Interaction with Tamil Nadu Discom, SERC

15 July 2011

olicy

aker

Insights from bureaucrats

the

Interaction with Tamil Nadu Discom, SERC

Roadmap to achieve financial viability



Post our meetings with Tamil Nadu State Electricity Regulatory Commission (TNERC)

and Tamil Nadu Generation and Distribution Company (TANGEDCO), we have came

assured about impending improvement in TANGEDCO's financials.



Clear roadmap exists to achieve financial viability for TANGEDCO and a clear

consensus amidst authorities on restoring the financial health of the power sector.

This is in line with the key theme in our Sector Update dated June 2011, Utilities:

Just an Eclipse…Brighter Days Ahead, highlighting improvement in SEB finances.

Power sector reforms key priority for government; consumer opinion favors tariff hikes:

There is a clear

consensus amidst authorities on restoring the financial health of the power sector. Load shedding has awakened consumer

opinion in favor of tariff hike and financial independence of TANGEDCO.

Roadmap to achieve financial viability: FY11 estimated revenue gap of Rs90b for TANGEDCO is targeted to

be bridged through:

1. TANGEDCO added capacity of just ~500MW over the last 8 years, leading to increased reliance on short-term

purchases. However, over the 18-month period beginning October 2011, ~6GW of LT capacity would be available

through own generating companies and state share in capacities commissioned by the center. According to TNERC's

August 2010 Tariff Order, TN will become a net exporter of power in FY13 (v/s being the largest buyer, currently).

2. The state government had provided subsidy of INR21b in FY11, including INR2.7b towards the agriculture sector,

which is grossly inadequate. It could increase subsidy towards agriculture by INR30b-35b per year.

3. The local elections would be completed by September/October 2011, post which there could be a tariff increase of

~15%, enhancing annual revenues by INR25b-30b. This would then be followed up with annual tariff petition and

'truing up' exercise every year.

Addressing cash flow issues, exploring LT funding options:

TANGEDCO indicated monthly under-recoveries of

INR7b-8b. Given its corporate status as against a state government body earlier, debt funding is becoming difficult. To

address near-term cash flow issues, TANGEDCO has resorted to load shedding in 2011, which could lower ST power

purchases by 400MW (~30% reduction). Outstanding borrowings stand at INR400b, and PFC and REC's cumulative

exposure is estimated at ~INR150b. Both these companies, however, have an escrow mechanism, and a large part of the

funding is towards generation projects (not as working capital). Additionally, TANGEDCO has term loans of INR170b-180b

from 17-18 public sector banks. These loans are unsecured and largely for meeting working capital requirements.

Lower ST purchases, increase in LT availability negative for merchant players; PFC / REC well covered:

continue to believe that merchant power prices will be under pressure, as TN contributes ~25% of the purchases in the

short-term merchant market and this is likely to decline meaningfully in FY13. According to TNERC's August 2010 Tariff

Order, TN will become a net exporter of power in FY13 (v/s being the largest buyer currently).

PFC / REC

continue to be

our preferred bets, as a play on the theme of 'improvement in SEB finances'. CPSUs continue to be our preferred sectoral

theme, given acceleration in earnings growth and attractive valuations. Our top picks are:

NTPC, Coal India

and

Powergrid.

SEB financials alarming, but the worst seems to be behind:

In our Sector Update dated June 2011, Utilities: Just

an Eclipse…Brighter Days Ahead, we had opined that FY11 would be the peak of SEB losses. With decline in ST power

cost and improvement in availability of LT power, there would be a reduction in SEBs' power purchase cost. This combined

with gradual tariff increase would lead to an improvement in SEB finances. We reiterate our positive stance. For SEBs',

we expect commercial losses to moderate from ~INR685b in FY11 to ~INR466b in FY13.

