Rajesh Agarwal BS Ltd
Rajesh Agarwal

—Rajesh Agarwal, Chairman & Managing Director, BS Ltd

BS made immense contribution to the National Grid by its 765kV Raichur-Solapur line that integrated the isolated southern grid. What are your plans in the field of independent power transmission (BOOM projects)? Have you been bidding recently for interregional and even intrastate projects?

We are proud to have been part of the prestigious Raichur-Sholapur project that is bringing the nation’s energy blueprint into reality. With the commissioning of the line, we now have a synchronous single-frequency National Grid in operation. This is even more significant because of the opportunity the power-starved southern states now have to draw electricity from the power-surplus northern states.

BS Ltd is an integrated service provider in the power infrastructure space with a capacity to produce up to 7.36 lakh tonnes of transmission towers (besides steel rolling mill of 1.2 lakh tonnes) and execution capability ranging up to 1200kV in T&D lines and 440kV in substations. This lends us significant strength to execute large BOOM projects with precision. We are keen to embark on new projects with BOOM model.

The company is participating actively in the bidding process and is awaiting the right opportunity to contribute towards strengthening the power infrastructure in the country, leading to nation building.

Last year, as we understand, BS made a strategic acquisition of four entities. Tell us how this acquisition is expected to bolster your EPC business.

BS Ltd announced acquisition of functional assets of four companies for a net consideration of Rs.937 crore on a slump-sale model. Apart from synergetic fit, this acquisition also gives us a strategic one-upmanship to seize the opportunities in the T&D space, especially with the government focusing on this segment within the power sector.

Our tower manufacturing capacity is set to almost triple with the incorporation of the acquired assets that will also enhance our bidding capacity. Our capability to execute high-end and more complex EPC and turnkey projects will also increase significantly.

Through the acquisition, BS Ltd will foray into EPC in railway electrification, a segment that is gaining traction in the economic growth model of the government while being a high-margin business.

How do you see prospects for railway electrification in particular?

BS Ltd is foraying into the railway electrification space through the acquisition of assets of a company that specializes in the field. We see significant opportunity in the sector and are confident of bagging orders and making headway in the space.

Speaking of the tariff-based competitive bidding regime, do you feel that the government has been able to elicit fair amount of private participation? What more can be done, at the policy level, to bolster private enterprise?

The government is putting in efforts to lure private players to participate in the new bidding process and provide a level playing field. A policy level change that can be brought about to promote private enterprise is to subsidize funding or provide access to low-cost funds. Reduction in interest rate can bring in more participation.

For example, EXIM Bank provides loans at nearly 12-14 per cent interest rates. In comparison, Chinese players have access to funds at 2-4 per cent, and hence dominate the overseas market.

In fact, cash-flow is the main soft spot, as we perceive, of the TBCB route as a top private player in the T&D sector. Any move from the government towards enabling reach of subsidized capital will spike interest among the small and mid-sized players to participate in the tenders actively.

More policy focus is required to expedite and remove the execution and procedural bottlenecks such as support and solution of RoW problems and issues related to bidding like reduction of time gap between bidding and the award of order, etc.

BS is involved in the 1,200kV Bina test station. What challenges do you see for equipment suppliers and EPC contractors when 1,200kV lines becomes commercial operational?

As the first-of-its-kind and the largest capacity project in the world, the 1200kV line is a landmark project that will change the power landscape of the country and possibly of the world. BS Limited is proud to be part of this history in making.

As far as challenges go, EPC contractors as well as equipment suppliers have been on a war-footing to upgrade their technology, R&D and training facilities. Higher transmission voltage has its own problems like requirement of suitable power equipment, wider transmission corridors (right of way), bigger and higher towers, resulting environmental impact, etc. Under the able supervision of the Project Steering Committee headed by Power Grid Corporation of India, manufacturers have succeeded in indigenously innovating the design, development, testing etc of the main equipment for the project such as transformers, surge arresters, circuit breakers, instrument transformers, transmission line hardware and accessories.

Once this UHVAC line is in commercial operation and initial experience is gained, the challenges thereafter may be more on funding and general reluctance to invest in R&D, low returns on investment, smaller pool of skilled manpower and absence of know-why at the UHV level.

The international market has represented a strong area for BS. Tell us about your perceived opportunities and how you plan to further your international power transmission EPC business.

BS Ltd is exploring EPC opportunities especially in the MENA region, Nepal, Bangladesh and Srilanka. We are expecting to break ground this year.

What is the kind of growth you are targeting in your EPC business, over the next (say) five years? What would you regard as your major business drivers?

We see tremendous opportunities in the T&D sector and we are confident of staying abreast in the market. We will be maintaining our growth rate in the years to come.

Within the power sector, transmission business is in the spotlight now with the government having launched initiatives for developing and upgrading the T&D network in the country. The Centre has promised to tender out power transmission projects worth Rs.1 trillion in a year and Power Grid Corporation of India has also received support in the form of funds from Asian Development Bank to scale up the transmission capacity in the nation. Our large capacity, capability and total integration (backward integration in the form of structural steel mill and forward integration as tower manufacturing) give us an edge over competition.

Backed by the additional capacity and proficiency that come with the acquisition, BS Ltd is foraying into new areas such as railway electrification, engineering & consultancy and ancillary manufacturing, where we see good growth prospects.

Another major anticipation is business growth from foreign markets, especially from the Middle East.

On a national level, the bailout of stranded infrastructure projects, easier access to low-cost funds, ensuring remunerative and sustainable tariff regime, policy support and stability and investment in R&D will usher in good times for the sector.

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