What is your assessment on investment required in transmission in the country to keep pace with the growing needs of expanding generation corridors?
India will need to spend between ₹13,000-15,000 crore every year on transmission beginning the current financial year. We are already seeing a lot of detailed plans with specifics which are being put up for various committees in the ministry for approval and they are going to come out for tendering and auction. So, we believe in the next five years, India will be a $30 billion market. This level of investment would be required to meet the 2030 renewable goals of 500 GW.
What kind of share is Sterlite Power Transmission looking for projected transmission market in the country?
Historically, we have about a 25-28% market share, and we like to maintain that even in an expanded market. So, this year about ₹30,000-40,000 crores worth of tenders for transmission projects is expected. This over five years would mean ₹1,50,000 crore to about ₹2 trillion in terms of transmission spent in the country. This number of tenders and auction would come to the market.
What is your funding plan for the massive investments that you intend to do in upcoming transmission projects?
We are currently executing already about six to seven projects in the country and about six projects in Brazil. We are expecting huge growth in both our markets. Coming to the funding side, historically, we have always funded investments in 75:25 debt-equity ratio. While debt comes from the NBFCs, private sector banks and public sector banks, on the equity side, we have been the pioneers in terms of raising third-party private capital. So, we bring more and more risk capital into the business. With the level of infrastructure outlay, it’s imperative to have access to all the kinds of global capital that are keen to invest in long-term infrastructure in India.
Is SPTL getting into renewable generation for commercial and industrial customers? What are your other plans in terms of diversification?
As far as pure diversification is concerned, certainly we are looking at renewable energy generation as our main new business vertical in the coming years. Even our core business of making products, we’re finding that many interesting parts of the energy transition value chain are going to be in short supply around the world. And we are continuously evaluating, I don’t have something specific to give you, but there’s going to be a shortage of transformers, shortage of cables, a shortage of undersea cables. Definitely, there is going to be a shortage of components in the wind turbine sector. For some time, there will be over-supply in modules, but then again, there will be a shortage of modules after 2-3 years. So, we’re evaluating the whole landscape and we will be thinking of how we can improve our product portfolio to cater to the world’s energy function.
Is Sterlite Power in discussions with pension funds and sovereign wealth funds to raise $500 million to $1 billion to expand its transmission operations in India and Brazil?
Yes; we are looking out for external funding. We have done four deals so far with external capital and we keep doing more. With regard to any specific discussion with pension and sovereign wealth funds, I will neither confirm nor deny it now. But then let me say that transmission sector has lagged behind in investment compared to generation and globally. For India, we have set a goal of 500 GW of renewable capacity by 2030, and this will also require massive and quick investments to keep pace with infrastructure requirements.
