CESC’s Malegaon franchise likely to break even in 2 years

CESC Ltd, the RP-Sanjiv Goenka Group flagship, is expecting its Malegaon power distribution franchise to be profitable around FY-2022. CESC Ltd had earlier this month announced that it had won the distribution franchise for the Malegaon circle.

According to Sanjiv Goenka, Chairman, CESC Ltd, Malegaon is expected to add around ₹322 crore to its turnover annually.

Apart from Malegaon, CESC has active power distribution franchises in three cities of Rajasthan — Kota, Bharatpur and Bikaner — which together accounted for ₹1,300 crore of revenue as per its 2017-18 annual report. Kolkata and Noida are the two other circles where it has licences. “The Malegaon circle marks our entry into Maharashtra. Although the circle is in loss now, we hope that it will turn profitable over the next few years, say by FY-22,” Goenka told reporters during a press conference. The handover is expected around April, this year.

Investments

While the circle has 100,000 consumers with 83 per cent of the users falling under the industrial category , transmission and distribution losses remain high at 45 per cent.

“Over a period of time, we will bring down the transmission losses. Subsequently, investments have also been planned there,” Goenka said.

CESC plans to invest around ₹150 crore in the franchise over the next 20 years. As of now, power will be purchased from the Maharashtra State Electricity Distribution Company Ltd.

As per the company’s last annual report, all three franchises in Rajasthan were reporting losses. However, Bharatpur is expected to turn profitable this fiscal, sources said.

“One of the three franchises in Rajasthan is profitable,” Goenka said without naming the franchise.

Kota Electricity Distribution Ltd (KEDL), a wholly owned subsidiary of CESC, took over operations there. As of FY18, the number of consumers stood at 2.1 lakh and the sale of electricity has grown to 890 MUs. Transmission and distribution losses stood at 27 per cent, as per CESC’s 2017-18 annual report.

In case of Bharatpur, Bharatpur Electricity Services Ltded (BESL), a wholly owned subsidiary of CESC, has 57,740 customers and the sale of electricity has grown to 213.61 MUs. BESL’s transmission and distribution losses stood at 20 per cent.

In Bikaner, there were about 1.5 lakh consumers. Annual sales were over 500 MUs as per the last available numbers (2015-16). Transmission and distribution losses were to the tune of 22 per cent.

Other than these, CESC had also won the bid for a distribution franchise in Ranchi, Jharkhand, in 2012. However, the agreement was subsequently terminated.

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