Power business contributes to a large part of the engineering sector's order books. And with the government clearing the blueprint to add 100,000 MW of electricity generation capacity by 2012, the engineering sector is likely to be a major beneficiary. Also, as part of the government's APDRP program, the states will have to unbundle the generation, transmission and distribution, and invest in T&D infrastructure. This will further augment the performance of the engineering sector.

Key Positives Power play: Since power utilities are one of the biggest consumers (generation, transmission and distribution) for engineering companies, reforms introduced in the power sector like privatisation of SEBs will help in strengthening the order book size. Huge addition in power generation capacity (100,000 MW by 2012), in order to meet the demand supply gap will be a big positive for the sector. Infrastructure development: The government is focusing on development of infrastructure like roads, ports etc. This will be big positive for engineering and construction companies. Industrial 'act': Industrial divisions of engineering companies are likely to benefit from the increased focus on automation and capacity addition plans drawn by the India Inc.		Key Negatives Slow pace of reforms: Since the new government is planning to review some of the provisions of the Electricity Act, reform implementation could slowdown. To that extent, the order booking for engineering companies could grow at a slower rate. Captive competition: Duty free import of T&D equipments by power generation units if allowed by government can have some impact on margins of the T&D majors because of competition.

Budget 2005-06: Complete Coverage

Equitymaster.com is one of India's premier finance portals. The web site offers a user-friendly portfolio tracker, a weekly buy/sell recommendation service and research reports on India's top companies.