Nalin Bhatt

(NalinBhatt@MotilalOswal.com) +91 22 3982 5429

Satyam Agarwal

(AgarwalS@MotilalOswal.com) +91 22 3982 5410

/ Vishal Periwal

(Vishal.Periwal@MotilalOswal.com) +91 22 3982 5417

olicy

aker

Roadmap to achieve financial viability

Utilities: Detailed Report

June 2011

We met various senior officials of 'Tamil Nadu State Electricity Regulatory Commission'

(TNERC), 'Tamil Nadu Generation and Distribution Company' (TANGEDCO) and also visited the

State Load Dispatch Management Centre. We came back assured that the financial situation

of TANGEDOC is set to improve meaningfully and there is a concrete roadmap to achieve

financial viability, going forward. This corroborates with the key theme highlighted in our

Sector Report (Indian Utilities: Just an Eclipse…Brighter days ahead, dated June 2011) and

vindicates our belief that directionally, SEB Finances are set to improve with FY11 being the

peak of the under-recoveries.

the

Severe cash crunch in interim period, PFC/REC secured on payment mechanism

Background:

Tamil Nadu Power Distribution Company is the top loss making distribution

entity in FY09 with commercial loss of Rs90b (17% of total Rs526b). It also continues to

be the largest purchaser of ST power and accounted for 24% of total ST purchase in

FY11 and 40% in April 2011. TN Discoms have last affected the tariff hike in August 2010,

after a period of 7 years. Recently, the state government of Tamil Nadu has asked for a

bailout from the Central Government to address the financial constraints with TANGEDCO.

Power sector is now the key government priority; consumer opinions

in favour of tariff hikes and financial independance

A. There seems to be a clear consensus from meetings with several officials in TNERC /

TANGEDCO that "restoring financial health of the Power sector is the most important

priority for the state government". The current financial crisis has led to commencement

of scheduled load shedding in 2011, leading to strong consumer opinions in terms of

rationalizing (increasing) tariffs. On the day of our visit, there was a review meeting of

the 'Chief Minister' with the senior members of TANGEDCO, where concerns were being

expressed that any delays in turnaround can seriously impact industrial growth / job

creation in the state, due to lack of power.

B. The average tariffs of Rs2.8/unit in the state are amongst the lowest in the country, and

the interim tariff hike in August 2010 (in the election year) was post a gap of 7 years.

This was applicable till March 2011, and has now been extended till Dec 2011. TANGEDCO

is ready with the Annual Revenue Requirement (ARR) petitions and is awaiting directives

from the state government.

Consumer opinions in

favour of Tariff Hike and

financial independence…

Roadmap to achieve financial viability

In FY11, the estimated revenue gap for TNGEDCO stood at Rs90b, of which tariff hike in Aug

2010 covered ~Rs18b and balance Rs72b was funded through creation of regulatory assets.

FY12 finances are expected at status quo, but FY13 could be a turning point. The pace of

loss reduction will depend on:

1. Capacity additions / increased Long Term (LT) power availability:

Capacity

addition by TANGEDCO over past 8 years has been just ~500MW, leading to increased

reliance on short term power purchases (for ~14% of demand, 1400MW). During the

18 months of 2HFY12-FY13, ~6GW of LT capacity would be available through own

generating companies (including Joint Venture projects) and state share from capacities

commissioned by Central Public Sector Units (CPSUs). This will lead to significantly

lower dependence on short term power purchases. As per the August 2010 Tariff order

of TNERC, TN will become a net exporter of power in FY13 (vs being the largest buyer

currently).

15 July 2011

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LT supply for Tamil Nadu to improve meaningfully by ~6GW over next 2 years...

