RTI Judgement Series
RTI Judgement Series: CBI is not above the law; PIO fined Rs5,000

Elementary principle of abiding by orders given by statutory authorities or Courts cannot be defied by anyone, including CBI, the CIC said, while imposing a penalty of Rs5,000 on the PIO. This is 169th in a series of important judgements given by former Central Information Commissioner Shailesh Gandhi that can be used or quoted in an RTI application

The Central Information Commission (CIC), while allowing a complaint, imposed a penalty of Rs5,000 on the Public Information Officer (PIO) of the economic offences wing (EOW) at Central Bureau of Investigation (CBI), Chennai for failing to comply with the order from the Commission. The CIC had directed to provide information before 20 June 2011, however, the PIO obtained a stay on 13 July 2011.


While giving this judgement on 25 July 2011, Shailesh Gandhi, the then Central Information Commissioner said, "Just as citizens are expected to follow, government agencies and their officers are equally bound to abide by all orders which have the sanction of law. Since the PIO has failed to comply with the order of the Commission, without a valid stay, she is liable to be penalized under Section 20(1) of the Right to Information (RTI) Act for the period between 21 June 2011 and 12 July 2011."


New Delhi resident PC Srivastava, on 6 July 2010, filed a complaint before the CIC contending that the PIO of CBI has not yet supplied the information as per the Commission's order. On 26 May 2011, the CIC had passed an order in the matter of PC Srivastava vs. PIO and SP, EOW, CBI (Chennai) (CIC/SM/A/2011/000309/SG/12557) directing the PIO to provide the information as available on record on queries 5 and 6 to the Complainant before 20 June 2011.


Subsequently, the CIC received a letter dated 20 June 2011 from Srivastava alleging that no information had been furnished by the PIO till date. The CIC registered this letter as complaint in accordance with Section 18(1) of the RTI Act.


Mr Gandhi, the then CIC, said, "From the facts before the Bench, it appeared that the PIO had failed to comply with the order of the CIC dated 26 May 2011 and not provided the requisite information within the time limit specified therein. The denial on the PIO's part in providing the information amounted to wilful disobedience of the Commission's order and raised a reasonable doubt that the denial may be mala fide."


The Bench then decided to initiate an enquiry in the complaint under Section 12(2) of the RTI Act, and summoned the PIO to appear on 25 July 2011.


During the hearing on 25 July 2011, Mr Gandhi noted that Thenmoezhi, the PIO has neither responded to the summons issued by the CIC nor provided any explanation for not furnishing the information to Srivastava in accordance with the Commission's order.


However, Srivastava, the complainant, informed the Bench, that a stay has been obtained subsequently on the CIC order dated 26 May 2011 by CBI- the public authority from the High Court of Delhi on 13 July 2011 in (WP (C) 4810/2011). He also requested the Bench to levy a penalty on the PIO for not providing information by 20 June 2011 as per the CIC order.


Mr Gandhi said, "Since the CIC's order has been stayed by the High Court on 13 July 2011, no order can be issued as regards the disclosure of information. However, the Bench will consider the complainant's demand for a penalty to be imposed on the PIO."


Section 20 (1) of the RTI Act states:


"20. Penalties.- Where the Central Information Commission or the State Information Commission, as the case may be, at the time of deciding any complaint or appeal is of the opinion that the Central Public Information Officer or the State Public Information Officer, as the case may be, has, without any reasonable cause, refused to receive an application for information or has not furnished information within the time specified under sub-section (1) of section 7 or malafidely denied the request for information or knowingly given incorrect, incomplete or misleading information or destroyed information which was the subject of the request or obstructed in any manner in furnishing the information, it shall impose a penalty of two hundred and fifty rupees each day till application is received or information is furnished, so however, the total amount of such penalty shall not exceed twenty five thousand rupees:


          Provided that the Central Public Information Officer or the State Public Information Officer, as the case may be, shall be given a reasonable opportunity of being heard before any penalty is imposed on him:


          Provided further that the burden of proving that he acted reasonably and diligently shall be on the Central Public Information Officer or the State Public Information Officer, as the case may be."


From a plain reading of Section 20(1) of the RTI Act, it appears that the CIC, at the time of deciding any complaint or appeal, must impose a penalty in the following circumstances:


1) Refusal to receive an application for information.

2) Not furnishing information within the time specified under Section 7(1) of the RTI Act.

3) Malafidely denying the request for information or knowingly giving incorrect, incomplete or misleading information or destroying information, which was the subject of the request.

