11 October 2023
On the 28th of September, 2023, SPTL's Board took a significant step by approving the demerger of its Power Transmission Infrastructure business, operating under the BOT model, into a distinct entity known as SGL5. The demerged SPTL will now focus on housing the Products business, including Conductors, OPGW, and Power Cables, as well as the Specialized EPC services business (MSI) and the Neutral Independent Fiberco business. This strategic move will generate substantial value for the Global Products and Service business. In the realm of Conductors, SPTL finds itself in direct competition with Apar Industries Ltd. Both companies hold considerable market share not only in India but also have a strong presence in international export markets. As for Cables, Apar boasts a diverse portfolio encompassing LDC, Elastomeric Cables, OFC, and Power Cables, while SPTL focuses on an impressive array of MV, HV, and EHV Power Cables, with plans to expand further to include Solar Cables. In a broader perspective, the demand for Conductors and Cables is anticipated to remain robust in the medium term. This projection is grounded in a backdrop of strong demand driven by global capital expenditure in Renewable Energy (RE) capacity expansion, Transmission and Distribution (T&D) network growth, High-Speed Rail (HSR) infrastructure upgrades, the advantages derived from the 'China+1' strategy, and favourable tariff structures within the United States. The company is to file
the Demerger application with NCLT. Under its Transmission Infra business, SPTL has developed/is developing a robust portfolio
of 15,000 circuit kms of transmission under the ‘BOT’ model. The company leads the 5-6
player market, with a market share of 25% among the private players and has an Order book
of ₹ 8000 Cr. The demerged entity will also own Neutral Independent Fiberco business in India. Currently,
SPTL has 29% market share in utility grade Optical Fiber Infra Leasing space. It has a portfolio of ~5,500 rkms of fiber network and monetization rights for an additional
~2,100 rkms. The management is targeting to be a pan-India ‘Alternate FiberCo’ with OPGW
portfolio of 50,000 rkms by FY25-end through PPPs.
In an optimistic demand scenario, the management envisions a doubling of the power transmission network over the next 8 years to facilitate the ambitious expansion of Renewable Energy (RE) sources. A projected investment of Rs5 trillion underpins this expansion. Furthermore, the management underscores that the demand for Conductors is poised to remain robust, driven by the aggressive expansion of RE, the continual growth of transmission lines, the benefits derived from the 'China+1' strategy, and advantageous duty structures in the United States, among other factors.
The expansion of transmission lines is anticipated to maintain its aggressive pace, primarily due to longer gestation periods in comparison to power generation expansion. Domestic and overseas transmission lines have gestation periods of approximately 2-3 years and 7-8 years, respectively. The management also notes a significant demand for new transmission lines in Rajasthan and Gujarat under the Tariff-Based Competitive Bidding (TBCB) framework. They maintain an optimistic outlook regarding the demand for new transmission lines in Karnataka, Andhra Pradesh, and Telangana.
Additionally, the management reports a substantial demand for conductors in the United States, attributed to the aggressive increase in RE power generation aimed at fulfilling climate objectives set by both Federal and State governments.
In an optimistic demand scenario, the management envisions a doubling of the power transmission network over the next 8 years to facilitate the ambitious expansion of Renewable Energy (RE) sources. A projected investment of Rs5 trillion underpins this expansion. Furthermore, the management underscores that the demand for Conductors is poised to remain robust, driven by the aggressive expansion of RE, the continual growth of transmission lines, the benefits derived from the 'China+1' strategy, and advantageous duty structures in the United States, among other factors.
The expansion of transmission lines is anticipated to maintain its aggressive pace, primarily due to longer gestation periods in comparison to power generation expansion. Domestic and overseas transmission lines have gestation periods of approximately 2-3 years and 7-8 years, respectively. The management also notes a significant demand for new transmission lines in Rajasthan and Gujarat under the Tariff-Based Competitive Bidding (TBCB) framework. They maintain an optimistic outlook regarding the demand for new transmission lines in Karnataka, Andhra Pradesh, and Telangana.
Additionally, the management reports a substantial demand for conductors in the United States, attributed to the aggressive increase in RE power generation aimed at fulfilling climate objectives set by both Federal and State governments.
