Power equipment cos continue to bleed

Blue-chip firms in the power equipment sector, which were expected to get orders after the auction of coal mines and faster clearances, continue to bleed as power producers are still holding back new projects as they await power purchase agreements from state-run power distribution companies.

Companies like 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. But these units have struggled to get jobs in the last three years as power projects have been stalled and even shelved due to lack of fuel availability, financing or approvals, or land acquisition issues. Experts peg their combine loss at over Rs 1,000 crore a year due to lack of orders.

“Capacity utilisation for the industry is 20 per cent-25 per cent. We are not even able to recover our fixed cost,” said S.N Roy, director and senior executive vice-president, L&T. He heads the company’s joint ventures with Mitsubishi for power equipment.

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