4) Obstructing in any manner in furnishing the information.


All the above are prefaced by the phrase, "without reasonable cause".


"Therefore, Mr Gandhi said, "if complete information is not furnished without any reasonable cause, the Bench, at the time of deciding any complaint or appeal is duty bound to levy a penalty at the rate of Rs250 each day till the information is furnished."


This principle has been relied on by Justice Ravindra Bhat of the High Court of Delhi in Mujibur Rehman vs. CIC in (CWP 3845 of 2007 decided on 28/04/2009). Moreover, as per Section 20(1) of the RTI Act, the PIO shall have to discharge the burden of proving that he acted reasonably and diligently.


Mr Gandhi said, "In the instant case, the order of the CIC dated 26 May 2011 clearly stipulated the date i.e. 20 June 2011 within which the requisite information was required to be provided to the complainant. However, despite its clear order, the Bench noted that the PIO did not provide the information to the complainant within the said date. Stay on the CIC order was obtained only on 13 July 2011. Given the same, it prima facie appears that the PIO has flouted the order of the Commission and not provided the information from 21 June 2011 to 12 July 2011. No explanation whatsoever has been provided by the PIO for not complying with the order of the CIC. The PIO has also failed to respond to the summons issued by the CIC."


The PIO was required to comply with the order of the Bench, unless a stay has been obtained on such order within the time limit mentioned in the order. "In the present matter, the PIO has provided no reasons for disobeying the order of a statutory authority. It is pertinent to mention that departmental procedures and administrative hurdles or exigencies cannot be used as an excuse for disobeying the order of a statutory authority and consequently denying the citizen's fundamental right to information. At the very least the PIO should have approached the Bench before 20 June 2011 and requested for an extension in time giving reasons. However, the PIO neither approached the CIC nor appeared before the Bench on 25 July 2011. Moreover, no written explanations have been submitted by the PIO before the Bench," Mr Gandhi noted.


In this regard, he said, the Bench would like to place reliance on certain pronouncements of the Supreme Court of India. In Prithawi Nath Ram vs. State of Jharkhand & Ors (Appeal (Civil) No. 5024 of 2000), the apex court, in its judgement dated 24 August 2004 observed as follows:


"If any party concerned is aggrieved by the order which in its opinion is wrong or against rules or its implementation is neither practicable nor feasible, it should always either approach to the Court that passed the order or invoke jurisdiction of the Appellate Court. Rightness or wrongness of the order cannot be urged in contempt proceedings. Right or wrong the order has to be obeyed. Flouting an order of the Court would render the party liable for contempt. While dealing with an application for contempt the Court cannot traverse beyond the order, non-compliance of which is alleged. In other words, it cannot say what should not have been done or what should have been done. It cannot traverse beyond the order. It cannot test correctness or otherwise of the order or give additional direction or delete any direction. That would be exercising review jurisdiction while dealing with an application for initiation of contempt proceedings. The same would be impermissible and indefensible." (Emphasis added)


Further, in Prakash Narain Sharma vs. Burma Shell Cooperative Housing (AIR 2002 SC 3062), the Supreme Court has observed that a judicial order, not invalid on its face, must be given effect entailing all consequences, till it is declared void in a duly constituted judicial proceedings. Reliance may also be placed on the observations of Justice SN Variava, in Ghaziabad Development Authority vs Balbir Singh (2004-002- CPJ-0012-SC) case, wherein he stated, “…unless there is a stay obtained from a higher forum, the mere fact of filing an appeal or revision will not entitle a person who is required to pay the penalty to not comply with the order of the lower forum. Even though the person may have filed an appeal or revision, if no stay is obtained or if stay is refused, the order must be complied with. In such cases, the higher forum should, before entertaining such appeal or revision, ensure that the order of the lower forum is first complied with.”


Mr Gandhi said, "The law laid down by the Supreme Court, as described above, is the law of the land and must be abided by all. The CBI is not above this law and in the absence of a stay, should have complied with the order of the CIC. Just as citizens are expected to follow this, government agencies and their officers are equally bound to abide by all orders which have the sanction of law.  Without this discipline, no rule of law can prevail. And if a police agency cannot follow this simple principle, it loses the moral authority to ask citizens to abide by its orders."