Projects

A] State Projects

North Chennai TPS

Mettur TPS

Co-Gen

Hydro projects

Total State projects

B] Joint Venture Projects

Vallur TPP

Ownership

State

Cap (MW)

1,200

600

183

2,076

NTPC JV

1,075

1.5GW capacity, but share of TN

DISCOM is 1.1GW

750MW to be available from

3QFY12 (from initial 1000MW)

375MW beginning 2HFY13

Tuticorin TPP

Udangudi TPP

NLC JV

BHEL JV

1,000

(from balance 500MW)

Supply to begin from 1QFY13 for 500MW &

500MW by 1HFY13E

1,600MW capacity not considered for

time being as initial progress slow,

Target CoD by FY14E looks challenging

CoD as indicated by TNERC/TANGEDCO

1st unit CoD by Feb-12 (earlier Feb-11),

Full CoD by June/July-12

2HFY12 (vs earlier 1HFY11)

2HFY12

To be completed by 1HFY12

As per CEA

the

Both units by Mar-12

Mar-12

1000MW by Mar-12

500MW in FY13

500MW in FY14

Total JV projects

C] Share from CPSU projects

Neyveli TS-II expansion

Kaiga Atomic Power (Unit 4)

Kudankulam Atomic project

Simhadhri Stage - II

Other projects

Share from CPSU Projects

Total [A + B + C]

2,075

Central Share

325

975

190

1,545

5,696

Out of total 500MW

Out of total 220MW

Out of total 2GW

Out of total 1GW

Entire Capacity in FY12

Commissioned

Entire Capacity in FY12

500MW Commissioned (95MW for TN),

500MW in FY12 (95MW for TN)

LT power supply is expected to increase significantly, as many projects delayed in past gets bunched up for commissioning

from 2H FY12. This will lead to significantly lower dependence on short term power purchases

2. Increased government subsidy:

The subsidy provided by the state government in

FY11 was Rs21b, including Rs2.7b towards the agriculture sector. This is a gross under

recovery as agriculture consumes 22% of the power in the state and is largely 'free

power'. There are expectations that the government will increase the subsidy towards

agriculture by Rs30-35b pa. Currently, TNERC has approved subsidy payment at Rs21b

in FY12, and we understand that the same could possibly be revised upwards in FY13E.

Consumption pattern (% of total, MUs)

Inter State

Others

Revenue pattern (% of total, INR m)

Inter State

Others

Domestic

26%

Domestic

16%

Industrial HT

/ LT

37%

Commerical

12%

Agriculture

22%

Industrial HT

/ LT

54%

Commerical

26%

Agriculture

Soucre: TNERC/TANGEDCO

15 July 2011

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3. Tariff increase

leading to higher revenues of ~Rs25-30b (~15% tariff hike) is possible.

In all our meetings, there was reconciliation that tariff hike is "inevitable". This is possible

by Sept/Oct 2011 as the local polls get completed. This would then be followed up with

annual tariff petition and truing up exercise every year. The severity of cash crunch led

to a tariff hike in Aug 2010 (in an election year), and now the political climate is more

conducive.

Tariffs in Tamil Nadu are amongst the lowest in the country (Rs/unit)

the

Top loss making states have

relatively lower tariffs

Soucre: CEA

4. Creation of a vibrant Renewable Energy Certificate (REC) market:

Recently

REC's have started trading on the power exchanges, and provide a mechanism for

various state discoms to meet the renewable energy obligations. Tamil Nadu has the

largest installed wind capacity of 6,000MW, meeting 15-20% of the power demand in

the state. This could lead to a potential savings of ~Rs10b given the lower PPA rates

possible.

Facing cash flow issues, various steps taken including 'scheduled' load

shedding



TANGEDCO has severe funding gap, with monthly under recoveries at ~Rs7-8b currently.

Post the unbundling in November 2010, TANGEDCO now has a corporate status and this

has made the lenders uncomfortable in increasing funding, hitherto given to TNEB, as

state government body. To address the near term cash flow issues, TANGEDCO has

resorted to load shedding in 2011 (1 hour in Chennai, 2 hours in Madurai & Coimbatore

and ~20% in HT/Commercial consumer on rotation basis), which could potentially lower

power purchases by 400MW. This will lead to ~30% reduction in short term power

purchases.

