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Growing Power Sector In India




The power sector which was in doldrums is all charged up due to some more mergers and acquisitions after foreign firms bought into projects recently as expectations of local developers were lowered after being nudged by their respective banks . Around  2 billion dollars have been pumped into hydro and thermal power plants in the last three months by the foreign companies .,But these foreign  investors are being choosy and are only keen to pick up projects as the cheap valuation is attractive .The foreign investors have little interests in neither operational nor interested in taking the execution risks .When the going was good lot of companies had entered and now they all are trapped .

Not all of them find good buyers .Surfing on the big waves five to ten years back several power companies embarked on the aggressive expansion plans while many other companies had diversified into the other sectors lured by the potential demands. But a sudden change in the economic environment and other local issues affected the companies in this sector with huge debt and put brakes in cash inflows. Both the smaller independent power producers as well  as bigger infra structure giants are seeking equity investments , but investors continue to be cautious about investing in the sector which further creates the deficiency of basic fuel availability .

Project delays, environment clearance, land acquisition, weak financial conditions of state electricity boards. Some of the Indian are selling their assets after almost four years of doldrums. Many foreign investors are confident that within one and a half years time this sector will come out of all the financial stresses it has been through during the recent past. So this sector has been through the maze of haze of statutory and regulatory approvals which are available at reasonable valuation and would start yielding cash flows pretty soon.