel. Other major cost is copper.
Adverse price movement of both commodities can impact the margins of the company. The company hedges its copper
cost on LME. So the impact of copper price movement is insignificant.
46
Sector Report
26 August 2016
Sector: Power T & D
Profit & Loss A/c
(Rs Cr)
FY14
FY15
FY16
445
517
563
Other Income
27
21
28
Stock Adjustments
-19
15
12
Total Income
453
553
603
Raw Materials
348
440
455
Employee Cost
19
21
21
19
24
27
22
22
31
Total Expenditure
411
512
538
Operating Profit
42
41
66
Gross Profit
41
41
65
Depreciation
34
33
59
Tax
16
Deferred Tax
-1
Reported Net Profit
26
28
44
Extraordinary Items
Adjusted Net Profit
21
22
Net Sales
Power & Fuel Cost
Interest
Profit Before Tax
Balance sheet
(Rs Cr)
FY14
FY15
FY16
Share Capital
10
10
10
Reserves Total
415
431
460
425
441
470
Other Liabilities
Total Liabilities
426
444
473
Gross Block
100
101
102
53
60
63
Net Block
47
41
39
Investments
219
211
220
Inventories
57
82
95
Sundry Debtors
143
145
149
Cash and Bank
Loans and Advances
13
10
13
214
239
258
Current Liabilities
35
33
25
Provisions
20
19
23
55
52
48
Net Current Assets
159
188
211
Deferred Tax Assets
Net Deferred Tax
Other Assets
36
Total Assets
426
444
473
47
26 August 2016
Sector: Power T & D
Key ratios
(%)
FY14
FY15
FY16
PBIDTM (%)
7.12
5.8
8.99
NPM (%)
4.31
3.96
5.9
ROCE (%)
6.6
5.83
10.75
RONW (%)
5.0
5.2
7.8
Price Earning (P/E)
18.5
22.78
17.96
1.14
1.47
1.68
11.63
15.74
12
EV/EBIDTA
Sector Report
Quarterly Number
(Rs Cr)
Net Sales
87
133
140
204
115
Other Income
10
Total Income
94
138
146
214
121
Total Expenditure
85
127
128
186
108
PBIDT
11
17
29
13
Interest
PBDT
11
17
29
13
Depreciation
PBT
16
27
12
Tax
12
19
48
26 August 2016

Stock Data
Rs 48.4
No. of shares
25.7 Cr
Market cap (Rs)
1239 Cr
62.5/ 24
580782
Bloomberg code
GPIN.IN
Reuters code
GEOE.BO
240
140
90
40
Aug-15 Dec-15 Apr-16 Aug-16
Genus Power
BSE_SENSEX
Sector: Power T & D
Genus power provides smart metering solutions to power distribution companies and also offers turnkey solutions
for substations, transmission lines upto 420 KV, covers rural electrification and distribution lines under
engineering, construction and contracts (ECC) business. In Indian electricity meter business, Genus is the market
leader with market share of 22%.
Price Performance
190
Sector Report
Companys electricity meter manufacturing facilities are located in Jaipur and Haridwar with R&D facility at Jaipur.
Haridwar facility is located in a tax free zone and has tax advantage till 2020. Newly set up Jaipur facility
manufactures electronic communication measurement system/electronic energy meter, meter reading instrument,
modem, printed circuit board assemblies, meter box and diaphragm gas meters.
Meter business to grow at a CAGR of 15%: In order to reduce AT&C losses, the government has taken various steps
including monitoring and billing, enhancing efficiency in revenue collection. Government aims Housing for all by
2022 and development of smart cities which is likely to drive the growth of electricity meters. Expected households
addition under house for everyone scheme are 15 mn. The current market size of the electricity meter business is
~Rs 3,500 Crore, which is likely to grow at a CAGR of 15% over the next 4-5 years. Government aims for installation
of 25 Cr (Rs 25,000 Cr opportunity) new meters over next 4-5 years which appears too optimistic.
African market is going through development phase and huge opportunities are available in African countries. Genus
power is looking to expand its presence and is focusing to generate 5-7% of total revenues in FY17 from export of
electricity meters.
Gas meters demand to grow: At present ~ 27 lakh families use piped natural gas for cooking in 47 cities and
government has target to supply piped gas to one cr families by 2019 which is likely to drive the market for gas meters.
Genus has recently entered into manufacturing of gas meters and is likely to benefit from growing demand of meters.
Financial Summary
Y/E March
FY14
FY15
FY16
Sales
(Rs cr)
PAT
(Rs Cr)
EPS
(Rs)
Change
(%)
PE
(x)
RoE
(%)
RoCE
(%)
DPS
(Rs)
766
915
858
60.5
63.2
76.1
2.4
2.5
3.0
4.5%
20.4%
16.2
13.1
13.7
13.7
12.4
14.5
11.3
0.1
0.2
0.25
49
26 August 2016
Sector Report

