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TRANSCRIPT
JM Financial Institutional Securities Limited
29 August 2016
Power for all by 2022:reality or dream
Despite multiple initiatives towards complete rural electrification in the past, 35% of India's rural households are still bereft of electricity access. In this report, we analyse the key factors inhibiting rural electrification, including past execution challenges, affordability, availability and other socio-economic factors.
The current rural electrification programme - DDUGJY - incorporates enhanced monitoring and transparent execution processes, and would be driving spend of c.USD12bn in power T&D across the duration of the programme (FY16–22). But will every Indian household (which is connected to grid) have 24x7 electricity by 2019 and will every Indian household get electricity access by 2022?
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JM Financial Institutional Securities Limited
Rural electrification - In execution mode
Access to electricity is a key socio-economic development indicator—an area
where there is still a significant gap in India. As of May’16, 35% of rural
households (HHs) are bereft of electricity with sharp variation across the
country; 87%/71% HHs in Bihar & UP have no reported access, while there is
universal electricity access in states such as Punjab, AP and Gujarat. As
electricity is a concurrent subject (both centre and state can legislate), lack
of effective monitoring and co-ordination can be attributed to the wide
variance across states. Delay in execution is evident from the low actual
spend in past programmes; for example, even by May’16, only 25% of the
XIIth
(FY12–17) plan’s amount allocated to rural electrification (RE)
programme has been spent and 81% for the X–XI plans (FY02-12) has been
spent. The current central government has launched DDUGJY as the flagship
RE programme with an aim of “Power for All”, which envisages 24x7
electricity availability to every connected HH by FY19 and electricity access
to every household by FY22. DDUGJY incorporates real-time monitoring of
work progress, independent verifications through GVA engineers and is
likely to see improved execution. RE, along with the urban T&D development
plan (IPDS), is expected to drive massive spending of c.`1.6tn (USD 24bn)
over FY16–22; benefiting companies across the electricity chain (Exhibit 33).
Our preferred picks are NTPC, Techno Electric, V-Guard and Voltas.
Five states account for c.80% of un-electrified households: The problem of
RE in India is highly skewed towards few northern and eastern Indian states. Five
states (UP, Bihar, MP, Odisha and Assam) account for c.80% of un-electrified (UE)
HHs (Exhibit 1).These states account for c.38% of total population, are
economically weaker (GDP/capita at 55% of the national average) and also have
inferior power generation infrastructure (18% of national installed power
capacity). However, due to the way village electrification is currently defined (if
10% HHs have access to electricity, whole village is termed as electrified), even
Bihar and UP report c.98% of villages as electrified, even though only 13%/29% of
rural HHs have electricity access in these states (Exhibit 2). Therefore the criteria
for declaring a village as electrified should be relooked and focus should be on
monitoring HH electrification more than village electrification. 1.
Cost of electricity is not a constraint for adoption: Our interaction with rural
households during the Rural Safari (Rural Safari III), analysis of power usage
data and current tariff rates clearly indicate that the cost of electrical power is
only c.4% of monthly HH consumption (Exhibit 3) and is thereby not a
constraint for adoption by rural HHs (total energy spend ranges between c.8–
12% of HH expenditure as per NSSO). Our analysis and interactions indicate: (a)
lack of timely and usable power (with steady voltage), (b) availability of
alternative sources such as kerosene reduce incentive for electrification, while
leakages (& illegal connections) depress reported electrification numbers. 2.
DDUGJY presents a c.̀ 825bn (USD 12bn) spend opportunity: From less than
1% of villages in 1950, 98% of villages in India were electrified, as of May’16
(based on current definition). After steady growth till the early 1990s,
electrification progress slowed down due to DISCOMs’ deteriorating financial
conditions and picked up again from 2005, driven by dedicated programme
RGGVY (Exhibit 7). However project delays, centre-state co-ordination issues and
lack of sufficient EPC contractors across states have likely led to the programme
remaining behind target (60% for intensive electrification, 57% for BPL family
connections, as of May’16, for X–XII plan (FY02-17). DDUGJY, the flagship RE
program (FY16-22) has allocation of Rs430bn for new projects & Rs393bn from
earlier RE programme and is likely to drive strong T&D spend.3.
Arshad Perwez
Tel: (+91 22) 66303080
Suhas Harinarayanan
Tel: (+91 22) 66303037
Exhibit 1: Five states have c.80% of Un-
electrified rural households (58mn out of
156mn total households)
18.2
14.7 4.7 4.3
3.5 2.9 2.5 1.9 5.1
57.8
0
10
20
30
40
50
60
70
Source: Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY)
Exhibit 2: Village electrification at c.98%
levels even in states which have much
lower household electrification
13.0
% 28.7
%
34.2
%
37.1
%
47.6
%
57.3
% 74.1
%
65.4
%
0%
20%
40%
60%
80%
100%
House-holds electrified (%) Villages electrified (%)
Source: Ministry of Power
Exhibit 3: Cost of electricity access is not a
constraint for rural adoption of electricity
D etails A mo unt (R s)
House-ho ld M onthly Consumption 6,755
Non-metered tariff 175
M etered tariff (100 units) 310
Average tariff (blended) 243
E lectric ity bill as % o f H H expense 3.6%
Electricity Tariff per household
Source: NSSO, JM Financial, Note: For a marginal household
29 August 2016
JM Financial Research is also available
on: Bloomberg - JMFR <GO>,
Thomson Publisher & Reuters,
S&P Capital IQ and FactSet.
Please see Appendix I at the end of this
report for Important Disclosures and
Disclaimers and Research Analyst
Certification.
India Strategy
India | Strategy
29 August 2016
India Strategy 29 August 2016
JM Financial Institutional Securities Limited Page 2
Rural Electrification progress in India
India, with c.1.2bn+ of population and 267mn HHs, has a significant gap in
electrification, particularly in rural India (69% of population). As per the last census
(2011), c.93% of urban HHs used electricity as their primary source of energy, while
only 55% of rural HHs had electricity as their primary source of energy.
The situation has improved over the years, but even at May’16, 35% of rural
households still do not have access to electricity.
Exhibit 4. RE remains a challenging task: 35% of rural HHs still do not have access to electricity (May ’16)
58mn of rural HHs still do not have access to electricity
Top-2 states account for 56% and top-5 for c.80% of UE rural
HHs
Electrified House-holds (mn), 110
Un-electrified House-holds (mn),
58
18.2
14.7
4.7 4.3
3.5 2.9
2.5 1.9
5.1 57.8
0
10
20
30
40
50
60
70
Source: DDUGJY
Out of the c.58mn rural HHs, which are UE (May’16), 56% are in only two states—UP
and Bihar; these states along with MP, Odisha and Assam account for c.80% of the UE
HHs. However, given the definition of village electrification even Bihar and UP
report c.98% of villages as electrified, (Definition: if at least 10% of HHs have
electricity access in a village, the whole village is termed as electrified),
Exhibit 5. Village electrification at near 100% levels even in states that have
much lower HH electrification:
13.0
%
28.7
%
34.2
%
37.1
% 47.6
% 57.3
%
74.1
%
76.2
%
79.7
%
85.6
%
86.3
%
87.1
% 94.6
%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
House-holds electrified in the state (%) Villages electrified in the state (%)
Source: DDUGJY
Bihar has 13% rural households with
access to electricity, while 98% of
villages are electrified!
