HPL Electric & Power Ltd is very upbeat on upcoming opportunities in the smart metering segment, according to Gautam Seth, the company’s Joint Managing Director & Chief Financial Officer.
Seth was addressing an investor conference recently discussing the company’s performance in FY22.
Gautam Seth noted that currently tenders worth around Rs.1,500 crore have floated for energy meters. Of this, an estimated 70 per cent or more would be for smart meters, he said.
Incidentally, HPL Electric undertook significant capital expenditure in its metering business during FY22. Of the total capex of Rs.30.72 crore, around Rs.23 crore was in the metering segment. In FY22, the metering business of HPL Electric grew by 7 per cent, year-on-year, Seth observed.
Apart from just the supply of meters, HPL Electric was looking at offering complete solutions. Going forward, as Gautam Seth explained, the company would not only supply the smart meters but would also provide services related to IT (information technology) and communication infrastructure.
Seth was also confident of maintaining the company’s market share in the energy metering business, which currently stands at 20-25 per cent. The company has been enjoying these levels of market share for several years now, the Joint MD said.
The current order book for meters alone is around Rs.337 crore, Seth observed.
Capacity utilization
Gautam Seth did not foresee enhancement of capacity for the metering business. Currently, capacity utilization stands at 70-75 per cent and the current capacity was adequate to meet the projected demand for FY23. Incidentally, capacity utilization in the metering segment during Q4 of FY22 was the highest in the preceding eight quarters, he noted.
Also read: HPL Electric: Metering Orders Dominate With 50 Per Cent Share
Overall market
Gautam Seth explained that the overall market for smart meters, as envisaged in the Revamped Distribution Sector Scheme (RDSS), is over Rs.1 lakh crore. This includes smart meters and the associated system integration. Seth was also confident of improved cash flows thanks to the innovative financing mechanisms proposed in RDSS. One such mechanism involves the entire capital cost to the undertaken by the private developer. The developer gets paid annually by the discoms. In turn, the discoms are assured of a revenue stream from consumers as the meters would be mainly of the prepayment type. The Union power ministry has targeted to roll out some 25 crore prepaid meters over the next five years or so, under RDSS.
(This story is based on a recent investor conference of HPL Electric & Power Ltd, the transcript of which was filed by the company on stock exchanges.)
