T&D equipment production in the country (according to IEEMA statistics) in 2008-09 came down by 2.7% as compared to 15% growth in the previous year on the back of postponement or reduction of procurement. Increase in new capacity across various product segment also impacted the prices.

Current year is also a tough one for the domestic T&D equipment industry. Presently the company has an order backlog of Rs 239.4 crore and while the order backlog for transmission line insulator of the company for 2009-10 is fairly satisfactory, the substation insulator is lower compared to 2008-09 due to postponement of several projects as well as weak industrial projects on the back of recession. The export order backlog for 2009-10 is also lower compared to 2008-09 due to economic slowdown as well as customers running down inventories.

The company expects to clock net sales of Rs 250 crore for the current fiscal ending March 2010. The company expects the share of project business to grow to 20% in current fiscal from 10% in 2008-09.

The Chennai plant (unit 1) has orders for full capacity utilization. However the SEZ Vizag plant (unit 2), which has seen it first phase of 5000 tonne/year capacity commissioned in July 2009 is yet to see ramp up in production. While the Chennai plant produces both transmission and substation insulators the Vizag plant fully focused on substation insulators. The company expects the Vizag plant to see full ramp up in production by Dec 2009 as it's getting for clearance from various overseas clients and the orders are expected to flow in steadily in coming months. On full ramp up the Phase I of Vizag unit could turn in revenue of Rs 130-150 crore a year. The full benefit of that to kick in only in next fiscal.

The company has completed about 95% of the planned capex of Rs 135 crore for both phases of Vizag plant. The company has completed 85% of the physical work in the Phase II of Vizag plant. The project may commence production in June 2010 depending on the market pickup for semiconductor insulators.

The company continues to upgrade the Chennai plant depending on the market requirement and in current fiscal it will invest about Rs 6 crore toward that. The company has changed the production mix of the Chennai plant towards 800 kV insulators, where the company is the first domestic company to complete the supply.

As far as 11^th five year plan orders, only the first round of orders has been awarded and the second round of orders are yet to be awarded.

The margin continues to be under pressure for current fiscal given the surplus capacity scenario in the market and OEMs such as Areva T&D etc., to whom the company supplies insulators are facing steep pricing pressure.

In export markets the company caters largely to US, Europe. In this market there is lot of replacement demand is happening especially after recession that will drive the export orders for the company. Further with the production shift already happened towards low cost countries of China and India for insulators from West the company is better positioned to capitalize for its SEZ Vizag unit.

WS Electric, the subsidiary company which develops a IT park in JV with one of the leading developers of the country has completed only 3 lakh sq feet of space and with changed market dynamics and lower offtake by IT/ITES sector especially non SEZ spaces the company has paused further development. The company which share in the project being just land, has got 87000 square feet of developed space out of the total developed area and started getting the lease rent. The company expects to net about Rs 4 crore per annum from rental out of this 87000 sft.