 "R N Nayak")
Notwithstanding the current slowdown and pressures on resource mobilisation, the state-run PowerGrid Corporation does not see any problem to achieve its capex target of Rs 22,150 crore during 2013-14 and a total of Rs 1,10,000 crore by end of 12th plan.
In an interview with Sanjay Jog & Jitendra Kumar Gupta, PowerGrid Corporation's chairman and managing director R N Nayak spoke at length on company's growth plans and challenges.
You have been saying earlier that most of your equity requirements will be done through internal accruals. What has changed now to go in for FPO?
FPO can happen as soon as possible, may be in November this year. As far as our requirement for funds is concerned, we have been looking for the internal accruals but because of the funding gap for the projects and new ventures like green corridor and focus on the product business we need more equity funds. So initially this money will be deployed for the projects and gradually infused into news ventures.
Is the time opportune for FPO considering current market conditions?
The government is planning a 13% fresh issue of shares and 4% divestment in the company. The government holds 69.42% stake in the company as of June 2013. Initially, this will have its impact of about 11% equity dilution and returns on equity but as the projects go on stream the return ratios will improve.
One should also consider the fact that we have seen improvement in the execution and capitalisation so that will help to some extent in protecting the overall return on equity of the company.
If you need equity why don't you reduce dividends?
Being a public sector enterprise we need to declare certain dividends.
What is the capex planned for 2013-14? Has it not impacted due to slow down?
Let me clarify at the outset that PowerGrid Corporation and transmission sector in general have not at all impacted due to slow down in the economy. We are progressing as per our growth plans. For the current fiscal we have proposed capex of Rs 22,150 crore of which Rs 11,500 crore worth is already achieved.
Besides, we have already achieved capitalisation of Rs 7,500 crore. Our capex has been increasing year after year. During 2010-11 it was Rs 12,000 crore which rose to Rs 17,000 crore in 2011-12 and Rs 20,000 crore in 2012-13. We are able to achieve out target of Rs 1,10,000 crore by end of 2016-17.
Can you please provide present status of the green energy corridors?
Total investment of Rs 43,000 crore is proposed for this project. Under the Indo German cooperation loan up to EUR 1 billion by KfW for intra and inter state transmission is proposed. Already states have implemented projects of Rs 10,000 crore.
Of the balance rs 33,000 crore, Rs 13,000 crore is towards development of intra state transmission and Rs 20,000 crore for inter state transmission. PowerGrid Corporation has entered into a memoraund of understanding with Delhi Mumbai Industrial Corridor Corporation for the establishment of smart grid in Dholera, the special investment region in Gujarat.
What are PowerGrid Corporation's investment and consultancy plans abroad?
We are currently managing the grid system in Ethiopia. The management company is headed by CEO from the PowerGrid Corporation. Besides, we are exploring opportunities in Kenya, Nigeria and Central Asia.
Do you think there is need to enter and focus on product business? How are you going to make arrangement for the technology and raw materials?
Initially the product business would not be much in size, but one should consider the fact that if we want to compete with the other players and if we have the product capabilities as we can have better bargaining power and a ready market. It will primarily cater to the internal requirements of the company for the transmission business.
