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આઈસીએસએ ઇંડિયા

બીએસઈ: 531524  |  ઍનઍસઈ : ICSA  |  ISIN: INE306B01029  |  Computers - Software

શોધો આઈસીએસએ ઇંડિયા કનેક્શન � Mar 10
ચેરમેનનું ભાષણ વર્ષ : Mar '11
Dear shareholders, Rarely in the history of a mature sector does one
 encounter an opportunity where the prevailing sectoral technology is
 poised to jump from first generation to third generation in just five
 years.
 
 This is precisely the kind of opportunity that addresses the power
 sector in India today.
 
 For decades, Indias power sector was plagued by legacy infrastructure,
 high losses and ineffective investments. This reality proved to be a
 national drag that not only pulled down the efficiency of nationa
 spending from a limited perspective but prevented Indians from
 inheriting an infrastructure that would take their lives ahead.
 
 As an Indian I am proud that our tryst with an improved destiny appears
 to be round the corner; as someone who promoted ICSA, am deeply
 satisfied that our Company is helping make this national transformation
 a visible reality.
 
 Enabling environment
 
 The Indian power sector is poised to emerge as one the most
 sophisticated in the world on account of the following realities:
 
 - The government formed the Revised APDRP for the focused reduction of
 AT&C losses in the country. This was implemented through Power Finance
 Corporation (PFC), who empanelled system integrators (primary
 customers) and who, in turn, outsourced assignments to network solution
 providers, GIS solution providers, and meter data acquisition and
 solution providers, among others (ICSA bid directly to customers under
 the erstwhile APDRP segment but was required to bid to system
 integrators in the new R-APDRP environment).
 
 - Under the R-APDRP programme, the government began to float tenders
 for a SCADA-based distribution management system to increase sectoral
 automation. ICSA was empanelled as one of only 14 system integrators,
 creating a large potentia opportunity.
 
 - The government is also rolling out distribution franchisees for
 efficient and profitable distribution; ICSA possesses the capability to
 conduct relevant projects.
 
 - The Government of India (GoI) is now laying a greater emphasis on
 private participation in building T&D networks; the central (PowerGrid)
 and state utilities (state transmission companies) are likely to place
 BOOT transmission line and substation contracts in the coming years.
 
 - The government also formed a national Smart Grid forum to evaluate
 the scope of Smart Grid opportunities in India.
 
 These developments indicate that India is approaching an inflection
 point in the history of its power sector.
 
 2010-11 review
 
 The financial year of 2010-11 was a year of steady improvement in our
 revenues and profits, which is reflected in the numbers below:
 
 - Revenues grew 13.56 per cent over 2009- 10
 
 - EBIDTA strengthened 16.70 per cent over 2009-10
 
 - Post-tax profit strengthened 3.11 per cent over 2009-10
 
 - EBIDTA margin enhanced 56 basis points
 
 However, the big story of 2010-11 is not reflected in these numbers;
 our various initiatives and benefits will reflect only from the current
 year onwards.
 
 Initiatives 2010-11
 
 IPS segment: This continued to be our biggest segment (68.43 per cent
 of our revenues), growing 19.37 per cent over the previous year. The
 Company is now enhancing its focus on the transmission segment by
 executing a range of transmission line projects (132 kv, 220 kv, 400
 kv) and entering into a joint venture for GIS substations and
 underground cable aying, completing its largest erection project (88
 substations) and creating a pan- India presence.
 
 ESS segment: This segments revenues (30.97 per cent of our revenue)
 increased 2.74 per cent in 2010-11. The Company strengthened this
 business by bidding for fresh tenders (with Dongfang Electric) in the
 SCADA-DMS segment, the benefits of which are expected from FY2011-12
 onwards. The smart meter manufacturing unit started operations.
 Streamlined processes enhanced efficiency and product quality. A
 redesigned IAMR reduced costs by 40 per cent. New products and newer
 versions of existing
 
 products were developed (with enhanced communication capabilities). A
 SCADA-based pilot project was executed to establish capability and
 credibility.
 
