Its a Hat-trick for SMART Wireless Limited - They won Sagar Distribution Franchisee also

'SMART Wireless Limited' is on a roll with its third successive bid win at Madhya Pradesh's Sagar city in Power Distribution Franchisee. The company's winning bid quote of Levelized Input Rate (LIP) was Rs. 3.726/unit. Compared to Gwalior and Ujjain, there were less number of participating companies in Sagar bids, totaling 6, out of which ACME disqualified due to some reason, against 9 in Gwalior and 10 in Ujjain      (see list of Technically qualified bidders for Sagar).

See our earlier blogs:

• Gwalior Distribution Franchisee Bid Results
• Ujjain Distribution Franchisee Bid Results

Key observations from Sagar price bid are:

• Minimum LIP was almost 35% less than the winning bid.
• Spanco, an existing Distribution Franchisee operator was 2nd with LIP of Rs. 3.050/unit, lower than  18% from the winning bid.
• Last bidder's rate was more than 30% lower than the winning bid.

Now, with the completion of Financial bid for all the three cities (Gwalior, Ujjain and Sagar), we look forward to see 'SMART Wireless Limited' taking over and managing distribution of electricity in those locations very soon to augment and catalyze the Distribution Franchisee model.  

Posted by: Kunjan Bagdia @ pManifold

pManifold's recent "Market Research Report on Input based Power Distribution Franchisee in India" is now available. The report is updated for 2012Q1. The report covers upcoming market opportunities in Distribution Franchisee, Competitive Landscape Assessment of existing operators, detailed previous bid analytics including recent MP bids, financial numbers and its sensitivity to different parameters, etc. For more details, see Table of Contents. You can place your order with us at kunjan.bagdia@pmanifold.com.          

'SMART Wireless Limited' does it again - Wins bid for Ujjain Distribution Franchisee

After winning Madhya Pradesh's Gwalior Power Distribution Franchisee bid, 'SMART Wireless Limited' has now won the bid for Ujjain city, making it two in a row winner in Madhya Pradesh DF landscape (see our earlier blog 'Gwalior Distribution Franchisee Bid Results - 'SMART Wireless Limited (Essel Group)' emerged as a Winner' for Gwalior bid analytics). The company's winning quote of Levelized Input Rate (LIP) was Rs. 3.781/unit, letting it again overtake other companies in the financial bid. Overall, there were 10 companies, who participated in Ujjain DF bids, out of which 9 were Technically qualified (see list of all technically qualified bidders for Ujjain Distribution Franchisee).

Some brief observations from the price bid are:

• Minimum LIP was Rs. 2.390/unit among all quoted LIPs.
• Margin rate between winning and 2nd price bid was Rs. 0.223, approximately 6% lower than the winning bid. The 2nd ranker in the bid is GTL, an existing DF operator at Aurangabad. Note that GTL won Auranganbad DF bid at higher bid LIP of Rs. 3.74/unit.
• 3rd and 4th bids were respectively 12% and 18% lower than winning bids.
• 4 out of 9 companies has given the price bid in the range of 2.95 - 3.35 Rs./unit. Two bidded higher  and 3 bidded lower than this range.
• The bid is aggressive as other established power players are lower by around 20%-25% than winning bid.

About Smart Wireless Ltd. 

The Smart Wireless Ltd. company is into generate new technologies in the messaging space and facilitate technology and process driven companies using cost effective data transfer solutions such as SMS. The Wire segment of the Essel group is currently one of the largest cable distribution system in India, with presence in 54 cities. It will be interesting to see their existing B2C reach also to the power distribution business. Overall the Essel group has wide portfolio in Infrastructure (roads, SEZ, power plants etc.), Media (ZEE, DNA being their leading brands), Technology, Education, and other diversified businesses.

Upcoming Results

Sagar city results are likely to be announced in next week on 12th March. With 'SMART Wireless' as the winner of 2 cities already, it is to be seen if they would do a hat-trick. It is also a question for MP policy makers if they would allow one company to do all the 3 DFs at such aggressive rates and risk non-performance.

Posted by: Kunjan Bagdia @ pManifold

In continuous effort to scale Power Distribution Franchisee business model, pManifold has launched a Market Research Report on Input based Power Distribution Franchisee in India. The report will provide detailed market, operational and financial insights into running a Power Distribution Franchisee. It will also include detailed previous bid analytics, including most recent from MP, future DF opportunities and trends. For more details, please see Table of Contents. You can place your order with us at kunjan.bagdia@pmanifold.com.

Market Report on Input based Power Distribution Franchisee Market in India

Brief Summary

Power Distribution Franchisee – evolving Public Private Partnership (PPP) model has picked traction since 2009 after successful demonstration by Torrent Power Ltd. at Bhiwandi, Maharashtra, which got operational in 2007.

The licensee (state utility) appoints a private company on the basis of rationale bidding for distribution of electricity in a specified area for specified years of contract. This Distribution Franchisee model stands midway between licensee and full PPP model and is considered as one of the major energy reforms in power distribution sector that has the potential to turnaround the sector and take electricity to rural areas as well.

Out of the variants available, ‘Input based Distribution Franchisee’ model has recently seen an increase, currently with five cities across India, out of which distribution in three cit

ies was handed over to private companies in 2011. Below shown is the indicative content of the report. Input based Distribution Franchisee, by far, has been mostly used operating model in urban areas.

Gwalior Distribution Franchisee Bid Results - 'SMART Wireless Limited (Essel Group)' emerged as a Winner

'SMART Wireless Limited', an Essel group company emerged as the winner for Madhya Pradesh's Gwalior Power Distribution Franchisee. The company quoted a Levelized Input Price (LIP) of Rs. 4.14/kWh, which enabled them to win and surpass existing DF operators like SPANCO and Torrent Power.

This rate quoted for Gwalior city is highest compared with all previous DF bids.

All 9 companies who participated in Gwalior bid were Technical Qualified (see our earlier blog Total 12 companies participated in Madhya Pradesh's DF bids for list of all received bids and participating companies for MP bids)

Some key observations from the price bid are:

• Of all quoted LIPs, minimum was Rs. 2.52/unit, coming from an existing DF operator.
• Average LIP of all quoted bids was Rs. 3.23/unit.
• Existing DF operators ranked 5th and last in the financial bid. They also quoted lower for Gwalior than their existing won areas.
• Margin between winning and 2nd price bid was Rs. 0.27/unit, a 7% lower than winning bid.
• 3rd and 4th bids were respectively 18% and 20% lower than winning bids.