skipper Management discussions

GLOBAL ECONOMIC REVIEW

The global recovery is set to decelerate amid continued COVID-19 flare-ups, diminished policy support, and lingering supply bottlenecks. A report by the International Monetary Fund (IMF) indicated that global growth is expected to weaken from the 2021 levels of 6.1 % to 3.6 % in 2022. While 2021 did witness some global growth recovery, the momentum was subdued due to the outbreaks of the Delta and Omicron variants of COVID-19.

The pandemic outbreaks affected critical links of global supply chains, causing longer-than-expected supply disruptions that impacted manufacturing. It also compelled countries to reimpose lockdowns and mobility restrictions. These disruptions, coupled with rising energy prices, resulted in higher, broad-based inflation as well as market volatility in several developed and emerging economies around the globe. Inflation is expected to remain high in the near term, averaging 3.9% in developed countries and 5.9% in emerging countries in 2022. The situation could potentially worsen due to higher crude oil prices if the Ukraine-Russia conflict continues.

Latest World Economic Outlook Growth Projections

(real GDP, annual percent change)

		PROJECTIONS
	2021	2022	2023
World Output	6.1	3.6	3.6
Advanced Economies	5.2	3.3	2.4
United States	5.7	3.7	2.3
Euro Area	5.3	2.8	2.3
Germany	2.8	2.1	2.7
France	7.0	2.9	1.4
Italy	6.6	2.3	1.7
Spain	5.1	4.8	3.3
Japan	1.6	2.4	2.3
United Kingdom	7.4	3.7	1.2
Canada	4.6	3.9	2.8
Other Advanced Economies	5.0	3.1	3.0
Emerging Market and Developing Economies	6.8	3.8	4.4
Emerging and Developing Asia	7.3	5.4	5.6
China	8.1	4.4	5.1
India	8.9	8.2	6.9
ASEAN-5	3.4	5.3	5.9
Emerging and Developing Europe	6.7	-2.9	1.3
Russia	4.7	-8.5	-2.3
Latin America and the Caribbean	6.8	2.5	2.5
Brazil	4.6	0.8	1.4
Mexico	4.8	2.0	2.5
Middle East and Central Asia	5.7	4.6	3.7
Saudi Arabia	3.2	7.6	3.6
Sub-Saharan Africa	4.5	3.8	4.0
Nigeria	3.6	3.4	3.1
South Africa	4.9	1.9	1.4
Memorandum
Emerging Market and Middle-Income Economies	7.0	3.8	4.3
Low-Income Developing Countries	4.0	4.6	5.4

Source: IMF, World Economic Outlook, April 2022

Note:. For India, data and forecasts are presented on a Fiscal year basis, with FY 2021/2022 starting in April 2021, For the April 2022 WED, India ‘s growth projections are 8.9 percent in 2022 and 5.2 percent in 2023 based on calendar year.

OUTLOOK

While the global economy was on its recovery trajectory during the year, the prospects of growth have been significantly impacted with the crisis in Europe caused by the Russia – Ukraine conflict. The conflict in Europe, the re-emergence of COVID-19 in China, in addition to the already fluctuating and rising metal and energy costs, supply chain disruptions and inflation across major economies will continue to remain as headwinds for global growth. In line with these, Global economy is expected to grow only by 3.6% in 2022 and 2023, against 6.1% in 2021. The WEO outlook table projects GDP Growth for both advanced and emerging economies while India is projected to outpace growth amongst all major emerging economies.

REVIEW OF INDIAN ECONOMY

At the beginning of 2021, as the Indian economy had just begun to recover from the devastating impact of the first wave of the COVID-19 pandemic, towards the end of March, the second wave of infections took over the country, prompting localised lockdowns across the country. The economy, battered by the impact of the first wave, had recorded the biggest contraction in economic growth in almost 40 years. As the second wave of the pandemic surged across the country, it was much deadlier than the first. However, for the Indian economy, the overall shock of the second wave across many indicators has been weaker than the second wave. Since the summer of 2021, growth in the country has recovered, due to high demand for exports and overall consumer demand. Similarly, the continued decline in COVID-19 cases, combined with an increase in the rate of vaccination, has prompted greater consumer confidence. Other overall positive signs of recovery in the Indian economy include a revival of the manufacturing sector and record agricultural production. IMF either estimates or projects India as the fastest growing major economy in the world. However, the downside risk to the economy arising out of Russia – Ukraine Conflict, increasing oil prices, potential trade and supply distortions and inflations remain and are a "drag" on growth.

