Established in 1981, Skipper Ltd., now with over 40+ years of domain knowledge, specializes in a big spectrum across various engineering products from Transmission Towers to Polymer Pipes and Fittings. It is, in fact, the largest transmission tower manufacturing company in India and the 10th largest globally. It is a leading and respected brand and reliable partner for executing critical Infrastructure EPC projects. Skipper differentiates its offerings with high quality but cost effective solution for infrastructure providers and telecom operators.
Skipper is also fast emerging as a national powerhouse in the Polymer pipes business contributing to multiple developing sectors. The Company manufactures premium quality polymer pipes & fittings, which serve both drip irrigation agricultural applications, as well as for plumbing installations in construction projects.
Its international footprint spans continents such as Latin America, Europe, and Africa and is spread across 50+ countries with presence across sub-segments such as Towers, EPC, Monopoles and Railway Electrification Structures. Its state-of-the-art facilities include five manufacturing facilities with a total capacity of 300,000 MTPA for Engineering business, 51000 MTPA Polymer Production Business, and 1 NABL accredited R&D Lab & Testing Facility.
Those small steps, which late Shri Sadhu Ram Bansal took way back in 1981 when he founded the S K Bansal Group, has over the decades, have left an indelible mark on the sands of time. The next level of journey continued in the same pace as Mr. Sajan Kumar Bansal played an instrumental role in helping the Company become a multi-product manufacturer of globally appreciated goods. He successfully turned it into a big brand.
Mr. Sajan Kumar Bansal, Managing Director and his sons Mr. Sharan Bansal, Mr. Devesh Bansal & Mr. Siddharth Bansal in a free-wheeling chat with Indian Economy & Market shared the ongoing ventures, their vision and future plans.
“We expect a 25% CAGR growth over the next 3 years”
Skipper Ltd. is in the field for more than 36 years – the largest integrated Transmission Tower manufacturing company. What kind of change you saw and what you envision in future?
Our performance in the last 36 years illustrates the opportunities and challenges. The phenomenal impact that technology is having on businesses around the world is creating exciting and viable new opportunities for us and our clients. However, capitalizing on this opportunity requires a strong focus and commitment to innovation and collaboration which Skipper has shown in every step of its operation. The goals set by Skipper during the initial days were surely aggressive and ambitious, but we strongly believed that these were eminently achievable through game-changing initiatives. The path was of course not easy but we have successfully waded through this flux and came out stronger on the other side.
Markets were volatile, business models were changing rapidly and new capabilities needed to be built and the organization needed to adapt with great agility. However, we took these challenges head-on. With focused energy, creativity and discipline many new initiatives taken up by the company in the past are showing tangible results today. With such technology, world-class facilities and a flexible operating model under its wing, Skipper is set to grow extensively in the next decade. I am extremely fortunate to find myself in a position to drive and experience this change first-hand in the coming days.
Skipper specializes in a big spectrum across various engineering products. Any plan to increase this basket?
Apart from Transmission Towers & Polymer Pipes & Fittings Skipper has already been broad basing its portfolio to include a higher proportion of Non-T&D products like Solar, Railways, Telecom and Fasteners. It will help us to de-risk our exposure in T&D. The Company chooses to be present in the power transmission infrastructure segment in the future. At the same time, we are diversifying into relevant high-growth segments. Recently our Telecom division secured a big order from BSNL. Apart from this Skipper is an end-to-end backward integrated company that manufactures all grades of fasteners used for transmission lines. These fasteners are manufactured from high-quality raw materials as per international standards and quality tested at every level.
We manufacture a range of bolts, nuts and washers coupled with galvanising, helping the company reduce the need for storing surplus on-site inventory. Skipper is also a leading supplier of hot-rolled structures, which offer extensive performance characteristics, versatility and economy. We manufacture different grades and can adhere to standards like IS, BSEN, ASTM, DIN. We also provide Coating services that provide protection for a variety of products, enhancing their durability, lifespan and overall aesthetic value.