India Strategy 29 August 2016
JM Financial Institutional Securities Limited Page 3
The definition for village electrification has been revised two times in the past two
decades, still if only 10% of HHs in a village have electricity, the whole village is
considered electrified. Therefore, for a reliable measure to track progress, the
government could enhance the definition to a higher percentage of HHs electrified in
a village and then track the electrification progress.
Exhibit 6. Criteria for village electrification: Should it be revised?
Timeline Definition
Till Oct
1997
A village should be classified as electrified, if electricity is being used within
its revenue area for any purpose whatsoever
1997-
2005
A village will be deemed to be electrified, if the electricity is used in the
inhabited locality, within the revenue boundary of the village for any purpose
whatsoever
2005
onwards
A village would be declared electrified if:
(a) Basic infrastructure such as distribution transformer and distribution lines
are provided in the inhabited locality as well as the Dalit Basti hamlet where
it exists
(b) Electricity is provided to public places such as schools, panchayat offices,
health centres, dispensaries and community centres
(c) The number of households electrified should be at least 10% of the total
number of households in the village
Source: Department of Power
How has RE progressed in India?
There have been multiple programmes undertaken by the Indian government over
the years for RE. The plans are made by the central government, while the
implementation is undertaken by respective state governments/DISCOMs.
RE saw strong push during 1970 & 80s as number of electrified villages increased
from 19% of total villages in FY71 to 83% by FY91. However, on account of
deterioration in DISCOMs’ financial positions, RE slowed down sharply during the
‘90s and picked up only after 2005 with dedicated program such as RGGVY and now
DDUGJY (Dec’14 onwards).
Exhibit 7. Historical progress in village electrification: 98% of villages electrified by May’16 (total villages: 593,000)
1970s & ‘80s saw strong growth in village electrification Village electrification picked up from 2005 onwards
105
272
481 508 495
440
498
561 582
-
100
200
300
400
500
600
700
-
100
200
300
400
500
600
700
FY71 FY81 FY91 FY01 FY04 FY05 FY10 FY13 May'16
Villages Electrified ('000) Total villages - RHS
83% of Villages electrified by FY91
Decline in FY05 due to change in definition
16,599 15,511
24,106
20,101
2,333 2,663 3,286
19,262
12,232
1,892
-
5,000
10,000
15,000
20,000
25,000
30,000
Electrification of villages per annum (no.)
Sharp de-celeration in 1990's
Source: CMIE, Ministry of Power
India Strategy 29 August 2016
JM Financial Institutional Securities Limited Page 4
Exhibit 8. What does RE require?
Source: Ministry of Power
Exhibit 9. Multiple programmes undertaken over the years for RE
Programme Period Details
Minimum needs
programme
Vth Plan
(1974–79)
100% loans for last mile connectivity. Discontinued in 2004-05 because of lack of response
from states
Kutir Jyoti Programme 1988–89 Aims: (a) Single-point connection to BPL Households, (b) 100% grant; merged with AREP in
2002 and now with RGGVY
Pradhan Mantri Gramodaya
Yojana 2000–01 90% loan, 10% grant; discontinued in 2005 with launch of RGGVY
Accelerated Rural
Electrification Programme
(AREP)
2002 Interest subsidy of 4%; merged with AEP
Accelerated Electrification
Programme (AEP) 2004 AEP of one lakh villages and one crore households; 40% capital subsidy and 60% loan
Rajeev Gandhi Grameen
Vidyutikaran Yojana
(RGGVY)
Mar’05
Aims: (a) electrification of all villages and habitations, (b) providing access to electricity to
all households, (c) free electricity connection to BPL families; programme was extended for
XI (2007-12) and XII plan (2012-17) and subsequently subsumed in DDUJGY
Deendayal Upadhyaya
Gram Jyoti Yojana
(DDUGJY)
Dec’14
Aims: (a) Separation of agriculture and non-agriculture feeders, (b) strengthening of sub-
transmission and distribution system, including metering at distribution
transformers/feeders/consumers, (c) subsumed component of all previous ongoing RE
schemes
Source: Ministry of Power
Apart from supplying power at
affordable price, RE schemes have
fallen short of other goals
India Strategy 29 August 2016
JM Financial Institutional Securities Limited Page 5
Key inhibitors for electricity adoption/electrification
in rural India
We analysed key inhibitors for electricity adoption in rural India through our
visits, and interaction with industry experts and government officials in
electricity department. The key factors we came across are as follows:
(A) Low usability reduces incentives for electrification
For effective use, electrical power should be available in a narrow voltage range and
with consistent timings. Our interactions indicate that voltage fluctuations are quite
common particularly in the rural regions of North Indian states. In addition, villages
get electrical power for only a limited duration (4-8 hours/day in few North Indian
states). Maintenance of electrical systems also needs to improve; for example, if
there is a fault in a village transformer, the resolution and replacement takes days on
end.
All these factors reduce the incentive for villagers to go for electrification, as
they continue to spend on kerosene/other alternative means for lighting and
power. A comparison across states in India also reflects a strong co-relation between
rural HH electrification and power availability per day.
Exhibit 10. Rural HH electrification and power supply per day show strong
correlation
Improvement in power supply per day can induce more rural HH’s to go for
electrification, where ever available
Bihar
UP
MP
Rajasthan
Karnataka
Punjab
Maharashtra
TN
Kerala
Gujarat
Odisha
Assam
0%
20%
40%
60%
80%
100%
120%
0 4 8 12 16 20 24
Ele
ctrf
ied
Ho
use
-ho
lds
(%
)
Power Supply per day (No. of hours)
Source: Census (2011), DDUGJY
Though data on power supply per day for states is from the previous census and we
believe available supply has improved from those levels, the key takeaway is the
strong correlation between power supply and electrified households.
The overall power supply situation (against demand) has improved in India over the
years (Exhibit 21), and from a deficit of c.8-10% five years back, India is expected to
have 1.1% excess power supply in FY17. However, for a successful RE programme,
energy requirements for states with low RE should be fulfilled on a priority basis
(power supply deficit in UP/Assam/Bihar was 12.5%/5.6%/1.3%, respectively, during
FY16).