Short term power purchases are being planned in a more systemic manner by inviting

bids, and recently ~2,600MW capacity has been tied up for specific periods at Rs3.81-

3.84/unit (vs Rs4.5-5.0/unit in FY11). The state has also done banking arrangements

with Haryana, Punjab, Chhattisgarh, etc. TANGEDCO has also invited medium term bids

for power procurement for 450MW (bid opening is August 2011) and this is valid for 5

years. This will bring down the reliance on less than one year power market for TNEB

quite meaningfully.

15 July 2011

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ST power accounts for 13% of total demand

Spot

purchases,

13%

the

TN accounts for 25% of ST power purchases

Tamil Nadu

Andhra Pradesh

Rajasthan

15.8

37.8

26.6

3.8

13.7

18.5

21.6

15.6

13.2

10.9

23.6

-1.1

FY09

FY10

FY11

Maharashtra

Other States

9.5

12.2

16.4

23.0

40.2

-1.3

Apr-11

Other

renew able,

Wind,

10%

Thermal,

67%

8.2

25.3

21.7

24.0

10.4

Hydro, 8%

Soucre: TNERC/TANGEDCO

Spot purchase of power account for 13% of total power purchase by TN DISCOMs.

Rs400b bailout demand towards past arrears; delayed payments but

no defaults till date



Outstanding borrowings of the erstwhile TNEB were Rs400b which was bifurcated as

40% for transmission and 60% for Gencos / Discoms. Within this, the bifurcation for

Gencos and Discoms is not yet finalized and they operate as single company. Also, the

officials indicated that the bailout is largely for past arrears, while they expect to operate

the current operations without any under recovery, with annual tariff revisions.

The borrowing is funded by: 1) Power Finance Corporation (PFC) and Rural Electrification

Corporation (REC) exposure estimated at ~Rs150b. We understand that these companies

have an escrow mechanism, and almost the entire funding is towards the generation

projects (not as working capital) 2) Exposure of TN PFC (state government entity) of

~Rs60b 3) Term loans of Rs170-180b from ~17-18 PSU banks and these are unsecured

and largely for meeting working capital requirements.

There are thoughts of swapping the unsecured borrowings with banks at 12% into

bonds at 10% (with part state government guarantee); which will lower the interest

cost. The bonds can also be subscribed by the other State agencies (under directives by

state government and backed by Government guarantee), who park surplus funds in

FDs, liquid funds, etc. This will also provide moratorium in terms of principal repayments

in the interim period.

There have been no defaults till date, but there have been delays in making payments.

To manage cashflows, Discoms have been making payments to utilities only at the last

date (2-3 months), while supplier payments are also delayed by 1-2 months (4-5 months).

Even for repayment of loan, in one instance, the payment was made through 4

installments.

15 July 2011

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Significant increase in leverage (INR b)

- Loans from FI/banks

- Other Loans

- Grants

- Consumer money

the

FY06

116

FY07

215

146

351

FY08

FY09

FY11

Soucre: TNERC/TANGEDCO

Implications negative for merchant players / PSU Banks; prefer NTPC,

PGCIL, Coal India and PFC / REC



We continue have a negative bias on merchant power prices, and model in merchant

rates of Rs4/unit in FY12 and Rs3.5/unit in FY13 (vs Rs4.11/unit in FY11). TN contributes

~25% of the purchases in the short term merchant market, and quantum is expected to

be reduced quite meaningfully in FY13. As per the August 2010 Tariff order of TNERC,

TN will become a net exporter of power in FY13 (vs being the largest buyer currently).

Also, top 5 states contribute ~70%+ of the short term market purchases and most of

these states are lowering purchases. Commissioning of large capacities by state gencos

/ CPSUs will lead to competition shifting to variable cost for merchant producers, in our

opinion. We have a Neutral rating on most private developers.

PFC / REC continue to be our preferred bets, as a play on theme of 'improvement in SEB

finances'. These companies have an escrow mechanism with large part of funding for

generation capacities, and valuations are attractive.

