Skipper Ltd Management Discussions.

ACCORDING TO THE ECONOMIC SURVEY 2021-21, INDIAS GDP GROWTH IS ESTIMATED TO BOUNCE BACK AT 11% IN FY2022 LED TO THE GOVERNMENTS ATMA NIRBHAR BHARAT ABHIYAAN RESULTING IN A STIMULUS PACKAGE OF Rs.29.87 TRILLION TRANSLATING TO 15% OF INDIAS GDP

GLOBAL ECONOMIC OVERVIEW

After clocking consecutive growth of 3.6% and 2.9% in calendar years (CY) 2018 and 2019, the COVID-19 pandemic halted the global growth momentum in 2020. According to World Economic Outlook April 2020 the worlds output contracted by 3.3% in CY2020. However, thanks to the prompt policy adopted by major countries, additional fiscal support and vaccine driven recovery in the second half of CY2020 to overcome the COVID-19 setback averted the 2008 global financial crisis. On the other hand, tourism and commodity i export economies have been hardly hit in CY2020.

WEO, April 2021 report states that the Advanced Economies growth contracted by 4.7% in CY2020 while Emerging Market and Developing Economies slipped by 2.2% in CY2020. However, Advanced Economies recovery are expected to out-pace Emerging Market and Developing Economies from the COVID-19 aftereffects due to earlier access to vaccinations and conducive macroeconomic policies. The United States and Japan announced significant fiscal support. The European Union has signalled to distribute the Next Generation EU Fund. The Bidens administration $1.9 trillion rescue package is expected to boost the US economy, also benefiting key US trading allies.

OUTLOOK

According to WEO, April 2021 estimates the global growth is pegged at 6% in 2021 and 4.4% in 2022 backed by fiscal support in key economies, projected vaccine-powered recovery in the latter part of 2021 and evolving economic activity to subdued mobility. Advanced Economies is expected to clock 5.1% and 3.6% growth in CY2021 and CY2022, respectively due to manageable debt service costs as majority debt is serviced by long-term and at times negative-yielding bonds. Emerging Market and Developing Economies is projected to register 6.7% and 5.0% growth in CY2021 and CY2022, respectively. China is estimated to grow by 8.4% and 5.6% in CY2021 and CY2022, respectively led by effective containment measures, spur in public investment activities and central bank aided liquidity support.

INDIAN ECONOMIC OVERVIEW

According to National Statistics Office (NSO) estimates, COVID-19 pandemic and several containment measures are expected to cause Indias Gross Domestic Product (GDP) growth contraction by 7.7% in FY2021 as against 4.2% growth in FY2020. As per the Government Response Stringency Index measured by Oxford University, the contraction mirrored Indias stringent lockdown measures enforced by the Government. The contraction indicated a once in a century crisis hit by the pandemic and associated public health measures. GDP at Current Prices or Nominal GDP in FY2021 is estimated to be pegged at Rs.195.86 trillion vis-a-vis Rs.203.51 trillion in FY2020, contracting by 3.8%.

Agriculture, Forest & Fisheries and Electricity, Gas, Water Supply & Other Utility services are the only two sectors projected to register positive growth of 3.4% and 2.7%, respectively. On the other hand, Trade, Hotels, Transport, Communication & Services related to Broadcasting, Construction, Mining & Quarrying and Manufacturing sector are estimated to degrow by 21.4%, 12.6%, 12.4% and 9.4%, respectively. Indias per capita income is estimated at Rs.85,929 in FY2021 as compared to Rs.94,566 in FY2020.

India adopted a four-pillar strategy of containment, fiscal, financial and long-term structural reforms to overcome the COVID-19 led economic setback. The governments calibrated fiscal and monetary support gave a fillip to consumption and unlocked investment opportunities. Additionally, a favourable monetary policy provided adequate liquidity and immediate aid to debtors, thereby smoothening the monetary policy transmission. Despite global adversities, India continued to be a preferred investment destination in FY2021. The Foreign Portfolio Investment (FPI) inflows pumped Rs.2.74 trillion into the Indian equity markets during FY2021, reflecting the confidence of foreign investors in the sound fundamentals of the Indian Economy. Indias Consumer Price Index (CPI) inflation rate stood at 6.2% in FY2021. The Indian Rupee surged by 4% to Rs.73.1 per US Dollar thanks to the sustained foreign fund inflows into Indian equities, despite higher interest rates and inflation than the US.

Indias trade deficit trimmed to USD 98.6 billion in FY2021 from USD 161.4 billion in FY2020. Indias exports contracted by 7.3% to USD 290.6 billion in FY2021. On the other hand, Indias import declined by 18% to USD 389.2 billion in FY2021. According to Doing Business Report (DBR), Indias Ease of Doing Business rankings improved to 63rd position in 2020 from 77th in 2018. India entered into the list of top 50 innovative countries and stood at 48th rank on the Global Innovation Index 2020. India was placed at 52nd position in 2019.

Outlook

According to the Economic Survey 2021-21, Indias GDP growth is estimated to bounce back at 11% in FY2022 led to the governments Atma Nirbhar Bharat Abhiyaan resulting in a stimulus package of Rs.29.87 trillion translating to 15% of Indias GDP Indias V-shaped recovery is augmented by a robust rise in consumption and investment coupled with a mega vaccination drive and bounce-back in the services sector. The reinstatement of inter and intra state movement and record-high monthly GST collections resonate with the unlocking of industrial and commercial activities. Additionally, a surge in commercial paper issuances, easing yields and steady credit growth to Micro, Small and Medium Enterprises (MSMEs) has renewed Governments focus on MSMEs to survive and grow. However, the second wave of COVID-19 infections coupled with reimpositions of lockdown might pose a threat to the sustaining V-shaped recovery dampening market and consumer sentiment. According to the Centre for Economics and Business Research forecasts, India will be the fifth largest economy in 2025 overtaking the United Kingdom.

ACCORDING TO THE CENTRE FOR ECONOMICS AND BUSINESS RESEARCH FORECASTS, INDIA WILL BE THE FIFTH LARGEST ECONOMY IN 2025 OVERTAKING THE UNITED KINGDOM.

GLOBAL TRANSMISSION AND DISTRIBUTION INDUSTRY

Global Energy Outlook

According to Bloomberg NEFs New Energy Outlook 2020, the future of the global energy economy will be shaped by tectonic economic drivers and tipping points and will look dramatically different by 2050. It points to underlying economic fundamentals affecting a seismic energy transition. It will be shaped by mankinds urgent desire to reduce greenhouse gas emissions to meet a well-below-two-degree emissions budget. It will be driven by the transition to clean electricity and deep decarbonization. Renewable energy will play an increasingly important role in meeting the worlds growing energy needs.

To meet 1.5 degrees by 2050 The Intl Renewable Energy Agency (IRENA) estimates installed renewable energy gigawatts need to increase 10x to 27k GW from 2.5k GW today for the mix of electricity in the energy pie to grow to over 50% in 2050 from 21% today.

This includes the share of renewables in electricity generation expanding to 90% from 25%. To achieve this the world needs to install ~840 GW/year compared to the ~200 GW/year in recent (record) years. The annual costs are estimated at $4.4 trillion/year, well above 2019s $1.8 trillion and represents $133T from 2021 to 2050.

The intermittency associated with the growing use of wind and solar power means a variety of different technologies and solutions are needed to balance the energy system and ensure the availability of firm power. Renewable energy, led by wind and solar power, is the fastest growing source of energy over the next 30 years, supported by a significant increase in the development of, and investment in, new wind and solar capacity. Accelerating learning curves, lower raw material costs and an array of new technologies have positioned wind and solar to compete without government subsidies and tax credits, oil and gas, while remaining needed for decades, will be increasingly challenged as society shifts away from its reliance on fossil fuels.

