Tata Power: Hidden Asset: Strategic Engineering Division

Tata Power:
CMP:  78.20
Market Cap:21,150Cr, Free Float: 14,170Cr
Annual March 2016
Sales: 36,700Cr,
PBDIT: 8070.13Cr
Net Profit: 873Cr
Annual Report March 2016
Power is a controlled commodity as its one of the basic necessities of modern life. Govt of India regulations exist such that power companies whether its Coal, Nuclear, Hydro, Solar, Wind, are entitled to a fixed return on their capital which is around 16%.  This results in Power companies leveraging their balance sheet so that during the initial growing years (new capacity addition) the company earnings are always under pressure from the debt repayment as well as depreciation.

Electricity pricing is a very politically sensitive subject and profits of any power company will be questioned for electoral gains.. so please consider this before considering Tata power as an investment destination.

But then what makes Tata Power attractive is its subsidiary " Tata Power Strategic Engineering Division"

http://www.tatapowersed.in/

Centre for Excellence in Strategic Electronics
For close to four decades, The Tata Power Company Limited through its Strategic Engineering Division (Tata Power SED) has been a leading private-sector player in the indigenous Design, Development, Production, Integration, Supply and Life-cycle Support of mission critical Defence Systems of Strategic importance. During this period, the Division has partnered the Ministry of Defence (MoD), the Armed Forces, DPSUs and DRDO in the development & supply of state-of-the-art Systems and emerged as a Prime Contractor to MoD for Indigenous Defence Production when it secured Orders for Pinaka Multi Barrel Rocket Launcher, Akash Army Launcher and Integrated EW System for the Indian Army and for the Akash Air Force Launcher, COTS-based Automatic Data Handling System for Air Defence and Modernisation of Airfield Infrastructure (MAFI) for the Indian Air Force.

Tata Power SED has the unique distinction of participating in Defence Programs through a dedicated R&D Centre at Mumbai and a Production facility along with an R&D Facility at Bengaluru. As a leading domestic player in Strategic Engineering, the Division is now globally recognised for harnessing its “Systems and Engineering” capabilities and has been appraised at Maturity Level 5 of CMMI® for Development v1.3.

Success in modern war depends on Integrated operations over distributed geographies using Sensors and Weapons of varying vintage. Tata Power SED's team has the right blend of technological and operational experience in integrating these heterogeneous systems, using both industry standard and system specific interfaces and protocols.

In recognition of its pioneering capabilities in Design, Development, Manufacturing and System Integration, Tata Power SED was nominated by MoD as a Major Work Centre for the Samyukta Electronic Warfare Program under the aegis of DRDO. Tata Power SED has also received several national awards from industry associations such as the Federation of the Indian Chamber of Commerce and Industry (FICCI), the Confederation of Indian Industry (CII) and the Ministry of Science and Technology.

The Government of India, Ministry of Defence awarded Tata Power SED in 2006, seven Defence Production Licenses, thereby empowering the Division to design, develop, manufacture, assemble and upgrade mission critical systems in seven core areas of Defence Strategic Electronics.

These Production Licenses open a vast domestic addressable market, which include upgrades of existing Weapon systems and platforms. Additionally, business opportunities through ‘Offsets’ for Systems Design, Engineering and Testing Services will also be targeted by the Division, thus opening up the export market.

The seven Defence Production Licenses received are:
1. Electronic Warfare Systems (Stand-alone & integrated) for Army, Navy, Air Force, Para-military and Inland Security,
2. State-of-the-art Network-Centric Warfare Enablers, including Tactical and Strategic Communication systems GPS-based Navigation & Tracking  and GIS systems.
3. Avionics, Airborne assemblies, Systems and Equipment for Aircrafts, Helicopters & AWACS including development of UAVs (Unmanned Aerial Vehicles) and UVs (Unmanned Vehicles) of all types.
4. Air Defence / Naval guns, Field Artillery, Tanks, Combat Vehicles, Anti-Tank Weapons systems, Mortar, Shell, missiles, rockets etc., and any associated systems.
5. Naval Combat, Air Defence, Artillery, Command & Control Systems, Border Security and Surveillance, including sensors such as Radars, Sonar, Thermal Imaging, Radiography, Optronics and Night Vision sub-systems.
6. MIL (Military Grade) products such as Display Consoles, Rugged Computers, Workstations Servers, On-board Computers, GPS Receivers, Printers, Documents / Bio-metric Security Systems etc.
7. Weapon Systems – Rocket and Missile Launchers, for Ground and Naval applications including associated systems and sub-systems, including inertial and GPS based navigation and tracking systems.
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 The Tata Power Company Limited through its Strategic Engineering Division (Tata Power SED) has consistently harnessed cutting edge technology to fulfill its deep rooted commitment to the Nation.

