Engineering and construction major BGR Energy Systems Ltd. is planning to enter new areas following stalled expansion of thermal power plants and a shift towards clean energy, according to its chairperson.
“The downturn in the Indian power industry coupled with stagnant power demand scenario had adversely impacted market potential for balance of plant (BOP) and engineering procurement and construction (EPC) opportunities for thermal power projects,’” said Sasikala Raghupathy in the annual report.
“The company has initiated strategic steps to leverage its design, engineering, construction and project management capabilities,” she added.
As per the plan, the company is poised to enter key sectors such as water, infrastructure, highways and roads, transportation, construction and transmission and distribution (T&D).
The city-based company is into manufacture of capital equipment for power plants, petrochemical industries, refineries, process industries and undertakes turnkey and EPC contracts for power plants.
In the last few years, the company had started feeling the heat as there was a global shift towards cleaner sources of power generation against the conventional fossil/coal-based power. This phenomenon had affected India and the company as well and it can be seen from the decreasing levels of lending by the financial institutions to the thermal power sector, as per company officials’ analysis.
The capacity utilisation of the thermal power plants hovered about 50-52%, due to emphasis on renewable energy and a stagnating economy. Besides, the decreasing price trend of renewable energy generation rendered many thermal plants either to remain idle or operate at low capacity due to high cost of generation.
Moreover, the capacity addition in the thermal power sector in the last two years was almost half of what was added in the renewablesector with the trend expected to continue, they said.
According to them, the annual demand for electricity contracted in the last three years owing to reduced offtake of energy by the manufacturing sector that led to a lower plant load factor of most operating thermal plants. This and the increasing emphasis on installation of green power had stalled expansion plans of coal-based power projects across the country.
In conclusion, they said the company would continue to be a significant market player in the thermal generation sector, by being selective in order booking and would leverage its competencies in focusing and seeking orders from nuclear power projects.
In capital goods/manufacturing businesses, the company has taken aggressive steps to expand its reach in international markets. The company has executed several water projects and is poised to be major player in water industry, they said.
During FY20, the BOP, EPC and construction segment achieved a turnover of ₹2,307 crore and the capital goods segment ₹384 crore.