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Informist, Tuesday, Apr. 21, 2026

 

By Anand JC and Abhijit Doshi

 

MUMBAI - Maharashtra State Electricity Distribution Co. Ltd., commonly known as Mahavitaran, is banking on its demerger to bring its aggregate technical and commercial losses below 10% in the next five years from around 15% at present, Managing Director Lokesh Chandra told Informist in an interview. To start with, Mahavitaran aims to bring leakages down to 12% over the next three years, from 23% in 2024.

 

Mahavitaran was facing high power leakages, mainly from the agriculture segment of its business. Chandra expects the company's aggregate technical and commercial losses to fall far more quickly following the recently approved demerger as the company shifts focus to industrial, commercial, and urban consumers. Like its private-sector competitors, Mahavitaran has been able to restrict power leakages to 6-8% in urban areas such as the Mumbai Metropolitan Region and Pune in recent years.

 

The company's aggregate technical and commercial losses have reduced, in part also because of its focus on the Revamped Distribution Sector Scheme, aimed at modernising its infrastructure through smart meters. "We have installed more than 1 crore (10 million) smart meters," Chandra said. "Out of 2.24 crore (22.4 million) consumers, we have completed installation for over 45%." These meters help Mahavitaran to assess where its network is facing leakages and to curb aggregate technical and commercial losses.

 

"Once you know where the losses are, where the theft is, and you will take measures to prevent the theft, then billing efficiency will automatically improve," the chief executive officer said. "Because when we know the areas where we have to concentrate, we can have (anti-)theft drives, we can also see the consumers where the meters were faulty," he said, adding that the company's power leakages have already come down and revenues have improved.

 

IPO PLAN

The Maharashtra Cabinet recently approved a plan to split Mahavitaran into two firms--one catering to industrial, commercial, domestic, and other non-agricultural consumers, and the other, MSEB Solar Agro Power Ltd., to cater purely to agricultural consumers. The split, over two years in the making, is also key to the success of Mahavitaran's initial public offering, which is set to hit the market by December, Chandra said.

 

Mahavitaran aims to raise between INR 50 billion and INR 100 billion through the public issue. The equity market has been volatile in recent months because of geopolitical challenges such as wars and tariffs, prompting many companies to tweak their listing plans. "Initially, we were looking (to list) this year-end," Chandra said. "So maybe one month here and there, depending on whether the market is very bad or we are advised not to go to the market at that point of time, then we will take that decision."

 

The company is hopeful that the public issue will help it to adhere more closely to corporate governance norms. "IPO is one way of making things happen in corporate governance. Making the company more efficient, more accountable, and more answerable to the investors," he said.

 

How much stake the government would part with in the initial public offering is not clear yet. Mahavitaran will use part of the proceeds to fund its capital expenditure and to run the newly-formed arm catering to agricultural consumers. The capital expenditure will be focused on strengthening Mahavitaran's network as it expects power demand to shoot up in the next few years.

 

"We have estimated a total of INR 3.5 trillion of investment which is required for the power sector in the next five years," Chandra said. Of this, around INR 2.5 trillion will be incurred towards power purchase agreements while INR 800 billion will be incurred towards transmission and INR 600 billion towards distribution. "Out of this, already works of INR 250 billion are in progress", he said.

 

DEBT RECAST

Mahavitaran, a wholly-owned corporate entity under the Maharashtra government, was making losses until the financial year 2023-24 (Apr-Mar). For FY25, it had reported a net profit of INR 9.22 billion, against a loss of INR 45.17 billion for FY24. The company is in the process of finalising its accounts for FY26. Its debt currently stands at INR 980 billion. The poor performance of the politically sensitive agriculture-sector business has been a drag on its performance.

 

Tariffs for agricultural consumers are highly subsidised. The high-paying industrial consumers end up cross-subsidising them. Additionally, Mahavitaran has high arrears in its agriculture-sector business with limited scope for a complete recovery of accumulated dues. "The demerger was necessary because you have to create a company which will be free from all these (legacy) issues," Chandra said. Highlighting the need for the bifurcation to keep finances clean, he continued, "If you track the power sector's history, the government always ends up giving bailout packages... if you keep doing the same thing every 10th or 12th year, this is the story."

 

Chandra expects the separation of the agriculture-sector business to be completed by June. As part of the financial restructuring along with the demerger, the Maharashtra government is set to issue long-term bonds with a tenure of 15 years to address liabilities adding up to INR 326.79 billion. The split will help Mahavitaran reduce its interest burden by INR 20 billion-INR 25 billion.

 

"The remaining debt is sustainable for us," Chandra said. "So in future there will be a situation where this company will always be profitable because we are not going to have the agri arrears or dues."  End

 

Edited by Rajeev Pai

 

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