OUTLOOK

• Indias economy has delivered a healthy growth of 8.9% in 2021, The overall economic activity and output surpassed the pre pandemic level

• According to the IMFs latest World Economic Outlook projections, Indias real GDP will grow at 8.2% in 2022-23, and 6.9% in 2023-2024, making it the worlds fastest growing major economy for all three years.

• The coming year is expected to see an increase in private sector investment with the financial system in strong shape to support the countrys economic recovery.

• The unwavering focus of the government on infrastructure spending (19% of the budget in FY 2022-23), clearly set the tone that the govt. continues to believe that growth will be revived by capex.

• The Union Budget unveiled ‘PM Gati Shakti masterplan to be implemented across 7 sectors (roads, rails, airports, ports, mass transport, waterways and logistic infrastructure) addressing the supply side constraints of the economy.

• Public investments to continue to pump private investments and demand in FY 2022-23. According to the Centre Of Business and Economic Research Forecasts, India will be the fifth largest economy in 2025 overtaking the United Kingdom.

Global Transmission And Distribution Industry

Renewable energy generation is flourishing around the world as it become one of the most cost-effective ways to power homes, industries and future transportation networks. The best locations for renewable generation assets tend to differ from legacy thermal generation assets, with the largest potential, often concentrated in sites far from the power grid, such as offshore or rural areas requiring massive investment to build new power evacuation infrastructure all over the world.

It could take a 50% rise in global grid spending over the next decade to meet long-term sustainability goals, according to the International Energy Agency. In particular, significant investment in the nearly 7 million kilometers (km) of transmission lines around the world will be crucial in supporting the continued transportation of increasing amounts of renewable energy, and helping manage volatility in supply and demand.

A wave of realization about this need is sweeping through markets around the world, but challenges remain. Attempts to upgrade legacy systems have traditionally been stymied by complex permitting processes, integration difficulties, and uncompetitive or challenging financing environments. The need to accommodate variable capacity only adds challenges as markets try to create more connections in different or varied locations, as well as addressing the need to both store and trade power between markets.

Thus, any attempt to increase energy generation from cleaner sources needs to be accompanied by an increase in transmission and distribution networks. An inadequate transmission and distribution network leads to constant congestion and curtailment issues, which affect the economic viability of projects. Investors are reluctant to build clean power plants if electricity from their projects will be curtailed due to congestion. Lenders will be unwilling to finance projects that could be riddled with such risks, affecting the projects financial viability. Even if new RE projects are built, it would be of little use if they are hampered from being dispatched to the grid, owing to congestion on the transmission network.

The COVID-19 pandemic outbreak affected the overall transmission tower market. The power sector being the backbone of the economy experienced a minimal impact. In addition, major renewable projects were commissioned without any delay. Moreover, the rising adoption of sustainable power sources across the commercial & industrial sectors coupled with public & private partnerships for the replacement of existing low, medium & high-voltage distribution networks will boost the industrys potential.

Growth Drivers across the world

	• Expansion of smart grid networks
North America and Europe	• Refurbishment & retrofit of existing grid infrastructure
	• Large-scale renewable integration
	• Rising peak load demand
Asia Pacific	• Expansion of micro-grid networks
	• Grid stability & security of supply concerns
	• Increasing electricity demand
Middle East, Africa, and Latin America	• Integration of a sustainable electrical network

OPTIMISM ABOUT INDIAS POWER TRANSMISSION SECTOR

One Sun One World One Grid Project (OSOWOG)

India and Britain signed a solar power initiative, called One Sun One World One Grid, that envisions an interconnected transnational solar grid.	OSOWOG is Indias initiative to build a global ecosystem of interconnected renewable energy resources.	A consortium steered by French state-run power utility firm ?lectricit? de France SA (EDF) has been awarded the tender of crafting the road map for Indias ambitious global grid. The other members of the consortium are Frances Application Europ?enne de Technologies et de Services (AETS), and Indias The Energy and Resources Institute (TERI).
The three-member consortium will develop OSOWOGs long-term vision, implementation plan, road map,and institutional framework including a technical and financial proposal.		By 2050, the grid aims for 2600GW of interconnection.