UP/Assam/Bihar, which have high
UE HHs (63% of India), reported an
overall power deficit of
12.5%/5.6%/1.3%, respectively,
during FY16; a successful RE
programme necessitates improving
power availability in these states
India Strategy 29 August 2016
JM Financial Institutional Securities Limited Page 6
(B) Does adverse economics lead to lower adoption of electricity in rural India?
We also investigated the average cost of availing electricity for rural households to
assess whether the cost in itself prohibits a large section of rural population to
access electricity.
Exhibit 11. Sample electricity consumption in a rural HH
Low usage Wattage No. of hours Units (kWh) per month
2 CFL Bulbs 15 5 2
2 Fans 100 6 18
1 TV 100 4 12
Total units consumed monthly
32
High Usage
2 Bulbs 100 8 24
2 Fans 100 16 48
1 TV 100 8 24
Total units consumed monthly
96
Source: JM Financial, Industry experts, Note: CFL: Compact Fluorescent Lamp
We have estimated average power usage at the marginal village HH, based on our
periodic visits to villages as part of the Rural Safari (Rural Safari III). As per various
estimates, average electricity usage is likely to be below levels of 100kWh per month
per household. Even NSSO survey has indicated rural per capita consumption of
electricity at 8.9 units/month, implying c.45 units/month for an average household
(i.e., a five-member family).
Exhibit 12. Power consumption (per capita, kwh) of rural users 1/3rd
of urban
users
5.7
20.0
7.9
24.3
8.9
25.8
0
5
10
15
20
25
30
Rural Urban
2004-05 2009-10 2011-12
Source: NSSO
Tariff levels in rural India vary across states with both metered and unmetered
connections (as shown in the exhibit below). For our analysis, we have taken the
average rural monthly per capita expenditure (MPCE) of three states (UP, Bihar and
MP), which have the highest UE villages. The base data used is from the NSSO survey
of 2012, and we have estimated rural consumption growth during FY13–16 at half
the rate of growth in the personal consumption expenditure (PCE), given weak rural
income growth.
The average marginal rural
household’s power consumption is
likely to be limited to 100 units
India Strategy 29 August 2016
JM Financial Institutional Securities Limited Page 7
Exhibit 13. Sample electricity rates charged to rural consumers across states
State Category Per unit charges (`)
Fixed Variable
Uttar Pradesh
Unmetered (< 2KW load) 180 Nil
Unmetered (> 2KW load) 200 Nil
All load (Metered) 50 2.2
Bihar
Unmetered 170 Nil
Metered
First 50 units - 2.1
51-100 - 2.4
100+ units - 2.8
MP
Up to 30 units - 2.9
Up to 50 units 30 3.7
51-100 55 4.4
Source: State Regulatory commissions
Exhibit 14. Rural electricity tariffs account for only c.3-4% of HH spend,
hence cost is not an inhibitor for electricity usage in rural areas
Details Amount
Rural MPCE (`) – Top-3 UE states 1,351
Household size 5
Household monthly consumption (`) 6,755
Electricity charges per connection in rural India (`)
Un-metered tariff per connection
UP 180
Bihar 170
Average – Unmetered 175
Metered tariff for 100 units
UP 270
Bihar 225
MP 435
Average - Metered 310
Average blended tariff 243
Electricity expense as % of HH consumption 3.6%
Source: NSSO, Company, JM Financial, Note: MPCE: Monthly Per Capita Expenditure
Based on the average of metered and un-metred connection, the tariff for 100 units
(kWh) comes out to `243. Compared to the overall household consumption, it
amounts to only c.4% of total spend and thereby is not a significant constraint, in our
view.
Even as per NSSO surveys, the combined spending on fuel and lighting for rural India
has been in the range of 8–12% over the past few years, thereby rural users would be
willing to spend on electricity at the current rates, if it is provided to them, in our
view.
Average electricity bill for a rural
household is c.Rs300 and constitutes
only c.4% of total household
consumption
India Strategy 29 August 2016
JM Financial Institutional Securities Limited Page 8
Exhibit 15. Monthly fuel & lighting cost per capita over the years for rural India
Fuel & lighting cost has been around 6–10% for rural India
Fuel & Lighting Spend - c.10–12% of total spending for lower
percentile (relatively poor) and c.6–8% for higher percentile of
population
2.5 4.17.9
11.8
20.7
36.6
56.8
114.1
0%
2%
4%
6%
8%
10%
12%
0
20
40
60
80
100
120
1973 1978 1983 1988 1994 2000 2005 2012
Fuel & Lighting - Rs Fuel & Lighting (% of total consumption) - RHS
64.575.6
83.292.4 96.6
103.7111.3
119.6130.0
148.2
169.4
202.8
114.1
0%
2%
4%
6%
8%
10%
12%
14%
0
50
100
150
200
250
Fuel & Lighting - Rs Fuel & Lighting (% of total consumption) - RHS
Source: NSSO
(C) Is it driven by behavioural issues?
Our channel checks also highlighted few reasons other than quality of available
power, which could be a factor in driving extremely low levels of electrification in
some states, particularly the top-five UE states.
Exhibit 16. Top-5 un-electrified states (c.80% non-electrified homes) –
Accounts for 38% of total population, 21% of GDP, 18% of installed power
78.6%
40.1%
18.1%21.0%
37.9%
55.1%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
Non-electrifiedhouseholds (%)
Total ruralhouseholds
Installed Power GDP Total population Per capita income(as % of national
average)
Top-5 states with non-electrified households (mn)
Source: Census, DDUGJY, States included – UP, Bihar, MP, Odisha, Assam which account for c.80% of UE HH
The states with lowest HH electrification also have lower literacy levels on an average
(thereby reducing the drive for electrification of homes) and reported electrification
numbers is likely to be depressed due to non-reporting/unauthorised access of
electricity connections.
(a) There have been multiple instances where two family use a single electricity
connection and share the bill (fixed), thereby depressing the reported
electrification data.
(b) There are electrical connections that are accessed illegally across many states,
which reflects in high aggregate technical & commercial (AT&C) losses for the
Illegal connections, sharing of one
connection by multiple families also
leads to under-reporting of
Household electrification
India Strategy 29 August 2016
JM Financial Institutional Securities Limited Page 9
distribution companies; for example, FY15 AT&C losses were at 46% in Bihar,
25% in UP, 39% in Odisha and 34% in Haryana, among others.
Exhibit 17. Co-relation of low literacy rate and lower HH electrification levels
Bihar
UPAssam
Odisha
MP
Maharashtra
Karnataka
TN
Gujarat
AP
Punjab
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
60% 65% 70% 75% 80% 85%
Ru
ral H
ou
seh
old
ele
ctri
fica
tio
n (%
)
Literacy Rate (%)
Source: Census (2011), DDUGJY
(D) Does Rural Electrification project execution needs improvement?