According to Bloomberg NEFs New Energy Outlook 2020, hydrogen, renewables, and nuclear power will play the major role in the worlds pathway to clean electricity. The use of hydrogen increases as the energy system progressively decarbonizes, carrying energy to activities which are difficult or costly to electrify. The production of hydrogen is dominated by a mix of blue and green hydrogen.

According to World Energy Outlook (WEO) 2020, the global energy demand is expected to contract by 5% in 2020 owing to the COVID-19 crisis. Additionally, it slows down the efforts of clean energy transitions as energy investments declined by 18% in CY2020. Renewable energy is taking centre stage with solar leading the front. Conducive policies and evolving technologies are facilitating swift capital access in the prominent markets. Solar projects are delivering cheaper and lowest cost electricity as against new coal or gas-fired power plants in most of the countries. Renewable energy is expected to meet 80% of global electricity demand growth by the next decade. Hydropower continues to enjoy the lions share of renewable growth. However, solar is the key growth source followed by both onshore and offshore wind energy.

ACCORDING TO BLOOMBERG NEFS NEW ENERGY OUTLOOK 2020, HYDROGEN, RENEWABLES, AND NUCLEAR POWER WILL PLAY MAJOR ROLES IN THE WORLDS PATHWAY TO CLEAN ELECTRICITY.

Mercom India states that the global electricity demand is expected to recover in 2021, registering a 3% growth. Asia Pacific region is forecasted to contribute 66.7% of the additional demand. China and Indias electricity demand is projected to grow by 5.2% YoY and 3.6% YoY, respectively in 2021. The renewable power sources are poised to register 6% growth in 2021. The share of renewables in the power mix is set to increase to 29% in 2021 vs. 28% last year.

According to World Economic Outlook (WEO) 2015, the global T&D industry is projected to witness USD 8.4 trillion investments between 2015 and 2040, averaging USD 320 billion per year. The market growth in developing countries was led by grid expansion and providing electricity to all regional pockets. Developed countries achieved distribution market growth through line up-gradation towards advanced technologies along with universal electricity access. Earlier, the distribution utilities would only connect generation sources to consumption points. However, now they are transforming into electricity aggregators and sourcing electricity from large generating stations and distributed sources like homes. The distribution utilities are deploying state-of-the-art technologies to meet the required demand. The distribution companies are building the desired infrastructure to bridge the rising use of electric vehicles in most of countries.

According to INMR, the global investment in transmission and distribution systems is projected to surpass USD 250 billion in 2020. Additionally, it is expected to touch USD 386 billion in 2030, registering a compound annual growth rate (CAGR) of 4.2% over the next decade. Asia is estimated to be the growth engine, attracting 45% of the global investment in 2020, rising to 51% in 2040. India is expected to clock a CAGR of ~7% and ~5% during the 2020-2030 and 2030-2040 period, respectively.

On 10th of August, 2021, the U.S. Senate passed legislation that calls for spending $1 trillion—including $550 billion in new funds—on improving the nations infrastructure. Most of the funding will go to upgrading transportation, water, and power infrastructure, as well as expanding broadband internet access. But the bill also includes some money for R&D, primarily for advancing clean energy technologies, including electric vehicles and efforts to trap carbon dioxide produced by power plants before it enters the atmosphere. The bill provides $73 billion to modernize the nations electricity grid so that it can carry more renewable energy, the single largest federal investment in power transmission in history. This added investment will add significantly to the global demand for new transmission networks.

INDIAN TRANSMISSION AND DISTRIBUTION INDUSTRY

Generation overview

According to the Ministry of Power (MoP), Indias cumulative installed power capacity grew by 1.9% YoY at 379.1 GW in FY2021. The growth was satisfying considering the socio-economic impact of COVID-19, negative electricity demand, low utilization of coal fired plants, mounting financial stress in the distribution & generation sector and a downward trend in power prices.

Thermal power (including Coal, Gas, Lignite and Diesel) continued to enjoy lion share (61.4%) of Indias installed power capacity mix. However, owing to increased focus towards cleaner and greener source of energy, Indias thermal power share continues to witness a downward trend (61.4% in FY2021 vs. 62% in FY2020). On the other hand, Indias thermal power capacity marginally grew by 1.1% in FY2021 to 233.2 GW.

Indias Renewable Energy Sources (RES) including Small Hydro Project, Biomass Gasifier, Biomass Power, Urban & Industrial Waste Power, Solar and Wind Energy contributed 24.5% (at 91.2 GW) of Indias installed capacity mix in FY2021. Hydro (Renewal) energy accounted for 12.2% (at 42.2 GW) of total Indias installed capacity energy mix in FY2021.

As per Central Electricity Authority (CEA), the Private sector led Indias installed capacity mix with 47.3% (at 179.3 GW), followed by the State sector and the Central sector at 27.5% (103.6 GW) and 25.4% (at 96.2 GW), respectively.

As per ICRA Ratings, India electricity demand is poised to register 6.0% YoY growth for FY2022 considering the favourable base effect, relatively lesser impact of the second wave on electricity demand and the pick-up in the vaccination programme. ICRA expects the all-India power generation capacity addition to rebound to 17-18 GW in the year, increasing by 45% YoY from 12.8 GW in 2020-21, mainly led by the renewable energy segment backed by a strong pipeline of 38 GW projects under development. The renewable energy segment would remain the main driver of capacity addition with a share of more than 60% over the next five years.

According to IEAs India Energy Report 2021, India became the worlds third largest power consuming nation backed by improving income and standard of living. Solar power is set for exponential growth in the coming two decades. The Solars share in Indias electricity generation is expected to touch 30% in 2040 from less than 4% in 2020. The massive turnaround is driven by Indias target to achieve 450 GW of renewable capacity in 2030. On the other hand, the share of coal in Indias overall power mix is expected to decline from 44% in 2019 to 34% in 2040.

Long-Term Drivers and Constraints for Demand Growth

CRISIL Research estimates energy requirement to grow at a CAGR of 5-6% between fiscals 2022 to 2025 on account of following factors:

Indias economy is expected to recover slowly post fiscal 2021, with a gradual pick up in industrial growth over the subsequent 4 years. Trickle-down effect of the Aatma Nirbhar Bharat relief package, government spending on infrastructure through the National Infrastructure Pipeline (NIP), dedicated freight corridors (DFC) infrastructure, service industry expansion, rapid urbanization, and increased farm income from agrirelated reforms are key macroeconomic factors which will aid a pickup.

Power Demand Outlook (Fiscals 2021-25)

Power demand to rise at a healthy pace of 4% CAGR over fiscals 2021 to 2025, after a minor decline of 1-2% in fiscal 2021 on account of economic downturn induced by the COVID-19 outbreak. Demand recovery will be driven by gradual uptick in economy, higher domestic demand due to rapid urbanisation, latent demand, and a strong recovery in fiscal 2022 over a lower base. Industrial demand, which forms the largest share in power demand, is expected to see an uptick owing to gradual recovery in industrial activity over the forecast period.

DEMAND RECOVERY WILL BE DRIVEN BY GRADUAL UPTICK IN ECONOMY, HIGHER DOMESTIC DEMAND DUE TO RAPID URBANISATION, LATENT DEMAND, AND A STRONG RECOVERY IN FISCAL 2022 OVER A LOWER BASE.

Investments in the Transmission and Distribution Segments

Investments in Power sector

Share of investments across power sector value chain

CRISIL Research projects investments of Rs 10-11 trillion in the power sector over the next five years. The share of generation,transmission, and distributions segments over the forecast period is expected to remain largely unchanged, with similar investments across the segments.

Investments in the segment are expected to increase to Rs 3.0-3.5 trillion from Rs ~2.50 trillion over the past five years, on account of higher nuclear capacity additions to the tune of ~4 GW over the forecast period. Investments are likely to have slackened in fiscal 2021 due to construction slowdown on account of the COVID-19 outbreak, but are likely to pick up fiscal 2022 onwards.