Outlook

The power transmission lines and towers market was valued at USD 27.23 billion in 2021 and is expected to reach USD 66.80 billion by 2032, growing at a CAGR of 8.5% from 2022 to 2032.

• Growing interest in adopting a renewable energy mix, as well as increased demand for efficient lines and towers with low energy losses will drive power transmission lines and towers market growth.

• Increasing power consumption, along with favorable government policies promoting the construction of smart grid networks, would boost the power transmission lines and towers market outlook.

• Furthermore, a considerable increase in investments in cross-border grid networks, in accordance with the rising integration of renewable energy networks throughout the world, would have a beneficial impact on the power transmission lines and towers market landscape.

"Rising demand for electricity, integration of sustainable electrical network, and rising demand for peak load are key factors that are anticipated to boost the growth of overall power transmission lines and towers market during 2022-2032".

With bipartisan support, the U.S. House of Representatives passed the US $ 1.2 Trillion Infrastructure Investment and Jobs Act on 5th November, 2021.

The Bipartisan Infrastructure Deals more than $ 65 billion investment includes the largest investment in clean energy transmission and grid in American history.

Plans to upgrade the power infrastructure by building thousands of miles of new, resilient transmission lines to facilitate the expansion of renewables and clean energy, while lowering costs.

Studies have estimated the U.S. will need to double or even triple its transmission capacity to decarbonize the countrys economy.

INDIAN TRANSMISSION AND DISTRIBUTION OVERVIEW

Demand for power transmission and distribution equipment correlates with investment in transmission and distribution networks. India is on the verge of becoming a major power nation among developing economies, and increasing demand for electricity, new power generation capacity additions and expansion of transmission and distribution infrastructure have become major growth drivers for the sector.

Besides, India has a number of advantages in the manufacturing sector that makes it an attractive investment destination. Apart from a large and growing domestic market, India also has a well-developed supplier base, availability of skilled manpower at relatively lower costs, supportive regulatory environment and good support infrastructure.

Going forward, increasing population and growing penetration of electricity connections, along with increasing per-capita usage would provide further impetus to the power sector.

Also, the strong public spending on infrastructure development and capacity building, especially in urban transportation, railways, oil and gas, sub-transmission etc, are expected to boost the sector. The industry is poised for growth in view of the governments thrust on the power and construction industries. To note, the government has already planned a large amount of investment to the tune of $800 million in renewable generation capacity, which is expected in next two years through tariff-based competitive bidding and will require huge investment to build new T&D infrastructure for power evacuation.

DEMAND RECOVERY WILL BE DRIVEN BY GRADUAL UPTICK IN ECONOMY, HIGHER DOMESTIC DEMAND DUE TO RAPID URBANISATION, LATENTDEMAND, AND A STRONG RECOVERY IN FISCAL 2023 OVER A LOWER BASE.

The Trickle-down effect of the Aatma Nirbhar Bharat relief package, government spending on infrastructure through the NationalInfrastructure Pipeline (NIP), dedicated freight corridors(DFC) infrastructure, service industry expansion, rapid urbanization, and increased farm income from agri-related reforms are key macroeconomic factors which will aid a pickup.

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 4,56,716 ckm in fiscal 2022.

There has been strong growth in the transmission systems 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 optimize the right of way, minimise losses and improve grid reliability.

Strong growth of transmission systems at higher voltages has grown due to increased requirement of the transmission network to carry bulk power over long distances and at the same time optimize 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 a comparatively amount of line loss.

Outlook

The power sector performance was weighed by COVID-19 damage. However, with the implementation of key market reforms, the Union Budget 2022 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 implementing reforms coupled with the overall approach to energy transition and meeting its ambitious goal to achieve 500 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 to Electricity Act 2020 and efforts to recover the financial losses of T&D, one can be optimistic about Indias T&D outlook.

As per Power Insight, India is the second-largest transmission towers market after China, contributing15% 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 IEAs India Energy Outlook 2022, spending on networks will quickly overtake spending on capacity growth.

RAILWAY ELECTRIFICATION PROGRAMME

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 6,366 Route Kilometer (RKM) in a single year during FY 2021-22. It surpassed the previous high of 6,015 RKM achieved in FY 2020-21. 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 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 of level crossings on all GQ/ GD routes.