There has been no dearth of programmes undertaken by the central and state
governments over the years for the power sector, including for RE; still 35% of UE
HHs in May’16 indicate significant gaps in execution.
Village electrification process has multiple stake-holders – From project formulation
by the implementing agency/state DISCOMs to project sanction and fund
disbursements by the nodal agency (REC) to project monitoring committees which
necessitates close co-ordination for successful implementation.
Exhibit 18. Village electrification process
DPRs preparation by the
Implementing Agencies/
State DISCOMs
Submission to RECfor processing
Letter of Award tothe successful
bidder and signingof Agreement
The TurnkeyAgency
commences works
Completion ofworks in a village
The ImplementingAgency invites
tender oncompetitivebidding basis
Sanction Letterswith reference to
the project isissued
Submitto StateGov. forapproval
Put up toMonitoringCommittee
forapproval
Evaluatethe Bids
Inspection byElectricalInspector
Village handedover to SPU
forenergization
andmaintenance of
VEI
Source: Ministry of Power, Note: DPR – Detailed Project Report, REC- Rural Electrification Corporation, SPU: State Power Utility, VEI: Village Electrification Infrastructure
India Strategy 29 August 2016
JM Financial Institutional Securities Limited Page 10
Exhibit 19. Significant execution delays in past RE programmes: Need for enhanced monitoring and project
management
As of May’16, disbursal of only 81% of amount for X, XI plan
(FY02-2012) and 24% for XII plan (2012-17)
Significant delay and likely miss in achievement of targets in
last RE programme
344
59
79
179
81.3% Disbursed
24.6% Disbursed
-
50
100
150
200
250
300
350
400
450
X (2002-07), XI (2007-12) Plan XII Plan (2012-17)
Amount Disbursed - Rs bn Amount yet to be disbursed - Rs bn
120
589
40
114
355
22
-
100
200
300
400
500
600
700
Electrification of UEVillages ('000)
Intensive Electrification ofVillages ('000)
Electrification of BPLHouseholds (mn)
Target (X,XI & XII plans) Achieved (till May'16)
Source: DDUGJY
Exhibit 20. Some reasons ascribed for delays/lack in execution of prior Rural
Electrification programs
Reasons
Delay in award of project
Detailed project report (DPR) was not prepared based on survey, resulting in 9–12
months delay after sanction of projects.
Delay in providing BPL list by the states
Repeated request for approval of revised cost estimates
Non-deployment of dedicated team for implementation of project
Milestones not monitored during implementation of project
Delay in obtaining statutory clearances (forest, railways, NH and others) and allotment
of land for sub-stations by states
Delay in execution on extremism affected areas, hilly terrains, difficult and far flung
areas
Inadequate upstream network
Delay in energisation due to theft and inspection by electrical inspector
Source: JM Financial
We reckon some factors, which have led to inadequate or faulty execution of RE in
the past are as follows:
(a) Most plans are made by the central government and execution is the
responsibility of state governments. In some of the projects, there is a limited
set of EPC companies, who have the capability to execute projects. Our
discussions indicate that in a number of occasions, these companies take up
projects across multiple states and then execution is delayed on ground due to
manpower challenges.
(b) Distribution companies or DISCOMs have structural dis-incentive for RE due to:
(i) high initial capital cost on account of geographical spread of villages, (ii) low
load density and unfavourable consumer mix (low spending consumer), (iii)
high cost of delivery and low tariff leading to further financial distress, and (iv)
increase in thefts and pilferage, leading to high aggregate technical and
commercial (AT&C) losses.
(c) Therefore, in case of large project implementations, enough feedback should
be taken from the state governments/local agencies and accordingly monitoring
should also be more rigorous. There have been media reports highlighting
instances of claims of village electrification turning out to be untrue after
investigations.
RE programs are made by centre
and executed by state governments
and DISCOMs; hence proper co-
ordination and monitoring is
essential
DISCOMs have structural dis-
incentives for RE due to high cost,
unfavourable customer mix, increase
in theft and pilferage leading them
to book higher AT&C losses
India Strategy 29 August 2016
JM Financial Institutional Securities Limited Page 11
We also interacted with industry experts such as Gyanesh Pandey, Co-Founder of
Husk Power Systems to understand rural behaviour towards electrification. HPS,
http://www.huskpowersystems.com/), is an off-grid rural electrification venture
established in 2007–08.
Interaction with Gyanesh Pandey, Co-Founder of Husk
Power Systems
HPS installs low power (25–100KW) generators using rice husk (agricultural
waste) and provides electricity in villages of Bihar and partly in Eastern UP.
Gradually, they have expanded their operations to Africa (Uganda and
Tanzania) and have included solar PV (Photo voltaic) solutions.
Basic electricity connection from HPS costs Rs150-160 per month per
household - HPS has more than 70 operating plants and provides power to
150,000+ villagers at present. The small power plants of HPS provide electricity
for 5–7 hours to roughly 400 HHs over a 3km radius. HPS charges `150–160 per
month for 2 CFL bulbs and a mobile charging unit (basic package) and charges
increase proportionately with additional devices. Earlier, the model was to
provide 7–8 hours of power. Now there is a demand for 24x7power as well,
which is being addressed by solar solutions.
A section of rural India has limited aspiration for electrification - After living
without electricity for generations, there is also a section of rural population that
has adapted to a lifestyle without electrical power and may not be too eager to
access electricity. As an example, in one of the villages, where HPS started its
operations in 2007–08, c.30% villagers have still not taken up electrical
connections. As per UE villagers, they are comfortable to lead their life without
electricity. The most cited reason for electrification is that it will help children
study. Electrification does help, but there is a very small percentage of villagers’
children who actually benefit from the light from electrification. The actual
beneficiaries are women who get proper lighting for household cooking and
other chores, in my view.
Extremely challenging to achieve “Power for all” goal by Mar’19 (India) - It is
a great initiative that the government is bringing grid to all villages and thereby
it will be easier for getting connections across broader rural population, but at
the same time, this is a very ambitious target and extremely difficult to achieve
given the challenges on the ground.
Uncertainty in policy and long gestation period restricts private investment
in Indian rural electrification - It is quite difficult to generate returns on
investments in the power sector. It is a very long-term investment and private
capital is not patient enough. Regulatory uncertainty, issues of delays in
payments of grants/subsidies, lack of clarity in the long-term plan has led to a
lack of private investment in RE (particularly off-grid).Though HPS started its
operations in India, we now finds that it is easier to implement such projects in
countries such as Uganda and Tanzania. Some of the African countries have
clearer policies for small energy producers and provide exclusive rights for 8–10
years, while the producers can commit on the tariff.