T&D overview

Robust generation capacity addition over the years and governments focus on 100% rural electrification through last mile connectivity has led to extensive expansion of the transmission and distribution (T&D) system across the country. The total length of domestic transmission lines rose from 3,39,737 circuit kilometres (ckm) in fiscal 2016 to 4,41,821 ckm in fiscal 2021.

Total transmission line network in the country (220 kV and above)

There has been strong growth in the transmission system at higher voltage levels and substation capacities. This is a result of increased requirement of the transmission network to carry bulk power over longer distances and at the same time optimise the right of way, minimise losses and improve grid reliability.

Strong growth in the length of high voltage transmission lines (220 kV and above)

Strong growth of transmission system at higher voltages has grown due to increased requirement of the transmission network to carry bulk power over longer distances and at the same time optimise the right of way, minimise losses, and improve grid reliability. Performance in a transmission line improves as voltage increases and as 765 kV lines use one of the highest voltage levels, they experience comparatively lesser amount of line loss. 800 kV lines have also shown strong growth momentum, rising at 29.8% CAGR over the last five fiscals, majorly owing to strong investments by the central sector.

The Electricity Act, 2003 coupled with Tariff-Based Competitive Bidding (TBCB) for development of transmission infrastructure, encouraged private participation in the power transmission sector and has supported the growth of transmission lines in India sector.

In recent years, the transmission segment has witnessed a significant increase in private participation, with the share of private players in the total line length increasing from 3.3 per cent in 2011-12 to 7.4 per cent in 2019-20, and that in substation capacity increasing from only 0.5 per cent to 4 per cent. However, Power Grid Corporation of India Limited (Powergrid) continues to dominate the countrys transmission sector with 163,222 ckt. km of lines and 409,898 MVA of capacity.

As per Power Insight, India is the second-largest transmission towers market after China, contributing 15% of the global market. Conducive reforms coupled with integrating renewable technologies in the grid are attracting huge investments for building a sustainable electric network. According to IEA;s India Energy Outlook 20212, spending on networks will quickly overtakes spending on capacity growth,

Average investment spending on electricity generation and networks in India in the steps, 2010-2030

2 https://www. iea.org/reports/india-energy-outiook-2021

3 https://powermin.gov.in/en/content/transmission-works-under-green-energy-corridors-

THE GOVERNMENTS AMBITIOUS PLAN TO EXPAND RENEWABLE ENERGY TO 175 GW BY 2022 IS A KEY DRIVER FOR GRID EXPANSION.

Green energy corridors and REMCs2 3

The Indian electricity transmission sector is gearing up to face the challenges posed by the changing power demand and energy mix. In order to meet the future peak load, which is expected to reach 226 GW by 2022 and 267 GW by 2025 (from 184 GW at present), huge investments are required for strengthening and ramping up the countrys transmission infrastructure. The governments ambitious plan to expand renewable energy to 175 GW by 2022 is a key driver for grid expansion. Private investments will continue to play a significant role in grid expansion as competitive bidding gains momentum.

For the integration of 226 GW of renewable energy by 2022, Powergrid, along with the associated state utilities, is developing green energy corridors (GECs) to connect new solar and wind capacity. Under GEC I, for which Powergrid received long-term access applications for 12 GW of capacity, over 9,700 ckt. km and 19,000 MVA of substation capacity got added at the intra-state level and 3,100 ckt. km and 17,000 MVA (across six substations) at the interstate level.

Under GEC II, transmission schemes for evacuation from 34 ultra mega solar power parks (UMSPPs) with a total capacity of 20 GW have been planned. Of this, evacuation systems for 13 solar parks (9.2 GW) have been identified through the ISTS. Powergrid is responsible for the implementation of the transmission system for eight solar parks (7 GW), including 1,870 ckt. km of lines and five substations of 13,500 MVA. So far, implementation has been completed by Powergrid for three solar parks (4,250 MW) while it is still in progress at four other UMSPPs4.

Under GEC III, estimated at Rs 416.88 billion, the central government has approved transmission schemes for renewable energy zones with a potential capacity of 66.5 GW to be achieved by December 2022. Further, a renewable energy potential of 65.5 GW has been identified across eight states for commissioning between 2022 and 2025. The associated transmission system will involve an investment of Rs 640.43 billion5.

4 https://powerline.net.in/2020/09/14/transmission-update-2/

5 https://powerline.net.in/2020/09/14/transmission-update-2/

DISCOM Reform Scheme6

In June 2021, the Cabinet Committee on Economic Affairs (CCEA) approved the marquee Q3.03 trillion power distribution company (discom) reform scheme, wherein the Centres share will be Q97,631 crore. The Scheme seeks to improve the operational efficiencies and financial sustainability of all DISCOMs/ Power Departments excluding Private Sector DISCOMs by providing conditional financial assistance to DISCOMs for strengthening of supply infrastructure. The ambitious scheme aims to bring down Indias average aggregate technical and commercial loss from the present level of 21.4% to 12-15%, and gradually narrow the deficit between the cost of electricity and the price at which it is supplied to zero by 2024-25. The reforms are also aimed at improving the reliability and quality of power supply. A measure for achieving this is the migration towards having a higher ration of high voltage to low voltage T&D networks, giving further push to the demand for upgraded transmission lines.

NIP - Expenditure Plan across Energy Sub Sectors

Rs Crore FY20 FY21 FY22 FY23 FY24 FY25 Total
Generation 30,056 53,819 63,789 63,474 64,982 50,690 326,811
Distribution 21,127 42,000 44,207 60,000 70,000 85,700 323,034
Transmission 54,875 53,897 50,712 51,522 51,522 41,522 304,050
Total 106,058 149,716 158,708 174,996 186,504 177,912 953,895
States11 58,081 75,834 63,027 48,491 38,732 33,090 456,533
Overall Totals12 164,140 225,551 221,734 223,487 225,236 211,002 1,410,428

Outlook

The power sector performance was weighed by COVID-19 damage. However, the implementation of key market reforms, the Union Budget 2021 announcements, policy and regulatory developments provided a much-needed boost to the power industry. Additionally, the government has allocated USD 1.4 trillion under National Infrastructure Pipeline during FY19-25 accounting for 24% capital expenditure over the period. The governments strong intent on implementation of reforms coupled with the overall approach to energy transition and meet its ambitious goal to achieve 450 GW renewable energy power target is set to provide a fillip to the power sector. Sustained financial growth continues to endure Indias electricity demand. With the government initiatives like Electricity for all and the recent amendments in Electricity Act 2020 and efforts to recover the financial losses of T&D, one can be optimistic towards Indias T&D outlook.

ESTIMATED AT RS 416.88 BILLION,THE CENTRAL GOVERNMENT HAS APPROVED TRANSMISSION SCHEMES FOR RENEWABLE ENERGY ZONES WITH A POTENTIAL CAPACITY OF 66.5 GW TO BE ACHIEVED BY DECEMBER 2022.

INDIAN TELECOM TOWER INDUSTRY

According to Invest India, India is the second largest telecom industry in the world with over a 1.2 billion subscriber base. The industrys remarkable growth is attributed to affordable data tariffs, wider availability, Mobile Number Portability (MNP), widening 3G and 4G coverage, consistently evolving consumption patterns of subscribers backed with favourable regulatory environment. According to Telecom Regulatory Authority of India (TRAI) January 2021 data, of the 1183.5 million telephone connections, 1163.4 million are mobile connections. The overall tele-density increased to 86.38% in January 2021.

According to Data Reportals Digital 2021 India report, Indias internet users stood at 624 million as on January 2021. The Indian smartphone users consume 12GB/ month and it is projected to increase to 25 GB/month by 2025. The telecom sectors contribution to GDP is projected to grow from 6.5% in 2017 to 2025 in 2025. Moreover, the industry boasts 100% FDI, wherein up to 49% is allowed via automatic route and above 49% under the government route.