INDIAN TELECOM TOWER INDUSTRY

India is the worlds second-largest telecommunications market. The total subscriber base, wireless subscriptions as well as wired broadband subscriptions have grown consistently. Tele-density stood at 85.91%, as of December 2021, total broadband subscriptions grew to 792.1 million until December 2021 and total subscriber base stood at 1.18 billion at the end of the previous year.

Over the next five years, rise in mobile-phone penetration and decline in data costs will add 500 million new internet users in India, creating opportunities for new businesses.

Strong traction in domestic telecom will be registered on account of 5G Rollout / High bandwidth usage.

Ahead of the rollout of the high-speed 5G network, the government is set to give a massive push to telecom infrastructure across the country with plans to add 8 lac new mobile towers over the next 2 years.

INDIAN POLYMER PIPES AND FITTINGS MARKET

The Indian PVC and Fittings market was pegged at Rs 300 billion in FY 2019-20 and is projected to surpass Rs 500 billion by FY 2024-25, clocking a CAGR of 10.8% for the FY 2020-2025 period. PVC pipes are lightweight facilitating faster water flow, cost-effective, corrosion resistant, 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 in demand from metal to polymer based pipes, especially in plumbing and piping application in the construction industry. This has led to increase in the usage of plastic pipes and emergence of CPVC pipes for hot and coldwater 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 for residential applications of pipes also. The Government at the Centre and States has put the priority focus on Jal Jeevan Mission, Swatch Bharat Abhiyan, Sanitation and affordable houses for all and development of 100 smart cities in all India basis.

NITI Aayog has declared the 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 houses to all

• Heavy investment by Government in irrigation, housing and sanitation

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

Going forward, the stress brought about by the 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 Rs10,000 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 Indian players. The Union Budget 2022-23 announcements provided the necessary boost recovery for the economy marred by the COVID-19 crisis.

What Drives The Market

• The Upsurge in the demand for pipes in the irrigation sector and the building & construction industry is the major driving factor for Indian PVC pipes market. Moreover, increased focus of the government on rural water management supports the demand for PVC pipes in India.

• The growing population will be a major contributor to the PVC pipes and fittings market in India.

• Growing problem of water shortage also results in an increase in demand for PVC pipes and fittings.

BUSINESS SEGMENT REVIEW

Skipper Limited is one of the worlds largest integrated T&D structure 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 ‘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.

ENGINEERING PRODUCTS

Revenue- _13218 million in the FY 2021-22

Skipper is the market leader in the manufacture of T&D structures and distribution poles. The Company is positioned among the 10 largest global T&D structure 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 45-plus countries.

Skipper is a differentiated player, the only one in its sector to possess captive rolling mills 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, the Company has commissioned Eastern Indias first tower & pole testing bed which has been recognized by the Department of Scientific and

Industrial Research (DSIR, GOI) as an in-house R&D unit. This allows the Company to avail certain expenditures (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

• Focused 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.

• The companys recently commissioned T&D Centre will increase its competitiveness in the global market. With its in-house design team, Skipper is set to bring more value to the table as well as offer innovative and cost-effective design solutions

• The Companys strategy of broad-basing the product portfolio to include a higher proportion of non T&D products such as solar railways, telecom and fasteners have started yielding good results.

Highlights For The Year 2021-22

• The company has a strong order book of Rs 21,150 million, with a well-diversified mix of domestic (55%) and export business (45%). The order book to sales stands at 1.6x of engineering revenue and is largely pending execution in FY 2022-23.

• T&D Order Book well diversified between Power Grid, Domestic SEB / Private players and international

• During the year, the company received a total inflow of orders worth Rs 16,480 million for engineering products supply from PGCIL, SEBs & Telecom Players and for various supplies across Asia Pacific, Middle East, Africa and LATAM markets.

• Made inroads into North America, Asia Pacific, Middle East and West African market with 3-4 large utilities, which were earlier dominated by Chinese players. The export order inflow in FY 2021-22 more than doubled over the Rs 7,440 million and the company is in advanced stages of negotiation to secure 2-3 large size contract in the current financial year.

• The recently set up R&D Centre and TowerTesting Station has improved 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 is now adding more value to the projects it bids, offering innovative, bespoke and cost-effective design solutions. This will further improve companys chances of winning in the marketplace.

• The tender pipeline for us to participate looks deep and the current Bidding Pipeline remains strong at 95,000 million highest ever in the company history, spread equally between Domestic & International.

