Industry Analysis

Improved health of discoms: The biggest change

Anil Bhasin, Executive Vice President, Havells India Limited

The Indian power sector is undergoing a significant change that has redefined the industry outlook and sustained economic growth continues to drive electricity demand in India. Anil Bhasin, Executive Vice President, Havells India Limited observes, “The reforms initiated by the government have definitely shown positive results in the power sector as this time around the government started addressing the problems from all the sides. He says, “From a situation of power deficiency to a situation where now we are talking about power surplus, it is definitely a turnaround story. Of course, there are pains but probably that pain is for a long-term gain in the power sector. Distribution companies (discoms) were given stiff targets under the Ujwal Discom Assurance Yojana (UDAY) scheme and somehow things seem to be falling in place”.

As per the Power Ministry analysis in March this year, Discoms have cut their revenue losses by upto 60 per cent in some cases. From cutting the Transmission and Distribution (T&D) losses to adopt energy efficient ways through UJALA scheme, 250 million LED bulbs have been successfully distributed with an eventual target of 770 million LED bulbs things are certainly moving in the right direction.

Game changer initiatives
Commenting on game changer initiative, Anil says, “I is difficult to pin point one aspect that can be called as a game changer. This time around it is a holistic approach that the government has adopted many initiatives.” Citing an example he said, the UDAY scheme cannot be seen in isolation. It has to be seen in context of UJALA scheme and also the reforms that took place in the fuel supply side in the power sector. All this has not only resulted in better discoms health but has also helped improve a range of operational and financial parameters.

Anil adds, “The focus of LED distribution has led to a marked improvement in the demand and supply management, which is beneficial to the sector as a whole. Therefore, it is difficult to single out any particular initiative that will change the game in 2017”.

Fiscal health of Discoms
According to Anil, the biggest change can be seen in the improvement of the fiscal health of the discoms. He says, “Discoms which were in heavy debt aggregating Rs 4.3 trillion and annual losses of Rs 60,000 crore till recently had been able to repay or refinance a major portion of the debt. This has led to significant improvement in discoms cash flow and in turn improved operational efficiencies.”

Havells’s performance past one year
During the last one year, Havells India witnessed a significant growth across all product segments and marked its entry into new product categories like home automation, air purifiers, air coolers, water heaters and personal grooming which are far superior in terms of innovation and user friendliness and adheres to the changing lifestyle, preferences and requirements of today’s modish customers. Moreover, the company enhanced its existing product portfolio and unveiled new models of modular switches, fans, MCBs, etc, and also marked its entry into consumer durable segment by acquiring Lloyd’s consumer durable business.

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