"The PIO's action is in clear violation of the principles laid down by the Supreme Court. Thenmoezhi, the PIO & SP, EOW, CBI (Chennai) has given no reasonable cause for not providing information for 20 days, before a valid stay was obtained on the Commission's order. Since no reasonable cause has been offered by the PIO for not providing the information from 21 June 2011 to 12 July 2011, i.e. for a period of 20 days, the Bench imposes a penalty on Thenmoezhi, the PIO, under Section 20(1) of the RTI Act at the rate of Rs250 per day of delay, i.e. 20X250 = Rs5,000," the Bench said.


The CIC also directed the director of CBI to recover Rs5,000 from the salary of Thenmoezhi, the PIO and remit the same to the CIC before 10 September 2011.




Decision No. CIC/SM/C/2011/000782/SG/13656Penalty


Complaint No. CIC/SM/C/2011/000782/SG



Complainant                                                 : PC Srivastava,

                                                            New Delhi


Respondent                                        : Thenmoezhi,

                                                            PIO & SP,

                                                            Economic Offences Wing,

                                                            Central Bureau of Investigation,

                                                            III Floor, A- Wing, Rajaji Bhawan,

                                                            Besant Nagar, Chennai- 600090


Consumer Protection: What Raghuram Rajan missed talking about

Having predicted the 2008 financial crash and been involved with the financial sector closely since then the RBI governor surely knows that the West has made consumer financial protection a centrepiece of financial sector regulation. How about setting the ball rolling in that direction in India too?

Raghuram Rajan has been garnering a lot of plaudits and praises for his first speech as governor of the Reserve Bank of India (RBI). However, he failed to mention one of the most important aspects of the banking system, or the entire financial system for that matter: consumer protection.

As a brilliant person who is well versed with the intricacies of finance and banking, he shot to fame when he predicted the financial crisis of 2008, when he knew that US consumers were hard sold cheap mortgages they couldn’t afford. Having realised this, the US government set up Consumer Finance Protection Bureau and the UK government had set up Financial Conduct Authority which will have the power to regulate all providers of financial across different sectors. Even in India Financial Sector Legislative Reforms Committee has suggested exactly the same approach of a special consumer protection agency.

However, it is surprising that he has not mentioned anything about consumer protection or mis-selling which mentioning that banks should expand freely. Mis-selling is far more rampant here than in the US because Indian regulators are often lax and ignorant about many issues plaguing consumers, from hard-selling third-party products to non-transparent banking charges and so on.

Moneylife Foundation has been batting for consumers over the years and has raised several issues on banking, consumer protection and safety of products. With over 23,000 members, it has stumbled upon a wide variety of cases of mis-selling, cheating, some of which are horrifying because they are targeted at senior citizens and women. Unfortunately, the spate of mis-selling over the years has caused Indian investors and savers to lose money and lose trust in the financial system.

If Raghuram Rajan is interested in batting for the Indian investor and saver, if he is interested in restoring the faith of the Indian banking system and get people to trust bankers and financial intermediaries again, then here are the list of issues he can look at, all of which Moneylife has written about over the years:

  1. Banking Charges that customers do not know about and are not aware : While banks argue that customers must pay for the convenience of modern banking, there is a growing sense of frustration among customers about the constant, stealthy increase in bank charges. But many don’t even know what exactly these charges are, even amongst the financially savvy.
  2. The problem with wealth management department run by banks: RBI had admitted that mis-selling is a problem in India in its 7th Financial Stability Report. Banks sell non-banking products and often club it with core banking products. Many savers are not financial savvy to understand complicated wealth management products. However, Moneylife found that some of the proposals in the report were found flawed. Moreover, will it implement and translate the suggestions into rules? Even celebrities like Suchitra Krishnamoorthy were cheated of crores of rupees because of this.
  3. Complicated and vague KYC rules harass consumers more than it helps: Moneylife had found out that some banks had taken their KYC measures a step too far, which had resulted in several irate customers complaining to Moneylife.
  4. Gold sales by banks: Banks are allowed to sell gold, at ridiculous rates, while they are not allowed to buy back from the customer. The earlier regime of RBI actually encouraged people to invest in gold. Because banks were not allowed to buy back gold, many consumers who were forced to buy from banks were stuck and had no where else to go but sell to jewellers at much lower rates. Here too, KYC was found to be inconsistent.
  5. Poor auditing of IT systems leading to glitches and harming consumers: Moneylife has come across many cases where savers, some of them old, had found that their TDS had been wrongly calculated, leading to lower interest payments, thanks to glitches in IT systems. All this leads to tax issues for consumers for no fault of theirs. Old people are the worst affected. Similarly, another bank printed out sensitive information like username and password on an envelope!
  6. Grievance Redress is poor and leaves a lot to be desired: One of the most important aspects of any product or customer service is ability to handle any complaint and rectify situations. Unfortunately, the grievance redress system is nearly broken while the banking ombudsman handles only complaint up to Rs25 lakh. Consumers who are mis-sold products over Rs25 lakh, particularly PMS-bundled products sold by banks, cannot approach the banking ombudsman.