Sector: Power T & D
The companys trust had 4.75 Cr shares of Genus Power, out of which it has sold 2 Cr shares worth Rs 100 Cr in in
FY16. Trust still holds 2.75 Cr shares of Genus Power which are shown in the balance sheet as current investment.
According to management, in 2-3 years, the company doesnt have any plan to sell these shares. Value of these shares
at current market price is ~ Rs 132 Cr.
Concern
Delay in execution of UDAY scheme by state Governments can result in lower than expected growth for smart meters
50
26 August 2016
Sector: Power T & D
Profit & Loss A/c
(Rs Cr)
FY14
FY15
FY16
766
915
858
Other Income
15
17
Stock Adjustments
Net Sales
-6
47
-16
Total Income
769
977
858
Raw Materials
508
664
548
57
65
65
40
47
44
47
70
48
Total Expenditure
662
857
718
Operating Profit
Power & Fuel Cost

Employee Cost
Sector Report
108
120
141
Interest
36
33
29
Gross Profit
72
87
112
Depreciation
11
16
14
Profit Before Tax
61
71
98
Tax
20
21
Deferred Tax
-2
-1
Reported Net Profit
61
53
79
Extraordinary Items
-10
Adjusted Net Profit
61
63
77
Balance sheet
Share Capital
Reserves Total
Secured Loans
Unsecured Loans
Total Debt
Other Liabilities
Total Liabilities
Gross Block
Net Block
Investments
Inventories
Sundry Debtors
Cash and Bank
Loans and Advances
Current Liabilities
Provisions
Net Current Assets
Deferred Tax Assets
Net Deferred Tax
Other Assets
Total Assets
(Rs Cr)
FY14
26
408
434
292
19
311
20
765
150
51
99
20
136
87
344
52
27
510
98
10
108
402
1
10
-9
116
765
FY15
26
462
487
323
38
361
16
864
191
61
130
1
122
156
400
49
25
629
158
20
178
451
3
10
-7
167
864
FY16
26
634
660
195
38
233
19
911
206
68
138
2
155
118
415
62
25
619
139
20
159
460
3
9
-6
162
911
51
26 August 2016
Sector: Power T & D
Key ratios
(%)
FY14
FY15
FY16
Debt-Equity Ratio
0.65
0.73
0.52
Interest Cover Ratio
2.72
3.55
4.39
PBIDTM (%)
13.7
14.51
16.19
ANPM (%)
7.71
6.84
9.03
ROCE (%)
12.4
14.5
14.3
RONW (%)
13.1
13.7
13.7
16.2
0.65
1.29
2.05
Price Earning (P/E)

EV/EBIDTA
5.03
Sector Report
7.82
10.84
Quarterly Number
(Rs Cr)
Net Sales
243
201
205
208
185
Other Income
Total Income
248
204
210
213
188
Total Expenditure
208
165
176
185
155
PBIDT
41
39
34
27
33
Interest
33
32
26
21
26
PBT
30
28
22
17
22
Tax
24
22
19
14
16
22
22
19
14
16
PBDT
Depreciation

52
Annexure
26 August 2016
Power Industry
Installation of transmission capacities
Sector: Power T & D
Power transmission infrastructure addition
Lower transmission capacity led to blackouts
India has two transmission systems which are known as

Inter-state
Transmission
system
and
Intra-state
Transmission system. PGCIL, a Central Transmission
Utilities (CTU), is responsible for planning inter-state
transmission system (ISTS) while State Transmission
Utilities (STU) (namely State Transco/ SEBs) are
responsible for the development of Intra State
Transmission System.
Both transmission systems cumulatively have 347,294
ckms of transmission lines (>220kv) and 6,75,584 MVA
of transformation capacity.
Transmission capacity
Transmission Lines (ckm)
HVDC Terminals
HVDC
765 kV
400 kV
220 kV
Total
Incremental addition
Substation Capacity (MVA)
HVDC
765
400
220
Total
Incremental addition
10th plan
11th plan
5,872
2,184
75,722
114,629
198,407
8,200
0
92,942
156,497
257,639
Sector Report
12th plan
(Planned)
13th plan
(Planned)
9,432
5,250
106,819
135,980
257,481
59,074
16,872
32,250
144,819
170,980
364,921
107,440
27,472
54,450
174,819
274,205
530,946
166,025
9,750
25,000
151,027
223,774
409,551
151,912
22,500
174,000
196,027
299,774
692,301
282,750
37,500
253,000
245,027
501,174
1,036,701
344,400
Indias power transformation capacity has increased from