How do commodity prices impact you and how do you shield business from volatile commodity prices?
The pandemic outbreak followed by the Russia-Ukraine war affected our overall transmission business. The T&D sector also experienced a significant impact. Major renewable projects that were commissioned faced delays and raw material prices were fluctuating. Due to the present conditions, we are strictly taking up projects which are secured based on current commodity prices and logistics costs. This is providing a better business landscape for us and gives us the confidence to improve the margins in near future.
In spite of a challenging environment, the Company clocked in strong revenue performance across major business segments. Going forward most of the engineering revenue execution will take place from newer contracts which were secured on FOB terms and at elevated commodity price levels aiding in continued better margin performance for the coming fiscal. The unprecedented volatility of commodity prices also negatively affected the execution margin of our already secured engineering fixed-type contracts.
The increased prices of key raw materials lead to increased working capital utilisation. So, here is what we did. We deliberately increased our raw material inventory to mitigate commodity price risk on secured contracts and took corrective steps and measures to neutralise raw material volatility. The Raw material prices have harmonised recently which will aid in better performance and finalisation of new orders.
Our satisfactory performance during this quarter is a reflection of our persistent focus on our robust business strategy. Our closing order book stood at Rs. 47,050 million, which constitutes 80% domestic & 20% exports giving us the confidence to deliver good growth in the current FY and subsequent coming years. Although the challenges of raw material price volatility and global logistics bottlenecks for exports have eased in the recent quarter; however, we are prepared with adequate steps to mitigate these uncertainties
A lot is happening in the sector and associated space, where you envision seeing the company after 3 years?
In the coming years, for our engineering business, we’re expecting international orders and execution to gain pace, complete some advanced stages of negotiation & secure some coveted international contracts. In light of this, I must mention that a great demand for domestic T&D still exists. We already have one of the largest production capacities of 3,00,000 MTPA, so we are set for at least the next couple of years in this regard.
We also expect good traction in domestic orders for the Polymer segment to continue. In the upcoming days, we will keep refining our productivity and cost reduction initiatives after the implementation of TOI at the plant and site level, which are expected to further improve efficiency in operations and aid in stable margins.
Our Nation’s attempts to upgrade legacy systems in its T&D sector have traditionally been stymied by complex permitting processes, integration difficulties, and uncompetitive or challenging financing environments. Some ongoing geopolitical constraints may continue to pose a challenge in the near future. Fluctuations in Important factors like Raw Materials & Freight affect our exports greatly. Although we operate on robust risk-mitigating policies, Skipper is geared up to take these challenges head-on.
How are you getting benefitted from China Plus One trend and what strategy you have developed to exploit this opportunity?
We currently do business in more than 50+ countries. Our maximum revenue is earned through exports. With China plus One trend, we did some excellent business with the rest of the world. As the global focus on renewable energy continues to grow, many countries required new transmission lines to be built to cater to a new green energy network. Our global presence puts us in an advantageous position to act upon such opportunities in the coming years. We are also continuing our engagement with more than 100 EPC players across the world, as partners in the bids that they will be participating in. The gradual decoupling from China is also causing many projects to seek alternative supply chains. Our R&D Centre and Tower Testing Station have improved our brand positioning in the export markets, helping us to be taken as a serious contender. With in-house design capability and human capital, we are able to add more value to the projects we bid on, offering innovative, bespoke and cost-effective design solutions. This further improves our chances of winning in the marketplace.
How investment in telecom will benefit Skipper?
We have the second largest telecom industry in the world with over a 1.2 billion subscriber base. With the continued increase in demand for data, additional telecom towers need to be installed to increase coverage in rural or non-metros and to increase capacity in metros. Currently, India has 5.5 lakh towers and the industry believes the country will require additional one lakh towers per year over the next 4-5 years to meet the estimated demand. We have successfully capitalized on the opportunity and recently secured new orders worth Rs 2,570 crore from Bharat Sanchar Nigam Ltd (BSNL) for erection of ground-based telecom towers, infrastructure as a service provider (IaaSP) for supply, installation of infrastructure items and subsequent O&M (operations and maintenance). The projects are to be executed under CAPEX and OPEX models in Rajasthan and Odisha for five years, extendable to five more years in the uncovered villages under 4G saturation projects.
