PowerGrid to raise Rs 4,000 cr via bonds

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PowerGrid Corporation of India (PGCIL) is planning to raise around Rs 4,000 crore in domestic bonds by end-August or early-September to expand and strengthen its transmission networks and grid system.

RT Agarwal, director finance of PGCIL, told Financial Chronicle, “We need around Rs 10,000 crore during the remainder of the fiscal year. While Rs 4,000 crore would be raised in the next 30 days, the rest would be raised in tranches by the end of the fiscal year.”

“We are tapping the domestic market as it is buoyant as of now and believe with complete mandate to the new government, sentiment would improve further. The domestic bond market has seen a revival in recent times and raising money in the Indian market is cheaper compared with external commercial borrowings,” said Agarwal.

The company has plans to invest Rs 22,450 crore in fiscal 2014-15 and has already spent close to Rs 7,500 crore. The remainder would be spent on strengthening the transmission infrastructure in the coming months.

Earlier this month, the company received approval to invest Rs 477.24 crore in two transmission projects. The utility will invest Rs 288.49 crore for system strengthening in the southern regional grid. Another Rs 188.75 crore would be spent on a transmission system for connecting Andhra thermal power company NCC Power Project's 1,320 mw plant. Both projects are expected to be commissioned 30 months from the date of investment approval.

PGCIL infrastructure comprises of 109,536 circuit km lines, 186 substations and 213,504 million volt ampere (mva) transformer capacity. These three assets have grown at a CAGR of 8.3 per cent, 8.3 per cent and 15.4 per cent, respectively, over 2003-14. Further, the inter-regional transfer capacity has grown from 5,050 mw in 2001-02

to 33,950 mw in March 2014.

ICICI Direct in a research report said the strong base business and enhanced capital expenditure plan of Rs 1.1 lakh crore during the twelfth plan would drive the future growth of the firm. “The five-year capex plan is 100 per cent higher than its 11th plan capex of 0.55 lakh crore. PGCIL earns 15.5 per cent RoE on its capitalised asset and is largely a beneficiary of increased capitalisation.

“Given the strong capitalisation trend over 2012-14, we believe PGCIL will be able to deliver revenue growth of 16 per cent over 2013-16. Furthermore, the proceeds of Rs 5,321 crore from its recent FPO would enable the company to relax its 73:27 debt equity ratio to 70:30," the report said.

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