Power Grid Corporation India LTD - 42 Pages, 519Kb

POWER GRID CORPORATION INDIA LIMITED (PGCIL) BUY
CMP: Rs.92.35 Date: February 26, 2009 Key Ratios: Particulars OPM(%) NPM(%) ROE(%) ROCE(%) P/BV(x) P/E(x) EV/EBDITA(x) Target Price :Rs.114.00 Market Cap.: Rs. 388686.50mn.
FY08 87 31 10.7 8.6 3.19 29.77 10.70
FY09E 90 25 10.1 8.8 2.12 25.69 8.10
FY10E 92 33 13.2 9.0 2.52 17.08 7.46
SYNOPSIS
We initiate the coverage of PGCIL and set a target price of Rs.114.00 for long term. PGCIL, a NAVRATNA PSU, is Indias principal electric transmission company. PGCIL is planning to invest a sum of Rs.550 billion over the next five years for strengthening the national grid, including inter-regional transmission system strengthening schemes. The company is planning to increase the interregional power transfer capacity of the grid to more than 37,000MW by 2012. The company is eyeing opportunities in West Asia and the African markets Currently in the process of setting-up a new subsidiary to handle the power management functions of the company. The topline and bottomline of the company is expected to grow at a CAGR of 25% and 23% respectively over FY07 to FY10E. Share Holding Pattern:
Key Data: Sector Face Value 52 wk. High/Low (Rs.) Volume (2 wk. Avg.) BSE Code
Power Rs.10.00 113.75/51.75 988722 532898
V.S.R. Sastry Vice President Equity Research Desk 91-22-25276077 vsrsastry@firstcallindiaequity.com
Dr. V.V.L.N. Sastry Ph.D. Chief Research Officer drsastry@firstcallindia.com
Firstcall India Equity Advisors Pvt Ltd
Table of Content Content 1. Investment Highlights 2. Company Profile 3. Peer Group Comparison 4. Key Concerns 5. Financials 6. Charts & Graph 7. Outlook and Conclusion 8. Industry Overview Page No. 03 08 32 32 33 35 36 37
Investment Highlights
Result Updates The topline of the company increased 36% YoY to Rs.14774.40mn from Rs.10857.70mn of the same period of the last year while bottomline has slipped into red by 3.1% YoY and stood at Rs.3723.50mn. EPS of the company for the quarter stood at Rs.0.88.
Expenditure of the company for the quarter stood at Rs.2504.90mn from Rs.1976.40mn.i.e, an increase of nearly 27%YoY. Staff cost for the quarter accounts for 10% of the revenue for the quarter and O&M expenditure accounts 7% of the revenue of the quarter. Interest expenditure increased 2.15times in comparison with the corresponding quarter of the previous year and stood at Rs.6002.60mn. OPM and NPM for the quarter declined to 88.81% and 25.2% respectively from 91.74% and 35.39% respectively.
Revenue from transmission segment contributes 89% of the total revenue of the quarter and that from consultancy, ULDC/RLDC and telecom contributes 4%,4% and 3% respectively. Details of segment-wise revenue are given below: Segment Transmission Consultancy ULDC/RLDC Telecom Dec.08 13954.2 589.6 664.5 427.6 Dec.07 10459.1 627.1 457.7 309.7 % Chg. 33% -6% 45% 38%
National Load Dispatch Centre (NLDC) The company has dedicated its National Load Dispatch Centre (NLDC) to the nation in Feb. 2009. The NLDC is connected with 5 RLDCs which in turn are connected to 31 state load dispatch centres. NLDC at Delhi is having a back-up at ERLDC, Kolkata. The set-up cost for this is Rs.45.0cr.
Dividend The board has proposed interim dividend at 5% on equity share capital of the company for FY09. This means that Rs.0.50 per equity share of Rs.10.00 each.
Establishment of New Transmission Lines
The company will invest Rs.7032cr. over next four years to establish transmission lines to supply power generated from Sasan UMPP to the electricity grid. Sasan UMPP, owned by Reliance Power, is having a generation capacity of 4000MW of electricity. These transmission lines will supply power to Madhya Pradesh, Punjab, Delhi, Uttar Pradesh, Rajasthan, Haryana and Uttarakhand. This UMPP is expected to start commercial operation by 2012. Power grid has plans to invest Rs.55000cr. in establishing transmission lines during the 11th five year plan. The company has invested Rs.6615cr. in the first year of the plan and has a target to invest Rs.8000cr. in the current fiscal. External Funding PGCIL has signed an agreement with World Bank (WB) for USD 400mn. The loan will be utilized to fund power grids transmission project during the eleventh plan. The company has targeted to invest Rs.55000cr. on projects during the eleventh five year plan. Accomplishment of Transmission Line The company has completed 220km. transmission line in Afghanistan. The project has been funded by Indian Govt. under the assistance programme to Afghanistan. Formation of New Subsidiary The company is in the process of forming a new subsidiary to take care of the power management functions of the company. The new subsidiary is expected to form by March 2009.
Joint Venture With NTPC PGCIL and NTPC have recently signed a deal to form a short-circuit testing joint venture. Rs. 94.36 billion Investment Plans The company has approved an investment of Rs.94.36 billion in the current fiscal year for its various projects. The investment constitutes common scheme and network for all the four regions at an estimated cost of Rs.70.75billion. The company has also approved for supplementary transmission systems associated with Damodar Valley Corporation and Maithon Right Bank Projects at an estimated cost of Rs.23.61billion.
New Joint Venture
PGCIL and Teesta Urja has joined together to form a new company called Teesta Valley Power Transmission. PGCIL & Teesta Urja have 26% and 74% stake respectively in the joint venture. The project is likely to bear an estimated cost of Rs 7.08 billion, including construction of 400 kv D/C Teesta - Mangan Transmission line (approx. length 10 kms) and 400 kv D/C Mangan-Kishanganj Transmission Line (Approx. length 180 kms). The project is planned for completion by September, 2011. The new company will develop associated transmission system for evacuation of power from 1200 mw Teesta-III hydro electric project (HEP) being developed in Sikkim by Teesta Urja. The project will be based on build, own & operate (BOO) basis and will also provide transmission capacity upto Kishanganj s/s of Power Grid to various private HEPs being developed in North Sikkim. Highlights of FY08 Performance During FY08, PGCIL commissioned transmission projects worth about Rs.6,000crores thereby adding transmission network of 7350 circuit kms, 9 EHV Ac sub-stations and transformation capacity of more than 13,700kVA. Major projects commissioned during the year include, Kahalgaon-II (phase-I) Transmission System (Rs.2830 crore), Vindhyachal-III Transmission System (Rs.690 crore), 400 kV D/C Bina-Nagda Transmission Line ( Rs.388 crore), System Strengthening III of Southern Region (Rs.285 crore). These additions to Power Grids network have helped in improving power supply situation in various regional grids, facilitating enhanced inter-regional power transfer capacity and reliability of the system.
In FY08, PGCIL is operating around 67,000 ckt. Kms. Of transmission lines along with 111 sub-stations with transportation capacity of more than 73,000 MVA. With the use of state-of-the-art preventive maintenance techniques, average availability of transmission systems during the year 2007-08 was maintained at 99.65%. PGCIL continues to wheel about 45% of total power generated in the country through its transmission network. In FY08, about 43,000MUs of inter-regional energy transfer was facilitated, an increase of about 13% compared to the previous year (about 38,000MU). Growth of interregional power exchange has helped in meeting more demand in energy deficit regions besides achieving overall economy. Under open access, more than 9,560 transactions were approved during the year involving 30,000MUs of energy compared to 5787 transactions and 23,000MUs of energy in FY07, increase of 30%. Energy worth about Rs.10,100 cr. transacted through UI mechanism compared to Rs.6,814cr. in FY08, an increase of 48%. During FY08, the company entered the capital market with an IPO of 573.9million equity shares of Rs.10 each. Overall, the issue was subscribed 64.50times; the institutional investors segment about 116 times and HNI 40 times. During FY08, PGCIL secured 34 nos. of new consultancy assignment with project cost of about Rs.1,840cr.l Company has realized consultancy fee of about Rs.235 cr. from its ongoing consultancy projects during the year. From its telecommunication business, PGCIL received revenue of Rs. 125 Crore during FY 2007-08, a growth of 62% over last year (Rs. 77 Crore). Today, PGCIL is serving major telecom players in mobile & NLDO segment and is also planning to tap customers in entertainment and broadcasting industry. The net sales of the company for FY08, increased by 15.2% at Rs.46,148.20million. The net profit of the company stood at Rs.14,484.70 mn. i.e., 15.44% increased compared to the previous year. Earning Per Share (EPS) of the company stood at Rs.3.60 for FY08.
The expenditure of the company stood at Rs.10,518.00million, interest at Rs.13,395.50 million and depreciation at Rs.9596.50mn. During FY08 the company has paid Rs.2820.00mn as tax.
Company Profile
