Thursday, April 7, 2011

Many new corporates entering into emerging Power Distribution Franchisee race

Power Distribution Franchisee has attracted various big corporate houses (see earlier blog). A distribution below of major players bidding in the market shows that most companies has come from services sector of Infrastructure and Power businesses. Those in Infrastructure like GMR, SMS, Ashoka Buildcon, A2Z & Kalpataru has earlier already diversified into Power sector primarily into Generation (balance of plant and EPC), distribution (substation EPC) and transmission (EPC). A more recent trend of these Infra companies further getting into generating and trading power (thermal, renewables, waste) is noteworthy. Now if absorbed into Distribution Franchisee, their portfolio will be pretty much covering all of power sector and building scope of economy.

There are some companies in core Power sector, who like Torrent and Tata Power already has experience of managing a Distribution utility. There are still others like Crompton Greaves, Vijai Electricals, Secure Meters and Glodyne Power who comes from products domain with strong relevant power engineering and technology background. A successful but uncommon entry is from telecom business GTL (who already have won Aurangabad Distribution Franchisee from MSEDCL) and IT giant SPANCO (who have won Nagpur Distribution Franchisee from MSEDCL). GTL intends to leverage its EPC, networking, hardware and software expertise, while SPANCO is banking upon its IT and BPO handling experience to bring value customer services and satisfaction to electricity consumers.

A rough strength mapping of these major players to Distribution Franchisee business will look like below:
  • Infrastructure & Power: EPC, high capex leveraging, operations handling
  • Power Utility: one-to-one mapping
  • Power Engineering (Products): Engineering, Technology, Networks, Good asset creation & maintenance, hardware, automation
  • IT/Telecom: Hardware, software, IT automation, Management, Customer services management
Wide bidding differences in last few bids between these categories of businesses, with IT, Telecom, Power products and utilities more successful over the Infra companies has hint on what strengths draws better margin to the Distribution Franchisee. More on this in coming blogs.

Post by: Rahul Bagdia @ pManifold

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