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Technology | August 2013

Uncertainties prevailing in power sector had a trickle-down impact for EPC companies

The power sector in India went through a challenging phase in 2012-13, as many private power projects were stalled due to uncertainties prevailing in this sector. PP Gupta, Managing Director, Techno Electric & Engg Co Ltd, opined that next year will be better for the company.

How do you assess the current market scenario?
The power sector in India is actually moving from production-oriented power business to market-driven power business. Keeping in mind the rising demand and necessity for power in the country, the sector expects a major shift in reforms, policies and incentives to encourage investments in all three segments including generation, transmission and distribution for rapid growth.

According to you what are the future prospects? What are the major challenges for the market?
The domestic power sector has witnessed few bottlenecks like fuel shortage, high import cost of coal, shortage of coal supply uncertainty over coal linkages, delays in land acquisition, environmental & other regulatory clearances, political irregularities, the new FSAs and issues of price pooling which has resulted in lower power generation & lesser capacity addition. Overcoming these issues and challenges remains the first and foremost agenda by the government.

What kind of strategy the company has planned to regain growth in this challenging market?
Being in the industry for about 30 years, we are attractively positioned to participate in rapid infrastructure development of the country. We had executed more than 250 projects across India. Moreover, moving up the value chain has leveraged well for the company from being a pure power EPC player to renewable energy generator and a power transmitter.

At present what is your market share in EPC energy business?
We have been involved in commissioning over 50 per cent of India's thermal power generating capacity and setting up major portion of the National Grid, in one capacity or the other.

It has been reported that during FY-13 the company's sales dropped and net profit remained flat. What were the main reasons?
The power sector in India went through challenging phase in 2012-13. Many private power projects were stalled due to uncer¡tainties prevailing in the sector. As a result, new orders were not issued. This had a trickle-down impact for EPC companies like Techno Electric, affected by competitive bidding and a lower order inflow. Given the fact that 2012-13 was the slowest growth year in a decade for India and correspondingly we reported a 14.6 per cent decline in topline and reported only a 0.45 per cent decline in our PAT to Rs 120.35 crore.

How do you see the FY-14 and what are your plans?
With a healthy order book, we see FY 14 to be a better year than the previous year. We plan to grow our EPC and asset book (renewable energy as well as transmission assets under PPP model). We have applied for around a dozen PPP projects and have already qualified for three, while the balance are in the pipeline. As far as renewable energy assets are concerned, we possess 207.35 MW on hand and plan to add at least 100 MW over the next year with the objective to grow our portfolio to 700-800 MW by the end of the Twelfth Five Year Plan (2017-18).

What is your current book size and what kind of expectations you are having in future?
We had an order book close to Rs. 1,000 crore as on 31st March, 2013 and we expect it to reach around Rs 1,500 crore by end 2013-14.

How was your performance in renewable segment last fiscal?

Revenue from the segment was reported at Rs 184.23 crore from Rs 115.82 crore in the last year, a jump of 59.07 per cent. Operating profit stood at Rs 177.32 crore as against Rs 111.47 crore. The vertical accounted for 26.31 per cent of total revenue in the FY13. The total wind capacity (207.35 MW) generated 471.9 million units of energy in the FY12.

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