 Industry overview
 
 It is a national irony that the second fastest growing country in the
 world should be suffering a peak power shortage of 12.1 per cent. The
 reality is that India stands sixth in the world in terms of power
 generation but is one of the lowest per capita electricity consumers
 (612 kWh against the globa average of 2,300 kWh) (Source: Ministry of
 Power). As per the government, the power sector lost Rs. 45,000 crore
 during the fisca year ended 31st March 2010, a figure that is likely to
 touch Rs. 68,000 crore by end 2010-11 and Rs. 1,00,000 crore by March
 2015 (Source: Livemint).
 
 ASSOCHAMs Study on Mounting T&D losses warned that almost a third of
 the countrys Rs. 810,000 cr investments in the 11th Five Year Plan
 would be largely wasted if immediate steps were not taken to reduce
 these losses. Even if only 50 per cent of the countrys transmission
 and distribution losses can be plugged by the stoppage of theft or the
 upgradation of its transmission and distribution system, India can more
 than make up its power shortage (Source: AEP).
 
 The country is investing extensively to correct this situation; it
 targeted a reduction in AT&C loss to 15 per cent in the Eleventh Five
 Year Plan. As this progressively transpires, distribution companies
 will be liquid enough to re-invest in strengthening their networks.
 
 This proposed investment will not come a day too soon: the government
 plans to add 100,000 MW of power generation capacity in the Twelfth
 Plan, making it imperative to create a corresponding transmission and
 
 distribution network. Besides, Power Grid Corp. of India Ltd. (PGCIL) -
 responsible for national power transmission - plans to increase Indias
 inter-regional power transfer capacity from 20,800 MW to 37,000 MW by
 2012, which will require state electricity boards to invest in a more
 sophisticated distribution system. This will not only plug national
 losses but also create a significant business opportunity for ICSA.
 
 Emerging opportunities
 
 ICSA is future-ready. The Company is readying to address the emerging
 automation opportunity in the Indian power sector through the
 implementation of SCADA-based projects on the one hand and addressing
 the Smart Grid opportunity on the other. Through these initiatives,
 ICSA is not merely addressing an Indian opportunity; the Company is
 working at the cutting-edge of a global technology curve that will
 enhance its international relevance.
 
 SCADA opportunity: Under the R-APDRP, the government plans to do
 something daring; it intends to implement SCADA- based Distribution
 Management System (DMS) solutions across India. During the first phase,
 the government identified 80 cities with a population of at least
 400,000 each where these solutions are planned to be implemented in the
 Eleventh Five Year Plan followed by another 140 cities in the Twelfth
 Plan. The combination of 220 cities is expected to create more than USD
 one billion SCADA opportunity, one of the largest such opportunities
 anywhere in the world.
 
 ICSA is attractively placed to capitalise on this scenario for the
 following reasons:
 
 - The Company is already empanelled as one of only 14 system
 integrators (including six serious players) for the first 80 towns;
 
 the Company is expected to benefit significantly once the tenders are
 floated.
 
 - The Company entered into collaboration with Dongfang Electronics Ltd.
 (Dongfang), the worlds largest SCADA deployer with more than 700
 global installations.  Dongfang is a pure SCADA company with
 distinctive core competence. ICSAs collaboration will facilitate
 technology transfer; ICSA is not only equipped to provide a competent
 solution but also at a competitive cost over larger players
 
 Dongfangs credentials are compelling as well:
 
 - The Company enjoys a reputation for having been the quickest SCADA
 deployer, completing implementation projects in an average four months
 against the industry average of 18 months
 
 - The Company has been associated with prestigious SCADA installations;
 the Company was engaged in the entire power automation of the Beijing
 Olympics; Dongfang also enjoys the reputation for possessing the
 richest experience across terrains, resulting in cost-effective
 installations the world over.
 
 - The Company is comfortable at working with multiple technologies for
 customised solutions, an advantage in India
 
 Two SCADA tenders were floated; the rest of the tenders are to be
 awarded in the current financial year.
 
 Smart Grid: Smart Grid represents the next generation of power services
 anywhere in the world. This grid will comprise hardware and software
 applications seamlessly integrated, leading to uninterrupted real- time
 communication with each other. This will make the grid an intelligent
 bi-
 
 directional digital network (unlike the conventional unidirectional
 alternative). A smart grid will comprise hardware - smart meters,
 energy management technologies, wireless sensor networks, control
 systems ike SCADA - and software system integrators. Besides, demand
 side incentives will be managed with pricing models that optimise
 consumption and minimise peak load usage.
 
