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Big improvement in Indian companies’ incorporation of internationally accepted trade terms

Indian utilities have progressed “enormously” in incorporating internationally accepted trade terms, but there is still more to be done.

Speaking at Coaltrans India 2014 in Goa, Rahul Bhandare, Chairman cum Managing Director of Knowledge Infrastructure Systems, said that tenders were currently indexed to capture the volatility of coal prices, freight and exchange rate fluctuations.

“While payment cycles, particularly for the balance payment after the initial CIF payment, continue to be stretched, my company has not had a single payment default in these utilities in the past seven year,” according to Mr Bhandare, who was one of the early innovators in the Indian energy sector.

However, he added that if there is one drawback, it lies in the failure of the tendering parties to sometimes make a mental adjustment to this new environment.
“The attempt of the bureaucracy in the tendering body to make post contractual amendments, sometimes in a rather coercive fashion, creates a conflict that not only vitiates the changes made in the tender document but have a disastrous impact on the international business environment.”

Mr Bhandare, who was among the first importers of coal to meet the growing demands of India’s thermal-based power projects, also told delegates at the conference that India’s rush to add power capacity after years of under-investment has resulted in a domestic coal shortage and has forced electricity generators, including NTPC, to increasingly rely on imported coal.
As a result, coal imports by Indian power utilities surged by 31 per cent between April and January and he estimated that power companies are likely to import 82 MMT this fiscal year, ending March 2014.

“The growth in energy is a given as 2014 marches on,” he said. “In a sense, the coal business is a recession-proof industry, and while we are impacted by weakened currencies, market inflation, shortage of availability of raw material, including coal, and very genuine environmental concerns, no country, no economy can progress without power to build roads and schools; hospitals and ports; public transportation systems and primary health care centres.”

This content is provided by Coaltrans Conferences for informational purposes only, and it reflects the market and industry conditions and presenter’s opinions and affiliations available at the time of the presentation.

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