We expect strong revenue performance across major business segments to continue & also expect a 25% CAGR growth over the next 3 years on the back of pending engineering execution & the BSNL order. In our Polymer division, our perseverance to deliver world-class products and the best services to our partners has resulted in revenue growth of 31% against last year’s quarter.
How do you manage the forex risk?
During the year the Company has managed foreign exchange risk and hedged foreign exchange to the extent considered necessary. In the case of imports and foreign currency loans, the Company does hedging on a selective basis. Most export orders are duly hedged by way of forward cover through the banks. Since the volume of export is much more, thereby the balance of imports are getting hedged by way of natural hedging.
The material exposure of the Company in commodities is on account of steel which is readily available. The Company does not accumulate excessive quantities of steel for its operations due to its voluminous nature. Accordingly, the requirement of hedging is minimal. Most of the engineering product contracts are having price escalation and de-escalation clause which is linked with the commodity prices and for non-price variation contracts the fluctuations are factored in pricing while bidding.
Going forward, the marketplace looks exciting and ripe with opportunities and the company has a positive outlook based on strong traction in domestic telecom on account of future 5G Rollout and a vibrant domestic & International T&D industry fueled by a surge in renewables generation; As the global focus on renewables energy continues to grow, many countries will require new transmission lines to be built to cater to a new green energy network
How Skipper hopes to make a mark in Aatmnirbhar Bharat story?
We differentiate ourselves by offering high-quality but cost-effective solutions for infrastructure providers.
In spite of Covid-19 induced disruption, Skipper is committed to cater 270 million people who are still set to be added to India’s urban population over the next two decades, even at a relatively modest assumed urbanisation rate. Our Products are completely manufactured in India with the sole purpose of creating opportunities in the Indian market in terms of business growth, Infra development & employment.
In Alignment with the various opportunities in the T&D & Polymer Segment presented by the Indian Government, Skipper has been able to capitalise on the domestic markets by supplying high-quality products that are made locally. Moreover, Skipper’s vision “To produce world-class quality products ensuring robust national infrastructure development and making India the preferred sourcing hub for global infrastructure needs” accredits the company’s motivation of being a strong supporter of ‘Atmanirbhar Bharat’.
Face Value: Rs 1
CMP: Rs 106
52 Week H/L: Rs 148.90-50.10
Marketcap: Rs 967 crore
Book Value: Rs 71.31
Q3FY23: Key Highlights
Order book Position: Q3FY23 order inflow Rs. 28,630 Million for engineering products supplies & EPC works from several SEB’s and for various export supplies. The closing Order book as on December 31, 2022 is valued to be Rs. 47,050 Million, which constitutes of 20% exports and 80% domestics orders.
The company has a strong bidding pipeline of 52,000 Million International & 31,200 Million Domestic and expects a substantial rise in the volume of international orders in the current fiscal.
Secured fresh new order valuing Rs 2,570 Crores from BSNL for Supply and erection of Ground Based Telecom Towers, Infrastructure as a Service Provider (IaaSP) for supply, installation of Infrastructure Items and subsequent O&M for 5 years extendable to 5 more years in the uncovered villages of India under 4G saturation projects. The total contract value to be executed under capex and opex model over 5 years. The works are to be executed in the states of Rajasthan and Orissa and includes development of approx. 3,350 tower location sites. The telecom sites will be set up to provide 4G connectivity.
Budget FY 23-24 has several measures like increasing capital investment outlay to Rs. 10 lakh crore for infrastructure that will facilitate the growth of the sector. The initiative of setting up a 13 GW transmission system for grid integration, with an investment of Rs. 20,700 crores and Rs. 2.4 lakhs crore outlay to railways will attract private investment in the sector and boost demand for operational products in the segment.