1.2MVA/MW to 2.2MVA/MW but it is far below than
the ideal level of 7MVA/MW of generation capacity.
Lower transformation capacity with respect to power
generation results in congestion in inter state power
transmission.
Blackouts: Due to grid failure, the country faced two

power blackouts in 2012. On day 1, around 30 Crore
people of northern region were affected while on day
2, around 62 Crore people were affected, which forced
policy makers to improve the reliability of power
transmission and to improve the infrastructure.
Substations (AC and HVDC, 400 KV and above)

Expected
At the end of
addition in
11th Plan
12th Plan
Expected
addition by
end of 12th
Plan
Expected
addition in
13th Plan
Expected
addition by
end of 13th
Plan
HVDC Terminals
HVDC b-to-b
3,000
3,000
3,000
HVDC bipoles
6,750
12,750
19,500
15,000
34,500
Total (MW)
9,750
12,750
22,500
15,000
37,500
765kV
25,000
149,000
174,000
79,000
253,000
400kV
151,027
45,000
196,027
49,000
245,027
Total (MVA)
176,027
194,000
370,027
128,000
498,027
AC Substations
54
26 August 2016
Disclaimer
Sector Report
Power Industry
Sector: Power T & D
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26 August 2016
Disclaimer
Sector Report
Power Industry
Sector: Power T & D
Disclaimer:
Nothing in this report constitutes investment, legal, accounting and tax advice or a representation that any investment or strategy is suitable or appropriate to the recipients specific circumstances.
The securities and strategies discussed and opinions expressed, if any, in this report may not be suitable for all investors, who must make their own investment decisions, based on their own
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Power T&DSector Thematic Report

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Towers & transmission lines

Akhand Pratap Singh

Power generation v/s transmission capacity

Bottlenecks in the power transmission

Investment in Power Distribution

Power distribution reforms and its impact

Opportunity for T&D Players

KEC International Ltd

Kalpataru Power Transmission Ltd

Shilchar Technologies Ltd

Techno Electric & Engg Co Ltd

Voltamp Transformers Ltd

Genus Power Infrastructures Ltd

bn and Rs 2,600 bn is planned for power transmission sector to improve transmission

Power Transmission from power plant to end user

Transmission and distribution sytem

RTU: Remote terminal unit ( micro controller based)

Power generation v/s transmission capacity

Transmission capacity growth lagged from generation capacity growth

In previous ten years, power generation capacity increased 2.3x

Source: CEA, Axis Securities

Power transmission capacity growth

9th FYP 10th FYP 11th FYP 12th FYP

Power transmission constraints

Source: CEA, Axis Securities

Power generation capacity

Sector: Power T & D

Indias power generation capacity doubled in last ten years

Coal resources and power demand needs T&D network

Source: CEA, Axis Securities

East &North East

Source: CEA, Axis Securities

Fuel wise capacity break up

There is huge disparity in location of coal

Source: CEA, Axis Securities

Concerns with Power Distribution Sector

Sector: Power T & D

Weak Financial Performance of SEBs:

Under recoveries resulted in Huge losses for discoms

DISCOMs have remained the weakest link in the Power

Lack of tariff hikes to pass on incremental cost

resulting in low cost recovery, low metering levels

Lack of support by the state governments.

Due to the above, the distribution companies have not

Source: PFC, Axis Securities

Source: CEA, Axis Securities

Bottlenecks in the power transmission

Transformation capacity MVA/MW

Sector: Power T & D

Lower transmission capacity addition resulted in deficiency in

Power generation of the country has more than doubled in

increased to that pace due to underinvestment in power

Source: CEA, Axis Securities

T&D sector. As a thumb rule, investment in power T&D and

10th Plan 11th Plan 12th Plan

generation should be in same proportion (1:1). But Indian

Indian Power transmission capacity has deficiency of 4.8 MVA/MW

dependency on transmission lines.

Due to inadequate power transmission and distribution

In an ideal situation, power evacuation transformation

(T&D) infrastructure, power evacuation and Aggregate

At present, the installed power generation capacity of

than the 9-11% losses at global level.