Slowdown has given us an opportunity to grow: Anand Agarwal

Interview with CEO, Sterlite Technologies

Pune-headquarterd Sterlite Technologies on Monday announced that Standrad Chartered PE has invested Rs 500 crore in its Power grid business. Signaling return of PE investment in the power sector.

Anand Agarwal, CEO, Sterlite Technologies in an interview with Shivani Shinde Nadhe, talks about the investment, outlook for power transmission business and overall business of the company. Edited excerpts…

Could please give the details of the investment and the stake dilution?

The investment has come at the SPV level. The SPV, Sterlite Power Grid Ventures, has six project SPVs under it. This investment is done at the parent SPV level. It's a convertible instrument, and hence the valuation, conversion and stake will be decided at the end of 5-years. At present it is a significant minority investment. We have a portfolio of six projects spread across 10 states. The fund will be used for the current projects. We have invested so far Rs 1,100 crore in these six projects.

Any further plans of raising funds?

I think we are well-funded for foreseeable future.

We have not seen much PE activity at the power transmission side. Is there a growing interest among the PE players?

There is good amount of opportunity coming up. We have been in this business for the last four years, it's a difficult sector and one needs to put in upfront investments. I think we are ready to take on the opportunities.

The problems in the power sector have been restricted to the generation side. At the Transmission segment, over the last two years everyone has to go through a tariff based bidding and there is no load risk. You quote for a fix tariff and there is no credit risk because the collection happens through Power-Grid Corporation.

How did the overall slowdown in the power generation business and stalling of project impact you?

Traditionally in India the entire amount outlay that has happened for transmission is much lower than what happens on the global scale. Last two years, we have had two major break-downs. The Northern-Grid breakdown happened twice and recently the power failures in Delhi are examples of not enough investments in strengthening our power grids. In a way the new generation load not coming is blessing in disguise for the sector because it provides an opportunity to strengthen this sector. While there has been a sort of slowdown, it has given serious players like us an opportunity to grow. Last 4-5 years there have been a lot of hype surrounding power sector with people entering this sector and very low execution capability.

Sterlite has also won two large contracts recently in the telecom space for laying of fiber optics. Can you give further details on the same?

Our total order book size is Rs 5,000 crore, of this the BSNL project is around Rs 2,450 crore. I think we will start accrual of revenues from sometime in FY15. India as a whole requires optical fiber. There has been a pent up demand, with the new government coming in the decision making process has improved. Moreover, India has been a tad slow on the telecom side when compared to other global countries. Similarly on power transmission is yet to catch up. Hence there is demand for players like us.