Apar sees delayed Power Grid orders next month

Apar Industries, speciality oil and power conductor manufacturer, hopes to bag about Rs440 crore worth of aluminium conductor contracts from the state-owned Power Grid Corporation of India (PGCIL) before the end of the fiscal, said chief financial officer V C Diwadkar.

The company’s current order-book stands at Rs1,200 crore, 30% of which is from PGCIL and the rest from private players.

“The tenders for Rs2,200 crore orders were opened in November 2009 and it does not take more than a year. We hope to get 20% of that,” Diwadkar said.
Apar is the second-biggest player in the Rs5,600 crore conductor market after Sterlite Technologies. Diwadkar said Apar’s share of the pie is about 20% while Sterlite’s is said to be 30%.

Talking of the possible reasons behind the delay behind the award of the PGCIL projects, he said it changed its tender norms last year allowing even those players whose product and plant are not approved to put in technical bids. The inspection happened after the technical bid stage. “But now they have gone back to their earlier rules,” he added.

The company’s current conductor capacity is 73,000 tonne per annum (tpa). It plans to expand the capacity at its Silvassa facility by 10,000 tpa and is putting up a Rs25 crore greenfield plant in Orissa, which will be commissioned in September.

“We’ll add 25,000 tpa in phase I and depending on the market demand we might go for further expansion,” Diwadkar said.

He also said the new capacity in Silvassa, which will be operational by next month, will be used to expand Apar’s range of high-temperature conductors, which can carry twice as much power as normal conductors.

“They are preferred in areas which have right of way issues. Currently only Sterlit and Apar have been approved by PGCIL to make them,” Diwadkar said.

Apar is targeting a volume of over 100,000 tonnes this fiscal, a one-third jump over 2009-10. Conductors and oils contribute equally to Apar’s topline. For the quarter ended December 31, Apar’s net sales rose 25% from a year ago to Rs648.51 crore while its net profit saw an increase of just 2.73% to Rs24.95 crore.