After a lull, core projects show signs of revival

MUMBAI: There is a flicker of a revival in core sector projects. After facing a two-and-a-half month cut in production, vendors to power projects are being sounded out to resume supplies to some mid-sized projects. The government���s recent measures to boost liquidity seem to be paying off with private power projects, that were earlier stalled, now being revived, say people connected with the industry.

Indications of the restart of projects are also reflected in the procurement schedules for key raw materials that are vital for making equipment for power and telecom projects. Executives of large metal companies such as Hindalco Industries and Sterlite Industries say that while the procurement from companies isn���t on the scale seen at least six months back, it has managed to reach halfway so far, and orders are expected to increase in January.

Hindalco and Sterlite, which make aluminium and copper that are used for making critical parts and equipment in the power and telecom industries, say that many vendor companies have resumed placing monthly orders.

While earlier companies used more than 600 tonnes of such material on a monthly basis, they are now placing orders of about 200 tonnes to 300 tonnes, after a lull of two months when no orders were placed at all. In the case of aluminium, where procurement was completely stopped, metal companies say that large purchase orders are being placed for January.
���Domestic demand is steady compared to the international situation and I think this would increase after metal prices stabilise compared to the volatility seen early this year,��� said Hindalco managing director Debu Bhattacharya.

According to Crompton Greaves MD Sudhir Trehan, most power projects are on track, after the initial slowdown. ���At the best, about 5% of the projects could be affected, while work on the remaining 95% is on,��� he said. The company, which makes products for the power sector, currently has an order book of $1.5 billion.

In the stimulus package recently announced, the RBI cut excise duties and offered refinance facilities for Small Industries Development Bank and the National Housing Bank to encourage small enterprises and real estate, besides improving liquidity. ���Apart from better funds flow, the move has also boosted industrial construction activity,��� said MVS Seshagiri Rao, finance director to JSW Steel, one of the key suppliers to most sectors. ���Although the auto industry hasn���t seen much of a pick up, there is certainly a revival in other areas such as line pipes (those used by ONGC, GAIL), engineering (L&T and Bhel) and in agricultural equipment and silos,��� he added.

According to Sunil More, director general of the Indian Electrical and Electronics Manufacturers��� Association, a representative body of power equipment makers, the slight revival is reflected in the electrical products market, especially due to the excise duty cuts. ���The other area where a revival can be expected is the RGVY Scheme (Rajiv Gandhi Vidyut Yojana) where about Rs 3,000 crore would be provided to boost the medium and slow voltage sectors,��� Mr More added.