Mr Rajan may like to know that Banking Code and Standards Board of India was created to enforce ethical and consumer-friendly practices but the code is voluntary. Brilliant, innovative and energetic that he is, we believe that Mr Rajan will have some new thoughts on effective consumer protection in the banking sector too. We wonder when he will start articulating his thoughts in this direction.




3 years ago

hasty comments!let's wait for the sept 19 (or 16)message from him.
'customers' have to wait when the macros are menacing.


Vinay Joshi

In Reply to srinivasan 3 years ago

Dear Mr. Srinivasan;

How rightly have you pointed it out & certainly the comprehension of MLDT is at fore! With its people like Mr.Nagesh Kini, FCA, COMMENTING!? WITHOUT UNDERSTANDING MACROECONOMICS BEHAVING LIKE ACTIVIST, OPPOSITION POLITICAL PARTIES!?

Sept;7, night he is leaving to attend BASEL III conference of Sept;8-9. On return he will, going thro' the aspects, as he had candidly announced, he will declare the mid quarter 'review policy' on Sept,20, after FOMC 17-18 announcement. WHY? why postponed?

To answer Mr. B.Ramesh Adiga, was ML,MLDT, sleeping & never raised the issues? If so, WHY TODAY ML & MLDT THINK ABOUT IT? WAS DR.SUBBARAO INACCESSIBLE? To a stalwart like Sucheta! WHEN Dr.K.C Chakrabarty was a guest speaker, invited to speak, what message was driven to him?


The DG may resign & go as Mr.Rakesh Mohan!

Why Mr.Nagesh Kini, FCA, instead of replying to me stating 'nothing to read between lines', & CAN'T UNDERSTAND WHAT'S NEW TO COMPREHEND SADDENS ME!?

Sorry gentlemen including MR.Nagesh Kini, FCA, i'm putting up this combined reply to you three, i was not wanting put up separate.

Mr.Nagesh Kini, FCA, in the simmering crisis you, MLDT, ML expect addressing micro issues?

FYI, RR, like proverbial 'frog in the pot'! He has to realise he is not cooked & be too late on MACROECONOMICS! YOU ARE TALKING of micro?????

As we are not discussing macro, i leave it here - but to MAKE UNDERSTAND 'reading between the lines' OF MY POSTS, i've put forth.


P.S - Mr. Nagesh Kini, FCA, you've not answered me on Jignesh Shah expose, your ML founders, praising him, IN THEIR AUTHORED BOOK- now tanking him, got him to the level of Keki Dadiseth & Mr.K.V Kamath.


Sucheta Dalal

In Reply to Vinay Joshi 3 years ago

Yes Mr Vinay Joshi... Dr Subba Rao was completely inaccessible. He sent us one email letter, which said NOTHING.
Mr Anand Sinha has the CIBIL issue to look at -- he also chooses NOT TO REPLY.

Mr U K Sinha is not only inaccessible ( I used to know him well when he was in the finance ministry) but SEBI gives ridiculous answers even to the Minister to be repeated in parliament. Nobody questions it or studies facts.
You are clearly VERY well informed and brilliant. BUT all you do is not needle us on this forum. Why dont you join our TINY effort and strengthen it? We are a tiny team doing 3 different things... dont you think you have the right to expect more when you contribute to our effort? We do what we can with tiny resources.

nagesh kini

In Reply to Sucheta Dalal 3 years ago

I completely agree with Sucheta.

nagesh kini

In Reply to Sucheta Dalal 3 years ago

I completely agree with Sucheta.

Vinay Joshi

In Reply to Sucheta Dalal 3 years ago

Hello Ms. Sucheta,

Noted your reply with due diligence. As reiterated I have highest respect for ML, be it Ms. Sucheta or Mr.Debashis, MLDT, certain other gentlemen viz, Mr. Nagesh Kini, FCA, Dr.A.K Ramdas, even Mr.Vivek & Mr.Raj Pradhan, Gurpur [should I disclose his name?] & Ms.Vinita. [she is exemplary, also Ms.Namita, she doesn't contribute much.]

