Vijay told CNBC-TV18, "I would like to make a differentiation between power producer and people who are in the power sector. BHEL does not produce power. It is an equipment supplier and a company with very strong cash flow. L&T also is a contractor who helps in building power plant but it is a contractor, whereas a GVK Power is a power producer with huge debt."
He further added, "In India power projects are implemented on a debt equity ratio of 4:1 which means 80% of the funds is debt. Considering this when we are seeing a general improvement in equities confidence and sentiment stocks like BHEL would be far better because investments will take place in power and the people who will benefit most are people like BHEL and L&T, but by the time that peters through and gets through as free cash flows in GVK power or a Lanco Power that is going to take a very long time because those balance sheets are so weak and written with debt."