Power Grid Corporation of India Limited (PGCIL) was incorporated on October 23, 1989 with an authorized share capital of Rs.5,000 crore as a public limited company, wholly owned by the Government of India. PGCIL started functioning on management basis with effect from August and took over transmission assets from NTPC, NHPC, NEEPCO and other central / Joint sector organizations during 1992-93 in a phased manner. In addition to this, it is also took over the operation of existing Regional Load Despatch Centers from CEA, in a phased manner, which have been upgraded with State-of-the art Unified Load Despatch and Communication (ULDC) schemes. According to its mandate, the Corporation, apart from providing transmission system for evacuation of central sector power, is also responsible for Establishment and Operation of Regional and National Power Grids to facilitate transfer of power within and across the Regions with Reliability, Security and Economy on sound commercial principles. Based on its performance PGCIL was recognized as a Mini-ratna company by the Government of India in October 1998. PGCIL, notified as a Central Transmission Utility of the country, is playing a major role in Indian Power Sector and is also providing Open Access on its inter-state transmission system. In 2008, the Government of India has declared the company as a NAVRATNA PSE. PGCIL, as ISO 9001 certified company, has acquired in-house expertise at par with global standards in the field of planning, Engineering, Load Despatch and Communication, Telecommunication, Contracting, Financial and Project Management. PGCIL is executing various consultancy assignments in these areas as a part of its Business Development Activity. PGCILs first International Consultancy Contract with Bhutan Telecom for establishment of OPGW system on turnkey basis in the Royal Kingdom of Bhutan was successfully completed on schedule. As a result of on-going initiatives being undertaken in PGCIL to make its presence felt internationally in dealing with all facets of power system, PGCIL in association with M/s Sigma Enterprises , a Dubai based Co., has secured the prestigious International Consultancy assignment against stiff competition from Dubai Electricity & Water Authority (DEWA) for providing engineering consultancy services for 2x400kV GIS sub-stations and associated Overhead Transmission Lines. The scope of the consultancy includes all activities like design,
planning, engineering, EIA studies, preparation of tender documents, evaluation, assistance in pre-award discussions & negotiations, preparation of award letters, inspection and witnessing of type testing, site supervision, project management, payment certification and resolution of corridor and outage requirement and co-ordinate for approval from various concerned authorities in Dubai. The company has bagged two consultancy assignments in Afghanistan against stiff competition from other international consultants. PGCIL, in its efforts to ensure delivery of quality power and to maintain grid discipline, implemented Availability Based Tariff (ABT) in all the five regions. This has stabilized the frequency to prescribed banned as par IEGC i.e. 49.0Hz to 50.5Hz for large percentage of time in all the five regions. ABT has also encouraged inter-state and inter-regional bilateral trading resulting in meeting higher demand from the existing sources. Merit order operation of generating units is gaining importance and many states are utilizing this facility to utilize the system commercially. There is overall improvement in Grid stability and partial blackouts have been drastically reduced, while it has been possible to save the grid from total blackouts. PGCIL has envisaged establishment of an integrated National Grid in the country by the year 2012 with an inter-regional power transfer capacity of over 37,000MW. A perspective transmission plan has been evolved for strengthening the regional grids with ultimate objective of establishment of strong and vibrant National Grid to support the generation capacity addition program of about 78,000MW during XI pan. Efforts made by PGCIL in modernizing the Regional Load Despatch Centers (RLDCs), implementation of Availability Based Tariff (ABT), power transfer through inter-regional links and effective Operation & Maintenance measures using State-of-the-Art technologies have led to overall improvement in power supply position in all parts of the country. It is demonstrated by the fact that there has been no major grid disturbance during in any part of the country in the last 5 years. PGCIL has taken lead role and making contributions in Govt. of Indias nation building schemes of Accelerated Power Development and Reforms Programme (APDRP) and Rajiv Gandhi Vidyutikaran Yojana (RGGVY) towards brining qualitative improvement in the distribution sector. Under APDRP, PGCIL is acting as Advisor-cum-Consultant (AcC) to lend its managerial and technical expertise for improvement of distribution system in 177 distribution circles / towns/ schemes spread over 18 states costing about Rs.6,626 crore. 81% of these schemes have been commissioned and the remaining sanctioned schemes are expected to be completed by March 2009. PGCIL is also implementing some of these schemes on deposit work basis under bilateral
arrangement in State of Bihar, Goa, Meghalaya, Uttar Pradesh, Tripura and Gujarat at a cost about Rs.1,100 crore, 90% of which has been completed. Under RGGVY, PGCIL has been assigned the job for execution of rural electrification in 68 districts covering 87,300 villages at an estimated cost about Rs,9,400 crore. Cumulatively, PGCIL has electrifies 22,082 villages including 3 lac. BPL connections. During FY 2007-08, more than 5,000 nos. of villages were electrified by PGCIL.
Subsidiaries The company is having two subsidiaries and none of them is neither a listed company nor a sick unit. 1. Parbati Koldam Transmission Company Limited (PKTCL). PKTCL was originally incorporated as Bina Dehgam Transmission Company Limited (BDTCL) on September 2, 2002 with the objective of establishing the 400KV D/C BinaNagda and 400KV D/C Nagda-Dehgam transmission lines. BDTCL was envisaged to be transferred to an Independent Private Transmission Company (IPTC). The proposed IPTC failed to get the license from the CERC. Hence, the Board of Directors decided that BDTCL should be engaged in the implementation of the Parbati and Koldam transmission systems through the joint venture route. The name of the company was subsequently changed to Parbati Koldam Transmission Company Limited with effect from December 30, 2005. 2. Byrnihat Transmission Company Limited (BTCL)
BTCL was incorporated on March 23, 2006. BTCL has been formed with the objective of undertaking the implementation of the 220 KV D/C Misa Byrnihat transmission line.
Joint Ventures PGCIL is having the following joint ventures with different companies. 1. Powerlinks Transmission Limited (PTL) This is a joint venture between PGCIL(49%) and Tata Power (51%). PGCIL is responsible for implementing the entire transmission system associated with the Tala Hydro-Electric Project being developed at Bhutan. The company has entered into a joint venture arrangement with The Tata Power Company Limited (Tata Power) for establishing specific transmission lines associated with the Tala Hydro-Electric Power Project. (Tala JV Transmission Project) on a BOOT basis. The joint venture company PTL has been incorporated pursuant to this joint venture agreement for the purpose of implementing the Tala JV Transmission Project. 2. Torrent Power Transmission Private Limited (TPTPL) This is the joint venture between PGCIL (26%) and Torrent Power Limited (74%). Torrent Power Limited (Torrent) is implementing a power generation project at Akhakhol in Surat, Gujarat. The company has entered into a joint venture arrangement with Torrent for establishing associated transmission lines for the aforesaid generation unit (Sugen Transmission Project). The joint venture company TPTPL has been incorporated pursuant to this joint venture agreement for the purpose of implementing the Sugen Transmission Project on a BOO basis. The joint venture with Torrent Power Limited consists of 496 circuit kilometers of transmission line and one sub-station with a capacity of 1,100 MW and is expected to be completed by Fiscal 2010. 3. Jaypee Powergrid Limited (JPL) This is the joint venture between PGCIL (20.63%) and Jaiprakash Hydro-Power Limited (79.37%). Jaypee Karcham Hydro Corporation Limited (JKHCL) is setting up a 1,000 MW power generation project at Karcham in Kinnaur, Himachal Pradesh. PGCIL have entered into a joint venture arrangement with Jaiprakash Hydro-Power Limited (Jaiprakash) for establishing associated transmission lines for the aforesaid generation unit (Karcham Transmission Project) on a BOO basis. The joint venture company JPL has been incorporated pursuant to this joint venture agreement for the purpose of implementing the Karcham Transmission Project. The joint venture with Jaypee
Powergrid Limited consists of 468 circuit kilometres of transmission line with a capacity of 1,000 MW and is expected to be completed by Fiscal 2011. 4. Power Grid- Reliance Energy Joint Venture The Company has entered into a Joint Venture with Reliance Energy Ltd. The Joint Venture Company has in its scope execution of about 300 kms. Transmission Lines from Parbati to Koldam and Koldam to Ludhiana. The Company will have a 26% equity holding in the Joint Venture Company and Reliance Energy Ltd will have 74% equity holding. The above lines are part of elements of the Transmission system associated with Generation Projects viz. Parbati-II HEP and Koldam HEP. NHPC is establishing 800MW Parbati-II HER and NTPC is establishing 800MW Koldam HEP in the state of Himachal Pradesh. 5. POWERGRID IL&FS Transmission Pvt Ltd Power Grid Corporation of India and Infrastructure Leasing & Financial Services (IL&FS) entered into a joint venture to form the new joint venture (JV) company named `POWERGRID IL&FS Transmission Pvt Ltd`. Both, the company and IL&FS will have 50% stake in the company. The main objective of the company is to undertake activities of project development of intra transmission and sub-transmission works for state power utilities, under Public-Private-Partnership (PPP) route within India and abroad including Interconnection with neighbouring countries subject to bilateral agreement between the countries. This JV will facilitate project preparation and development work for State Transmission Units (STUs) and will act as a bid process coordinator (BPC) of STUs and manage the bidding process for selection of the private Implementing agencies. The joint venture company also has objective to undertake transmission projects in the neighbouring countries.
Company Business The core business of the company is electric power. The company own and operate a large network of transmission lines and infrastructure that constitutes most of Indias interstate and inter-regional electric power transmission system and carries electric power across India. The Indian power system has historically been divided into five regions for the planning and operation of electricity generation, transmission and distribution, namely the Northern, Southern, Eastern, Western and Northeastern Regions. In general, the Eastern and Northeastern Regions generate more electricity than they consume and the other regions