CPSUs continue to be our preferred sectoral theme, given acceleration in earnings

growth and attractive valuations. Our top picks are:

NTPC, Coal India

and

Powergrid.

Comparative valuations

Company

CPSUs

NTPC

PGCIL

CIL *

NHPC

Recom

CMP

TP UpSide EPS (INR/sh) EPS Gr (%)

Price

Buy

Neutral

189

110

365

229

125

447

(%)

FY12

11.7

6.6

22.1

1.6

FY13

13.9

7.6

27.7

1.9

FY12

389

FY13

-7

-2

RoE (%)

FY12

13.6

26.3

6.5

9.0

34.1

18.5

19.7

6.8

12.5

6.2

FY13

15.0

14.2

26.2

7.5

7.2

30.8

15.8

19.2

7.7

11.6

7.0

P/BV (x)

FY12

2.2

5.4

1.1

2.4

2.8

1.8

1.0

0.8

1.1

1.0

FY13

2.0

4.2

1.0

2.3

2.2

1.6

0.9

0.8

1.0

0.9

P/E (x)

FY12

FY13

EV/EBITDA (x)

FY12

FY13

Private Sector

Tata Power

Neutral

Adani Power Neutral

JSW Energy

Neutral

Lanco Infra

Buy

Reliance Infra Buy

1,269 1,261

110

106

569

879

-1 111.7 104.3

-4 11.5 13.6

142

6.9

4.1

44.9

39.3

4.8

6.8

4.5

53.7

40.6

5.6

CESC

Buy

335

434

PTC

Buy

127

* RoE adjusted for OB reserves provisions

Source: Company/MOSL

15 July 2011

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Takeaways from August 2010 Tariff order by TNERC

TANGEDCO under recoveries to halve by FY13 even assuming current tariffs

We also highlight few of the important workings covered in the tariff order (TO) approved by

TNERC in August 2010, highlighting improvement in financial position, purely on the back of

lower power purchase cost. TO also expects TN DISCOMs to have surplus power for sale in

open market in FY13. Thus, under recoveries are expected to halve from Rs79b in FY11 to

Rs35b in FY13 without any additional tariff hikes.

the

TNERC and TANGEDCO officials indicated that actual under recovery (of Rs90b in FY11) can

be quite minimal in FY13, driven by possible ~Rs35-40b of savings in power purchase cost,

Rs25-30b from tariff increase (only ~15% increase, should not face opposition) and Rs30-

35b additional subsidy from government. We believe that the situation is manageable and

the delayed capacity addition in past 1-2 years accentuated the problems of TN DISCOMs.

With 6GW of capacity addition over next 2-3 years, TN DISCOMs look on track to achieve

turnaround without much ado.

TN expects to be net exporter of power in FY13, vs largest buyer now (MUs)

FY11

Energy input requirement

70,933

26,539

Energy required for Dd-Sy mismatch

Total energy required

Less: Net energy from own generation

FY12

74,453

2,000

76,453

33,113

43,885

(545)

2,250

4,545

FY13

78,196

2,000

80,196

38,414

52,834

(11,052)

2,000

15,052

Soucre: TNERC

TNERC/TNDISCOMs working

indicates possible surplus

power for state by FY13

Available from Central Sector, CPPs, etc

39,856

Net balance to be procured from open market 4,538

Actual open market purchases

4,538

Net saleable energy in open market

TNERC expects power purchase cost to decline over next 2 years, and ARR to

remain flat despite demand growth (INR b)

FY11

Power purchase cost

Transmission charges

Fuel cost /

Cost of own generation

O&M Expenses

Depreciation

Interest on Loan

Other debits

RoE

Demand side management

Total ARR

Less: Other operating receipts

Net ARR to be recovered

162

288

279

FY12

138

285

275

FY13

114

276

263

Soucre: TNERC

ARR is expected to decline,

despite demand growth

Remarks

Electricity purchase cost to come down

by ~Rs50b

Increase in-line with increase in own

gencos capacity

TO working indicates

reduction in purchase cost

and decline in ARR

requirement despite

demand growth

15 July 2011

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TNERC forecasted under recovery at Rs80b in FY11, but to come down to Rs35b

in FY13

FY11

FY12

275

196

(78)

