Power Grid: Wired To Succeed

The FY2016-17 turned out to be a great year for Power Grid. The Navratna company recorded its highest turnover of Rs 26,580 crore, and its highest ever yearly capital expenditure of Rs 24,429 crore during the year.

In FY16-17, the company commissioned projects worth Rs 32,000 crore; and Rs 1,30,000 crore worth of projects will be commissioned in the next three to four years. The company’s fast-paced asset commissioning and its growing capex are the top reasons that have kept the company’s investors elated.

Power Grid’s revenue and earnings growth, to a great extent, depends on the expansion of its transmission network capacity. Today, it owns and operates more than 85 per cent of India’s inter-state power transmission capacity. It achieved capitalisation or project addition of transmission projects worth over Rs 31,000 crore during the year including the Rs 210-crore Champa-Kurukshetra project. The impact of strong capitalisation was reflected in the company’s robust revenue and profit growth. In FY16-17, the company displayed an impressive financial performance with total income of Rs 26,437 crore and net profit of Rs 7,308 crore, a steep rise of 25 per cent and 26 per cent, respectively.

Apart from the income from the transmission business, Power Grid has been strengthening its consultancy and telecom businesses too, building new revenue streams. The company registered consultancy revenue of Rs 582.43 crore and telecom revenue of Rs 503.83 crore, a growth of 25.13 per cent and 28.45 per cent, respectively over the previous year.

While the scope in large cross country transmission projects has come down, experts believe there is a great opportunity emerging in local power transmission infrastructure in states. Power Grid is making a smart leap by cashing in on this opportunity created by the government’s ‘Power to all’ mission. This aggressive intra-state diversification of the company, with the help of potential joint ventures with respective state governments, is bound to pay off in future.

“State governments intend to invest in intra-state projects that are estimated to require Rs 1.5 trillion. We are setting up joint ventures and are participating in tariff-based competitive bids for state projects,” says I. S. Jha, chairman and managing director of Power Grid Corporation of India.

The expanding scale of renewable and intra-state transmission would provide huge growth opportunities to the company. Smooth integration of renewables in the national grid is a major challenge Power Grid would be facing. Having said so, the company is girding up well with development of Rs 43,000 crore Green Energy Corridors project that would connect the renewable energy plants with the national grid. This also includes establishment of Renewable Energy Management Centres (REMC) in states to facilitate forcasting and efficient management of renewable ensuing grid stabilisation.

“We have a clear pipeline for next three to four years and we see the assets to grow to Rs 2.75 lakh crore by the end of 2020-21. This is based on the current works in hand,” says Jha, who for the five-year period from 2017-18 to 2021-22 has projects worth about Rs 1.3 trillion to commission and is geared up for a strong win.