 This scenario is no wishful thinking; India has already formed a
 National Smart Grid Forum to evaluate this possibility. The task force
 suggested that DISCOMs must undertake pilot projects by 2012, covering
 the following:
 
 - Remote reactive power management
 
 - Remote frequency control
 
 - Remote metering with open communication protocol
 
 - Remote disconnect and connect
 
 - Real time harmonic measurement
 
 - Create a data base for electrical and other parameters for effective
 forecasting and scheduling
 
 ICSA is prepared for this unfolding reality.  The Company provides a
 suite of pioneering embedded solutions and quality infrastructure in
 energy management, energy audit and control applications. It provides a
 versatile data acquisition system using several communication media
 (GSM, GPRS, CDMA, PLCC, optical fibre and RF, among others). It
 provides embedded and high performance communications software with
 advanced real time functionality that can be used throughout the energy
 sector.  The Company is also evaluating inorganic growth prospects in
 developed nations that are a couple of years ahead in this cutting-
 
 edge technology. This arrangement will grow our competence and make it
 possible for us to offer related solutions anywhere in the world.
 
 Distribution franchisee: The Indian government is rolling out the
 concept of Distribution Franchisees where the distribution
 responsibility for a particular geography is allocated to a private
 player. In these instances, power tariffs will be fixed as per
 government rates; franchisees will be given the responsibility to run
 the distribution network within that area and collect revenues for
 about 10 to 20 years.  The key to success under this model lies in an
 important determinant: franchisees who reduce their distribution losses
 will add to their revenues. Four Indian cities have already implemented
 this model with success, resulting in reduced T&D losses and enhanced
 revenue collection.
 
 ICSA is competently placed to enter this business for the following
 reasons: The Company understands how power distribution networks
 operate; the Company comprises a strong Board of Directors and senior
 management set up with a rich experience in the management of
 distribution companies.
 
 BOOT model in power transmission and distribution: The government has
 lined up transmission sector investments worth Rs. 380,000 crore (USD
 84.4 billion) during 2008-17. Following a decade of underinvestment in
 the T&D space, the Eleventh Plan and Twelfth Plans are expected to
 correct the situation. This is clearly evident from the fact that the
 projected share of T&D expenditure in total power expenditure in the
 Eleventh and Twelfth Plans is 51 per cent and 56.4 per
 
 cent respectively, compared to 44.2 per cent in the Tenth Plan. The
 foray of private companies to build T&D infrastructure is sign of a
 huge quantum of capex to be committed by them in the next couple of
 years. It is expected that both central (PowerGrid) and state utilities
 (state transmission companies) will place transmission line and
 substation contracts only on a BOOT basis in the coming years,
 strengthening investment pace and quality (Source: icicidirect.com).
 
 ICSA is attractively positioned to take advantages in this sector for
 the following reasons: the Company has executed a number of T&D
 projects covering design and erection; it possess the capability to
 execute projects up to 400 kv and entered into a business-enhancing
 arrangement for GIS substation and underground cable laying.  Going
 forward, it will also gain qualification for 765 kv projects.
 
 Road ahead
 
 The Indian power industry is marked by the following opportunities:
 contemporariness, longevity, size and speed. On the one hand, the
 government has laid down a priority in mitigating transmission and
 distribution
 
 losses; on the other, a growing proportion of the investment in the
 countrys power industry will be derived from the private sector. Over
 the foreseeable future, the sector is expected to evolve faster on
 account of modernisation and automation, throwing up attractive
 opportunities.
 
 ICSA is attractively placed to capitalise on this unprecedented
 phenomenon. ICSA established its capability in providing automation
 products and creating a proactive competitive edge. In the IPS segment,
 the Company is embarking on bigger projects (in India and abroad),
 graduating to solutions for 765 kV transmission lines and planning to
 bid for GIS substations and buried cable lines.
 
 In 2011-12, the Company expects to start generating SCADA revenues,
 grow its topline 25 per cent, protect margins and generate a
 corresponding increase in its bottomline.
 
 This will bring ICSA closer to its vision of emerging as a formidable
 force in the power sector.
 
 Regards,
 
 G Bala Reddy
 Chairman-cum-Managing Director
સ્તોત્ર: રેલીગેર ટેકનોવા


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