In nutshell, the business environment of your company was not very good during the year
2016-17. Company has seen steep fall in the business due to competition and inordinate
delay in payment by the State Electricity Boards played major role in negative growth in
business.
Industry Overview
Power is one of the most critical components of infrastructure crucial for the economic
growth and welfare of nations. The existence and development of adequate infrastructure is
essential for sustained growth of the Indian economy.
Indias power sector is one of the most diversified in the world. Sources of power
generation range from conventional sources such as coal, lignite, natural gas, oil, hydro
and nuclear power to viable non-conventional sources such as wind, solar, and agricultural
and domestic waste. Electricity demand in the country has increased rapidly and is
expected to rise further in the years to come. In order to meet the increasing demand for
electricity in the country, massive addition to the installed generating capacity is
required.
India ranks third among 40 countries in EYs Renewable Energy Country Attractiveness
Index, on back of strong focus by the government on promoting renewable energy and
implementation of projects in a time bound manner.
Market Size
Indian power sector is undergoing a significant change that has redefined the industry
outlook. Sustained economic growth continues to drive electricity demand in India. The
Government of Indias focus on attaining ‘Power for all has accelerated capacity
addition in the country. At the same time, the competitive intensity is increasing at both
the market and supply sides (fuel, logistics, finances, and manpower).
Total installed capacity of power stations in India stood at 315,426 Megawatt (MW) as
of February 28, 2017.
The Ministry of Power has set a target of 1,229.4 billion units (BU) of electricity to
be generated in the financial year 2017-18, which is 50 BUs higher than the target for
2016-17. The annual growth rate in renewable energy generation has been estimated to be
27% and 18% for conventional energy.
The Government has added 8.5 GW of conventional generation capacity during the period
of April 2016 to January 2017. Under the 12th Five Year Plan, the Government has added
93.5 GW of power generation capacity, thereby surpassing its target of 88.5 GW during the
period.
Investment Scenario
Around 293 global and domestic companies have committed to generate 266 GW of solar,
wind, mini-hydel and biomass-based power in India over the next 5–10 years. The
initiative would entail an investment of about US$ 310–350 billion. Between April
2000 and December 2016, the industry attracted US$ 11.4 billion in Foreign Direct
Investment (FDI) in the power industry.
Some major investments and developments in the Indian power sector are as follows:-
Japans JERA Co. Inc, has acquired a 10 per cent stake in ReNew Power Ventures Pvt. Ltd
for US$ 200 million, valuing the company at US$ 2 billion before its proposed Initial
Public Offer (IPO).
The Indian Railways is looking to award six tenders worth Rs. 8000 crores (US$ 1.2
billion), for setting up of a countrywide electricity transmission network, as part of a
strategy to reduce electricity bills.
Renewable energy company ReNew Power has announced securing US$ 390 million debt
funding from its existing investor Asian Development Bank (ADB) for developing and
expanding capacities of 709 megawatt (MW) across various states of India.
International Finance Corporation (IFC), along with IFC Global Infrastructure Fund, the
private equity fund of IFC Asset Management Company, has announced investment of US$ 125
million equity in Hero Future Energies, which will help the firm set up 1 gigawatt (GW) of
greenfield solar and wind power plants over the next one year.
Indias largest energy conglomerate NTPC Limited plans to invest Rs 2,648 crore (US$
397 million) for developing three coal blocks in Odisha.
French power major EDF Energies, has announced that EDF plans to invest US$ 2 billion
in renewable energy projects in India.
International Finance Corporation (IFC), the investment arm of the World Bank, plans to
invest Rs 840 crore (US$ 126 million) in Hero Future Energies Limited, the renewable
energy arm of the Hero Group, which will be used to fund the construction of solar and
wind power plants.
The World Bank Group has committed to provide US$ 1 billion for Indias solar energy
projects and plans to work with other multilateral development banks and financial
institutions to develop financing instruments to support future solar energy development
in the country.
The Ministry of New and Renewable Energy (MNRE) has signed an agreement with
Germany-based KFW Development Bank to fund the Rs.300 crore (US$ 45 million) floating
solar project in Maharashtra and Kerala, which is expected to generate over 310 GW of
green energy.
CLP India, one of the largest foreign investors in Indias power sector, has acquired a
49 per cent stake in SE Solar, a Special Purpose Vehicle (SPV) set-up by Suzlon Group for
building a 100 MW solar energy plant at Veltoor in Telangana, for Rs 73.5 crore (US$ 11.02
million).
Canadas second largest pension fund, Caisse de depot et placement du Quebec (CDPQ),
has set up its office in India and committed to invest US$ 150 million in the Indian
renewable energy sector over the next three to four years.
Sembcorp Industries have launched a 2,640 Mega Watt (MW) Sembcorp Gayatri power complex
worth US$ 3 billion in Nellore, Andhra Pradesh which is the largest Foreign Direct
Investment (FDI)–driven project on a single site in the thermal power industry in
India.