Road Ahead

• The massive global and domestic focus and investment on building T&D infrastructure catering to Renewables will drive up the demand for setting up new transmission networks. As the global focus on renewable energy continues to grow, many countries will require new transmission lines to be built to cater to a new green energy network. Our global presence puts us in an advantageous position to act upon such opportunities in the coming years

• The company is getting benefitted from "China +1" Trend, The global supply chain is actively scouting to minimize its dependency on China is a great positive outcome of this crisis. The gradual decoupling from China is also causing many projects to seek alternative supply chains, giving further fuel to business potential coming our way.

• The company has established strong working relationship with over 100 global EPC players and is witnessing a surge in global enquiries.

• Customers have now accepted this Commodity priceshift - resulting in finalization and awarding of long pending order with them.

• Bid to-order life cycle which got prolonged due to covid led disruption and commodity price volatility are now showing signs of getting back to normalcy

• 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.

• Taking advantage of these market conditions, over the last 3 years. Skipper has successfully transformed itself from being a predominantly domestic player to a company with a significant export business as its mainstay. Today skipper boasts of over 45,000 million international bidding pipeline and is well positioned to grow exports not required to 50% of engineering revenue in current year FY 2022-23 and to 75 % by next year FY 2023-24

• 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.

POLYMER PRODUCT BUSINESS

Revenues: Rs 3200 million in FY 2021-22.

The polymer business comprises a portfolio of products finding applications in plumbing and agriculture. The segment accounts for 19% 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 FY 2020-21. In Q4 of FY 2021-22, the Company reported its highest ever quarterly revenue of 1,177 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.

Key Differentiators

• 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 companies to implement Theory of Constraints (TOC) in an organized manner, currently deriving 75% of overall revenue through TOC channel network

• Leverages technology alliances with international majors to produce better quality. Currently engaging with more than 25,000 retail sales touchpoints and planning to double the same in the next 2 years.

• Retailer touchpoint increased manifold (upto 10 times) in the last 2 fiscals

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

Highlights For The Year 2021-22

• The company achieved Achieved highest ever Annual revenue performance in Polymer Business in FY 2021-22 at Rs 3,200 million, registering a staggering growth of ~ 48 % over the last year same period

• Total Retailer touchpoints in excess of 25,000 plus (nos)in March 22 and Monthly Billed Retailers of 5,000 plus (nos)

• Added New products in the polymer pipe segment - Launched "Marina" Water Tanks under the Skipper Pipes brand.

• Focus on Plumbing Portfolio post a good response from recently launched new products like CP bath fittings and accessories as well as water storage tanks

INFRASTRUCTURE BUSINESS

Revenues: Rs 652.2 million in FY 2021-22

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, Retrofitting works and power evacuation. 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 on. 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.

Stand Alone Financial Performance

Sl Profit & Loss Summary	12M FY 2021-22	12M FY 2020-21	Change%
1 Revenues	17,070.8	15,815.1	7.9%
2 Reported EBITDA	1,678.3	1,437.1	16.8%
EBITDA Margins (%)	9.8%	9.1%	+70Bps
3 (+) Other Income	40.1	40.2
4 (-) Depreciation	484.9	452.6
5 (-) Finance Cost	930.0	723.6
Finance cost as % to Revenue	5.4%	4.6%
6 Profit Before Tax (2+3-4-5)	303.5	301.2	0.8%
PBT Margins	1.8%	1.9%
7 Tax	17.4	90.4
8 Profit / loss After Tax (6-7)	286.1	210.8	35.7%
PAT Margins	1.7%	1.3%

Key Financial Ratios	2021-22	2020-21	Change(%)	Explanation for Change The reasons for change in parameters have been covered and explained in the previous sections of the report
Debtors Turnover	3.52	3.25	8.2%
Inventory Turnover	2.44	2.87	-14.9%
Interest Service Coverage Ratio	2.21	2.42	-8.3%
Current ratio	1.28	1.35	-5.1%
Debt-equity ratio	0.77	0.62	24.3%
Operating Profit Margin %	9.8%	9.1%	8.2%
Net Profit Margin %	1.7%	1.3%	25.7%
Return on Net Worth %	3.9%	3.0%	31.5%

Key Performance Highlights

• The Company reported strong revenue performance across all the business segments. Revenue grew by 8 % yoy despite of covid related lockdown and Geo political related challenges

• Polymer Buisness reported Highest ever Annual revenue of Rs 3,200 million in FY 2021-22; currently deriving 75% of overall revenue through TOC channel network

• Stand Alone EBITDA margins improved to 9.8 % for the current year in comparison to 9.1% the previous year

• Unavailability of Sea Containers and longer lead time adversely impacted export revenue execution of engineering business and some piling of finished goods

• Continuing port congestion and delays making shipping transit time longer; leading to delayed collection and higher finance cost.