6https://www.livemint.com/industry/energy/cabinet-approves-3-03-trillion-power-discom-reform-scheme-11625051611930.html

Growth Drivers for the Indian Telecom Sector

With continued increase in demand for data, additional telecom towers need to be installed to increase coverage in rural or non-metros and to increase capacity in metros. Currently, India has ~5.5 lakh towers and the industry believes the country will require additional ~1 lakh towers per year over the next 4-5 years to meet the estimated demand.

RAILWAY ELECTRIFICATION PROGRAM

Indian Railways took the COVID-19 pandemic as an opportunity to scale the speed of projects. According to the Ministry of Railways (MoR), Indian Railway clocked the highest ever electrification of sections covering 6,015 Route Kilometer (RKM) in a single year during FY2021, translating to 37% YoY growth. It surpassed the previous high of 5,276 RKM achieved in FY19.

Rapid route electrification has translated to Rs.80 billion savings for India Railways in diesel fuel imports during FY2021. Indian Railways eyes 100% Railway Electrification by December 2023. The move is aimed to reduce Indias dependence on crude oil imports, enhance energy security and provide an eco-friendly, faster & energy-efficient mode of transportation. The total rail electrification goes in sync with the goal of net zero emissions by 2030, thereby securing its complete electrical load from renewable energy sources.

The MoR through National Rail Plan (NRP) intends to augment the national Railway Network through longterm planning. National Rail Plan, Vision 2024 has been initiated for faster execution of certain critical projects by 2024 to build up capacity, infrastructure and enhance rail freight share ahead of the demand. NRP aims to develop capacity by 2030 serving to mounting demand up to 2050. It includes 100% electrification, building new high-density networks lines, upgrading to 160 kmph speed on Delhi-Howrah and Delhi-Mumbai routes, upgrading to 130 kmph speed on all other Golden Quadrilateral-Golden Diagonal (GQ/GD) routes and complete removal level crossings on all GQ/ GD routes. Thus, the Indian Railways freight model will swiftly move from the current 27% to 45% with complete implementation of NRP 

Robust growth opportunities for Railway electrification

• Mission 100% route electrification

• Need for electrification - to eliminate polution and Indias dependence on imported fuel

• Highest ever budget allocation of Rs.7,542 crore for electrification project during 2021-22

• Sub-station capacity to enhance leading for opportunities for transmission & distribution utilities

• Engineering procurement and construction (EPC) contractors shall have multitude of opportunity in terms of infrastructure creation for railway electrification

INDIAN PVC PIPES AND FITTINGS MARKET

The Indian PVC and Fittings market was pegged at Rs.300 billion in FY2020 and is projected to surpass Rs.500 billion by FY2025, clocking a CAGR of 10.8% for the FY2020-2025 period. PVC pipes are lightweight facilitating faster water flow, cost effective, corrosion resistive, easy to install and maintain strength under pressure. Additionally, it generates less friction than cast iron or concrete pipes. Over the years, PVC pipes applications have grown in sewage pipes and drainage solutions, water mains and irrigation, transportation of drinking water, and manufacture of advanced fire- sprinkler systems. India is witnessing rising PVC pipes demand from agriculture, automotive, building & construction, electrical and other end-use industries thanks to the governments initiatives like Housing for All, Nal se Jal, Atal Mission for Rejuvenation and Urban Transformation (AMRUT) project and Swachh Bharat Mission.

India is one of the biggest consumers of CPVC through plumbing pipe and fittings products. The mounting need for clean water in all residential and commercial projects will drive the growth of plumbing pipe and fittings products.

• Further, the amplified demand for housing which is attributable to the ever increasing population as well as the rise in personal disposable income will also drive the overall growth of this segment.

• Further, there has been a drastic shift of demand from metal to polymer based pipes, especially in plumbing and piping application in the construction industry. This has led to increase in usage of plastic pipes and emergence of CPVC pipes for hot and cold water plumbing. In order to encourage the sector, the Government of India (GOI) has been placing orders for sewage, water supplies and plumbing pipes. Continuous increase in allocation of irrigation and housing by Government of India is going to give momentum to the piping industry. With rapid growth in population, there has been an increase in demand of residential applications of pipes also.

INDIA IS ONE OF THE BIGGEST CONSUMERS OF CPVC THROUGH PLUMBING PIPE AND FITTINGS PRODUCTS. THE MOUNTING NEED FOR CLEAN WATER IN ALL RESIDENTIAL AND COMMERCIAL PROJECTS WILL DRIVE THE GROWTH OF PLUMBING PIPE AND FITTINGS PRODUCTS.

The Government at the Centre and States has put the priority focus on Jal Jeevan Mission, Swatch Bharat Abhiyan, Sanitation and affordable houses to all and development of 100 smart cities on all India basis.

NITI Aayog has declared following as growth drivers across the country:

• Government infrastructure spending

• Increasing construction

• Increasing Industrial production

• Rising demand from irrigation sector

• Replacement of aging Pipes

• Providing affordable house to all

• Heavy investment by Government in irrigation, housing and sanitization

Almost all the above growth drivers will boost the business of Plastic Piping System Division.

Going forward, the stress brought about by second wave of Covid-19 will cause further consolidation within the unorganised sector within the industry, in which smaller players with weaker balance sheets will be severely challenged. According to Company estimates, this consolidation will add an additional Rs.10,000 crores to the addressable market size for organised players in general. At Skipper, the Company is already seeing the traces of this shift through the surge in demand for our products.

The Governments Anti Dumping Duty on import of CPVC resin/compound from China and Korea for five years (2020-25) will benefit the India players. The Union Budget 2021-22 announcements provided the necessary boost recovery for the economy marred by the COVID-19 crisis. The Government enhanced its capital expenditure to Rs 5.5 trillion for FY2022, apart from creating institutional structures and providing a big impetus to monetizing assets to achieve the goals of the National Infrastructure Pipeline (NIP).

MICRO IRRIGATION

According to Fortune Business Insights, the Global Micro irrigation industry was valued at USD 7.59 billion in 2019 and is estimated to surpass USD 12.4 billion by 2027, resulting in a 6.92% CAGR during 2019-27. The rising use of advanced techniques for micro irrigation, easy accessibility, acceptance of this technique amongst commercial property owners, households, landscape developers and conducive government policies for producing quality crops are driving the growth of the market in the coming years.

Mordor Intelligence projects the India Micro Irrigation Systems Market is expected to grow at 10.9% CAGR during 2020-25 thanks to the adoption of microirrigation systems on open fields through water saving techniques like drip and sprinkle irrigation. The green house equipped horticulture production helps the farmers to obtain the year-round output.

According to Agriculture Times, about 1.1 million farmers have benefitted by the adoption of drip and sprinkler irrigation systems in 2019-20. During the last five years, an area of 4.79 million hectares has been covered under micro irrigation in the country which includes 1.7 million hectares for the year 2019-20 which is a significant achievement. India set a target of 10 million hectares under micro-irrigation in five years.

ACCORDING TO AGRICULTURE TIMES, ABOUT 1.1 MILLION FARMERS HAVE BENEFITTED BY THE ADOPTION OF DRIP AND SPRINKLER IRRIGATION SYSTEMS IN 2019-20.

The government has created a dedicated Micro Irrigation Fund of Rs 50 billion through NABARD to facilitate States in mobilizing resources for expanding coverage of micro irrigation. The Steering Committee of MIF and NABARD has sanctioned projects of Rs.38.1 billion for covering 1.25 million hectares under MIF.

India needs to adopt a holistic approach for increasing productivity from the unit area by improving soil health, decrease in input costs, enhancing crop productivity and increasing farmers awareness for benefiting the farming community and helping the vision of Prime Minister Narendra Modi for doubling of farmersRs. income.

