Industry Analysis

Privatisation of distribution: The game changer

Jitendra Agrawal, Ex. Director,
The Motwane Manufacturing
Co Pvt Ltd

Government’s initiatives paid off with power surplus
Government has carried out many initiatives like UDAY (Ujjwal DISCOM Assurance Yojana) to improve financial situation of discom, widespread adoption of LED bulbs, aggressive addition of renewable power through solar and wind, hybrid and electrical vehicles, enhanced coal supply, rural electrification etc, and these initiatives have paid off with power surplus and India become net exporter of the power, believes Jitendra Agrawal, Ex. Director, The Motwane Manufacturing Co Pvt Ltd.

He adds, “Due to cheaper power from renewal sources, thermal and hydro power taken a huge biting with falling in their capacity utilisation substantially because of non-viable power generation due to heavy cost of generation. This is adding further concern on already piled up NPA of power sector with banks which needed to be resolved urgently by the government.”

It is estimated that solar and wind capacity shall be 110 GW by 2022 due to their lower tariff rates, requires less time for capacity building with less maintenance, requires less capex etc. Such gigantic increase in renewal power capacity shall reduce capacity utilisation of convention power by almost 50 per cent further effect ballooning NPA of the power sector mainly for existing thermal power plants.

India presently have more capacity of power than demand however per capital power consumption of India is at 1010 kWh which is much lower than Chinese 4000 kWh and developed nation average of 15,000 KWh.

Privatisation of distribution with carriage and content model
Majority of the distribution is managed by the State Utilities operating distribution of the power with heavy losses barring few cities in India operated by under private franchise model where losses are much lower than state utilities for state power distribution. “Privatisation of distribution with carriage and content model in distribution shall change the game in 2017. With carriage and content model, the consumer shall able to choose the distribution supplier of their choice who is in their neighbourhood, efficient and cheaper,” says Agrawal.

Huge slowdown for power sector
Pointing out on the changes observed during the past one year as far as improving the health of the industry is concerned Agrawal says, “Due to no new addition of capacity other than renewal power, no new major private investments on ground, piled up NPAs of the power sector, surplus power etc. Power sector as a whole is observing huge slow down including capital goods, consumption and service industry related to the power. It seems that for next few years, power sector health shall remain weak and for its revivals, GDP should grow above 8 per cent with revival of the investment cycle.”

He adds, “Our business has direct linkage with addition in new capacity, demand of power related capital equipment etc, and we are observing major slow-down of our business due to almost negligible capacity addition, slow down of the investment cycle etc.”

Adapting to change
Informing about his company’s innovative strategies to remain competitive, Agrawal says, “In change scenario as explained, in massive rebound, we were quick to mould ourself with new innovative solutions and diversifications which helped us in reducing our dependence on conventional power sector market.”
Motwane has already launched very innovative products “Smart Street Lighting Solution” with Internet of Things (IoT) application helping its customer with full automation of street lighting with remote monitoring, huge energy saving resulting into increased profitability for them, reduced CO2 emission and reduced use of manpower.

Motwane has also diversified recently into entrance automation security products and expected that this division/vertical shall grow with CAGR of 15 per cent for next 5-10 years. These new products or line of products are designed and developed by Motwane’s high class modernised Research and Development centre.

He says, “Digital transformation, IoT, data analytics are providing new opportunities in such challenging scenario of power sector and Motwane is working on innovative products under its own design and development house and we are expected to release few more innovative products in the near future. We are expected to grow in such scenario due to ability to quickly adapt the change situation of the power sector.”

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