generate less electricity than they need. As a result, one of the overriding tasks of the companys transmission business is to move electricity from the high generation regions to high consumption regions. As the owner and operator of most of the Inter State Transmission System (ISTS), the company expands system progressively, connect new customers to the system and operate and maintain the system. Operating and Maintaining the ISTS PGCIL carry out the day-to-day operations of the ISTS. The company takes continuous actions regarding operation and maintenance to seek to ensure compliance with prescribed standards as well as to achieve high availability of the system for uninterrupted power supply to customers. Maintenance of the ISTS involves the routine inspection and overhaul of transmission system assets and the replacement of components. Condition assessment and monitoring techniques are used to help optimise maintenance intervals and reduce system outages. PGCIL have developed flexible working practices to take advantage of the system conditions for day-to-day maintenance work and also modify the annual maintenance programme according to generation maintenance schedules. The company also uses techniques such as live-line working to enable certain types of maintenance to be carried out without taking transmission lines out of service. Emergency restoration systems (ERSs) are used for early restoration in case of natural disasters and other exigencies. Renewal of the ISTS involves the refurbishment or replacement of transmission system components. The company seeks to maintain inventories at optimal levels for system requirements. PGCIL plan the renewal program through assessments of plant and equipment conditions, reliability and life expectancy. Part of the ISTS was constructed in the 1980s and 1990s and consists principally of major assets with technical life of between 25 and 35 years. The combination of these factors is taken into account in planning the renewal program. Other Roles in Transmission As the CTU, PGCIL participate in the following activities:
Undertaking the transmission of electricity through the ISTS; Planning and coordination relating to the ISTS, including coordination among state transmission utilities, the GoI, state governments, generating companies, the regional
power committees, the CEA, transmission licensees and any other parties deemed appropriate by the GoI;
Ensuring development of an efficient, coordinated and economical interstate transmission lines for the smooth flow of electricity from generating stations to load centres; and
Providing non-discriminatory open access to the transmission system for use by any licensee, generating company or consumer as and when such open access is required by the applicable regulatory commissions in the various Indian states.
Open Access The Electricity Act, 2003, requires transmission utilities to provide customers with nondiscriminatory open access to capacity, as available, in the utilities transmission networks. CERC has issued regulations in respect of open access and instructed us, as the CTU, to formulate a detailed procedure to facilitate the open access of the ISTS. In line with CERC open access regulations, PGCIL provide the following two types of services to open access customers: i. Short Term Open Access: Under this category of service, access is provided for a maximum period of three months. Access is available on one of the following bases: advanced reservation (three months in advance); first-come-first-served; day ahead; or same-day. The nodal RLDC is entrusted with the responsibility of short term open access application processing and scheduling, while making sure that the provision of short term open access applied for will not affect the security of the grid. The company charge for short term open access at rates equal to 25% of its applicable regular fixed charges for regional access and 50% of its applicable regular fixed charges for inter-regional access. The company retains 25% of the short term open access charge and pass 75% of the charge on to its regular customers in the form of rebate adjustments to their bills. However, CERC is presently considering the removal of the short term open access charges. ii. Long Term Open Access. Under this category of service, open access services are made available to customers located anywhere in the country for a period of not less than 25 years. Any required
augmentation of the transmission system must be done in consultation with PGCIL. The customer is also required to enter into agreements with generators and other relevant utilities. Completed Projects The following are some of the large or otherwise more notable completed projects of the company: Project Project Cost as per tariff petition submitted to CERC (in Rs. Million) System Strengthening Scheme in Eastern Region (Formerly part of Tala Suppl.) 3,130 February, 2007 Date of commissioning
Northern Region System Strengthening Scheme-II Dulhasti Combined Transmission System
2,038
December,2006
4,673
October, 2006
East-North Interconnection and Northern Region Transmission System associated with Tala HEP
5,220
August, 2006
Tehri Transmission System
8,610
May, 2006
Tala- Silliguri Transmission System
2,616
May,2006
Rihand-II Transmission System
8,359
October, 2005
Tarapur 3&4 Transmission System
2,510
August, 2005
ULDC- West Region
1,574
August, 2005
Madurai-Thiruvananthapuram Transmission System
2,478
July, 2005
ULDC- Eastern Region
2,835
June, 2005
Raipur- Chandrapur Transmission System
2,478
May, 2005
Augmentation of Capacity GajuwakaHVDC B/B Project
of
6,186
February, 2005
ULDC-Northeastern Region
1,907
June, 2003
East- South Interconnector ( Talcher-II Trans. System)
30,007
April, 2003
System Strengthening of Southern Region
3,450
February 2003
East- West Inter-regional Links ( Raipur-
1,985
January 2003
Rourkela)
Ongoing Projects i. Transmission Lines
Sl. No.
Name of the Trans line
Length (CKM)
GoI / BoD Appl.
Cost (Appd.) / Ant.
Progress of Construction
Completion Tgt.
Locs. Stubs TowerE Strng.( (no.) Setting rect. ckm) (no.) (no.)
Sch.
Ant./ Act.
1.0
INTER REGIONAL SYSTEMS 816 Jan'05 464.02 1123 1088 1082 738 Oct'07 Sep'08
1.1 Kahalgaon Stage-II (Phase-II) Trans. System (400KV D/C Ranchi - Sipat line) 1.2 Trans. System associated with Barh Gen. Proj. (3x660 MW) 1.3 Trans. System associated with North-West Trans. Corridor Strengthening Scheme 1.4 East-West Trans. Corridor Strengthening Scheme
2447 Dec'05 3779.5 3707 2310 1927 648 Sep'09 Sep'09
600
Jan'06 483.10 987
700
425
168 Jan'09 Jan'09
1230 Jun'06 803.70 1614 108
Jun'09 Mar'10
2.0
NORTHERN REGION 91 Jan'04 271.80 252 252 252 91 July'07 May'08
2.1 Northern Region System Strengthening Scheme - I (Balance portion) 2.2 Northern Region System Strengthening Scheme - III 2.3 System Strengthening Scheme in Uttranchal 2.4 RAPP 5 & 6 Trans. System. 2.5 Koteswar Trans. System 2.6 Sewa - II Trans. System
180
Jun'04 230.52 404
404
404
180 Mar'08 Mar'08
50
Jun'04 76.42
81
73
64
Mar'07 Dec'09
448 36 209
Jun'05 499.45 687 Jun'05 260.34 Jul'05 98.47 84 345
612 73 330
588 27 290
407 Mar'08 Dec'08 Jun'08 Sep'09 150 May'0 July'08 8 18 Sep'08 Sep'08 Dec'08 Sep'10
2.7 Koldam HEP Trans. System 2.8 Trans. System associated with PARBATI-II HEP. (to be executed under JV) 2.9 System Strengthening Scheme in Roorkee (LILO of Rishikesh Muzaffarnagar 400KV S/C line at Roorkee) 2.10 Northern Region System Strengthening Scheme - V 2.11 Trans. System Associated
396 129
Sep'05 464.91 502 Dec'05 358.42 323
115
69
Dec'05 109.95
12
May'0 May'09 9
1222 Jun'06 721.25 1726 866
539
284 Jun'09 Jun'09
543
Jul'06 557.24
Jan'10 Jan'10
with PARBATI-III HEP 2.12 URI - II HEP Trans. System 114 Oct'06 238.25 320 32 May'1 May'11 1 274 118 Apr'09 Apr'09
2.13 System Strengthening in South-Western part of Northern Grid (Part-A) Scheme 2.14 System Strengthening in South-Western part of Northern Grid (Part-B) Scheme 2.15 Northern Region System Strengthening Scheme - VIII 2.16 Northern Region System Strengthening Scheme - VI 2.17 CHAMERA - III HEP Transmission System
496
Oct'06 381.28 682
429
187
Oct'06 150.26 513
243
169
12
Oct'09 Oct'09
68
Oct'06 220.69 179
11
Dec'09 Dec'09
54
Jan'07 186.95
82
10
July'09 July'09
343
Sep'07 559.47 / Apr'08 Dec'07 408.36 690 3
July'11 July'11
2.18 Northern Region System Strengthening Scheme - X 2.19 Northern Region System Strengthening Scheme - XI 2.20 Northern Region System Strengthening Scheme - XII 3.0 WESTERN REGION 3.1 SIPAT Trans. System Stage - I (Balance Portion ) 3.2 Western Region Strengthening Scheme - I
510
Dec'10 Dec'10
320
Dec'07 417.76
Dec'10 Dec'10
104
Feb'08 261.55
Nov'10 Nov'10
354
Dec'03 1672.9 958 8 Jul'04 199.21 410
958
958
354 Feb'07 Apr'08
298
410
410
298 Nov'07 Jun'08
(400KV D/C Sipat - Raipur ) 3.3 Sipat - II Supplementary Trans. System 3.4 Western Region Strengthening Scheme - III 3.5 Western Region Strengthening Scheme - II 1123 Jun'05 813.67 1822 1473 1027 229 Jun'08 Dec'08
65
Feb'06 75.65
125
125
119
61 Aug'08 Jun'08
7075
Jul'06 5221.2 2551 602 3 (3581.4 0-PG & 1639.8 3 JV) Aug'06 653.21
148
July'10 July'10
3.6 Trans. System associated with Gandhar-II (GBPP) 3.7 Western Region Strengthening Scheme - V 3.8 Western Region Strengthening Scheme - VI 4.0 SOUTHERN REGION 4.1 Kaiga 3 & 4 Trans. System 4.2 Neyveli TS - II Trans. System 4.3 Kundankulam - APP Trans. System 4.4 System Strengthening -VII of SR 5.0 EASTERN REGION
850
435
Dec'07 477.69 648
Sep'10 Sep'10
112
Feb'08 340.72
Nov'10 Nov'10
759 830
Mar'05 588.25 1133 836
790
479 Dec'07
Jan'05 691.83 1218 1165 1006 501 Dec'07 Aug'09
1844 May'05 1779.2 2263 1618 1542 1059 Nov'08 Nov'08 9 248 Apr'05 279.30 346 221 121 18 July'09 July'09
5.1 Trans. System Associated with TEESTA -V HEP (400KV D/C Teesta-V HEP Siliguri) 5.2 Eastern Region Strengthening Scheme - I 5.3 Eastern Region Strengthening Scheme - II 5.4 Transmission System for Start - up Power to DVC and Maithon Right Bank Gen. Project. 6.0 NORTH EASTERN REGION 6.1 NER System Strengthening Scheme - I (Missing link Trans. System in NER) 6.1.1 132KV S/C Kopli - Khandong
