How long will the good times last for Power Grid?

Power Grid, India's biggest power transmission company, said full-year profit rose 15 percent as an expanded network helped boost sales.

Net income in the year ended March 31 rose to 14.2 billion rupees ($356 million) from 12.3 billion rupees a year earlier, the Gurgaon-based company said in statement to the National Stock Exchange. Revenue climbed 15 percent to 47 billion rupees from 40.8 billion rupees.

Power Grid spent 66.15 billion rupees adding 7,350 kilometers (4,570 miles) of transmission lines last year, helping supply electricity to new areas in the country, where the peak power deficit is 14.8 percent. India increased generation capacity by 7,263 megawatts in the 10 months through January, the government said.

Power Grid plans to spend 550 billion rupees on expansion in the five years to 2012, when the government estimates 78,755 megawatts of capacity will be added and the transmission capacity will be increased to 37,700 megawatts. The company's network carries 45 percent of the power generated in India.
“We need to expand capacity because India is power- hungry,” Chairman R.P. Singh told reporters in New Delhi. “As more capacity comes up, there will be a higher need for transmission lines.”

The power industry is expected to grow 9.5 percent annually, according to the Economic Survey prepared by the Finance Ministry. India plans to spend 280 billion rupees in the next five years to help sustain economic growth of more than 9 percent annually.

Power Grid may borrow $400 million from the World Bank and $200 million from the Asian Development Bank in the year ending March 2009 to fund plans to expand in India and overseas, Singh said.

The company may spend 80.4 billion rupees on new and existing projects in the year to March 2009, a third of which will be funded through borrowings, Singh said. Power Grid will use 24 billion rupees of its own funds to pay for the projects. The company, which listed on Indian stock exchanges in October 2007, doesn't need to sell more shares to raise funds, he said.

Power Grid shares rose the most in almost a month after the earnings announcement. The shares gained 4.2 percent to 102.8 rupees at 2:27 p.m. local time on the Bombay Stock Exchange, after rising as much as 6.2 percent.

The state-run company aims to set up transmission projects in Dubai, Afghanistan, Myanmar and Sri Lanka as part of a plan to grow overseas, Singh said.
Power Grid will lay cables to transmit 1,000 megawatts of electricity between India and neighboring Sri Lanka. The project is expected to cost 20 billion rupees, he said.

The company expects its telecom business to earn 3 billion rupees by 2010 from 1.25 billion rupees in the year ended March. Power Grid earned 2.35 billion rupees as consultancy fees last year, it said in a statement to the stock exchanges.

Power Grid plans to build an 800-kilovolt transmission line for 6,000 megawatts of electricity to link India's northeastern provinces, which has surplus power, with northern states that are in deficit, according to the statement.

To what extent will Power Grid’s plans ease India’s energy woes?