Feb 13, 2013 10:31 PM IST | Source: CNBC-TV18

Will not cut capex; eye on consultancy income: Power Grid

N Nayak, CMD, Power Grid Corporation of India, says on CNBC-TV18 that the company will not cut capex and increas it focus on boosting income from the consultancy business

N Nayak, CMD of Power Grid Corporation of India says that that the PSU's total capex for 12th Plan is at Rs 1 lakh crore and that the company has completed most projects targeted in the 11th Plan.

The transmission company's total outstanding stands at Rs 550 crore and it is not planning to reduce capital expenditure going forward, Nayak told CNBC-TV18.

The company completed many large projects including the Mundra UMPP in nine months and the first leg of transmission links for Sasan UMPP are to be completed. The third-quarter capex stood at Rs 5,536 crore as against Rs 4,074 crore (Y-o-Y). The company has already completed a capex worth Rs 15,000 crore year-to-date.

Below is the edited transcript of the interview on CNBC-TV18

Q: What contributed to your headline this time?

A: We performed very well in Q3- the revenue is up by 35 percent and net profit is up by about 40 percent.

Q: After Q3 what is the total capitalisation that the company has achieved year-to-date and in that light, would you maintain your FY13 capex guidance?

A: We had a capex plan of Rs 100,000 crore in the 12th Plan. For this year, it was Rs 20,000 crore and we have already spent more than Rs 15,000 crore. So we are certain of meeting our target and may even exceed it.

Q: How has the project-award activity been for the quarter? What kind of levels are you looking at going into Q4 and the next fiscal?

A: The fourth quarter will be similar to the same period last year because this is the time the situation has improved, but we cannot provide any estimates due to the SEBI guidelines. We are confident that the quarter will be good this year too.

Q: What is your income from consultancy which has been a bit subdued this quarter?

A: Our consulting services- the Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) and the APDRP - achieved a considerable portion of the target for the 11th Plan. The work for the 12th Plan is yet to start and that is the reason for the dip. But in this quarter, income was about Rs 66 crore against last’s quarter Rs 67 crore. We are aggressively pursuing business in the overseas and domestic markets. Hopefully, in the coming days the results will be good.

Q: The company does have some direct exposure to receivables-risk given the weak financial conditions of the state electricity boards (SEBs). Could you highlight the overall receivables across India?

A: Our monthly bills are about Rs 910 crore. In a billing cycle of 60 days, the SEBs are obliged to pay their dues in 60 days’ time. So, out of this Rs 910 crore, the outstanding is about Rs 550 crore. Though it is not very substantial, we are aggressively pursuing the process of collection with all the distribution companies and state transmission utilities.

Q: Infrastructure players seem to be reeling from a slowdown, funding pressure and a certain amount of policy freeze weighing-in. So will any new delay in capacity-addition directly impact your targets on capex? To what extent would the downside be if the scenario turns bearish?

A: When there is less generation, there is more pressure on transmission as any amount of surplus power has to be transmitted. So there is no slowdown as far as our transmission system is concerned but we may have to increase transmission to meet the deficit. So there is no question of reduction in capacity addition or capital expenditure.

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