Power equipment business of L&T, Thermax and others hit as generator cos shun new projects

MUMBAI: The power equipment business of Larsen & Toubro, ThermaxBSE 0.66 %, Bharat Forge and others that invested several crores on building capability, continue to bleed as their customers — the power generators — are still holding back orders for new projects as they await visibility of power purchase agreements from state-run power distribution companies.

The coal block auction and a pick-up in pace for clearances could have made a case for developers to revive plans and take up new projects. But they are hamstrung as most developers are dealing with stretched balance sheets and banks are jittery about potential bad assets from the sector. The reluctance of lossmaking discoms to sign long term power purchase agreements (PPAs) has aggravated the sector’s problems and pulled the plug on new investments. “Power equipment makers like us have invested a total of Rs 30,000 crore to set up manufacturing units.

But where do we sell? There’s no private power generator announcing a single new project. This investment runs the risk of turning into an NPA,” said MS Unnikrishnan, managing director and chief executive officer of Thermax. Companies such as L&T, JSW Energy, Bharat Forge, Thermax, BGR Energy, among others, formed joint ventures with foreign partners and made huge investments to set up units to manufacture thermal power boilers and turbine generators in India.

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