INDUSTRYPOWER EQUIPMENT

COMPANYVOLTAMP

TRANSFORMERS LTD.

TRANSFORMERS-INDUSTRY

India has the fifth largest power generation capacity in the world.

Demand for transformers is directly proportional to power generation capacity and T&D N/W.

Transformers (Power equipment) market is pegged at Rs 10,000 crore.

Strong base of over 500 transformer industries with overall capacity of 1000 GVA sufficient for domestic and export market.

Export: 30-35 % of annual production.

ROLE OF TRANSFORMERS

POWER GENERATIONSTEP UP POWER TRANSFORMER

RECEIVING SUB STATION

DISTRIBUTION TRANSFORMERS

STEP DOWN POWER SUBSTATION

STEP DOWN POWER TRANSFORMERS

USERS

POWER SECTOR

GENERATION

DISTRIBUTION

TRANSFORMERS

TRANSMISSION

TRADING

TYPES OF TRANSFORMERS

PRESENT SCENARIO

Power generation in March 2010 grew by 8.3% (Y-o-Y) to 62,070 MW. In March 2010, thermal power and Hydel power generation increased by a 7.3% and 16.6% respectively.

  FY10 recorded 6.6% growth in power generation to 771.55

billion kWh.  Every MW requires approximately 8 MVA Transformers.  In 2010-11, the country is expected to add 21,441 MW of fresh

power projects – the highest ever in a single year.

Therefore 21441 MW will create a demand for 171528 MVA transformers

Government is able to achieve 60%, hence the market for transformers would be 102917 MVA.

SWOT ANALYSIS OF INDUSTRYSTRENGTHS:

-COST COMPETITIVENESS

SKILLED WORKFOCE

-TECHNICAL TIE UP WITH GLOBAL PLAYERS

-DOMESTIC PLAYERS PRE-QUALIFIED WITH SEBs

WEAKNESSES:-DEPENDENT ON IMPORT OF CRGO

-HIGH DEPENDENCE ON GOVERNMENT PROGRAMMES

-HIGHLY WORKING CAPITAL INTENSIVE

-HIGH DEBTOR DAYS IN GOVERNMENT PROJECTS

OPPORTUNITIES:-LARGE AND GROWING DOMESTIC DEMAND

-HIGH CAPEX PLANS ANNOUNCED BY VAIOUS INDUSTRIES

-VARIOUS GOVERNMENT PROGRAMMES UNDERTAKEN FOR ADDITIONAL GENERATION CAPACITIES

-REPLACEMENT MARKET TO SUPPLIMENT DEMAND FROM FRESH INSTALLATIONS.

THREATS:-IMPORTS OF CHEAPER VARIANTS FROM CHINA

-RISING RAW MATERIALS PRICES- CRGO AND COPPER

-CHANGE IN TECHNOLOGY

-LOW CAPITAL REQUIRED TO SET UP A FACILITY WHICH COULD INDUCE FORIENG PLAYERS TO ENTER THE MARKET

SWOT

PEERS

VOLTAMP TRANSFORMERS LTD

COMPANY OVERVIEW

Voltamp Transformers Ltd. , initially incorporated in 1963 and was characterised as Private Limited Company in year 1967 in Vadodara, It was converted into public ltd in 2006.

80% of the present annual sales is from project business.

Clientele includes leaders in Government and Semi-Government projects, Refineries, Fertilizer Plants, Power sector, Pharma , Paper, Steel, Cement sectors etc and various other Industries and State Electricity Boards.

DESIGN

CORE ASSEMBLY

WINDING

TRANSFORMER

ASSEMBLY

CONNECTION

DRYING

TANKING

Man

ufa

ctu

ring

pro

cess

DESIGN

CORE ASSEMBLY

WINDING

TRANSFORMER

ASSEMBLY

CONNECTION

DRYING

TANKING

GROWTH STRATEGY

It has levered its position into dry type transformers (realizations and margins are better).It has a market share of 40-45% in dry type transformers.

It is focusing on export markets targeting the high growth markets –Middle East, African and South East Asian countries.

As of the latest , the order book of VTL stood at Rs 420 crs of which 80-90% is from non SEBs.

VTL has planned a capex of Rs 11 crs for FY11 which will be mainly to equip power transformer facility with better handling and modern testing facility.

CONCERNS

Growth is dependent on pace of industrial capex which could be hampered in case of slowdown.

China and Russia can be major threats as they provide cheaper substitutes.

The company does not have any long term contracts with suppliers of key raw materials which could pressurize the margins in case of price fluctuations.

Major competitors include BHEL, Sujana Towers, Techno Elect Ltd. etc.

FY08 FY09 FY100

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Net salesEBITDAPAT

FY08 FY09 FY100.00%

5.00%

10.00%

15.00%

20.00%

25.00%

EBITDA margin PAT margin

Revenue Projections

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