Business Segment

Skipper Limited is one of the worlds largest integrated Transmission Tower manufacturing companies with Angle Rolling, Tower, Accessories & Fastener manufacturing and EPC line construction. Our manufacturing capacity is the largest in India and among the top 10 in the world. Skipper Limited is a national powerhouse in the Polymer Pipe business. Under the brand name of Skipper, the Company manufactures a huge range of premium quality pipes and fittings, which are used in different areas such as Plumbing, Sewage, Agriculture and Borewell sectors.

Impact of COVID-19

Skipper has actively resumed the manufacturing process. To kick-start the deliveries, the Company with its key associates have chalked out extensive catch-up plans for various locations and work fronts to ensure timely completion and avoid any slippages. During FY21, Skipper functioned at 75% of its manufacturing capacity, post phase wise resumption of work. Detailed SOPs / protocols have also been devised in compliance with the instructions/ guidelines issued by the Government.

The Company was able to act quickly and effectively to deliver support under our "Skipper Cares" programme where it was most needed. Fiscal year 2021 saw multiple national lockdowns when only essential stores could run, and people were asked stay at home. These restrictions placed significant pressure on the Companys people and its operations. Apart from setting up stringent SOPs at its operations for protecting the health and safety of the staff and workers, Skipper organised multiple vaccination drives without charge for all its employees and their family members to combat the second wave of pandemic.

The Company also revised its Covid term policy by enhancing the insurance coverage and those in home isolation can now also claim redemption through Skippers empanelled health insurance partner.

Under the "Skipper Cares" programme, the Company also extended support to families of deceased members, including last drawn salary upto Rs.50,000 for 2 years; education support for children; 3 years of medical coverage for dependants; and preferential employment for family members among other measures.

Throughout, the priority for Skipper has been the wellbeing of its people. The Company has already extended a hybrid model of work culture. In the manufacturing plants, the Company has rolled out its operations with minimum workforce to continue delivering the committed output to its customers.

The Company has worked hard to foster employee engagement through online resources to create a culture of support and understanding where everyone has access to the assistance they need. Its employee- led staff networks were a valuable source of advice, practical support and entertainment and played a key role in preserving the culture of the business while the staff worked from home.

In terms of contributing to society at large, the Company distributed oxygen boosters to Shree Vishudhanand Hospital, Kolkata, and the CSR wing of Skipper, Skipper Foundation, distributed food and medicine supplies to the cyclone hit locations of West Bengal.

(A) Engineering products

Revenues Rs.11,986 million in FY2021

Skipper is the market leader in the manufacture of transmission tower and distribution poles. The Company is positioned among the 10 largest global tower manufacturers. The Company invested in building a superior scale which helps in making it possible to cater to global customers with large orders.

The Company has created a diversified order book with customers from both domestic and international markets. The Company is supplying towers to customers across 35-plus countries.

The Company has grown into an industry leader riding capacity additions from 1,00,000 tonnes per annum (MTPA) in FY13 to 3,00,000 MTPA in FY2021.

Skipper is a differentiated player, the only one in its sector to possess captive rolling mill and galvanising plants. The Company has eight galvanising plants, with a capacity of 8,000 tonnes per month being the largest in the country (14m long). The fully integrated facilities help enhance quality, timely delivery and customer service.

The Companys long term ambition is to make India the preferred sourcing hub for global infrastructure needs and has set a benchmark for the power T&D industry through several proactive measures. In this direction, during the year, the Company has commissioned Eastern Indias first tower & pole testing bed that has been recognized by the Department of Scientific and Industrial Research (DSIR, GOI) as an inhouse R&D unit. This allows the Company to avail certain expenditure (including capital expenditure other than land & building) as deduction under Income Tax Act.

The Company is increasing its focus on the railway electrification (EPC) projects, a key focus area of the government. The Company also received core approval for all of its plants and rolling mill to supply various railway infrastructure products.

Key differentiators

• Focussed T&D Structure manufacturing and exporting country and an ideal partner to global EPC contractors in the Transmission business.

• Fully integrated plants help in providing cost leadership on one hand and provide unmatched quality on the other.

• The Company provides a wide range of products making it a one-stop shop

• First company in India to manufacture and supply 800 Kv transmission towers to Power Grid Corporation.

• Possesses complete control across the value- chain (angles to tower production), enhancing quality and efficiency.

• Accredited with ISO 9001:2008 certification for all its manufacturing facilities.

• DSIR approved in-house R&D unit facilitates load testing and prototype testing leads to enhance and customize tower design, thereby raising the customer delight quotient.

Highlights FY2021

• The Companys order book position stands at Rs.16,020 mn as on March 31,2021. The order book mix between domestic and exports stands at 67:33 in FY2021.

• Skipper received order inflow of Rs.8,750 million during FY2021. The order inflow was lower than last year as a large percentage of orders available in the market are on fixed price basis and the Company adopted a cautious approach in new order intake considering the present volatile commodity market scenario. Also, majority of the new transmission lines are now getting built to cater renewables; leading to shorter execution cycle and faster supplies to meet project deadlines. Additionally, the bid to order life cycle is prolonged due to COVID-19 led disruption.

• To add to this, USA is in the midst of a historically large infrastructure upgradation plan, in which thousands of kilometres of outdated transmission lines will need to be rebuilt. Skipper opened up its first overseas office in Canada as a first step and has appointed several representatives across the United States to target this massive upcoming opportunity. The Company appointed Mr. Brian Lacoursiere as its VP Sales & Business Development to lead its North Atlantic business development from our Canadian office. He brings with him more than 30+ years in the industry, in which he has worked for a number of steel and composite pole manufacturers and has been an active participating member of many U.S. and Canadian utility industry code and standard committees.

• Skipper is also continuing its engagement with more than 100 EPC players across the world, as partners to the bids that they will be participating in. The gradual decoupling from China is also causing many projects to seek alternative supply chains, giving further fuel to business potential coming our way.

• Skipper started operations in its new Tower & Monopole Test Station located in Howrah, West Bengal. The testing station has been assessed and accredited in accordance with the standard ISO/IEC 17025:2017 General Requirements for the Competence of Testing & Calibration Laboratories by NABL.

• Skipper recently set up R&D Centre and Tower Testing Station is expected to improve the Companys brand positioning in the export markets, helping to be taken as a serious contender. With in-house design capability and human capital, the Company can add more value into the projects it bids, offering innovative, bespoke and cost-effective design solutions. This will further improve Skippers chances of winning in the marketplace.

• The massive global and domestic focus and investment plans on T&D infrastructure, Green Energy Corridors in India, and renewable focus globally will drive up the demand for setting up new transmission networks. The Indian electricity transmission sector is gearing up to face the challenges posed by the changing power demand and energy mix. In order to meet the future peak load, which is expected to reach 226 GW by 2022 and 267 GW by 2025 (from 184 GW at present), huge investments are required for strengthening and ramping up the countrys transmission infrastructure.

• According to Mordor Intelligence , the market for India HVDC transmission systems market is expected to grow at a CAGR of approximately 6.2% during the forecast period of 2020 - 2025. Major factors driving the market include the growing renewable energy sector, rapid urbanization, and increasing rural electrification. Skipper is among a Few handful companies around the world pioneering the production of HVDC transmission lines.

• The Company has a positive outlook based on a vibrant domestic T&D industry; large pent- up demand fuelled by a surge in renewable generation; and a deep tender pipeline of new contracts that will soon be awarded in the new future.

• A pioneer, Skipper Limited is the largest Monopole designing and manufacturing facility in India, armed with global expertise and intellectual capital. It has an application of upto 765 kV in Transmission Towers and for heights of up to 40 metres for Telecom Towers. Skipper is among a Few handful companies around the world pioneering the production of Monopoles upto 765 kV for High Voltage Transmission Lines. Monopoles are fast gaining popularity and wider acceptance, giving Skipper confidence in growing this part of its business.

