Power equipment manufacturers expect UDAY to boost order flow

Manufacturers hope states wil be pro-active in UDAY's implementation

Equipment manufacturers such as ABB, Siemens, Alstom T&D, and KEC International expect their order flows to get a boost with the implementation of the Centre's ambitious Ujwal Discom Assurance Yojana (UDAY). Aiming to revive the ailing state electricity boards (SEBs), UDAY focuses on measures to make SEBs efficient by reducing the aggregate technical and commercial losses to 15 per cent from 22 per cent at present and cutting intra-state transmission losses.

UDAY also envisages strengthening of sub-transmission and distribution network in rural and urban areas, metering of distribution transformers, feeders, separation of agriculture and non agriculture feeders.

Union power minister Piyush Goyal has estimated UDAY will eventually lead to a saving of Rs 1.8 lakh crore annually.

Rathin Basu, managing director of Alstom T&D India, told Business Standard: “We are hopeful that if implemented well, UDAY will go a long way in revamping SEBs and give them the much-needed fiscal space to invest in both generation and transmission & distribution (T&D). With capabilities in both generation and T&D equipment, we would expect more business opportunities arising out of this in the coming years. We have sufficient capacity to produce T&D equipment to meet requirement of various state electricity boards.”

Basu said the execution success of the UDAY programme eventually depends on the states. It is now up to the state governments to benefit from UDAY and work towards improving and recasting their respective electricity boards.

According to Vimal Kejriwal, managing director and chief executive of KEC, losses might come down substantially and the liquidity position of SEBs would improve thanks to the revival plan. “This would enable SEBs to increase their capex spend, thus generating ample business opportunities for companies like us,”  Kejriwal added.

Over the past two years, the share of SEBs in KEC’s order book has increased significantly - from six per cent at the end of FY13 to 16 per cent at the end of FY15. We’re witnessing an increase in the quantum of orders from SEBs as they are under pressure to match the inter-state capacity additions done by PGCIL (The Power Grid Corporation of India). During FY15, we secured the highest ever single order in SEB sector from Karnataka Power Transmission Corporation of Rs 543 crore,” Kejriwal added. According to him, the company is equipped to meet the orders from SEBs.

Prabhudas Liladhar in its recent report termed UDAY a big positive for ABB, Siemens, Alston T&D, Crompton Greaves, Voltamp, KEC International, and Kalpataru Power, apart from generators such as NTPC and Adani Power.

“This is a very important move to give operational space to SEB by reducing their interest burden, and allowing additional cash flow to spend on capex for operational improvement and buy more power. However, like all other previous schemes, successes will depend on cooperation from states in increasing traffic and reducing T&D losses and political will,” it added.

If implemented will be positive for utilities like Adani, NTPC and from slightly medium term perspective for equipment manufactures like ABB, Siemens, Alston T&D, Crompton Greaves, Voltamp, KEC International, Kalpataru Power," it added.