Hyderabad: Tata Projects Ltd, which currently sources transmission towers from other companies while completing engineering contracts for power projects, plans to start making the towers itself in an effort to benefit from growing demand for such towers and avoid delays arising from overflowing order books at most tower makers.
“The move to manufacture transmission towers would not only help the company improve its profit margins, but also enable it ensure the quality and also maintain delivery schedules. We expect savings of roughly Rs4.5 crore per year by having our own transmission towers facility,” said A. Venkateshwar, vice-president, Tata Projects.
The company’s manufacturing efforts will focus on high voltage (HV) and extra high voltage (EHV) towers that are being installed, largely by the Power Grid Corp. of India Ltd, the public sector power transmission firm that hopes to install 60,000km of lines in the next five years. Private sector power projects (14 of them), coming up over the next five years, will also increase demand for the towers the company plans to make—together, these projects will add 24,000km of transmission lines.
Part of the Tata group, Tata Projects ended 2006-07 with Rs938 crore in revenues. Other large companies in the transmission towers business include Larsen & Toubro Ltd, KEC Ltd, Jyoti Structures Ltd and Kalpataru Power Transmission Ltd. The transmission towers business also has several small and medium-sized regional players. The order books of most third-party suppliers are full and this has affected their delivery schedules.
Tata Projects will start off by making towers that will be used in its engineering business where it sets up transmission networks. That’s a substantial amount of business, said Venkateshwar.
“While the Power Grid’s plans need around Rs55,000 crore of investments, the private sector investments are estimated at around Rs22,000 crore, taking the total to Rs77,000 crore,” he said.
Of this, the investments for HV and EHV transmission towers account for around 40% or Rs30,800 crore, he said. “Rs6,000 crore investments are expected each year in the Plan period (next five years). This is the market that we are setting our eyes on,” Venkateshwar added.
Tata Projects’ facility to manufacture transmission towers is coming up near Nagpur in Maharashtra at an investment of Rs20 crore in the first stage. The initial installed capacity of this facility will be 24,000 tonnes per annum.
The company, which is currently executing orders worth Rs1,450 crore, estimates to grow its revenues by more than 70% in 2007-08, to around Rs1,600 crore from Rs938 crore in 2006-07.