In 1975, Tata Power SED, originally known as the R&D Division of Tata Electric Companies (TEC R&D), started its foray into the development of systems for Indian Defence. It developed and supplied systems for the Air Defence Ground Equipment System (ADGES) built by Tata Institute of Fundamental Research (TIFR). The systems covered Radar PPI displays & Random Scan Displays (with synthetic graphics and text display facility).

Since the mid 80s, Tata Power SED also made a significant contribution to the Integrated Guided Missile Development initiatives of Dr. APJ Abdul Kalam and has to its credit, the development and supply of AKASH Launchers (Army and Air Force versions), Missile Interface Units for AGNI Launcher, On-board Computers and Launcher Electrical Systems for PRITHVI Launcher and a host of other Ground Electronics support systems.

Tata Power SED has now evolved into a Systems Integrator for programs of national importance such as the Pinaka MBRL System, Launchers for the Akash Air Force and Army Programs, Electronic Warfare Program, Command & Control Systems for Air Defence and Naval Combat.

With its sound knowledge of interfacing and integrating Weapon Systems, coupled with its capabilities in the area of Mission Critical Software, Data Fusion, Communications and Large System Integration, Tata Power SED has the multi-disciplinary resources necessary to take the decade old partnership with the Armed Forces into a new dimension in the era of Digital Wars.

Interesting news Item: Tata Power SED to make 16 Akash surface to Air Missile Launchers for 36 Million USD .. it goes on to say that Total order over the next 20 yrs is 3000 Akash Missile launchers for Army and Airforce. (March 2009 News Item)

Capabilities:

Weapon Systems and their Upgradation for Ground Forces
=>Pinaka Multi Barrel Rocket Launcher
=>Akash Army and Air Force Missile Launchers
=>Medium Range Surface to Air Missile Launcher
=>TCT A5 Launcher
=>105mm Mounted Gun System
=>Upgrade of Air Defence Guns with EO Sights and on board Ballistic Computers
=>Launchers with Integrated sensors for All Types of Missiles and Rockets
=>Fire Control Computer for Tanks and ICVs
=>155/52mm Mounted Gun System
=>155/52mm Self Propelled Gun (Tracked)
=>Remote Weapon Station
=>Pragati Mobile Launcher System

Upgradation of Tanks, Armoured Vehicles and related Equipment
=>Advanced Hull Electrical Systems for Armoured Vehicles
=>Thermal Imager Fire Control Systems

Ballistics and Data Fusion
=>Ballistic Software for Air Defence Guns
=>Ballistic Software for Field Artillery Weapon Systems
=>Ballistic Software for T-90 tank (Indian and Russian Projectiles including Tank fired Missiles)
=>Data Fusion

Aerial Reconnaissance Equipment, Airborne Radio Transmitters / Receivers, Radars and Navigation Equipment
=>Reconnaissance payloads for UAV
=>Operational Data Link
=>Navigation Equipment including GPS and INS
=>Medium Altitude Long Endurance UAV
=>PTA - Digital version

Air Defence Data Handling Systems including Ground Radar and Equipment including Air Defence Control & Reporting System
=>Air Defence Artillery Control & Reporting System
=>Radar Interface Devices
=>Mobile Command Post for Command & Control for Air Defence Artillery

Computer-based Trainers, Simulators and other Training Equipment
=>Air Traffic Control Training Simulator
=>Operator Training Simulator for Pinaka MBRL System

Ruggedised Computers and Peripheral Equipment
=>Tactical Field Computer (TFC)
=>RUGBY - Rugged computers
=>Fire Control Computer (FCC)
=>Dual-Redundant Rugged Computer
=>Tactical Consoles
=>Rugged Workstations on Mobile Platforms

Network Centric Warfare Enablers, Tactical/Secure Communication Systems including Network & Spectrum Management Systems, Electronic Warfare and Power Supplies
=>Systems for Tactical Communications and Network Centric Operations
=>Spectrum / Network Management System
=>Signal Command and Control System
=>Operational Data link
=>Tactical Radio with Mobile ad-hoc technology (Adaptive SDR)
=>DC-DC Converters and Ruggedised Power Supplies
=>Intracom for Electronic Warfare Systems
=>Tactical Rugged Router
=>Rugged Multimedia Communication Systems
=>Integrated Packet Voice Communication System (IPVCS)
=>Indigenous Security based Messaging and Networking Solutions (ISMNS)
=>Evolved Packet System (EPS)
=>Sectorial Antenna System with Amplifiers
=>Multi-service Tactical Access Switch