• Deliberately held high level of RM inventory to mitigate commodity price risk on secured contracts; Prices of key raw materials have gone up by over 30-40% during last quarter on account of Geo political issues, leading to increased working capital utilization

• Focus continues on bottomline profitability, Profit after Tax surges by 35.7 % YOY to Rs 286.1 million in FY 2021-22

Outlook

• Company expects to clock high double digit annual revenue growth in Fy23 on the back of strong pending execution of engineering contracts and strong polymer segment performance

• Skipper is witnessing a surge in global enqueries and it will be benefitted from ‘China + 1 trend. The global supply chain is actively scouting to minimize its dependency on China. Moreover, the majority of the new transmission lines are catering to renewable which ultimately leads to a shorter execution cycle and faster supplies to meet project deadlines.

• Targeting Inflow of Rs 22,000 - 25,000 million in FY 2022-23 , largely on account of international export orders and rebound in Domestic T&D ordering

• Expect good traction in International TL orders to continue, While pending domestic TL ordering bids are expected to start getting awarded by Q2/Q3 of FY 2022-23

• Continuing efforts to further strengthen the international T&D order book ; positioned to grow exports to 50% of engineering revenue in current year (FY 2022-23) and to 75 % by next year (FY 2023-24)

• The companys strategy of broad basing its portfolio to include a higher proportion of Non T&D products like Solar, Railways, Telecom and Fasteners have started yielding good results. and is helping us to derisk our exposure in T&D. The facilities are fungible to a large extent and that creates an option of dedicating our capacity to the sector, which offers the return to us.

• Productivity and cost reduction on required initiatives at the plant and site levels are expected to further improve efficiency in operations and aid to stable margins

• Skipper Polymer Pipes is a growing National Brand with expanding reach and consistent market share gains taking shape, the business is set for rampant growth over the next couple of years.

• Implementation of TOC in both Engineering and Polymer business to significantly improve our working capital cycle and bottom-line profitability Skipper will continue to focus on improving bottomline profitability, stabilise operating cash flows, and trim debt thereby leading to improvement of the Companysmargin 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 toward sustainable business practices will help to achieve its goals by making meaningful contributions to the national and global infrastructure.

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 fronts to ensure timely completion and avoid any slippages. The Company was able to act quickly and effectively to deliver support under our "Skipper Cares" programme where it was most needed.

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.

The Company also extended support to families of deceased members, under the Skippers Cares programme.

The Company has already extended a hybrid model of work culture for smooth functioning in these times.

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.

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.

Business Continuity Risk The companys business may not be relevent in the coming years.	MITIGATION-The Company chooses 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).
Quality risk Decline in the quality of the products of the Company may lead to fall in sales.	MITIGATION- The Company possesses 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 makes us the preferred choice for the customers; not only in India but across the globe. The Company received several global certifications, reinforcing the Companys commitment to quality.
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.
Geography risk Dependence on any particular 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. Exports accounted for 14% of the Companys revenues during the year under review.
Finance risk An inability to mobilise debt funds at a low cost and in an adequate quantum could impact viability.	MITIGATION- The Company enjoys a strong debt-equity ratio of 0.81, which provides the Company with additional room for borrowing. Besides, the Company possesses cash and cash equivalents of H108 million to fund growth initiatives (as on 31st March 2019).
Working capital risk Stretched working capital management could impact viability.	MITIGATION- The Company took a number of initiatives to optimise its receivables cycle across its business divisions, the full impact of which is likely to be visible across the foreseeable future

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. The 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 of 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.

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 benefits strategy to keep pace with the sector.

• Employee talent pool development through training and development of 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 from all the Companys strategic business units participated to share perspectives and align goals to its mission and vision.

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

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 short term (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.

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.

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 with the organizational goal.

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

• 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)

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:

• 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.

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.

Outlook

Skipper Management is extremely focused on people development along with a 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, The team must identify five essential focus areas to enhance productivity and employee motivation, believe 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 toward 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.