226
Jan'04 208.75 341
341
341
226 May'0 May'08 8
1142 Oct'06 975.96 1593 675
86
Oct'09 Oct'09
146
Dec'07 227.52 365
Jun'10 Jun'10
320 April'08 290.49 698
April'1 April'10 0
14
May'06 58.93
43
Sep.'0 Sep.'09 9
12
40
Sep.'0 Sep.'09 9 Sep.'0 Sep.'09 9
6.1.2 LILO of 132KV Dimapur Kohima at Dimapur (PG)
ii. National Load Dispatch & Communication System
Sl. No.
Name of the Scheme
GoI / BoD Appl.
Cost (Apprvd.) Ant.
Status of Construction
Completion Tgt.
Schedule
Ant./ Act
1.0
National Load Despatch Communication EMS/SCADA Package Telecom Equipment
May'05
44.96
Engg. in progress in EMS/SCADA packages & Telecom package. FAT completed in Telecom packageof NR link. Civil works under progress. Equipment supplied & erection under progress. SAT commenced. Data base updation under progress.
May'08
July'08
Project Implementation PGCILs project implementation capabilities encompass all facets of a project development, from conceptualization to construction to the commissioning of a project, at which point it can begin operation. The company have adopted an integrated project management and control system (IPMCS) for the planning, monitoring and execution of projects. Under the project management system, various project implementation activities are broken down with identified key milestones to enable the monitoring and control of critical paths of implementation. Project procurement is divided into well defined contracts to be awarded through competitive bidding. Following the award of contracts, integrated plans govern the implementation of the project, including control of the quality of materials and work during construction. i. Planning & Conceptualization On an ongoing basis, PGCIL interact with various departments of the GoI and with generating companies, traders and the state utilities, in order to plan and evaluate implementation of new transmission projects so as to ensure that the goals of
adequacy, reliability and security of the electric power system are achieved. Among many other factors, the companys planning efforts take into account possible future transmission configurations for interconnected areas, optimal utilisation of rights of way, grid operational constraints, environmental and social effects and cost comparisons. Based on the ongoing planning, the company is able to formulate views in respect of the appropriateness and feasibility of projects that have been conceived. The conceptualisation of new power transmission projects is finalised by PGCIL based on overall transmission system requirements, in consultation with the CEA and other interested parties, including generators, intended beneficiaries, state transmission utilities (STUs) and traders. Before the finalization of any new transmission project, the beneficiaries are identified and targeted, and the generating capacity that such project will service is allocated among the beneficiaries in accordance with the requirements and availability of the region. The entire tariff for the transmission system is shared by the beneficiaries. The tariff, which is set according to CERC regulations, is recovered from the beneficiaries irrespective of the actual transmission of power. PGCILs transmission projects fall into the following broad categories:
Generation-linked transmission projects, to facilitate the transfer of power from a specific new interstate or inter-regional generation project to its intended beneficiaries; Grid-strengthening projects, to strengthen power transfer capacity and add to reliability and security; and Inter-regional transmission projects, to strengthen power transfer capacity between regions and allow for inter-regional power exchanges.
The types of projects identified above facilitate the development of integrated regional power grids and the national grid. Upon the finalisation of a scheme, a Feasibility cum Detailed Project Report (FR) is prepared. This report addresses the justification for the project, the scope of work, cost estimates, pricing, financing and other matters, and is prepared for the consideration of the competent approving authorities.
ii.
Design & Engineering PGCIL have in-house competency in the design and engineering of EHV systems up to 800 kV AC, and HVDC systems up to 500 kv. and also have experience in the design and engineering of transmission lines and substations for different wind zones, climatic conditions, seismic zones, terrains, seashores and tough hilly terrain. The company possesses advanced software tools for electric system simulation studies and for the design of various kinds of towers, substation structures and foundations, including in regard to the electrical line parameters of transmission line and sub-station design, insulation co-ordination, grounding and other matters. PGCIL is also finalizing, in association with a number of renowned international consultants, the design and technical specifications for an 800 kV HVDC system, which to the companys knowledge has so far not been implemented anywhere in the world.
iii.
Tendering process and award of contracts Procurement requirements for a project are divided into a number of well defined contracts and are awarded on a competitive bidding basis. In each case, qualifying requirements for bidders are stipulated and the bids are evaluated by a tender committee. Award recommendations are put up for approval to the appropriate authorities consistent with the applicable delegation of powers in the Company. The highest authority for the approval of any award recommendation is The Board of Directors. In the case of contracts funded by multilateral agencies, the award recommendations are also sent to them to confirm that they have no objection. The tendering process is subject to guidelines of the GoI; applicable guidelines of concerned multilateral funding agencies such as the World Bank and the Asian Development Bank that are financing the project; guidelines or similar terms set out in any applicable loan agreement; and PGCILs own Works & Procurement Policy and Procedures (WPPP), which were established to strengthen transparency.
iv.
Detailed engineering After contracts are awarded, detailed engineering is carried out as per the tender specifications, site conditions and applicable domestic and international standards and
practices. Drawings and related documents are either generated in-house or prepared and submitted by the contractor. These are checked and approved to ensure compliance to the stipulated technical specifications and requirements and the site condition before the project is taken up for construction. Only type-tested equipment conforming to technical requirements and applicable national and international standards are put into service as part of the companys transmission line and substation infrastructure. Over the years, PGCIL have standardized most of its designs and technical specifications to save time on detailed engineering in respect of items which are of a repetitive nature. v. Quality assurance and inspection In order to ensure the quality implementation of various projects, PGCIL have adopted a total project quality assurance and inspection concept. The company have developed and implemented systems and procedures aligned to the requirements of ISO9001:2000 (Quality Management Systems), ISO14001:2004 (Environment Management Systems) and OHSAS 18001:1999 (Occupational Health and Safety Management Systems). PGCIL have been certified for compliance to these standards and specifications by international accredited bodies. The company specifies quality requirements in the technical specifications for projects, and vendors and sub-vendors are selected based on stipulated qualifying and technical requirements. Goods and equipment are manufactured as per the agreed quality plan, and there are check points to confirm that technical requirements are being met at different stages of manufacturing. The process is also monitored for quality assurance during manufacturing. Major components and raw materials are sourced from approved sub-vendors of acceptable quality. PGCIL also carry out quality surveillance and process inspection periodically at the manufacturing facilities of vendors. The final product is tested according to national and international standards before it is dispatched to the project site for installation. The company also implement agreed field quality plans to ensure quality during installation and the testing and commissioning of goods and materials at the site. PGCIL have inspection offices around the country so that it can make timely inspections and have also implemented a web-based inspection management system for the total inspection process.
vi.
Project monitoring For the purpose of project implementation as well as operation and maintenance, the companys operations are divided on a regional basis. While the awarding of major contracts is done from the corporate headquarters, post-award contract management is done by the regional offices. A centralised Monitoring Group, located at the corporate and regional headquarters, monitors the implementation of projects and keeps management informed about progress and critical areas requiring their 0intervention.
