Electrical equipment makers stare at Rs 800-cr dues from states, Centre

This segment wants to disassociate itself from the power sector

The electrical equipment industry is staring at dues of more than Rs 800 crore, payable for a period of over three years.
 
These are mostly from states and central government-owned companies, including BHEL and Power Grid.
 
Some of the biggest defaulters are the power departments of Uttar Pradesh, Rajasthan, Tamil Nadu and Andhra Pradesh.
 
The industry, in its latest exercise of collating dues, said around 25 per cent of the companies did not disclose figures. So, on an average estimate, the dues could go up to more than Rs 1,500 crore, said the Indian Electrical and Electronics Manufacturers Association (IEEMA).
 
The units that could be awaiting dues include meter makers, transformers, cable, and other electric equipment manufacturers.
 
IEEMA’s data on dues had been collected in the period when the Central government was running several electrification schemes in states.
 
This includes village electrification under DDUGJY, household electrification under SAUBHAGYA and urban power reforms under the IPDS scheme.
 
Most of these schemes had a component of grant from the Centre and balance was supposed to be funded by states, which ranged from 30-60 per cent.
 
While most states were aggressive in infrastructure creation, they lagged behind in paying equipment suppliers.
 
Industry executives said most hit could be meter makers, which, apart from the dues, are also looking at a fresh accumulation of close to Rs 5,000 crore. These meters were supplied under Saubhagya and IPDS.
 
Apart from these units, close to 70 per cent of the electric equipment industry comprises small and medium enterprises (SMEs), which are feared to become stressed due to non-payment.
 
“SMEs are largely affected by the payment delay as their working capital gets restricted. These small players are finding it difficult to get loans from banks,” said a senior sector executive.
 
The electrical equipment industry is planning to ask the Centre to ease financing regulations for the industry, especially the SMEs.
 
In February this year, IEEMA asked the finance ministry to club the segment with capital goods, instead of the power sector.
 
Power generators are facing dues totalling Rs 80,000 crore from state-owned power distribution companies (discoms).
 
At the same time, the generation sector is marred with Rs 2 trillion worth of non-performing assets. The industry wants to disassociate itself from the power sector to improve its credit rating.
 
“Having a share of 65 per cent in the capital goods sector, the electrical industry does not only supply to power infrastructure of the country but also to railways, metros, smart cities, urban and rural household development, e-mobility, exports, and most importantly, the private sector,” said the letter.
 
IEEMA further said its members should not be classified as NPAs if power utilities are not paying the approved bills on time.
 
Executives from the association said the finance minister then had assured the industry that the 90-day deadline for NPA classification would be relaxed.

 
However, any step by the RBI and banks is yet to be taken, said executives. RBI’s norms mandate that a bill overdue for 90 days would be classified as an NPA.
 
As the credit outlook of most banks and financial institutions for the power sector is low, IEEMA said this impacts lending to the equipment industry as well.
 
“Delayed payments from the government and utilities have cascading effect on the banks and financial institutions of the company’s account,” IEEMA said.