Vehicle Equipment and Trailers
=>EMI / EMC and EMP Hardened Mobile Command and Control Posts
=>Payload retraction and hoist system
=>Hydraulic / Electrical / Electro-mechanical Outrigger Assemblies

Electronic Warfare Systems and Related Equipment
=>Integrated Electronic Warfare System for Mountainous Terrain
=>Low Power Jammer systems
=>Low Intensity Conflict EW Systems
=>Heliborne EW Systems
=>Aerostat Based COMINT Systems
=>Spectrum Monitoring and DF for IAF
=>Command & Control Software for Com and Non Com EW Systems
=>Countermeasures Control Centre Software
=>Voice / Tone Recognition and Keyword Spotting System
=>Antenna Retraction and Servo System
=>Ruggedised Work Stations and Consoles for EW Entities
=>Entity Engineering on various platforms including Tracked vehicles and HMVs
=>Synchronized Direction Finders and location fixing
=>Intra Com for EW Systems
=>Indigenous GIS and High Speed Light Weight GIS
=>Passive Interception and decoding of GSM (Encryption type 5.1 and 5.2) and CDMA
=>Migration from Solaris based systems to Linux / Windows based client - Server systems
=>Voice Recognition and Analysis System
=>Fast Scan Receiver

Air Defence Systems & associated products
=>Radar Data Processors
=>Multi-sensor Data Fusion
=>Plot Extraction Devices
=>Dual Channel Video Extractors
=>Area Moving Target Indicators
=>Futuristic Automated Air Defence System
=>COTS-based Air Defence System
=>Integrated Air C&C System
=>Mission Planning Package
=>Air Intelligence Package
=>Mission Computer for Sukhoi Aircraft
=>SRSC - Software Radar Scan Converter
=>AURA - Remote Control and Monitoring System for Airfield Lights

Unmanned Aerial Vehicles, Aerial Reconnaissance Equipment, PTA & Air-Ground Data Link
=>Reconnaissance payloads for UAV (Gimbal Payload Assembly)
=>Electronic Modules for PTA (Lakshya)
=>Digital version PTA

Command Posts, Displays and Multi Function Consoles
=>Dual Monitor Multi Function Consoles (DMFC)
=>Tactical Naval Consoles

Setting up / Upgradation / Modernisation of Air field Infrastructure, Strategic facilities & Bases
=>Modernisation of Air Field Infrastructure

Sensors / Underwater Sensors
=>Thermal Imaging / Night Vision Systems
=>Electro Optical Payloads
=>Tadpole Sonobuoys

Border Security Management Systems
=>Secured Perimeter with Intelligent Detection and Effective Response
=>Remote Pan/Tilt Observation System
=>Ground Based/ Underground Sensors
=>Solar Panel based un-attended Power Supplies

Manufacturing, Documentation, Maintenance, Support and Repair Services
=>Design Engineering Services
=>Value Added Electronic Manufacturing Services
=>Life Cycle Support
=>System Up-gradations in case of non-availability of obsolete components
=>Refurbishments, Retro-fitments and modifications as per User requirements
=>Warranty Support/Comprehensive Annual Maintenance Contracts
=>Obsolescence Management / Drop-in Replacements
=>Structured Training Modules for Operations and Maintenance
=>Customised Technical Documentation – JSS0251 Standards
=>Inventory management with Component-level traceability for components
=>All India network of Service Centres: Resident engineers deputed at remote installation sites

Pinaka Multibarrel Rocket launchers are now the de-facto standard Multibarrel Rocket Launchers for Army. and Army is producing 5000 rockets per year (2014)

My take: if you consider the Defence capabilities built in "TataPower SED" I think Tata Power SED will be worth atleast 20,000Cr. Tata Power power assets are also substantial as its the largest Pvt sector power company In India. From the look of it tata Power SED is into Electronic & Communication systems for Indian Defence industry.. and does everything under the sun. For someone who is looking for an above the market returns over the next 5-10 yrs can expect Tata Power to deliver the same. I would say a multibagger with risk reward in favour of investors..