Innovative products and geographical diversification will allow ICSA India to expand its footprint globally.

It is well known that the Indian power sector has been experiencing shortages perennially. The peak power shortage amounts to about 13 per cent, while the total energy shortage is about 8 per cent for the entire country.

The story turns gloomier as the power transmission and distribution companies grapple with incessant power thefts across the country. Transmission and distribution losses to state electricity boards (SEBs) and distribution companies amount to almost 35-40 per cent of their total distributed power.

The few power ancillaries from the industry have been trying to come up with innovative solutions to tackle power-thefts, and have achieved some success. ICSA India is one such power ancillary, which has its roots in making devices to monitor power supply at various points of its distribution, is now adding more products and solutions using information technology.

Versatile products

ICSA has developed technologies with embedded software, which monitor as well as communicate the supply and consumption to a central database stationed at the distribution company’s offices.

These devices help distribution companies monitor their networks for faults, as well as to get real-time supply and consumption data while conducting energy audits, which are now mandatory for all SEBs.

ICSA is now extending the application of this technology from distribution of electricity to other areas such as supply of water, oil and gas pipelines for remote meter reading, supply audits, monitoring of thefts, leakages and other maintenance.

“Our strength lies in our R&D, which enables us to design and launch new proprietary technologies and products,” says G Bala Reddy, chairman and managing director, ICSA India. “We already have four patents approved, and another two are likely to be approved by the end of FY08,” he adds.

The company has recently developed a technology to measure and monitor corrosion in oil and gas pipelines, with the use of sensors placed on pipelines at various places which communicate the condition of the pipeline back to the control rooms using GSM technology. With this product, ICSA is eyeing oil and gas majors globally to expand its client base.

Globalising

In FY07, about 12 per cent of ICSA’s top line constituted of export revenues. Says Reddy, “We are now looking to expand our reach beyond the Indian shores, and considering entering developed markets such as the US and the UK.”

The company has been mulling over acquiring similar outfits in the west. For this, it has raised $22 million (Rs 88 crore) and $24 million (Rs 96 crore) via foreign currency convertible bonds (FCCBs) in April-June this year.

Of this, $17 million (Rs 68 crore) has been utilised towards modernisation of its R&D and expansion of its existing production facilities. The rest will be used for acquisitions, which are likely to be completed by the end of FY08.

Over the past three months, the stock has returned a whopping 78 per cent, and continues its uptrend. Given the company’s diversification strategy based on its intellectual capital, its growth plans appear well on track. One may consider including the stock in a long term portfolio.