This is because, says Sameer Gupta, Chairman & MD, Jakson Group, the government´s first priority is to complete stuck projects with enough fuel source, and then announce Greenfield projects with a fresh set of investments.
The government has claimed several records in its first year. Are these in the best interests of the power equipment sector?
These achievements will certainly be in the best interests of the power equipment sector. There are aggressive plans to add to power generation capacity and this is obviously going to boost demand of all related equipments like transformers, cables, HT switchgear, LT switchgear, black start generating sets, inverters, control systems, turbines, solar panels, transmission equipment, etc. Despite improved performance, continuous power availability is still an issue and almost 45 per cent of rural households have no access to electricity. We certainly see a bright future for the power equipment sector as there is a genuine need to raise capacity.
There is lack of orders and investments for the 13th Plan. Do you see new orders coming your way specifically, and in general?
The first step of the government has been to have policy reforms so as to bring to closure unfinished projects where huge investments have already been made. The government, apparently is making every effort to remove the roadblocks, including issues like fuel availability, financial issues and environmental clearances, etc. India´s per capita power consumption is around 750 units a year, which is almost one fourth the global average.
There is every reason for this to go up over the coming years, which will leave us with no choice but to invest in more power plants. We have already started seeing investments happening in the T&D sector in many states, which needs to be robust to support improved power generation.
There are certainly orders coming our way from investments in T&D sector and from unfinished power projects, which are not moving towards completion.
What kind of new orders you are expecting for power equipment, by when will they materialise?
Over the next five year horizon, we are forecasting orders for all kinds of equipment including solar power equipment, control panels and black start generating sets. At Jakson, we have bagged orders worth around Rs 250 crore in the past six months for power sector equipment which is almost five times more that the previous year. The renewed focus on solar power itself translates to investment of more than Rs 50,000 crore every year, which will spur demand.
Indian IPPs complain that domestic manufacturers do not have capacity and opt for import. What´s your assessment?
From the solar IPPs point of view the demand forecast is huge, and current capacity of domestic manufacturers is certainly not enough to meet the demand. This is an excellent opportunity to align with the government´s ´Make in India´ initiative and make investments in manufacturing.
Is the government only announcing projects? Why is investment not picking up?
It is wrong to say that investment is not picking up. There are two aspects to this, one is the power generation and other is T&D. On thermal power generation, the current focus is to complete unfinished projects and hence new project announcements may take some time. In solar power generation, there are new projects getting announced on a regular basis both by the Centre and states.
On the T&D side, many states have already awarded contracts to strengthen the existing systems and investments are certainly picking up.
What is your assessment towards the power equipment industry?
We are very bullish on a power equipment sector growth and Make in India initiative. We do foresee big investments both in power equipment sector and manufacturing sector related to power equipment over the foreseeable future.