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Editorial | December 2012

Green shoots

“When there is a will, there is a way”— there can be no better testimony to this adage, than the performance of the county’s ailing power sector. Despite a tumultuous global economy, emerging economies have maintained a mixed performance and growth trend beating industry blues by sheer grit and will.

September results have been a mixed bag with Jaiprakash Power, NTPC, PGCIL, Neyveli Lignite, CESC, Gujarat Industries Power clocking a double digit PAT growth with over 15 to 20 per cent, while the topline grew by over 20 per cent in general for these companies. Tata Power has witnessed a 5 per cent rise on the PAT front on stand-alone basis. However, on consolidated results, it has red ink. On global economic growth prospects, Organization for Economic Cooperation and Development (OECD), in its latest report, said that it expects the world economy to grow by 3.4 per cent next year, up from 2.9 percent this year. “The projected advance masks big divergences around the world,” international agencies reported.

For India also, the global rating agencies such as Moody’s and Goldman Sachs predicted a growth revival in long term, however, they remained pessimistic on quick recovery, citing credit challenges posed by the country’s poor social and physical infrastructure high fiscal deficit. In a way one cannot deny that immediate recovery is almost impossible in the back drop of current financial scenario. But, long terms prospects for India are unquestionably upbeat. Actually, there are green shoots of recovery all around! Recently, heavily indebted Lanco Infratech managed to secure credit line of $ 2 billion from China Development Bank. Lanco was grappling with heavy debt on its account and was declined by the domestic lenders for fresh loan. But, its hope for sustenance has revived. Anil Ambani Group-owned companies Reliance Communications and Reliance Power have similarly borrowed $11.2 billion for refinance of loan and for buying power equipment.

Meanwhile, many large companies, especially in the power and infrastructure sectors, are exploring options for raising funds and offloading loans or refinancing existing loans through domestic and global routes ( See table for ten top debt burdens). Moreover, many who sought debt restructuring are receiving short-term relief from domestic banks. However, they may find difficulties in securing fresh loans from domestic market. According to reports, domestic banks, mainly state-run, have restructured stressed loans amounting Rs 19,544 crore in the July-September quarter through the corporate debt restructuring (CDR) route.

While the government is getting its act together, the private players are innovating to find solutions to keep afloat and enhancing efficiency. But debt requires treatment over long term.

In the current issue, our cover story explores the green shoots of revival developing around power sector. Apart from this, industry experts have averred views on wind energy, prospects beyond coal gate and electrical equipment. Here’s wishing our readers a “powerful” 2013. Happy New Year!

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