Grid Management and Load Despatch Function A crucial aspect of the operation of an electric power system is the management of load despatch in real time with reliability and security on an economical basis. PGCIL have modernised the existing five RLDCs and state load despatch centres and their communication networks, down to the level of individual substations. The company undertook and completed this work under the ULDC Project. The company is currently establishing a National Load Despatch Centre (NLDC), which it expect to complete in 2008. Based on the declared capacity of interstate generating stations and the entitlements of states/ beneficiaries, daily generation schedules are prepared. Deviations from these schedules by either generators or customers attract unscheduled interchange (UI) charges. In certain circumstances, including in the case of unscheduled demand or unscheduled supply, there can be mismatches of demand and supply of electric power across the system. In such circumstances, the ISTS may be put under strain, and the company, acting as the load despatch manager, may instruct generators to curtail their generation or load centres to refrain from drawing the power they are seeking to draw, notwithstanding their regular contract arrangements. Role of PGCIL in Distribution and Rural Electrification In general, distribution refers to the movement of electric power after it leaves transmission and moves downstream towards consumers. The electric power distribution system in many parts of India is in need of modernisation, capacity expansion and sectoral reform. The GoI has taken a number of initiatives to improve electric power distribution in general and rural
electrification in particular. One of these is known as the APDRP and another is known as the RGGVY. Under the APDRP, PGCIL have been appointed as an Advisor-cum-Consultant (AcC), and in that role is consulting on and monitoring the development of 178 electricity distribution schemes spread over 18 states, covering urban and semi-urban areas. PGCIL is also implementing distribution improvement schemes in seven of those states, namely Bihar, Goa, Gujarat, Meghalaya, Uttar Pradesh, Tripura and Mizoram. The company implements these schemes by following a process that includes design, engineering, the awarding of contracts, inspection and monitoring. Under the RGGVY, PGCIL have entered into agreements to implement rural electrification projects on behalf of SPUs in nine states, namely Bihar, Uttar Pradesh, West Bengal, Gujarat, Rajasthan, Orissa, Chattisgarh, Assam and Tripura. These projects entail the progressive provision of infrastructure for approximately 88,000 villages in 68 districts. Through December 31, 2006 PGCIL have implemented the electrification of over 8,800 villages in the states of Bihar, Uttar Pradesh, West Bengal, Gujarat and Rajasthan. Other Businesses i. Consultancy Since Fiscal 1995, the company has provided transmission-related consultancy advice to approximately 90 clients in the context of over 200 assignments, both domestically and internationally. These consultancy services include system engineering and feasibility studies, the review of load despatch and communications systems, contract and procurement services, turnkey execution of transmission and sub-transmission projects, supervision of rural electrification projects, the implementation of intrastate availabilitybased tariffs and the preparation of distribution code. PGCIL acquire its consultancy assignments through bidding processes, from marketing and from potential clients approaching us. The company take on a wide variety of assignments, so long as it believe that it have the in-house expertise needed to provide assistance. The company staffs its assignments with teams of specialists from throughout its organisation. Employees take on consulting duties that fit within the areas of expertise they have developed by working in our core business. A central department coordinates, facilitates and supports service delivery.
Domestic clients include almost all of the state power utilities in India. Among others, PGIL have undertaken and are currently undertaking international consulting assignments in Nepal, Bhutan and Afghanistan. The companys assignments tend to fall into one of three broad categories: Work under the APDRP and the RGGVY; The execution of transmission- and communication system-related projects on a turnkey basis; and Technical consulting assignments for Indian utilities and utilities in other countries. The company seeks to leverage its experience in the power transmission sector to continue to expand the consultancy operations in India and abroad. The following table sets forth certain information in respect of a selection of our larger or otherwise more notable consultancy assignments: 1. Completed
Assignment
Client
Year of Award
Turnkey execution of transmission line from Indra Sagar to Indore
MPSEB
FY04
Strengthening scheme in Bihar
of
sub-transmission
BSEB
FY04
Turnkey execution of 400kV DC Vishnu Prayag-Muzaffarpur transmission line
UPPCL
FY03
Augmentation of sub-transmission and
Electricity Department
FY03
distribution system in Northern Goa
of Goa
Turnkey execution of 220kV transmission line and upgrading of Tivim substation.
Govt. of Goa
FY02
Turnkey execution of 110/11 substation and LILO line Pillaithiruvasal, Kairakal
kV at
Pondicherry
FY00
2. Ongoing
Assignment
Client
Year of Award
Construction of NLDC at Thimpu in Bhutan Strengthening of sub-transmission scheme under Phase II, Part 1
Bhutan Power Corporation MOP, Govt. of Bihar and BSEB
FY07
FY07
Field survey and preparation of bid documents for Turkmenistan Sheberghan transmission line
AEAI/ USAID
FY07
Establishment of SLDC at Rishikesh and two sub-LDC at Kashipur and Dehradun
UPTCL
FY06
Turnkey execution of 400kV transmission system
WBPDCL
FY06
Accelerated electrification of villages and rural householsa in Uttar Pradesh
Porvanchal Vidyut Vitran
FY05
During FY08, PGCIL secured 34 nos. of new consultancy assignment with project cost of about Rs.1,840cr.l Company has realized consultancy fee of about Rs.235 cr. from its ongoing consultancy projects during the year. ii. Telecommunication PGCIL have diversified into the telecommunication business by creating a telecommunication network principally using our overhead transmission infrastructure. The company own and operate a fibre-optic cable network that as at March 31, 2007 consisted of over 19,000 kilometres and connected over 60 Indian cities, including all major metropolitan areas. The company has been leasing bandwidth on this network to more than 60 customers, including major telecom operators such as Bharat Sanchar Nigam Limited,Videsh Sanchar Nigam Limited, Tata Teleservices Limited, Reliance Communications Limited and Bharti Airtel Limited. The companys telecommunication network benefits from the extensive geographic reach of its power transmission network. PGCILs telecommunication network covers substantially all the main territories of India. In addition, the company is currently one of the few telecommunications network providers that have a presence in remote areas of India, such as Jammu & Kashmir, Himachal Pradesh and the North Eastern region (Assam, Manipur, Meghalaya, Nagaland and Tripura). The total capital expenditure approved by the Cabinet Committee on Economic Affairs (CCEA) for the establishment of our telecommunications network is Rs. 9,342.3 million. Beyond this, further capital expenditure will be governed by market requirements. PGCIL have been granted the Infrastructure Provider-I (IP-I) and Internet Service Provider Category-A (ISP-A) licences. In July 2006 the company acquired a National Long Distance (NLD) License, which increases its target market by enabling it to offer its services to nonlicensed service providers such as entities in the corporate, government and defence sectors. Since then, the company has added such end-user customers as the Indian Army,
Indian Intelligence Bureau, Central Reserve Police Force, National Infomatics Centre and a number of corporations, including Infosys Technologies Ltd. and Ericsson India Pvt. Ltd. Under its NLD License, the company may participate further in the national long distance business through tie-ups with other telecom service providers. From its telecommunication business, PGCIL received revenue of Rs. 125 Crore during FY 2007-08, a growth of 62% over last year (Rs. 77 Crore). Today, PGCIL is serving major telecom players in mobile & NLDO segment and is also planning to tap customers in entertainment and broadcasting industry. Research & Development PGCIL is constantly striving to excel in its technological leadership which is essential for sustainable business growth and to maintain competitive edge over others in national and international market. The organization through its technological leadership is catering to diverse geographical climate and terrain conditions utilizing existing transmission infrastructure along with creating new transmission capacities in a cost effective manner. Towards technological advancement, PGCIL has established several fully automated remote controlled 400kV substations like Bhiwadi, Kolar, Gajuwaka, Chandrapur etc. Many more sub-stations are being planned on similar lines with a view to optimize upon operational costs. PGCIL has also introduced INVAR power conductors, which can sustain high temperature upto 2000c against the normal 850c. This can wheel electric power more than two times the normal line. PGCIL also using Thyristor Controlled Series Compensation (TCSC) and uprating/upgrading of lines etc. to enhance power carrying capacity of existing lines. Futher, in order to conserve the precious Right of Way, width of 765 kV transmission towers has been reduced from usual 85 mtrs. To 64 mtrs. For the first time in the world. Further, at selected location the tower height was raised to 75 mtrs., which makes it taller than the Quatab Minar, to save precious forests and protect wildlife. PGCIL commissioned 400kV Gas Insulated Substation (GIS), first time in the country at Maharani Bagh, New Delhi, which reduced 75% land requirement over conventional EHV Air Insulated substation. Besides, 765kV Single Circuit Sipat-Seoni transmission line was commissioned to evacuate bilk power from pit head power station at Sipat, which is first time at 765 kV level, operating in the country. PGCIL envisages established a Centre for Power Transmission Research and Application which shall supplement the facilities of existing Research Institutions and provide opportunities for applied research in power transmission sector. PGCIL has also constituted an advisory body consisting of eminent experts from power utilities, research and academic institutions and consultants from India as well as from Canada, USA and Brazil to facilitate adoption of latest
technologies for construction, monitoring and maintenance of transmission system suiting Indian conditions.
Peer Group Comparison

