Date: 5 January 2016
Price: Rs. 167
Schneider Electric Infrastructure India Limited (“Schneider Electric” or the “Company“) is a subsidiary of Schneider Electric Singapore Pte. Ltd and is engaged in the business of power transmission and distribution. The Company’s products include transformers, electrical equipment and components (switchgears), ring main units, and automation.
Schneider Electric Product Offerings
- Substation Automation (Smart Grids) – in this Schneider Electric provides equipment and services to manage and control the flow of electricity in transmission and distribution grids. The Company also provides digitized automation solutions for power utilities and other related activities.
- Systems and Solutions – The Company provide turnkey solutions and servicing of large scale on-shore and off-shore, conventional and renewable energy projects.
Presence in India – 16 sales offices, 7 factories and 7 solution centres.
|Energy Grid Automation Transformers and Switchgears India Private Limited*||70.57%|
|Foreign – Schneider Electric Singapore Pte Ltd||4.43 %|
* As of January 17, 2013, Energy Grid Automation Transformers and Switchgears India Limited operates as a subsidiary of Schneider Electric Singapore Pte. Ltd
Clients – The Company’s clients include Larsen & Toubro, Odisha Power Transmission Corporation Limited, Procter & Gamble, Hindustan EPC, Mahindra, Tata Power, Ramco Cement, IOCL Guwahati, Trident, and Honda Cars etc.
- Crompton Greaves
- Alstom T&D India
- ABB India Limited
KEY FINANCIAL FIGURES
Smart Grid – Growing Opportunity to Boost Power Efficiency
“A smart grid is an electricity network that uses digital and other advanced technologies to monitor and manage the transport of electricity from all generation sources to meet the varying electricity demands of end-users.”
India loses almost 23% of the electricity generated during transmission and distribution. As the energy demand continues to grow and urgent need to prevent the power losses, there will be a greater demand for digital solutions to efficiently manage the grid.
Smart grids market offers growing opportunity to the Company. Further, government’s focus on providing access to electricity for all with reliable energy infrastructure augurs well for the Company through its strong portfolio of technological offerings.
Government’s Smart City Project
Other market drivers important for the Company are the ageing of electrical infrastructure requiring replacement and modernization. The government 100 smart cities projects, industrial corridors, and expanding urban centers are also expected to expand the horizon of opportunities.
Schneider Electric enjoys a competitive advantage because of its integrated smart city solutions covering the complete domain from energy, mobility, water, and services.
Identifiable Growth Area – Smart City Solutions
- Smart grid automation & flexible distribution
- Smart metering management
- Real-time smart grid software suite
- Traffic management
- Tolling & congestion charging
- Integrated mobility
- Public transit
- Traveller information
- Smart water networks
- Distribution management
- Leak detection
- Storm-water management and urban flooding
Smart Public Services
- Public safety
- Video surveillance
- Emergency management
- Digital city services
- Integrated City Management Platform
- Security Systems & Management
Smart Buildings & Homes
- High-performance Buildings
- Energy efficiency
- Efficient Homes
- Connection to the Smart Grid
New Areas of Opportunity – Automation and Switch Gears
Switchgear forms a crucial part in the power sector across various segments including power generation, transmission and distribution, and equipment protection. Switchgear is employed to minimize electric failures and mitigate aftereffects of fault currents that flow through the circuit. These high-intensity fault currents can damage equipment or devices in the circuit.
According to a report – Switchgear Market by Type (High, Medium, and Low Voltage) and by Application (Industries, Utilities, Transportation and Power Generation) – Global Trends and Forecasts to 2019, switch gear market is estimated to touch $136.71 billion by 2019 and major share for this to be contributed by the Asia-Pacific region.
Safe Revenue Stream – Not Dependent on SEBs
Unlike power generation companies, Schneider Electric is not dependent upon the cash strapped State Electricity Board (SEBs). Unlike power producers, Schneider Electric gets its revenue on a project by project basis, (being a service provider in this space). This significantly reduces the likelihood of payment defaults emanating from the same customer over a longer term.
Weak Financial Position
For FY 2015, Schneider Electric’s, income from operations increased by 7.79 % to Rs. 1,310.31 Cr. from Rs. 1,215.65 Cr. but the Company reported operating losses consecutively for 2 years and net losses for 3 years.
Schneider Electric Infra’s average long term debt to equity ratio over the last 5 financial years has been 0.98 times.
View: Operates in an interesting space but has weak financial position and is running in losses for the last 3 years. The Company has not paid dividend over the past 4 years.
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