Thanx for your left hand compliments at the same time stating ‘not needle us’, indirectly stating that I should be willing to state ‘a spade is a spade’ is what is read unless otherwise as it may mean.

The only aspect as you have known thro’ your three decades journalistic career is ‘authenticity’!? Am’I wrong? You are defeating the premise!? I’m not criticizing. There is a Marathi saying ‘nindakache ghar asave shejari’ – meaning ‘be your neighbor a critic’! [your are well versed with Marathi!]

Ms. Sucheta if Dr.Subbarao, was inaccessible, no audience & no submission of memorandum, why have not made it a press issue? Was that inaccessible? I understand your modest approach. On the farewell evening he was dancing to certain film tunes. [taking some steps, not virtual dancing.]

Well SEBI, no comments, or SEBI v.MCX-SX, et al, trashed it out from my ‘hard disc’, my neurological functions should be proper.

Well Ms.Sucheta, my view point is absolutely different & ‘no needle’, or as earlier yr mail msg to me ‘heckle’, on Soma Bagaria, or Anil Harish. These reputed professionals can’t counter professionally? BECAUSE THEY HAD NO ANSWERS, they only lobby. Ms.Soma a beginner not accustomed, if, but with limited aspects. I’ve respect for them, undoubtedly.

Ms. Sucheta, the need is to promote the e-paper, e-communication to the computer savvy GenX. This coupled with financial literacy as is your noble endeavour, expose & alerting & trying to get to book the culprits.

Ms.Sucheta, today slowdown has taken a toll on media houses. The world over print worst affected, Indian TV channels are cutting back programming BUT the internet / broadband, Wi-FI, coming 4G, will be in the offing.

My conservative estimate the INR depreciation will cost the print media additional of 1KCR+ FY14, 1.2mt import, [yr mag cost increase!] necessitating move to the digital domain. So to be on platform a must & should not be used as branding exercise only, without authentic contents. Complex subject.

Hence Ms.Sucheta you have a first mover advantage & earnestly wish you, ML, MLF, get into center stage.


Vinay Joshi

In Reply to Sucheta Dalal 3 years ago

Hello Ms.Sucheta,

Further to my earlier post, as was on different an issue tho'with diversion, all said.

The resources --CSR the possible aspects have to be clarified & many clarifications are underway.

Hence your NGO can benefit from this & i may try depending.

But at the same time i have your mail msg, wherein you have stated that you're sufficiently funded & no funds required.

Well, i'll dismiss it as an 'aberration', w/o contradicting yr abv st on resources.

As per my earlier post in reply today, MLF should grow in strength.


nagesh kini

In Reply to Vinay Joshi 3 years ago

He has nothing new to say!

Vinay Joshi

In Reply to nagesh kini 3 years ago


nagesh kini

In Reply to Vinay Joshi 3 years ago

He has nothing new to say!

Vinay Joshi

In Reply to Vinay Joshi 3 years ago

Hello All,

By the way Keki Dadiseth & Mr.K.V Kamath, are world renowned personalities, admired & respected.


B Ramesh Adiga

In Reply to srinivasan 3 years ago

. . Not necessarily. He surely can think over the issues underscored here and give his considered response in his forthcoming interactions. In any case, the ML has laid the platform for debate on certain burning issues. It is welcome.


3 years ago

'he has not mentioned anything about consumer protection or mis-selling which mentioning that banks should expand freely.'

should it be 'while' instead of 'which'?

Satya Sharma

3 years ago

Unfortunately in India the banking industry or to that matter any industry lobbying is so strong that consumer power cannot stand tall. With this situation, who ever may be the Governor of RBI, it does not any sense to consumers. Consumer Power should be made stronger in Asia especially in countries like Bangladesh, India, Indonesia and China.

nagesh kini

3 years ago

If only the PMO and MOF were made aware that Joshi sab, knew much more than RR, the new RBI Governor, they would not have had to go in search of an NRI?

Where is the need to go hammer and tongs on ML & MLDT he claims he 'highly respects'?

It must be remembered that making use of high end funda makes for utter nonsense in everyday life!

MLF needs to submit a Memorandum on the Consumer concerns to RR. After all his DG Dr.KCC is fully aware of all the issues.


Vinay Joshi

In Reply to nagesh kini 3 years ago

Read between the lines before commenting. If required my detail comments will follow. MLDT!?


nagesh kini

In Reply to Vinay Joshi 3 years ago

There is nothing to 'read in the lines' why go 'between' them? After all there is nothing new!