• In June 2021, the Cabinet Committee on Economic Affairs (CCEA) approved the marquee Rs.3.03 trillion power distribution company (discom) reform scheme, wherein the Centres share will be Rs.97,631 crore. The ambitious scheme aims to bring down Indias average aggregate technical and commercial loss from the present level of 21.4% to 1215%, and gradually narrow the deficit between the cost of electricity and the price at which it is supplied to zero by 2024-25. A measure for achieving this is the migration towards having a higher ration of high voltage to low voltage T&D networks, giving further push to the demand for upgraded transmission lines. This will provide the Company additional opportunities to participate in.

Order Book Mix as on 31.03.2021

Total Order Book: Rs.16,020 mn

SKIPPER IS THE MARKET LEADER IN THE MANUFACTURE OF TRANSMISSION TOWER AND DISTRIBUTION POLES.

THE COMPANY IS POSITIONED AMONG THE 10 LARGEST GLOBAL TOWER MANUFACTURERS.

Objectives of TOC (Theory of Constraints) in the Engineering business

• Reduction of inventory leading to reduction working capital investment.

• Supply of towers within 30 days of PRI received from the client which will help in increasing customer reliability leading to repeat order.

• Rolling of working capital will increase as well as decrease in supply time / lead time.

Ensuring full kit supply which will help in reducing billing time.

(B) Polymer products business

Revenues: Rs.2,165 million in FY2021.

The polymer business comprises a portfolio of products finding applications in plumbing and agriculture.

The segment accounts for 14% of revenues of the Company, of which the Plumbing sector contributes 70% of polymer revenues and the remaining 30% contributed by the agriculture segment.

The Polymer Business is consistently growing each quarter over the four quarters of FY2021. In Q4 of FY2021, the Company reported its highest ever quarterly revenue of Rs.792 million.

The Companys polymer capacity is 51,000 MTPA and is the only polymer product manufacturing company that has introduced Theory of Constraints (TOC) in an organized manner.

Differentiator

• The largest manufacturer of PVC pipes in West Bengal and possesses one of the largest polymer pipe capacities in Eastern India.

• Only polymer product manufacturing company to implement Theory of Constraints (TOC) in an organized manner.

• Leverages technology alliances with international majors to produce better quality.

• Collaborated with Sekisui (Japan) for the production of CPVC compounds for advanced plumbing solutions.

• A robust distribution network

The objective of implementation of Theory of Constraints (TOC):

Skipper is the only Indian polymer pipe company to implement a Theory of Constraints-based approach with the following objectives:

• To increase market share

• To strengthen organizational and distribution capabilities

• To implement a pull-based product replenishment system leading to high retail availability and lower inventory

• To strengthen ties with channel partners through a process-driven approach

• To develop partnerships with trade influencers (through a long-term loyalty program)

Advantages

• Sharp sales growth and increased market share

• Robust processes and systems to improve profitability

• Consistent availability of the entire products range at billing points

• Improved working capital cycle and inventory reduction

• Increased throughput from the existing capacity

• Improved ROI for trade partners (dealers and distributors)

Theory of Constraints in Skippers polymer business

Skipper is the First Polymer Pipe Company in India to take an innovative approach in implementing the Theory of Constraints (TOC) into its operation for strengthening revenues and margins.

• This helped in discovering that product unavailability at key points of sale led to sales and opportunity loss, affecting overall business viability.

• The Company rationalized its product portfolio and focused on the high-value plumbing sector, maximizing reach, enhancing availability across key retailers and minimizing sales loss.

OUR POLYMER BUSINESS ACCOUNTS FOR 14% OF REVENUES OF THE COMPANY, OF WHICH THE PLUMBING SECTOR CONTRIBUTES 70% OF POLYMER REVENUES AND THE REMAINING 30% CONTRIBUTED BY THE AGRICULTURE SEGMENT.

• The Company strengthened its supply chain, moderating dealer inventory without compromising stocking range, strengthening the dealers return on investments. The Company focused on just-in-time delivery across smaller product lots, the first such proposition in the sector.

• The Company focused on complete product availability through the manufacture of products and quantities sold, resulting in effective replenishment that strengthened the Companys market orientation, business development focus, deeper understanding of opportunities and working capital efficiency, obviating the need for dumping products on trade partners.

(C) Infrastructure business

Revenues: Rs.1,664 million in FY2021

A fully integrated EPC major offering solutions in tower design, tower testing, manufacturing and onsite construction.

The Company is also engaged in EPC Projects in Telecom infra and Railway Structures in various parts of the country along with other geographies. It has specialized teams for live line works, Retro fitting works, Power Evacuation solutions. It has expert teams for Project management services, Inspection Services, Construction Management, Restoration works and live line stringing. With continuous efficient pre & Post Sales Services, Skippers proves itself as a long-term partner across all major leading Infrastructure companies. We study the clients requirements sharply to understand the specifications and technical & documentation requirements of different countries and fulfil their requirements with utmost quality, quantity, and in time.

Skipper pioneered the trench-less technology service in India, offering Horizontal Directional Drilling (HDD) to accelerate the installation of underground utilities, while eliminating the need for surface excavation. HDD helps reduce environmental impact, moderating associated costs related to underground construction.

The Company also provides trench-less horizontal drilling for the installation of optic fibre cable networks, oil and gas pipelines and cable networks, among others. Skipper analyses feasibility and geo-technical reports for installation through the HDD method

RISK MANAGEMENT

Skipper continued to enhance a comprehensive system that helps promptly identify risks that affect the Company, assess their materiality, and take measures to minimize both the likelihood of risks being realized and losses they can lead to.

The Company has a unified risk assessment and management methodology: goals, objectives, and principles of setting up and operating the corporate risk management system.

Risk management is applied across all management levels and functional and project areas

a. Business Continuity Risk

The Companys business may not be relevant in the coming years.

Mitigation

The Company has selected to be present in the power transmission infrastructure segment, which is critical to national growth. The Company is diversifying into relevant high-growth segments (telecom and railway electrification).

b. Quality risk

A decline in the quality of the products of the Company may lead to fall in the sales.

Mitigation

The Company has more than three decades of domain knowledge across various engineering products like transmission towers, distribution poles, telecom towers, hot rolled sections, plastic pipes and fittings. Integrated manufacturing units, focused management and committed production and quality control team make them the preferred choice for the customers not only in India but across the globe.

The Company received several global certifications, reinforcing the Companys commitment towards quality.

THE COMPANY HAS A UNIFIED RISK ASSESSMENT AND MANAGEMENT METHODOLOGY: GOALS, OBJECTIVES, AND PRINCIPLES OF SETTING UP AND OPERATING THE CORPORATE RISK MANAGEMENT SYSTEM.

c. Competition risk

Increased competition could affect profitability.

Mitigation

With more than three decades of sectoral experience, the Company enjoys deep terrain familiarity. The Companys backward integration has enhanced competitiveness and product quality. The Company is among a handful in its industry present across the value-chain (rolling mills to test beds for product testing), a unique competitive edge.

d. Geography risk

Over dependence on any specific geography could impact the Companys performance owing to a slowdown in the particular geography.

Mitigation

The Company expanded to more than 30 countries to de-risk from excessive dependence on the Indian market.

e. Working capital risk

Stretched working capital management could impact viability.

Mitigation

The Company took several initiatives to optimise its receivables cycle across its business divisions, the full impact of which is likely to be visible across the foreseeable future.

f. Foreign exchange risk

Currency volatility could significantly impact the profitability of the Company.

Mitigation

The Company imports few raw materials and equipment; it exports to more than 30 plus countries - a hedge against foreign currency fluctuations. Besides, the Company took several initiatives to minimize the impact of forex fluctuations on its financial performance.

