Government's focus on capacity addition to power RPG Transmission's growth
01-Feb-2007 •Value Research
RPG Transmission (Idirect Code: RPGtra), the maker of power transmission towers, railway electrification and telecommunication towers has put its turbulent past behind to emerge as a formidable player in the industry. The company is riding on the growth in the transmission industry as the country will need a massive 37,000 MW of transmission capacity by 2012. The increased spend by the government in augmenting capacity in the power sector will stand in good stead for the company.
The company's bad patch started when high cost-debt started telling on its books. The company had to borrow the high-cost debt since it was facing capital shortage. The corporate restructuring programme with its creditors has led to better working capital management for the company.
The company recently secured large orders from Power Grid Corporation (PGCIL) worth Rs 193 crore for supply and construction of transmission lines for the latter's two projects. The PGCIL deal has taken RPG Transmission's order book to around Rs 450 crore. The company also has ABB-Alsthom, Escotel, MTNL, BPL and Bharti Telecom as its customers. The Jabalpur-based company, with an installed capacity of 48000 MT per annum, plans to ramp it up to 60,000 MT to meet the burgeoning demand in the sector. This means the company compares well with other players in the sector like Jyoti Structures, Kalptaru Power and KEC International, who are also expanding their capacities.
As the company derives a majority of its business from the government power utilities, any change in the policy might affect its profitability adversely.