India Strategy 29 August 2016
JM Financial Institutional Securities Limited Page 12
Do we have enough power generation capacity for
100% RE?
Given the strong growth in capacity addition (3x over the past 15 years, Appendix 1),
power deficit has continued to decline over the past five years and India is expected
to be a power surplus country from FY17 onwards.
Exhibit 21. Driven by the strong capacity addition, electricity deficit has
reduced from c.8–10% to a power surplus scenario at present
-12%
-10%
-8%
-6%
-4%
-2%
0%
2%
FY98 FY00 FY02 FY04 FY06 FY08 FY10 FY12 FY14 FY16 FY18E FY20E
Electricity Deficit (%)
Source: CEA, JM Financial
We have estimated the required power capacity in case of complete RE. If we assume
per household consumption of 100 units (100 kWh), the incremental HHs usage
would amount to 70bn units. This amount of energy usage can be easily covered by
incremental capacity of 10GW, or only 3.4% of the current installed power capacity in
India.
Exhibit 22. Incremental power generation needed for complete household
electrification
Details Amount
Rural UE HHs (mn) 58.0
Units (kwh) consumed per month for incremental UE HHs 100
Units consumed per year (BU) 69.6
Power required for 100% RE (GW) 7.9
Power required for 100% RE at 80% PLF (GW) 9.9
Installed power generation capacity - FY16 (GW) 294
Incremental power generation capacity in case of full rural household
electrification as % of existing capacity 3.4%
Source: DDUGJY, JM Financial
India’s power generation capacity
has gone up 3x in past 15 years
leading to electricity deficit reducing
from c.8-10% few years back to
power surplus in FY17
India Strategy 29 August 2016
JM Financial Institutional Securities Limited Page 13
Exhibit 23. However, few states would need significant additional power
supply in case of complete RE
States UE HH (mn)
Incremental
energy demand
in case of 100%
RE (MU)
Existing
energy
demand
(MU) -
FY17E
Incremental
energy
demand as
% of FY17E
demand
UP 18.2 21,840 110,850 19.7%
Bihar 14.7 17,640 26,369 66.9%
MP 4.7 5,640 74,199 7.6%
Odisha 4.3 5,160 29,805 17.3%
Assam 3.5 4,200 9,309 45.1%
Total 45.4 54,480 250,532 21.7%
Source: DDUGJY, JM Financial
As shown above, on an overall basis the required capacity for power generation is
quite limited or c.4% of existing capacity.
However, digging a bit further, given the distribution of the existing power supply,
incremental demand from complete RE in the top-5 UE states, presents a different
picture. The incremental increase in power demand (from FY17 levels) from the
addition of rural HHs ranges between a low of c.8% for MP to a high of 67% for Bihar
and averages 22% for the top-5 UE states. Therefore a prudent policy for providing
power to these states needs to evolve, for the success of RE in India.
Due to low installed power
generation capacity (18%), the top
Un-electrified states would see
significant power demand
requirement over the next few years
India Strategy 29 August 2016
JM Financial Institutional Securities Limited Page 14
How DDUGJY plans to address Rural Electrification?
The current central government announced DDUGJY scheme in Dec’14 (FY15) with
the overall objective of universal RE.
The scheme entails:
(a) Separation of agriculture and non-agriculture feeders, facilitating improved
quality power supply to non-agricultural consumers and adequate power supply to
agricultural consumers in the rural areas, and
(b) Strengthening and augmentation of sub-transmission and distribution
infrastructure in rural areas, including metering of distribution
transformers/feeders/consumers. The scheme also subsumes existing RE
programmes.
Exhibit 24. Key components of current RE programme - DDUGJY
Feeder Separation
•Helps in effectiveDemand Side & PeakLoad Management
• Regulated supply toagricultural consumersand continuous powersupply to non-agricultural consumersin rural areas
Strengthening of sub-transmission and
distribution system
• Creation /Augmentation of newsub-stations,transformers, HT & LTlines
• High VoltageDistribution System(HVDS) & AerialBunched Cable (ABC)
Metering
•Metering at all inputpoints and allconsumers for existingunmeteredconnections,
•Replacement of faultymeters &electromechanicalmeters
Micro-grid and off-grid distribution network
•DecentralizedDistributed Generationusing renewableenergy sources in offgrid and gridconnected areas
Source: Ministry of Power
What is the outlay under DDUGJY?
The estimated outlay for DDUGJY is `430bn, including budgetary support of `335bn
over the period of the scheme. The programme enables total spending of c.`825bn
over FY16–22, including unspent allocated amount of previous RE programmes.
Exhibit 25. RE program outlay of Rs823bn over FY16-22
Areas of spending – ` bn Target Investment
- ` bn
Number of feeders to be separated/laid 16,500 248
New sub-stations 1,620/
1,615 41
Augmentation of existing sub-stations
33/66 kV lines 21,900 CKms* 15
Installation of distribution transformers
54
Meter installation - Consumer end/distribution
transformers/feeders 65
Total
421
NOFN & PMC
2.8
Other costs
6.4
Total
430
Amount already allocated for RGGVY but not spent in
previous electrification programmes, now part of
DDUGJY
393
Total Spend on RE programmes 823
Source: Ministry of Power, NOFN: National Optical Fiber Network, PMC: Project Management Consultant, CKm – Circuit
Kilometres
Feeder separation helps in demand
management and regulating supply
to agricultural consumers and non-
agricultural consumers
India Strategy 29 August 2016
JM Financial Institutional Securities Limited Page 15
Key spend areas under DDUGJY programme
The detailed breakup of projected spending of `421bn, under DDUGJY (new
projects), is provided below and is likely to benefit players in the T&D segment as
well as EPC contracting companies.
Exhibit 26. Key area of spending on DDUGJY new projects over FY16–22
Key areas of spending Share (%) ` bn
Aerial Bunched (AB) Cable 26.3% 111
Aluminium conductor steel-reinforced (ACSR) conductors 16.1% 68
Poles 16.1% 68
Project contract execution 16.0% 67
Distribution transformers 7.3% 31
Meters (whole current) 6.7% 28
Power transformer 6.3% 27
U/G cable 3.4% 14
Vacuum circuit breakers 1.8% 8
Total 100.0% 421
Source: Ministry of Power
How is the funding done for the RE programme?
In this scheme, 60% of the project cost (85% for special states), is provided as grant
by the Central government, and additional grant of up to 15% (5% for special states)
is provided by the government on achievement of prescribed milestones.
Exhibit 27. Funding plan for DDUGJY
Funded by
Nature
of
support
Quantum of support
Special category
states Other states
Government of India Grant 85% 60%
DISCOM Own
Fund 5% 10%
Lender (FIs/Banks) Loan 10% 30%
Additional grant from GOI on
achievement of prescribed
milestones
Grant 50% of total loan
component i.e.5%
50% of total loan
component
i.e.15%
Maximum grant by GOI (incl.
additional grant) Grant 90% 75%
Source: REC, Note: Special Category states- All North Eastern States including Sikkim J&K, Himachal Pradesh and
Uttarakhand.