Name of the company
Power grid Tata Power NTPC Neyveli Lignite
CMP (As on, Feb. 26, 2009)

92.35 730.90 184.20 73.90
Market Cap. (Rs. Mn.) 388686.50 1522112.70 161812.30 123982.70
EPS (Rs.)
3.44 35.17 9.01 6.47
P/E (x)
27.00 20.78 20.44 11.42
P/BV (x) 2.88 11.45 0.51 1.37
Dividend(%)
5% (For FY09) 10% (For FY08) 9% (For FY09) 10% (For FY08)
Key Concerns
A major part of the companys income derived from the transmission of power to the State Power Utilities and many of them have a weak financial position. Higher debt level.
Financials
12 Months Ended Profit & Loss Account (Standalone) Description (Rs. Million) 31Mar.08A 12m 31Mar.09 E 12m 31Mar10E 12m
Net Sales
46,148.20
59,843.44
70,016.82
Other Income
4,667.10
3,737.75
4,201.01
Total Income
50,815.30
63,581.19
74,217.83
Expenditure
10,518.00
9,720.69
10,152.44
Operating Profit
40,297.30
53,860.50
64,065.39
Interest
13,395.50
25,329.75
25,329.75
Profit Before Depreciation And Tax
26,901.80
28,530.75
38,735.64
Depreciation
9,596.50
10,891.31
11,902.86
Profit Before Tax
17,305.30
17,639.44
26,832.78
Tax
2,820.60
2,479.61
4,024.92
Profit After Tax
14,484.70
15,159.83
22,807.87
Equity Capital
42,088.40
42,088.40
42,088.40
Reserves EPS (Rs.)
92,985.30 3.44
108,145.13 3.60
130,953.00 5.42
A=Actual, E=Estimated
Quarterly Ended Profit & Loss Account (Standalone) Quarter Ended on ---> Description (Rs. Million) Net Sales Other Income Total Income Expenditure Operating Profit Interest Profit Before Depreciation And Tax Depreciation Profit Before Tax Tax Profit After Tax Equity Capital EPS (Rs.) 2,637.90 3,536.50 479.60 3,056.90 42,088.40 0.73 2,744.50 4,578.00 613.7 3,964.30 42,088.40 0.94 2,746.10 4,373.10 649.6 3,723.50 42,088.40 0.88 2,762.81 5,004.10 736.71 4,267.39 42,088.40 1.01 30 June 08 3m 12,940.30 1,138.80 14,079.10 2,264.80 11,814.30 5,639.90 6,174.40 30 Sep.08 3m 15,876.90 852.8 16,729.70 2,383.20 14,346.50 7,024.00 7,322.50 31 Dec. 08 3m 14,774.40 852.3 15,626.70 2,504.90 13,121.80 6,002.60 7,119.20 31March09E 3m 16,104.10 893.85 16,997.95 2,567.79 14,430.16 6,663.25 7,766.91
Charts
1 Year Comparative Graph
POWER GRID CORP.
BSE SENSEX
Outlook and Conclusion