214

(61)

9.1

FY13

263

209

(54)

229

(35)

9.2

Soucre: TNERC

Revenues as per last revised tariff in 2003

Remarks

the

Tariff hike in Aug-10 was

mere ~9% (after a gap of

~7 year) and additional 15%

tariff hike could mean no

under recovery in FY13

Required revenues as per TO

279

Revenues as per prevailing tariff

(before Aug-10 hike)

Gap in the revenues

Revenues post tariff hike

(Aug-10 approved)

Gap in the revenues,

post tariff hike

Effective tariff hike (%)

184

(96)

200

(79)

9.0

Regulated asset in books, total

Rs168b.

Subsidy payments by increased marginally since FY10

TNERC and TNDISCOMs are

looking to avail higher

subsidy from State

government as subsidy was

decided based on the earlier

cost structure (2001-02)

and thus, possibility of

upwards revision exists.

Category

Domestic

Agriculture

Huts

Public Worship

Powerloom consumers

Handloom weavers

Utilities

Lift Irrigation Co-op soc

Total

Petition by

TNGEDCO for FY12

16.6

2.9

0.2

0.1

0.6

0.1

0.6

0.0

21.0

FY12

16.3

2.9

0.2

0.1

0.6

0.1

0.6

0.0

20.7

Approved by TNERC

FY11

14.9

2.7

0.2

0.1

0.6

0.1

0.5

0.0

19.1

FY10

13.7

2.6

0.2

0.1

0.6

0.1

0.5

17.7

Soucre: TNERC

15 July 2011

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SEB Financials: Alarming, but worst seems to be behind…

Commericals losses to moderate from FY11 peak levels

We highlighted that health of distribution companies would improve from FY11 peak levels

in our sector report recently (Indian Utilities: Just an Eclipse…Brighter days ahead, dated

June 2011), on the back of lower power purchase cost (as ST power cost is coming down,

while LT availability of power improves) and gradual tariff increase. We believe that there is

sufficient incremental generation available at competitive rates and India will not be a large

buyer for imported coal at spot rates for power generation; keeping LT power costs under

check. We re-iterate our positive stance and feel more comfortable post the meeting with

TN DISCOMs.

the

Expect SEB losses to taper off (INR b), driven by...

SEB losses to taper off on

the back of lower power

purchase cost (as ST power

cost is coming down, while

LT availability of power

improves) and gradual tariff

increase

FY06

FY07

FY08

FY09

FY10

FY11

FY12E

FY13E

FY14E

-271

-209

-319

-526

-466

-411

-685

-588

-612

Soucre: PFC report on SEB finacials/MOSL

... ST power cost as a % of total procurement cost declined (INR b), and

FY06

Total purchase

of discoms

ST market size

ST power as %

of purchases

1,317

6.2

FY07

1,477

116

7.9

FY08

1,685

153

9.1

FY09

1,976

351

17.7

FY10

2,123

318

15.0

FY11

2,223

336

15.1

Soucre: CERC/CEA

15 July 2011

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... Sizable addition from CPSUs and State government over next 3 years, improving

LT power availablity

FY08

FY09

FY10

FY11

2,490

120

220

250

1,000

200

FY12E

3,660

1,372

2,500

500

3,200

200

FY13E

3,930

1,800

500

1,326

FY14E

6,260

2,045

412

500

110

FY15E

Total

Established Utilities - CPSUs / State Gencos

NTPC

1,740

750

1,240

NHPC

SJVN

NPCIL

510

220

250

520

440

500

3,118

5,298

250

833

660

735

2,478

300

the

551 20,621

5,847

412

3,380

1,750

5,450

2,356

Capacity addition by Central,

State is expected to be

15GW+ pa over FY12-14

NLC

DVC

Others

State Gencos

5,273

1,821

Total (A)