How are projects managed under DDUGJY?
There are multiple stages to cross before a project is executed under the RE
program. Project formulation is done through the preparation of detailed project
reports (DPRs) by the implementing agency/state DISCOMs after initial need
assessment is done with nodal agency (REC in case of DDUGJY).
There are multiple committees formed to check the cost of project as well as to
monitor it over the period of execution. Projects are expected to be completed within
24 months from the date of issue of letter of award (LoA) by the utility.
There are detailed reports available online to track the progress of each and every
project under the DDUGJY scheme and up to the village level. In addition, the RE
programme also provides a real-time monitoring Application (mobile App) which
provides status of electrification progress across villages.
Central government provides 60% of
project cost as grant which can go
up to 75% on achievement of
prescribed milestones (90% for
special category states)
India Strategy 29 August 2016
JM Financial Institutional Securities Limited Page 16
Exhibit 28. DDUGJY dashboard: provides real-time output and details up to the village and project level
Source: Ministry of Power
Exhibit 29. DDUGJY dashboard provides details of engineers termed as Grameen Vidyut Abhiyanta (GVA) who verify
the electrification details in their area; increases transparency of the process
Source: Ministry of Power
India Strategy 29 August 2016
JM Financial Institutional Securities Limited Page 17
DDUGJY fund allocation across states and key segments
The allocation of RE scheme is largely in line with the UE population in the states. UP
and Bihar have been allocated 33% of DDUGJY spend, and the top-5 UE states will
obtain 48% of total on-grid allocation on new projects. Including the allocations from
earlier schemes, UP and Bihar have been allocated 39% and top-5 states 60% of RE
budget, as of May’16.
Exhibit 30. DDUGJY new project allocation by states
Total allocation (on-grid) spend for DDUGJY
Feeder Separation (agri. and non-agri.) to see 35% allocation in
the scheme
0
10
20
30
40
50
60
70
80
UP
Bih
arW
BM
PR
ajas
than
Mah
aras
htra
Kar
nata
kaO
dish
aA
ssam
Cha
ttisg
arh
Jhar
khan
dG
ujar
at TN
AP
Uttr
akha
ndJ&
KK
eral
aT
elan
gana
Har
yana
Aru
nach
al P
rade
shP
unja
bH
PT
ripur
aM
anip
urN
agal
and
Nag
alan
dM
izor
amM
izor
amS
ikki
m
DDUGJY Allocation - Rs bn
Feeder Segregation, 34.8%
System strengthening &
RHH, 50.4%
PMA charges, 0.5%
Metering, 9.4%
SAGY, 1.0%UEV Electrification
works, 3.7%
Source: Ministry of Power, DDUGJY, Note: RHH- Rural House hold, SAGY: Saansad Adarsh Gram Yojana, PMA: Project Management Agency, UEV: Un-electrified Village works
Feeder segregation (between agriculture and non-agriculture) would get 35% of
allocation, while strengthening of transmission system and metering would get the
rest of allocation.
Exhibit 31. Spending allocation varies significantly across states under DDUGJY schemes (new projects) reflecting
underlying conditions
DDUGJY Grid
Spending UP Bihar WB MP Raj Maha Kar Odisha Assam Chattis.
All
India
Feeder segregation 46.9% 75.8% 27.2% 28.6% 23.6% 32.4% 43.0% 8.5% 0.0% 32.9% 34.8%
System strengthening
& RHH 47.4% 21.2% 60.8% 55.3% 61.5% 66.3% 26.8% 43.9% 58.1% 59.0% 50.4%
PMA charges 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5%
Metering 4.2% 2.4% 10.4% 14.3% 13.1% 0.0% 26.4% 26.6% 5.5% 3.3% 9.4%
SAGY 0.9% 0.0% 0.0% 0.3% 0.4% 0.9% 3.2% 2.2% 3.9% 0.4% 1.0%
UEV electrification
works 0.1% 0.0% 1.1% 1.0% 0.8% 0.0% 0.2% 18.2% 31.9% 3.9% 3.7%
Other 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.1%
Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Share of DDJUGY new
projects spending 18.1% 15.2% 11.1% 7.4% 7.3% 5.6% 4.5% 4.3% 3.3% 3.3% 100.0%
Source: DDUGJY, Note: WB: West Bengal, MP: Madhya Pradesh, Raj: Rajasthan, Maha: Maharashtra, Kar: Karnataka, Chattis: Chattisgarh
India Strategy 29 August 2016
JM Financial Institutional Securities Limited Page 18
Beneficiaries from Rural Electrification
Data from NSSO and our primary checks indicate sharp variance in penetration of
electrical goods across states, with lower than average penetration in low HH
electrified states such as Bihar, UP, Jharkhand, Assam, MP etc.
We believe the penetration of electrical goods will significantly improve in these
states over the next few years driven by
(a) Additional households accessing electricity (c.58mn or 35% of rural HHs in India),
(b) Increase in duration of available power per day (as part of RE program mandate),
and
(c) Improvement in quality of power supply with lower voltage fluctuations (through
better T&D infrastructure).
Exhibit 32. Penetration of TV and electric fan in select states
0
100
200
300
400
500
600
700
800
900
1,000
TV penetration (per 1000 HH) Electric Fan penetration (per 1000 HH)
Source: NSSO
We reckon a number of companies in the electricity chain would benefit from
investments in RE as well the as push towards improvement in urban transmission &
distribution infrastructure programme (IPDS, Appendix 2).
Exhibit 33. Beneficiaries from investments in RE
Power Generation
•NTPC
•Coal India
Transmission & Distribution
•PGCIL, KEC, Techno Electric
•Alstom T&D
•REC, PFC
•Crompton, Siemens
Power Consumption
•V-guard
• Havells
•Bajaj
Electricals
Voltas•
Source: JM Financial
India Strategy 29 August 2016
JM Financial Institutional Securities Limited Page 19
Our Preferred picks….
Exhibit 34. Valuation table
Company Reco. M Cap
(` bn)
CMP
(`)
Chg.