SunEdison, worlds largest renewable energy company, plans to continue its focus on
‘Make in India by further reducing the cost of renewable energy and developing over
15 gigawatts (GW) of wind and solar projects in the country by 2022. Sterlite Grid,
Indias largest private operator of transmission systems is joining hands with US major
i.e. Burn & McDonnell for its Rs 3,000 crore (US$ 450 million) power transmission
project in the Kashmir valley
Government Initiatives
The Government of India has identified power sector as a key sector of focus so as to
promote sustained industrial growth. Some initiatives by the Government of India to boost
the Indian power sector:
• The Union Cabinet, Government of India has given its ex-post facto approval for
signing of a Memorandum of Understanding (MoU) on Renewable Energy between India and
Portugal, which will help strengthen the bilateral cooperation between the two countries.
• The Ministry of New and Renewable Energy plans to introduce a fixed-cost
component to the tariff for electricity generated from renewable energy sources like solar
or wind, in a bid to promote a green economy.
• The Union Cabinet has approved the ratification of International Solar
Alliances (ISA) framework agreement by India, which will provide India a platform to
showcase its solar programmes, and put it in a leadership role in climate and renewable
energy issues globally.
• The Government of India plans to introduce a scheme to encourage setting up of
bio-mass plants across the country, which will generate electricity and also help dispose
of agricultural waste in a carbon-neutral manner to help tackle growing pollution.
• The Government of India plans to rationalise various categories of electricity
consumers across states, which is expected to bring transparency and efficiency in
billing, improve tariff collection and improve the health of distribution companies in the
country.
• The Government of India plans to set up a US$ 400 million fund, sourced from The
World Bank, which would be used to protect renewable energy producers from payment delays
by power distribution firms, while at the same time protecting the distribution firms from
the shrinking market for conventional grid-connected power, caused by wider adoption of
roof-top solar power generation.
• The Ministry of Power plans to set up two funds of US$ 1 billion each, which
would give investment support for stressed power assets and renewable energy projects in
the country.
• The Government of India plans to start as many as 10,000 solar, wind and biomass
power projects in next five years, with an average capacity of 50 KW per project, thereby
adding 500 MW to the total installed capacity.
• Government of India has asked states to prepare action plans with year-wise
targets to introduce renewable energy technologies and install solar rooftop panels so
that the states complement governments works to achieve 175 GW of renewable power by
2022.
The Road Ahead
The Indian power sector has an investment potential of Rs 15 trillion (US$ 225 billion)
in the next 4 to 5 years, thereby providing immense opportunities for the companies in
power generation, distribution, transmission, and equipment. The governments immediate
goal is to generate two trillion units (kilowatt hours) of energy by 2019. This means
doubling the current production capacity to provide at 24x7 electricity for residential,
industrial, commercial and agriculture use in our country.
The Government of India is taking a number of steps and initiatives like 10 year tax
exemption for solar energy projects, etc., in order to achieve Indias ambitious renewable
energy targets of adding 175 GW of renewable energy, including addition of 100 GW of solar
power, by the year 2022. The government has also sought to restart the stalled hydro power
projects and increase the wind energy production target to 60 GW by 2022 from the current
20 GW.
The Government of India is extended the policy support by allowing 100% FDI in the
power sector, introduced new schemes like Deen Dayal Upadhyay Gram Jyothi Yojana (DDUGJY)
& Integrated Power Development Scheme (IPDS) have been under implementation in rural
and urban area respectively.
Power is one of the most critical components of infrastructure crucial for the economic
growth and welfare of nations. The existence and development of adequate infrastructure is
essential for sustained growth of the Indian economy.
Indias power sector is one of the most diversified in the world. Sources of power
generation range from conventional sources such as coal, lignite, natural gas, oil, hydro
and nuclear power to viable non-conventional sources such as wind, solar, and agricultural
and domestic waste. Electricity demand in the country has increased rapidly and is
expected to rise further in the years to come. In order to meet the increasing demand for
electricity in the country, massive addition to the installed generating capacity is
required.
India ranks third, just behind US and China, among 40 countries with renewable energy
focus, on back of strong focus by the government on promoting renewable energy and
implementation of projects in a time bound manner.
B. PERFORMANCE
Company has not done any business turnover during the year under review, but the other
income is pertaining to the foreign exchange fluctuation (gain) on the FCCB loans, as
compared to the turnover of Rs.4.56 crores during the previous year and company has
incurred a net loss of Rs.8.76 crores during the year as against the net loss of Rs.20.80
crores during the previous year. The Nil turnover during the year on account of
non-availability of funds for operations which has lead to cancellation of orders by
almost all the SEBs and not getting new orders due to non-performance in the Infra
Division. The decrease in loss in the year due to no provisions made and gain in the
exchange fluctuation as against the loss in the previous year. However the interest on the
loans has not been provided in both the accounting years. The trend of the decrease in
turnover has continued in the accounting period due to bad cash flows of the company and
the turnover of the company during the year 2017-18 may not improve as compared to the
year 2016-17, as the current year turnover is the lowest due to non-availability of funds
for business. The company is making efforts to solve the financial issue matters with the
banks and planning to improve the performance after getting the solution for bank matters.
As discussed in Industry Overview, there is enough potential for business in the power
sector for Company, but on account of non-availability of funds, Company could not improve
its operations.
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