>TORRENT CABLES: TCL continues to replace major plant & machinery with the latest equipment

■ Q3FY12 & FY11 Results
During FY11, sales advanced by 45.4% to `245.3 crore but net profit fell by 34.5% to `6.9 crore due to 235% higher provision for depreciation. OP and NP margin stood at 6.9% and 2.8% against 7.0% and 6.3% respectively in the corresponding period last year.


EPS for FY11 stood at `8.0.The DER as at FY11 stood at 0.08:1 whereas the value of the gross block at `112.0 crore.


During Q3FY12, sales rose 13.2% to `64.7 crore and net profit by 621.8% to `6.5 crore. (YoY). OPM and NPM stood at 16.3% and 10.0% compared to 5.8% and 1.5% respectively in Q3FY11. EPS for Q3FY12 stands at `7.6.


■ Clients
TCL’s clients include Alfa Laval India, Bajaj Auto, Alstom, BHEL, Bharat Forge, Cummins India, Engineers India, Infoysys Technologies, Idea Cellular, IVRCL, Jyoti Structures, L &T, Mecon, NCCL, Shapporji & Pallonji, Tata Motors, Thermax, Siemens, Suzlon Energy and Uhde India. It also supplies its products to almost all SEBs.


■ Expansion & Modernisation
In order to capitalize on the growing HT/EHV cable demand, TCL had embarked on a `64 crore expansion program in the HT cable segment with product capability ranging upto 132 KV cables. The new line was partially commissioned in FY09-10.


Currently, TCL has arranged for Suppliers’ Line of Credit to the extent of `20 crore for the imported equipment in respect of expansion undertaken at Nadiad plant.


Along with expansion, TCL continues to replace major plant & machinery with the latest equipment.


■ Prospects
HT power cable segment has witnessed a lot of capacity addition, due to a major emphasis on the electrification programs and 'Power on demand by 2012' program. Based on the predicted growth of HT power cables, capacity additions are being planned.


As the Indian economy prepares for sustained growth of 7 – 9%, the importance of power sector should continue to increase. The power sector demand is expected to grow at 7.5% - 8% CAGR till 2017. The Government’s focus on attaining “power for all” has accelerated capacity addition in the country. For the next few years there is the possibility for huge investment in the power sector. The above suggests that power related business will have good prospects.


The power cable industry is expected to grow steadily over the coming years. Several market segments are expected to generate this demand. Industries will play a vital role in the surge in demand for cables. Since industries have planned substantial investments, either to add capacities or to setup green-field projects, their power requirement is expected to increase. A significant rise in the number of captive power plants and substations will also add to the demand.


Investment in infrastructure is positive and is expected in various segments ranging from manufacturing to service industry. The service industry is one of the fastest growing sectors in India. Demand for cables will be originating from the development of new industrial parks and office complexes. Power sector is expected to become the second largest consumer of power cables.


■ Outlook
The new HT XLPE line was fully operational during FY11. The major refurbishing and renovating the old HT XLPE line in FY11-12 should help to maintain the production level. TCL planned investments in the range of `5 to 8 crore to overcome the imbalances and thereby increase the output of the new HT XLPE line by nearly 15%.


This was expected to be operational in Q4FY12. TCL will continue to focus on operational efficiency in all facets of manufacturing.


To read full report: TORRENT CABLES
RISH TRADER