(%) 12M
TP
Upsid
e (%)
EPS EPS
CAGR
(%)
P/E (x)
PEG
EV/EBITDA P/BV RoE
TTM FY16 FY17E FY18E FY16 FY17E FY18E FY17E FY18E FY17E FY18E FY17E FY18E
NTPC* BUY 1,308 159 33 189 19.1 12.4 11.2 13.3 3.3 12.8 14.2 12.0 4.3 11.3 9.7 1.4 1.3 10.0 11.0
Techno
Electric BUY 37 640 22 700 9.4 21.3 32.5 36.2 30.3 30.0 19.7 17.7 0.6 13.5 12.3 3.1 2.7 17.0 16.5
V-Guard
Industries* BUY 52 1,727 98 1,650 -4.5 37.1 48.0 59.0 26.1 46.5 36.0 29.3 1.4 23.5 19.5 8.9 7.1 27.3 27.0
Voltas BUY 126 379 39 385 1.5 10.4 13.5 15.4 21.7 36.4 28.1 24.6 1.3 22.5 19.2 4.6 4.0 17.5 17.5
Source: JM Financial, Note: * indicates stand-alone financials, Valuations as on 26th
August 2016
NTPC
NTPC is the largest power utility in India owning and operating 40GW on assured
regulated RoE-based norms. Coming from a low base of 1-2GW of annual
commissioning, we believe NTPC will report higher earnings growth in FY18-20
period driven by high project capitalisation (4-5GW during FY17-20). With 20GW
of under-construction capacity to commission by FY19–20, NTPC will add 40% of
its existing 40GW commercial base, in the next 3–4 years.
Since this entire capacity has signed PPAs at assured RoEs, earnings growth will
closely follow project capitalisation. Since new capacity addition is at a higher
capex rate in `/MW terms, addition to regulated equity (and hence RoE) is
expected to be higher at 65–70%. With bunched capitalisation targeted towards
FY17-end, earnings growth will be visible from FY18.
The only lingering concern which remains is the HC decision on CERC regulation
for coal cost (“as fired” vs. “as received”), which as per our analysis can impact 2%
of the RoE. Hence, we factor a sustainable core RoE of 18%, considering the risk.
We continue to find NTPC attractive at 1.3x FY18 BV, given the superior RoE
profile coupled with high earnings growth in FY18–20.
Techno Electric
Techno Electric and Engineering (TEEC), a niche player in T&D market, will be a
prime beneficiary of pick up in T&D capex over the next 3–5 years. We expect
Techno Electric to report sales and earnings CAGR of 19% and 30%, respectively,
led by a strong order book of Rs27bn (2.6x TTM sales); supported by
management guidance of annual order intake of Rs20bn.
The company has strong return ratios, as it reports RoCE of 35%+ in the EPC
segment (90% of sales), and has a build-up of BOOT asset portfolio that will
stabilise the earnings profile over the next 3–5 years.
T&D investments are on a multi-year growth path on: a) under-investment in past
as transformation capacity to generation capacity ratio stands at 1x against
global benchmark of 4x, b) increased renewable energy investment leading to a
shift towards dynamic load projects, wherein TEEC has an edge, and c) increasing
share of EPC in a project on increasing complexity of projects.
Superior earnings growth in FY18-20
driven by high project capitalisation
Early beneficiary from spending
pick- in the T&D segment
India Strategy 29 August 2016
JM Financial Institutional Securities Limited Page 20
V-Guard
V-Guard, a Kochi based company started in 1997 as a manufacturing unit for
voltage stabilizers and has over the years diversified into a range of products,
which include standalone UPS, digital UPS, electric and solar water heaters,
domestic/agricultural pumps, wires and cables, fans, induction cooktops, and
switchgears. V-Guard offers excellent mix of growing product portfolio, enjoys
significant brand recall in South India and is now creating the same swiftly in the
non-south region (spends c.8–10% of revenue vs. 4% in south), rapidly expanded
distribution reach, especially in non-south region (26% CAGR in distributors over
FY11–16).
V-Guard follows an asset light model, wherein c.60% of its production is
outsourced (mostly to SSI units that enjoy excise exemption), while keeping a
strong control over design and quality. This helps V-Guard to reduce its
capex/working capital requirement, leading to higher return ratios. V-Guard can
utilise its cash flows for brand building purposes, leading to higher growth in the
future. It has manufacturing facilities at Coimbatore (Tamil Nadu), Kashipur
(Uttaranchal), Kala Amb (Himachal Pradesh) and Sikkim.
V-Guard We estimate revenue/EBITDA/net profit CAGR of 16%/20%/26%,
respectively, for FY16–18E with strong RoE/RoCEs (>25%).
Voltas
Voltas incorporated in 1954 under Tata group, has seen a significant change in
its business model over the past six years, as share of the Unitary Cooling
Products (UCP) segment’s sales/EBIT increased from 25%/23% in FY10 to
44%/67%, respectively in FY16. The increase in share of the UCP segment augurs
well for Voltas because: a) it reduces cyclicality, b) improves return ratios/cash-
flows, c) has low NWC requirement. We believe improved predictability of earnings
will lead to re-rating of the stock.
Electro Mechanical Projects (EMP) segment (46% of sales) is set for turn-around
driven by (a) completion of legacy projects, (b) cautious approach by
management in winning new orders and (c) synergies resulting from integration
of water and RIEL in the domestic projects group. We expect adjusted net profit
to increase at a CAGR of 22% over FY16–18E, led by margin expansion in the EMP
segment (+250bps in 2 years) and strong sales growth in the UCP segment on
new product launches and increased penetration in room ACs.
Voltas reported average RoE of 36% and FCF of Rs1bn/annum over FY06–11. We
believe a recovery in domestic ordering activity is likely to propel RoEs back to
the 17–18% range, with FCF yield of 4–5%.
Expanding presence in non-south
markets, asset light model leads to
superior return ratio and cash flow
generation
Improving return ratio profile and
cash flows to drive valuations
India Strategy 29 August 2016
JM Financial Institutional Securities Limited Page 21
Appendix 1: Electricity demand and supply growth
in India
Power demand in India has grown at CAGR of 5.7% between FY93-04 and increased
marginally to 5.9% during FY05–16. The GDP multiplier (power demand growth/GDP
growth rate) has averaged 0.88x over the past two decades. Even assuming GDP
growth rate of 8% in FY16–21E, total demand grows from 1.114 billion units (BU) to
1,564 BU in FY21 at a CAGR of 7%.
Exhibit 35. Power demand has grown steadily in India
Energy demand reached 1.1K BU in FY16, doubled in past 10
years
Power demand/GDP growth rate has averaged 0.88x over past
22 years
425 546
691 831
937 1,069
1,276
1,564
-
200
400
600
800
1,000
1,200
1,400
1,600
1,800
FY
98
FY
99
FY
00
FY
01
FY
02
FY
03
FY
04
FY
05
FY
06
FY
07
FY
08
FY
09
FY
10
FY
11
FY
12
FY
13
FY
14
FY
15
FY
16
FY
17E
FY
18E
FY
19E
FY
20E
FY
21E
Energy Demand (BU)
0.0
0.5
1.0
1.5
Power demand growth/GDP growth (x)
Source: Ministry of Power, CEA, JM Financial
Power generation capacity has seen a sharp jump during the past decade, from
average annual addition of 3.5GW during FY93-03, increased to 7GW in FY04–10 and
then further to massive 19GW during FY11–16. As a result, the total power
generation capacity trebled over the past 15 years to 294GW by FY16 (c.9% CAGR in
FY04–16).