STANDALONE FINANCIAL PERFORMANCE Financial performance FYRs.21

Profit & Loss Summary (Rs Million) FY2021 FY2020 Change %
1 Revenues 15,815.1 13,905.1 13.7%
2 Reported EBITDA 1,437.1 1,391.3 3.3%
EBIDTA Margin (%) 9.1% 10.0%
3 Other Income 40.2 19.6
4 Depreciation 452.6 381.0
5 Finance Cost 723.5 847.6 14.6%
6 Finance Cost as % to Revenue 4.6% 6.1%
8 Profit Before Tax (2+3-4-5) 301.2 182.3 65.2%
9 PBT Margins (%) 1.9% 1.3%
10 Tax 90.4 (232.6)
Profit After Tax (8-9) 210.8 414.9 -49.2%
Pat Margins (%) 1.3% 3.0%

Debt Details

Particulars (Rs Million) FY2021 FY2020 Inc/(Dec)
Long Term Debt 2,563 1,569 994
Current Maturities of Long Term Debt 586 344 242
Short Term Debt 1,236 2,624 (1,388)
Gross Debt Level 4,385 4,537 (152)

Ratio Details

Particulars (Rs Million) FY2021 FY2020 Explanation for Change
Debt Equity Ratio 0.62 0.66 The reasons for change in parameters have been covered and explained in the previous sections of the report
ROE 3% 6%

Key Performance Highlights FY2021

Reasons for Revenue growth

• The Company reported strong revenue performance across all the business segments. Revenue grew by 14% yoy despite of covid related lockdown and challenges

Consistent & Improved Revenue Performane Trend

• Company clocked the highest ever quarterly revenue performance during Q4FY2021 in the Polymer segment.

• The Company secured new orders of Rs.8,750 million in FY2021 for Engineering product supplies from PGCIL, SEBs, Telecom and for supplies across various export markets.

• Unprecedented commodity price rally in our Key raw material items (i.e Steel, Zinc & Resin), higher ocean freight rates and Non Clarity of Remission of Duties and Taxes on Export Products (RoDTEP) adversely impacted profitability

• The Company continues to make sincere efforts on cash flow & Balance Sheet consolidation. As a result, the interest expenses declined by 14.6% YoY to Rs.723.6 million in FY2021.

• Skipper Profit before Tax surged by 65.2% YoY to Rs.301.2 million in FY2021.

• The Companys Gross Debt was reduced by Rs.152 million during the year, on account of better working capital utilisation.

• Skippers external credit rating has been assigned as A-/Stable by ACUITE for long term has been assigned on account of improved operational & financial performance in conjunction with better growth prospects.

• Skipper is the only polymer product manufacturing company to implement Theory of Constraints (TOC) in an organized manner. The Companys retailer touchpoints increased 10x times in the last two years.

ICRA ANTICIPATES THAT THE ALL- INDIA POWER GENERATION CAPACITY ADDITION IS TO REBOUND TO 17-18 GW IN FY2022, REGISTERING 45% YOY GROWTH FROM 12.8 GW IN 2020-21.

Outlook

Indias power sector is on an inflection point with the governments ambitious goal to achieve 450 GW renewable energy power target coupled with power- packed reforms leading to the sustainable growth of Indias T&D sector. As per ICRA Ratings, Indias electricity demand is projected to grow by 6.0% YoY in FY2022 owing to the favourable base effect, mild impact of the second wave on electricity demand and the pick-up in the vaccination programme. ICRA anticipates that the all-India power generation capacity addition to rebound to 17-18 GW in FY2022 registering by 45% YoY growth from 12.8 GW in 2020-21, primarily led by the renewable energy segment coupled with a strong pipeline of 38 GW projects under development.

The Company expects to clock double digit annual revenue growth in FY2022 on the back of strong pending execution of engineering contracts and a strong polymer segment. Skipper expects good traction in the International Transmission Lines (TL). Skipper is witnessing a surge in global enquiries and it will be benefitted from China + 1 trend. The global supply chain is actively scouting to minimise its dependency on China. Moreover, the majority of the new transmission lines are catering to renewables which ultimately lead to a shorter execution cycle and faster supplies to meet project deadlines.

The domestic T&D environment is showing signs of a rebound after two years of lukewarm response. Additionally, the pending domestic TL ordering bids to the tune of Rs.5,00,000 million of GEC related projects are expected to come up for bidding, providing the necessary momentum to the T&D industry from FY2022. The Company is committed to leverage and address the vast potential of Indias transmission sector with its integrated operations. With the Governments accelerated efforts towards scaling infrastructure and improving electrification in rural areas, Skipper is poised to support this growth. The Company has always strived to be a significant contributor towards nation building and we will continue to explore opportunities for growth by leveraging our strong transmission network.

Skipper focus on mechanisation and automation along with several cost reduction initiatives to further improve efficiency in operations and aid to stable margins.

Skipper is taking necessary steps to tackle & neutralise the impact of the temporary Raw Materials volatility issues in its fixed type contracts and protect margins. The Companys mitigation strategy includes:

• Secure Newer Contracts at the elevated price level

• Take advantage of low working capital debt level of the Company to keep higher raw material inventory so that a larger portion of the fixed price contracts are covered with the inventory

• Hedge Zinc & Flat Steel exposure through vendor & commodity exchange

• Negotiate firm prices contract with raw material supplier for longer duration

• Expand raw material supplier base

• Forge Tie-ups with major raw material suppliers with minimum upliftment commitment to gain maximum possible rebates and discounts

Skipper is increasingly focusing on the international market with its growing global competitiveness. This is reflected with a strong international bidding pipeline of Rs.27,000 million. The proposed USD 1.2 trillion bipartisan infrastructure plan of rebuilding of roads, bridges and other traditional infrastructure, as well as expand broadband internet service to many rural parts of the United States is poised to benefit to the Company in the coming years. Skippers first overseas office in Canada is operational in FY2021 and the Company has appointed several representatives in the US States for winning projects under the proposed USD 1.2 trillion bipartisan infrastructure plan.

The Company is consistently focusing to grow its exports pie by being connected and working with 100 global EPC players.

Skipper is looked up to as a serious player armed with complete R&D Centre and Tower Testing Station, thereby further strengthening its brand equity in the global market. The Companys in-house design team adds meaningful value into the projects laced with innovative and cost effective design solutions. Skipper will benefit from the pent up demand as the global economy opens up and operates in normalcy backed by increased pace in awarding of tenders.

The Company looks forward to tap emerging opportunities in sectors aligned with the governments rising interest. Skippers inroads into railway electrification and drip irrigation have tremendous potential aiding to strengthen its revenue stream.

THE COMPANY IS COMMITTED TO LEVERAGE AND ADDRESS THE VAST POTENTIAL OF INDIAS TRANSMISSION SECTOR WITH ITS INTEGRATED OPERATIONS.

The record high PVC resin price is poised to provide a major fillip in the organised sector as consolidation gathers pace. Small and regional manufacturers marred with working capital challenges are facing difficulties to procure polymers at a high price. Thus, companies with stronger balance sheet have gained market share from the unorganised sector. The Governments Anti Dumping Duty on import of CPVC resin/compound from China and Korea for five years (2020-25) will benefit the India companies. The Company can scale the business without incurring any major capex. Moreover, the Governments ambitious Jal Jeevan Mission (JJM) for providing tap water connections to all rural households by 2024 will boost polymer pipe demand. Additionally, the real estate housing and commercial activities have started gaining traction and completion of the pending projects will lift market sentiments for the polymers products.

Skippers Polymer division has been able to deliver the highest revenue during Q4FY2021. Skipper managed to create an increase in the touchpoints by 10 times in the last 2 years, through our concentrated efforts to streamline operations through the implementation of TOC. The polymers industry is witnessing consolidation post second wave of COVID-19. The smaller players with weaker Balance Sheet are facing numerous challenges. The polymers industry had experienced unorganised to organised shift in FY2021 as the latter was aptly able to navigate the COVID-19 operational hiccups. The organised players eye an additional Rs.100 billion market opportunity owing to this shift. The Companys polymers segment is in a sweet spot as Skipper eyes multifold expansion in the PVC business under TOC on a pan-India level enabling scalable growth opportunities.

