Companies & Sectors
India's power sector outlook remains negative: Moody's

Indian power generators' capacity utilisation will be limited by the financial weakness of offtakers

 

The outlook for India's power sector remains negative due to evident structural challenges, Moody's Investors Service said on Thursday, while assigning a stable outlook for the power sector in the Asia Pacific, except Japan.
 
"Moody's Investors Service says that its stable outlook for the power sector in Asia Pacific (ex-Japan) is underpinned by steady demand, low input costs for most countries and transparent tariff mechanisms for some countries," the American agency said in a release here.
 
"However, the outlook for India's power sector remains negative, reflecting structural challenges," it said.
 
"The negative outlook for the Indian power sector reflects the persistent challenges from high, albeit moderating, fuel supply risk, and the limited capacity to pay on the part of financially weak distribution utilities," it added.
 
Indian power generators' capacity utilisation will be limited by the financial weakness of offtakers, in turn constraining off-take electricity demand, despite growing electricity demand and increasing domestic coal production, Moody's said.
 
Some Indian private producers are also locked into power purchase agreements (PPAs) that have become unviable, because they do not allow the high costs of imported fuel to be passed through, said the report titled, "Power Utilities - Asia Pacific ex-Japan: 2016 Outlook - Steady Demand, Low Input Costs Drive Stable Outlook".
 
It said that for state-run generator NTPC, its unfavorable business conditions are offset by India's central and state governments, the Reserve Bank of India's standing agreement to offset high off-taker risk, and the company's well secured fuel supply sources from domestic and overseas markets.
 
"The high off-taker risk in India will not be addressed over at least the outlook period, as the financial profiles of off-takers will remain weak," the report said.
 
Some state governments have also not paid all subsidies that the distribution utilities are entitled to, thereby constraining the utilities' liquidity positions, it added.
 
Moody's said, overall, 70 percent of rated power utilities in Asia Pacific, except Japan, have stable outlooks, reflecting the stable fundamentals and their adequate financial profiles relative to their ratings.
 
"Steady demand for electricity in most countries in the region, and low input costs under stable market structures will allow most power companies to recover capex and maintain adequate financial buffers," said Mic Kang, Moody's vice president.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
 

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Reliance Group seeks 16 more defence manufacturing licences
Going overdrive in the defence manufacturing space, Anil Ambani-led Reliance Group has applied for as many as 16 more licences in areas ranging from missiles to radar, barely two weeks after it got conditional nod for 12 requests to make aircraft, choppers and more.
 
"We have applied for these industrial licenses to manufacture defence equipment and hardware such as heavy weapons, ammunition, explosives, missiles, small arms, electronic warfare, armoured and amphibious vehicles, radars and unmanned aystems," an informed source said.
 
"The new facilities to come up in Gujrat and Maharashtra in a phased manner," the source added, requesting anonymity, since he was not authorised to speak to the media. "Once these 28 licenses are in place, we will create tens-of-thousands of thousands of highly skilled jobs."
 
Late last month, the government had approved conditionally 12 licences for the Reliance Group in this this area. These were part of approvals for 32 similar applications from other stakeholders, as per the list put up by the Department of Industrial Policy and Promotion.
 
The projects are to be executed by companies floated by Reliance Defence that is a wholly-owned subsidiary of Reliance Infrastructure. These will cover the entire spectrum of land, Naval and air systems, sources said.
 
Reliance Defence also has strategic plans to set up a maintenance, repair, overhaul and upgrades of various platforms. The group is also in the process of acquiring Pipavav Defence an hopes to conclude the deal by the end of this year.
 
Reliance Defence has 11 subsidiaries in niche segments of the sector and chairman Anil Ambani had told shareholders recently that defence manufacturing and smart cities will be the future drivers of growth for the company.
 
The group is also pursuing partnerships with several leading international companies, besides looking at stakes in some existing firms in the country and outside to meet home-grown solutions for the sector.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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Car majors halt production in flood-hit Chennai
Leading car makers Hyundai, Ford and Renault-Nissan were forced to suspend operations on Wednesday, as torrential rains flooded their production plants in the Tamil Nadu capital.
 
"Production work has been suspended for the day, as rain water gushed into the plant and our employees could not turn up due to transport disruption," a Hyundai official said.
 
The Korean auto major was among the first to set up its Indian plant at Sriperumbudur in this coastal city, which is called 'Detroit of India', after Ford, Renault-Nissan and other car makers came calling.
 
Hyundai will review the situation on Thursday and decide when to resume production, though the Met office has predicted more rains this week due to the formation of low pressure over the Bay of Bengal.
 
Similarly, Ford India's subsidiary plant at Chengalpattu, 45 km from the city centre, was shut down after rain water flooded the facility and its workers could not to reach the factory, as commutation became difficult on flood-ravaged roads.
 
"We have halted production at our plant due to heavy rains flooding the area and approach roads remaining cut off owing to water logging," a company spokesperson said.
 
French-Japanese auto alliance Renault-Nissan also suspended operations for the day at its plant in Oragadam for the safety of its employees, as the whole area was flooded with rain water.
 
"Resumption will depend on normalcy returning as employees' safety is paramount. We are monitoring the situation," Renault India chief executive Sumit Sawhney said in a statement.
 
A. Satish Kumar, general secretary for the Chennai Ford Employees Union, told IANS: "Ford India has declared holidays on December 2-6 due to heavy rains. However, need-based employees involved in maintenance and production would be called for duty. That also depends on the situation."
 
According to people close to truck-maker Daimler India Commercial Vehicles, the company's plant worked half-a-day on Tuesday and it was a holiday on Wednesday.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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