8,513 2,571

Established Utilities - Private

CESC

Lanco Infratech

Tata Power

Adani Power

Jindal Power

JSW Energy

750

250

500

383

3,454

25.6

2,759

8,315

7,843

7,954

7,039 19,747 15,899 17,281

733

1,320

735

2,788

300

1,200

1,870

1,850

1,980

1,410

7,110

1,000

500

1,600

2,640

4,740

870

1,350

500

2,580

1,200

1,600

1,200

2,800

1,050

2,600

1,350

2,780

2,353 39,436

2,904 79,252

1,200

250

3,936

5,300

6,600

3,400

2,880

Total (B)

750

Emerging Utilities - Private

GVK

GMR

Essar Energy

Indiabulls Power

Jaiprakash Power

Reliance Power

Sterlite Energy

Other Utilities

Total (C)

Total (A+B+C)

9,263

1,200 22,366

300

1,800

1,320

3,200

870

1,350

4,400

2,700

2,820

9,160

2,400

1,509

428

1,236

1,205

1,334

3,024

9,524

1,809 2,333 2,236 7,705 9,114 9,644 33,224

9,585 12,160 29,093 28,344 29,195 13,748134,842

44.7

42.1

32.1

43.9

40.8

78.9

41.2

Pvt Sector (% of total) 8.1

Highest capacity addition

Second highest capacity addition

Third highest capacity addition

15 July 2011

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FY11 demand growth lower as loss making states curtail demand

Comm Loss

FY09

Tamil Nadu

Andhra Pradesh

Rajasthan

Uttar Pradesh

Haryana

Madhya Pradesh

(89.6)

(79.4)

(76.6)

(58.2)

(41.2)

(37.3)

(32.4)

(31.2)

(17.3)

(13.2)

(10.9)

(9.0)

(4.7)

(1.4)

(0.8)

(0.7)

(0.5)

(0.0)

0.1

0.3

0.4

1.2

1.6

2.2

7.7

Demand Growth (% YoY)

FY10

9.4

10.5

16.5

9.6

15.2

2.6

9.9

5.7

11.7

9.4

12.6

4.3

2.5

19.0

(6.1)

2.9

4.9

6.4

10.9

0.4

(4.7)

(9.5)

11.7

8.0

12.0

8.2

8.4

10.1

(0.2)

(25.8)

FY11

5.3

(0.0)

3.5

1.0

3.4

12.2

(2.6)

10.7

6.7

5.4

3.2

1.8

2.6

10.9

8.8

6.2

0.2

4.3

11.6

5.6

24.9

0.2

5.0

2.2

8.5

7.9

5.8

2.2

2.3

(6.2)

CAGR (%)

FY06-11

8.2

8.3

7.3

6.6

7.8

5.6

4.6

7.8

9.6

8.9

7.5

4.6

4.5

13.9

2.2

8.1

4.8

9.7

7.6

6.0

19.5

2.4

13.7

3.5

12.1

7.9

3.5

6.2

5.7

(4.5)

Soucre: CEA

the

As a "Self-correction"

mechanism, top five loss

making states have recorded

FY11 demand growth of

2.4% YoY, v/s historic five

year average demand

growth of ~9%

Punjab

Karanataka

Bihar

Jharkhand

J&K

Gujarat

Maharashtra

Uttarakhand

Manipur

Orissa

Puducherry

Mizoram

Nagaland

Assam

Arunachal Pradesh

Meghalaya

Sikkim

Tripura

Himachal Pradesh

West Bengal

Delhi

Goa

Kerala

Chattishgarh

ST procurement as % of total demand for top loss making states

14 14

FY11

FY09

12 12 12

(1)

Soucre: CEA

15 July 2011

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