Skipper will continue to focus on improving bottomline profitability, stabilise operating cash flows, trim its debt thereby leading to improvement of the Companys margin profile and strengthen its balance sheet position. Skipper Limited is constantly benchmarking to be best in class and remains focussed on building up an organised corporate structure. The Companys efforts towards sustainable business practices will help to achieve its goals by making meaningful contributions to the national and global infrastructure.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The internal control framework is designed to ensure proper safeguarding of assets, maintaining proper accounting records and providing reliable financial information and other data. This system is supplemented by internal audit, reviews by the management and documented policies, guidelines and procedures. The Company has a well-defined organizational structure, authority levels, internal rules and guidelines for conducting business transactions. The Company intends to undertake further measures as necessary in line with its intent to adhere to procedures, guidelines and regulations as applicable in a transparent manner. Internal audit department of the Company carries out the internal audit of the Company operations and reports its finding to the audit committee. In this process, the internal audit also evaluates the functioning and quality of internal controls and provides assurance of its adequacy and effectiveness through periodic reporting. The internal audit is carried out as per risk based internal audit plan which is reviewed by the audit committee of the Company. The committee periodically reviews the findings and suggestions for improvement and is apprised on the implementation status in respect of the actionable items.

HUMAN RESOURCE

Skipper is constantly developing effective and innovative human resource practices to remain competitive for its 2200+ employees. Skipper conducted research and revisited its human resource practices which helped it identify five essential focus areas to enhance productivity and employee motivation:

a. Goal setting with dynamic HR policies and guidelines

• KRA goal setting with dynamic HR policies and guidelines and integration of performance management system with a performance- driven organizational culture driven by dynamic compensation and benefit strategy to keep pace with the sector.

• Employee talent pool development through training and development HR system and process integration through new automation and technology implementation. Skipper conducted a senior management workshop comprising an experiential learning mix for outlining an organizational development objective. Seventy-five senior management professionals participated from all the Companys strategic business units to share perspectives and align goals to its mission and vision.

b. Integration of performance management system with performance driven organizational culture & dynamic compensation & benefit strategy to keep pace at par with industry

The Company implemented a new approach with a nine-grid performance management System comprising the following:

• Innovative appraisal system implemented with performance and potential rating Increment process linked with newly-defined job band and salary range grid

• Named individual KRA/ KPI as per the business unit and people linked with organizational and departmental goals. Individual evaluation based on defined KRA/ KPI and allotted target Compensation and benefits. Skipper redesigned its compensation and benefits structure at par with industry practices to attract the best talent. The Company defined its job bands and salary slabs as per the prevailing industry standards. It implemented a shortterm (quarterly) incentive scheme.

• Rewards and recognition: The Companys initiative to ensure a sound reward and recognition system comprised the following:

• Eight leadership competencies (mid-senior to senior) and four behavioural competencies (junior to middle-level) assessment model designed and implemented for the flagship R&R program.

• Talent pool development: Training and nurturing is a continuous activity at Skipper.

The Companys initiatives in this regard included the following:

• Defined KSA development areas and plans for all grids.

c. Employee Talent Pool Development - Training & Development

The Company updated the training calendar as per the defined organizational plan. Initiated leadership development training (coaching, mentoring and sharing feedback)-Experiential session for stress management and energy-based healing by GMCKS Pranic Healing.

d. HR System & Process Integration with New Automation & Technology implementation

• HR system & process integration: The existing HR automation system is being replaced by automated and integrated new generation software with customized solutions, including the entire Employee Life Cycle with a user- friendly technology tool. Skipper strengthened interpersonal relationships among team members with learning being an integral part of career development aligned to the organizational goal.

• HR technology: HR Payroll was extended to cover the entire employee life cycle (HRIS - Cloud Partner with Adrenalin)

WITH THE GOVERNMENTS ACCELERATED EFFORTS TOWARDS SCALING INFRASTRUCTURE AND IMPROVING ELECTRIFICATION IN RURAL AREAS, SKIPPER IS POISED TO SUPPORT THIS GROWTH.

• Sales Force Automation: Hand-held tool (Sales Manpower - ACE-DNS)

• Performance Management and Talent Management: Integrated Tool & Employee policy and benefit interactive tool (Skipper-DNA)

e. Recruitment

Recruitment and talent nurturing is a continuous process at Skipper, where innovation is a must and a new process of training always creates a different impact on the employees. Talent development linked with the talent management grid for a specific outcome is a globally accepted model.

The Company believes that employees performance is driven by their skills, attitude and their ability to innovate and drive change.

In response, Skipper has implemented a new and agile approach towards performance management through 9 Grid Performance Management System: Like- innovative appraisal system implemented with performance and potential rating- Increment process linked with newly defined job band and salary range grid- Identified individual KRA/KPI as per business unit and people linked with organizational and departmental goal-Individual evaluation based on defined KRA/KPI and allotted target.

f. Leadership development strategy Organizations today face numerous challenges to operate efficiently and maintain a competitive advantage in times of change. Change requires new behaviours, new routines, new methods, new customers, new perspectives, and new technology. It is upon company leadership to provide the proper direction to help their teams & employees navigate these challenges and adapt appropriately. To improve alignment between achievement of business goals and leaders skills to drive achievement of those goals, three steps are required: the creation of a business strategy, followed by a leadership strategy, followed by a leadership development strategy: Organizational transformation programs: strategic transformation programs enabling the organizational strategy and offered to the different leadership levels > "Prepare for Change".

• Career programs: broad and LD programs preparing selected leaders for their next leadership role > "Prepare for Tomorrow"

• Performance modules: stand-alone and short LD-modules to upskill leaders at the individual level based on performance needs

• Digital Academy: 24/7 available and short learning nuggets to support leaders at all levels in handling immediate business issues > "Prepare for Now"

g. Collective relations between employee, workers and management & government Skipper is making a venture of co-operation under the direction of the Management to secure the effective co-ordination of men, materials, and machinery and money. It is, thus, an employer- employee relationship in an industry. Two parties - employer and workmen are necessary without which such relationship cannot exist and it is the industry that provides the setting for industrial relations-Relationship emphasizes on the process of accommodation whereby both the parties develop skills and methods of adjusting to and cooperating with each other.

Outlook

Skipper Management is extremely focused on people development along with organizational growth journey. With this positive business & people driven mindset, the Skipper HR team has started its new initiatives & HR Change management practices, HR Team is conducting research and revisiting its HR practices, must identify five essential focus areas to enhance productivity and employee motivation, believes that its inherent strength lies in its dedicated workforce. The Company created a holistic working environment that encouraged employees to extend beyond their work scope towards innovative interventions.

INFORMATION TECHNOLOGY

Information technology represents the backbone of business transformation. Riding the back of superior technology, Skipper transformed into one of the most prominent players.

The Company invested periodically in its IT architecture, enhancing process productivity, service and competitiveness. The Company remained proactive to find new ways of staying ahead of the curve. This modern cutting-edge IT infrastructure enhanced capacity flexibility, availability and a disaster- protected SAP landscape in the data centre cloud.

The following key results were achieved from the migration:

- Faster and better performance

- Operational efficiency from reduced data footprint

- Mobilization of business with mobile applications

- Embedded analytics to engage in real-time analytics on live transaction data Model for smarter business innovation

CAUTIONARY STATEMENT

Statements in management discussion and analysis describing the Companys objectives, projections, estimates, expectations or predictions may be forward looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those either expressed or implied. Important factors that could make a difference to the Companys operation include among others, economic conditions affecting demand/supply and price conditions, variation in prices of raw materials, changes in governmental regulations, tax regimes, economic developments and other incidental factors.