Power Grid Corporation (PGCIL), a NAVRATNA PSE, is Indias principal electric power transmission company. The company is planning to spread its business overseas. It is eyeing opportunities in West Asia and The African markets. The company has plans to increase its power lines network by 11% in FY09 and the total targeted investment for the year is Rs.85 billion. PGCIL wants to add 8,000km. of lines to its existing network of 70,000kms in this year. To enhance its business, the company is looking forward to form new joint ventures and subsidiaries. At the market price of Rs.92.35, the stock trades at 25.69x and 17.08x for FY09E and FY10E respectively. On the basis of EV/EBDITA, the stock trades at 8.10x and 7.46x for FY09E and FY10E respectively. Earning Per Share (EPS) of the company for the earnings of FY09E and FY10E are seen at Rs.3.60 and Rs.5.42 respectively. We expect the topline and bottomline of the company will grow at a CAGR of 25% and 23% respectively over FY07 and FY10E. We recommend to BUY this stock with a target price of Rs.114.00 for long term.
Industry Overview
The power sector is high on India's priority as it offers tremendous potential for investing companies based on the sheer size of the market and the returns available on investment capital. In the past few years, there has been considerable growth in power plants based on renewable sources of energy. The All India installed capacity of electric power generation stations under utilities stood at147402.81 MW with thermal power plants constitute 64.6% ( coal-53.3%, gas-10.5% and oil0.9%) of the installed capacity followed by 24.7 from hydro power, 2.9% nuclear and 7.7% renewable sources. The power sector has seen a growth at a CAGR of 5% over the last five years.
Sector State Sector Central Sector Private Sector Total

