Total about 30000 MVA Transformer tenders are out in April May 2015. This is about more than 3 times tendering growth on YoY basis. While generally, April-June quarter remains sluggish, this is the first sign of revival.

Orders are coming from Trancoms and SEB's. Orders from industry side have yet not picked up.

Of these Transformer tenders, a substantial chunk is from Gujarat, Andhra and Telangana States.

Pricing have yet not improved in Transformer segment, and management expects the pricing scenario to improve only post Dec'15. But with pie of tending getting bigger, management believes at least this will ensure that every player has some pie and the industry as a whole will be able to operate at higher capacity. Current average operational capacity of the industry will be around 60%.

On Raw material side, while Copper, Aluminum, Crude are lower, CRGO prices are up by around 25-30% YoY. As per the management, generally, when the CRGO prices are up, the transformer industry revives and uptrend cycle begins.

On competition side, while local players have learnt their lesson and some are still learning, internationally, competition has reduced specially from China in Transformers upto 765 KVA. As compared to earlier duty structure, which incentivized imports of Transformers from India, now Government have rationalized duty structure and have made it mandatory for localization and production of transformers in India which is in line with the make in India concept of Prime Minister.

States like Andhra Pradesh is also looking aggressively on the 2 way feeder power line as built in Gujarat for Transmission and Distribution, one for Agriculture and other for rural and urban markets. This will further open up new business and orders for the sector. Replacement demand of 220 KV Transformers which constitute more than 75% of total transformers being used by the SEB's, will be a huge opportunity for industry players, as SEBs shift and upgrade to 400 KV transformer capacity.

Current installed capacity of transformers in India is around 1040 GVA and it is estimated that about 400 GVA of this requires repair, replacements as of Mar'15. This will reach to around 1548 GVA by 2020. This also will drive the demand for transformers apart from new opportunity for supporting the increasing need of the power.

The thumb rule is 15 MVA transformer capacity is required for 1 MW of power capacity addition.

IMP Powers has current installed capacity of 12000 MVA with transformer range upto 400 KV class.

The company exports its products to more than 15 countries. Majority the exports are to countries in Africa, Asia and Middle East. Exports have higher margins.

IMP Power compared to other industry players never went after orders. While peers took whatever orders they can find at whatever prices and are now bleeding, IMP focused on ensuring that it does not lose money and debtors don't pile up.

IMP power has an order book position of around Rs 260 crore as on Mar'15. This translates into order book of about 4315 MVA. Orders received from EPC contractors account for 32% of order book, about 28% of orders are from Electricity boards, 11% from exports and about 29% of order book are Hydro Projects.

The company is expected to receive some about Rs 100 crore of orders in next 1 month where it is already L1.

In FY'15, the company produced about 7883 MVA of Transformers and operated about 66% of total installed capacity.

Company aims to garner about 7500 MVA orders from the 30000 MVA orders that are tendered out in the Q1 FY'16. This will make the company full for FY'16 and some orders may spill over for FY'17 as well.

While the company is a prominent player in Transformer capacity of upto 400 KV class, it also aims to expand its facility to manufacture transformers of 765 KV class and above going forward.

IMP Energy in which IMP power holds about 77% stake, is engaged in complete EPC work of Small Hydro Power (SHP) business. The company sets up small hydro power plants of upto 5 MW capacity and does the entire EPC work. It is currently executing 2 such contracts.

The company expects to complete 1 Hydro power project in FY'16 and another 2 at least in FY'17. Also IMP Energy is L1 in 8 MW of IPP projects in Jammu And Kashmir State.

Of the total 170000 MW of renewable power capacity planned by the Government in next 5 years, SHP would account for about 5000 MW of planned capacity from currently less than 20 MW of total SHP current capacity. Management expects on a conservative basis about 1000 such less than 5 MW of SHP contracts to be tendered out in next 5 years. Each such entire contract including the EPC value can be of around Rs 10 crore or more depending upon design and location. There is hardly any competition and is generally ignored by the market participants.

Overall, IMP Power expects to continue to focus on bottom line growth. Idea is to be selective in orders in FY'16. As per the management, FY'16 will be a year of positive consolidation and from there on the growth in orders and pricing will pick up strongly for the Transformer industry in general and IMP Power in particular.