Ramesh Chandak, Managing Director and CEO,
KEC International Ltd
Can you tell us about the opportunities you see for this industry? And how is the market shaping up?
Abundant opportunities are enumerated for the entire power sector in the 12th and the 13th Five year plans. Specifically for the T&D sector, the planned transmission capacity enhancement of around 107,440 ckm and 130,000 ckm during the 12th and 13th Plans and similarly 270,000 MVA and 300,000 MVA of substation capacity addition respectively are expected to translate into good demand for electrical equipment and generate good prospects for players like us.
Further, the Indian government´s recent emphasis and approach on providing 24X7 power to all is expected to give an impetus to the growth of the T&D sector. The latest launch by the government is the new power infrastructure upgrade scheme-Integrated Power Development Scheme (IPDS)-to improve the distribution and transmission system in urban areas.
On the project financing front, the RBI has extended its flexible refinancing and repayment option for long-term infrastructure projects to cover existing projects where the total exposure of lenders is more than Rs 500 crore. With this, the banks will lend for 20-25 years as against the current lending period of 10-12 years. This is definitely a step towards progress which will take care of funding constraints associated with most infrastructure projects since they are long duration projects. This coupled with growth from emerging global markets, is expected to ensure a positive long-term outlook for equipment manufacturers. In addition, with the proposed development of smart cities, green energy corridor, Metro rails, river interconnection, and solar focus etc., the demand for electrical equipment will definitely see an upward trend.
With this momentum the Indian market seems to be shaping up moderately well. Recent industry reports indicate that of overall Rs 2.8 trillion infrastructure projects which were stalled, projects worth Rs 1.8 trillion have already kick-started.
Tell us about your current order book position...
Our order book for Q2FY15 is around Rs 9,000 crore. Also, we are at L1 position in projects worth Rs 2,000 crore, which we expect will materialise into orders during the near term. With this we are expecting our order book to improve. On account of improvements happening in power distribution, the demand for cables is also expected to pick up. We manufacture a wide range of power and telecom cables (HT and EHV).
Our cables business has developed its capabilities in the 220 kV cables segment and has started commercial production. We have also substantially enhanced our capacity of instrumentation cables at Mysore. For 220 kV cables, we have received the short test approval from KEMA. Other long term test approvals will take another 6 to 8 months.