Source: Mini. of power
MW 76185.57 48970.99 22246.05 147402.81
%age 52.5 34.0 13.5
India has the fifth largest electricity generation capacity in the world- low per capita consumption at 631 units; less than half of China. Generation Overall generation in the country has been increased from 662.5 BU during 2006-07 to 704.45BU in 2007-08. There has been significant improvement in the growth in actual generation over the last few years. As compared to annual growth rate of about 3.1% at the end of 9th Plan and initial years of 10th Plan, the growth in generation during 2006-07 and 2007-08 was of the order of 7.3% and 6.33% respectively.
Year 1990-91 1995-96 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
Source: Ministry of Power
Generation (Billion Units) 264.3 380.1 499.5 515.3 531.4 558.3 587.4 617.5 662.5 704.5
The electricity generation target for the year 2008-09 has been fixed at 744.344 BU comprising of 631.270 BU thermal; 118.450 BU hydro; 19.000 BU nuclear; and 5.624 BU import. Transmission & Distribution Indias transmission and distribution network consists of 5.7mn. circuit kilometers makes it the third largest in the world. The entire country has been divided into five regions for transmission systems like Northern Region, North-Eastern Region, Eastern Region, Western Region and Southern Region. The Government of India has an ambitious mission of POWER FOR ALL BY 2012. This mission would require that our installed generation capacity should be at least 2, 00,000 MW by 2012. In order to ensure that the generated power reaches the entire country, an expansion of the regional transmission network and inter regional capacity to transmit power would be essential.
CUMLATIVE GROWTH IN TRANSMISSION SECTOR and PROGRAMME FOR 11th PLAN At the end of VIII Plan ie March 1997 At the end of IX Plan ie March 2002 At the end of X Plan ie March 2007 At the end of XI Plan ie March 2012
Unit
Transmission Lines VIII Plan 765 kV HVDC +/- 500kV HVDC 200kV Monopole 400kV 230kV/220kV Total Transmission Line Substations VIII Plan HVDC BTB HVDC Bipole+Monopole MW 1500 IX Plan 2000 X Plan 3000 XI Plan 3000 ckm ckm 409 3138 IX Plan 971 3138 X Plan 1704 58728 XI Plan 7132 11078
ckm
162
162
162
ckm ckm
36142 79601
49378 96993
75772 114629
125000 150000
ckm
119290
150642
198089
293372
MW
1500
3200
5200
11200
Total-HVDC Terminal Capacity 765kV 400kV 230/220kV Total- AC Substation Capacity
MW
3000
5200
8200
14200
MVA MVA MVA
0 40865 84177
0 60380 116363
2000 92942 156497
53000 145000 230000
MVA
125042
176743
251439
428000
Source: National Electricity Plan(vol-II) Transmission
The majority of generation, transmission and distribution capacities are either with public sector companies or with state electricity board (SEBs). Private sector participation is increasing especially in Generation and Distribution. Potential & Outlook of Power Sector Large demand-supply gap: All India average energy shortfall of 9.9% and peak demand shortfall of 16%. The implementation of key reforms is likely to foster growth in all segments: o Unbundling of vertically integrated and distribution network. o Open Access to transmission and distribution network. o Select distribution circles to be franchised / privatized. o Tariff reforms by regulatory authorities. Opportunities in generation for: o Ultra Mega Power Plants (UMPP) 6 projects of 4000 MW each. o Coal based plants at pithead or coastal locations (imported coal) o Natural gas/CHG based turbines at load centers or near gas terminals o Hydel power potential of 150000MW is untapped as assessed by the Government of India. o Renovation, modernization, up-rating and life extension of old thermal and hydro power plants. Opportunities in Transmission network ventures-additional 60,000 circuit km. of transmission network expected by 2012. Government is planning to reduce the T&D losses to 15% by 2012. o Private sector participation possible through JV and 100% equity mode.
Total investment opportunity of about US$200 billion over a five year horizon. Over 78,000MW of new generation capacity is planned in the next five years.
_________________________________________________________
Disclaimer: This document prepared by our research analysts does not constitute an offer or solicitation for the purchase or sale of any financial instrument or as an official confirmation of any transaction. The information contained herein is from publicly available data or other sources believed to be reliable but we do not represent that it is accurate or complete and it should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of its affiliates shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. This document is provide for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision.
Firstcall India Equity Research: Email info@firstcallindia.com B. Harikrishna Banking & Financial Services P. Anu Power & Energy B. Prathap IT C. Dhatri Prabha Metal & Cement C.V.S.L.Kameswari Pharma U. Janaki Rao Capital Goods; Real & Infra Asha Kiran Kumar Auto E. Swetha Oil & Gas
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POWER GRID CORPORATION INDIA LIMITED (PGCIL) BUY

FY08 87 31 10.7 8.6 3.19 29.77 10.70

FY09E 90 25 10.1 8.8 2.12 25.69 8.10

FY10E 92 33 13.2 9.0 2.52 17.08 7.46

Power Rs.10.00 113.75/51.75 988722 532898

V.S.R. Sastry Vice President Equity Research Desk 91-22-25276077 vsrsastry@firstcallindiaequity.com

Dr. V.V.L.N. Sastry Ph.D. Chief Research Officer drsastry@firstcallindia.com

Firstcall India Equity Advisors Pvt Ltd

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Establishment of New Transmission Lines

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New Joint Venture

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Northern Region System Strengthening Scheme-II Dulhasti Combined Transmission System

Tehri Transmission System

Tala- Silliguri Transmission System

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Rihand-II Transmission System

Tarapur 3&4 Transmission System

ULDC- West Region

Madurai-Thiruvananthapuram Transmission System

ULDC- Eastern Region

Raipur- Chandrapur Transmission System

Augmentation of Capacity GajuwakaHVDC B/B Project

East- South Interconnector ( Talcher-II Trans. System)

System Strengthening of Southern Region

East- West Inter-regional Links ( Raipur-

Firstcall India Equity Advisors Pvt Ltd

Ongoing Projects i. Transmission Lines

Name of the Trans line

GoI / BoD Appl.

Cost (Appd.) / Ant.

2447 Dec'05 3779.5 3707 2310 1927 648 Sep'09 Sep'09

Jan'06 483.10 987

168 Jan'09 Jan'09

1230 Jun'06 803.70 1614 108

Firstcall India Equity Advisors Pvt Ltd

NORTHERN REGION 91 Jan'04 271.80 252 252 252 91 July'07 May'08

Jun'04 230.52 404

180 Mar'08 Mar'08

Jun'05 499.45 687 Jun'05 260.34 Jul'05 98.47 84 345

Sep'05 464.91 502 Dec'05 358.42 323

1222 Jun'06 721.25 1726 866

284 Jun'09 Jun'09

Firstcall India Equity Advisors Pvt Ltd

Oct'06 381.28 682

Oct'06 150.26 513

Oct'06 220.69 179

Sep'07 559.47 / Apr'08 Dec'07 408.36 690 3

Dec'03 1672.9 958 8 Jul'04 199.21 410

354 Feb'07 Apr'08

298 Nov'07 Jun'08