Vinay Joshi

3 years ago


As usual you can write, without knowing what is stated or what is required to be stated?

MLDT; firstly all that is said can be put to villagers on loudspeakers & not in ML, if ML can ascertain posts of its valued contributors!?

MLDT, kindly make it known ML founders & ML highly respected by me, its goal & their dedication to perceive it . BUT YR POSTS DEMEAN ML!!!?? I’ve no idea how they are carried!


MLDT, its easy to state that Rajan predicted, WITHOUT KNOWING his premise then. CAN MLDT TELL WHAT was he talking about which eventually happened after three years?

WHAT WAS HE TALKING IN 2005? Let me know.

Bank branch expansion is different an issue beyond the comprehension of MLDT & its implications questioned in view of mis selling?

MLDT in the last ten years HOW MANY TIMES HAVE YOU & YOUR ML MET THE RBI GUV; TO ADDRESS THE ISSUE? If at all, the outcome? WHY HAVE YOU NOT HAULED THE ERSTWHILE GUV’s? Never reported! Apart from taking isolated representation & reporting.

MLDT, I’m of the opinion THAT YOU CAN COACH THE RBI GUV!!!???


Vinayak Bhimarao Mudholkar

3 years ago

America’s industrial economy — one in which companies compete not on price and quality but in political influence, and earn profits not by attracting customers with good service, but by using the power of the state to protect markets and force customers into the fold-Matt Taibbi, Griftopia
If this is the reality in US then what to expect in India....This is the dark side of Capitalism.


Vinay Joshi

In Reply to Vinayak Bhimarao Mudholkar 3 years ago

Dear Mr. Vinayak Bhimarao Mudholkar,

Have you ever heard of 'Anti Trust' laws, 'Class Action' suit? As well in EU?

So if Matt, in picture can he now answer US corn production risen with soy & cereals thereby the grain commodities market down, corn futures down & trading at 436.50!11% rise in reaping harvest.

The REALITY IN US IS THEY ARE ON STRONG FOOTING, WANTING TO TAPER OFF STIMULUS - WITHOUT THE CONCERN OF INDIAN PM OR BRICS IN ONGOING G20 SUMMIT. The St.Petersburg afternoon report i had was deliberations ongoing, in Germany Mario Draghi, declaring out from six quarters expanded by 0.3%, expect keeping rates steady.

AUG ISM non mfgr risen to 58.6, tho' July factory order drop 2.4% but ex-transport 1.2%. Job data will be released Friday, with other data.

Who is the 'grifter class'? Only monetary?!


Cummins India’s FY14F to remain weak on falling powergen demand

There is a continued sense of concern over the near-term outlook on powergen and exports segments for Cummins India, according to Nomura Financial Advisory and

Securities in its research note on the company based on its meeting with Rajiv Batra, CFO, Cummins India. However, export realisations could lead to gains in margins on account of the depreciating rupee.


Nomura recommends investors to remain focused on the fundamentally superior business model and franchise that Cummins India offers with a solid long-term opportunity in a power-short India. Nomura had been waiting for a better entry point given its expensive valuations so far. The Cummins India has a ‘Neutral’ recommendation with a target price of Rs382.


In the long term, Nomura believes that India’s industrial sector offers the unfolding of a substantial opportunity in coming years. In particular, it sees potential opportunities in niche segments. Powergen is one of the best hi-tech niche segments.


The business forecast for Cummins India, according to Nomura analysts, is given below:



According to the CFO of the company, the overall economic slowdown is a big worry and that has led to the postponement of capex decisions, thus, hurting back-up power demand. A continued slowdown in capex decisions for industrial/ commercial projects could continue to hamper powergen growth beyond what is already visible, Nomura adds in its research note.


On the industrial segment, the Nomura research note mentions that the company had been doing well until now led by water well rigs (40% of the segment now) on the back of water scarcity last year. However, good monsoons this year could be a concern for the demand from this segment, in our view. Other bit of demand support for the segment continues from construction equipment original equipment manufacturers (OEMs) which are seeing increased offtake due to better export pricing.


On the exports side, according to Nomura, only 15% of the company’s exports in the high HP segment (2/3rd of all exports) are into the US, while Middle East, Europe/Russia and Africa contribute about 40% where demand is still declining. As such, hopes of a US recovery benefitting exports are misled, in Nomura’s view.


The CFO also expects that the replacement cycle of DG sets will elongate from the current 8-10 years to 10-15 years as the usage of gensets is decreasing following better power availability, concludes the Nomura research note.


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