The ambitious capacity addition envisaged by the government in the power sector during the 12th Five-Year Plan offers an opportunity to Power Grid Corporation to commensurately increase its assets and revenue.
The company has lined up an investment plan of R1 lakh crore to lay transmission network for evacuation of electricity in view of the 1 lakh MW capacity addition envisaged under the 12th Plan ( April 2012- March 2017).
The company?s board has already approved investment plans of R84,000 crore, of which orders have been placed for projects worth R70,000 crore. In line with the industry norms, the company finances its projects in a debt-equity ratio of 7:3. It plans to invest R28,000-30,000 crore as equity from its internal accruals. The balance will be funded with debt of R70,000-72,000 crore. Of this, R23,500 crore has been tied up.
The company made a capital expenditure of R17,814 crore during 2011-12, of which R14,100-crore investment started generating revenue before the end of March 2012. The company?s net profit grew at compounded annual growth rate (CAGR) of 21.86% during 2007-12.
Power Grid has targeted to spend R20,000 crore in the current financial year. Against that, it has spent R4,500 crore till the end of July. The pace of investment should pick up during the second half of the year in line with the industry trend.
Power Grid has raised R8,000 crore in debt via bonds and external commercial borrowings and plans to mop up the balance during November-December.
?Timely execution of projects is our strong point. We are confident of meeting the investment target?, RN Nayak, chairman and managing director, Power Grid, told FE.
Power Grid was the only company from the power sector to meet its investment target during the Eleventh Plan. Its pace of investment was higher compared to the generation sector, as the company implemented system strengthening schemes besides greenfield transmission projects.
The company?s investment plans are getting bigger with each Plan. Its expenditure outlay was R6,000 crore in the Ninth Plan, which increased to R18,000 crore during the Tenth Plan, R55,000 crore in the Eleventh Plan and 1 lakh crore in the 12th Plan.
The government has envisaged expenditure of R2.3 lakh crore for the transmission sector during the 13th Plan. Of this, R1.3 lakh crore investment is envisioned for inter-state power transmission projects. Power Grid stands to benefit from the envisaged investment as it is responsible for laying and managing national transmission lines.
