Power cable market poised for a big growth

Power cable market poised for a big growth
Riding on T&D investments, power cable market in India is poised for a big growth in the next 5 years, anticipates Shardul Kulkarni, Principal-Energy, Tata Strategic Management Group
Please discuss the status of power cable market in India. How is the status of domestic players?One of the major challenges for the Indian power sector is the financial health of the distribution utilities. The main driver is investment in transmission and distribution (T&D) infrastructure for the power cable sector. The same is lagging significantly as compared to global standards. Globally, the ratio between generation investment and T&D investment is 1:1. In India, it is 1:0.5. A lot of T&D investments are required to bridge this gap.
This backlog investment will be supplemented with new T&D infrastructure, which will be created to cater to fresh demand, and push for rural electrification.
Riding on these T&D investments, power cable market in India is poised for a big growth in the next 5 years.
What are the challenges for the industry?Indian power sector, apart from poor financial health of discoms, faces various challenges, including feedstock shortage (coal/gas), bottlenecks in the T&D infrastructure, land acquisition/obtaining right of way to lay transmission lines.
Cash infusion – as proposed under financial restructuring plan of state discoms – can bring the favourable scenario and improve their financial health. Under this scenario, growth rate of 13-15 per cent would be possible.
If the liquidity crunch continues, the power cable industry growth will be moderate to 7-8 per cent a year.The ongoing slowdown causes the players in power cable industry to witness deferred orders. The inventory is increasing, but it is impacting margins.
In 2nd quarter, power cable business in India has witnessed a negative growth of 16.05 per cent compared to the corresponding period of last year. According to you, what are the main reasons behind this negative growth?Thanks to fuel (coal/gas) issues and poor financial of utilities, many power projects are stuck. EPC contractors are not getting payments, so they are forced to defer T&D equipment orders, including power cables. As a result of these, industry has witnessed a negative growth.
The performance of power cable sector has largely been hit by credit crunch across state utilities. Recently, the centre has approved restructuring of Rs. 1.9-lakh-crore debt of state electricity boards. How do you perceive this initiative?It’s a welcome bailout package for bleeding state discoms. This package offers an additional incentive of Rs. 1,500 crore for every percentage reduction in aggregate technical and commercial losses by discoms.
In the short run, it would help discoms borrow and ease the liquidity situation. In the long run, it will be a win-win feature, if the discipline of tariff revisions is maintained.
This package comes with responsibility. States, seeking bailout package, need to enact “State Electricity Distribution Responsibility Bill” binding upon the state regulator, state government and discoms. It is at draft stage and expected to be finalised before the end of the current financial year.

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