Power cos cancel 6,000 crore equipment orders; very few contracts awarded

Power companies have cancelled about Rs 6,000-crore equipment orders in the past few months, leaving domestic equipment suppliers in distress as very few contracts have been awarded in the current fiscal. The power sector is in trouble because of fuel scarcity, sluggish approvals and lack of distribution reforms. The sector's distress has affected equipment suppliers, who have seen orders worth only Rs 9,465 crore in the past 10 months, which is meagre by industry standards. In the previous fiscal, state-run monopoly Bhel alone booked 8,921-mw orders worth Rs 36,000 crore during April-December, including orders worth Rs 7,877 crore in a single quarter. Advances from customers for companies like Bhel and L&T have declined while receivables and working capital have soared. The two companies, however, have sizeable order backlogs. For new electrical equipment companies, capacity is lying idle, making it difficult to recover capital and costs.

Source: Economic Times