Exhibit 36. Significant increase in power generation capacity over the past decade
New capacity additions scaled up from FY04, and accelerated
from FY10
Power generation capacity has trebled in the past 15 years,
from c.100GW to c.300GW at present
3.5
7
1918
0
2
4
6
8
10
12
14
16
18
20
FY93-03 FY04-10 FY11-16 FY17-21
Average annual Power capacity Addition (GW)
89 98 108 132
159
200
272
322
383
-
50
100
150
200
250
300
350
400
450
FY
98
FY
99
FY
00
FY
01
FY
02
FY
03
FY
04
FY
05
FY
06
FY
07
FY
08
FY
09
FY
10
FY
11
FY
12
FY
13
FY
14
FY
15
FY
16
FY
17E
FY
18E
FY
19E
FY
20E
FY
21E
Generation Capacity (GW)
Source: Ministry of Power, CEA, JM Financial
India Strategy 29 August 2016
JM Financial Institutional Securities Limited Page 22
Appendix 2: Accelerated power development and
reforms programme (APDRP) Scheme (now IPDS) to
aid further urban T&D spending
The APDRP scheme was initiated in 2002–03, as additional Central assistance to
states for
(a) Reducing the aggregate technical and commercial (AT&C) losses in the power
sector (AT&C captures the total loss in the distribution network). Technical loss may
be due to ill-maintained equipment, substations and inadequate investment in
infrastructure, while commercial loss may be due to low metering efficiency, faulty
meter reading, theft and pilferages.
(b) Improving the quality and reliability of power supply. This was to be achieved by
strengthening and upgrading the sub-transmission and distribution system of high-
density load centres such as towns and industrial centres.
The restructured accelerated power development and reforms programme (R-APDRP)
started in 2008 was a revised version of the APDRP programme with total outlay of
`516bn for IT enablement and strengthening of distribution sector. The completion
period for projects was five years from the sanction date. The Power Finance
Corporation (PFC) was the nodal agency to operationalise the scheme under the
guidance of the Ministry of Power.
Integrated power development scheme (IPDS) to drive c.̀ 770bn (USD 11.5bn) of
T&D spending over FY16–22
The government has approved the IPDS scheme during 2015, which envisages: (a)
strengthening of sub-transmission and distribution network in the urban areas; (b)
metering of distribution transformers/feeders/consumers in the urban areas, and
(c) IT enablement of distribution sector and strengthening of distribution
network. This scheme subsumes the previous RAPDRP scheme.
In this scheme, 60% of the project cost (85% for special states), is provided as grant
by the government, and an additional government grant of up to 15% (5% for special
states) is provided on achievement of prescribed milestones.
Exhibit 37. IPDS allocation: `766bn of T&D spending in urban areas
Details (` bn)
Scheme allocation 326
incl. budgetary support 254
Amount carried from RAPDRP for 12th & 13th plans 440
incl. budgetary support 227
Total project outlay 766
incl. budgetary support 481
Source: PIB
India Strategy 29 August 2016
JM Financial Institutional Securities Limited Page 23
Appendix 3: Detailed scope of project execution
under DDUGJY
Exhibit 38. Detailed Project scope for Rural Electrification - DDUGJY
Nature of work Detail of the work involved
Feeder Separation
(a) Physical separation of HT feeders for Agricultural and non-Agricultural consumers
Erection of HT lines for drawing new feeders and reorientation/re-alignment of existing lines
Installation of new distribution transformers and augmentation of existing distribution transformers
Re-location of distribution transformers and associated LT lines for regrouping of consumers
(Agricultural and Non-Agricultural)
(b) Virtual separation of feeders
Installation of new distribution transformers and augmentation of existing distribution transformers.
Re-location of distribution transformers and associated LT lines for regrouping of consumers
(Agricultural and Non-Agricultural).
Installation of rotary switch and associated hardware at sub-stations.
Strengthening of sub-
transmission and
distribution system
Creation of new sub stations along with associated 66 KV / 33 KV/ 22 KV/ 11 KV lines.
Augmentation of existing sub-stations capacity by installation of higher capacity/additional power
transformer along with associated equipment/ switchgear etc.
Erection of HT lines for reorientation/re-alignment including augmentation of existing lines
Installation of new distribution transformers and augmentation of existing distribution transformers
along with associated LT lines.
Installation of capacitors.
Renovation and Modernisation of existing sub-stations and lines.
High Voltage Distribution System (HVDS).
Arial Bunched Cable for theft prone areas
Metering
Installation of suitable static meters for feeders, distribution transformers and all categories of
consumers for un-metered connections, replacement of faulty meters & electro-mechanical meters.
Installation of Pillar Box for relocation of meters outside the premises of consumers including associated
service cables and accessories.
Micro-grid and off-grid
distribution network.
Decentralised Distributed Generation using renewable energy sources in off grid
and grid connected areas.
Source: DDUGJY
India Strategy 29 August 2016
JM Financial Institutional Securities Limited Page 24
Appendix 4: Progress of HH electrification under
DDUGJY
During the past 14 months, c.2.7mn rural households (c.5%) have been electrified
through the scheme. The project has also completed electrification of 10,079
villages by Aug ’16 (out of 18,452 un-electrified villages) and aims to complete in
rest of villages by May 2018.
Exhibit 39. HHs electrified during the past 14 months (total: 2.7mn) under
DDUGJY scheme
-
200
400
600
800
1,000
1,200
HH's electrified between Mar 2015 and May 2016 ('000)
Source: DDUGJY
Bihar saw the highest addition in
rural electrification over the past 14
months
India Strategy 29 August 2016
JM Financial Institutional Securities Limited Page 25
APPENDIX I
JM Financial Institutional Securities Limited
(Formerly known as JM Financial Institutional Securities Private Limited)
Corporate Identity Number: U65192MH1995PLC092522
Member of BSE Ltd. and National Stock Exchange of India Ltd. and Metropolitan Stock Exchange of India Ltd.
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Hold Price expected to move in the range of 10% downside to 15% upside from the current market price.
Sell Price expected to move downwards by more than 10%
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All of the views expressed in this research report accurately reflect his or her or their personal views about all of the issuers and their
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No part of his or her or their compensation was, is, or will be directly or indirectly related to the specific recommendations or views
expressed in this research report.
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India Strategy 29 August 2016
JM Financial Institutional Securities Limited Page 26
connection with this report or (c) do not have any other material conflict of interest at the time of publication of this report. Research
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