Basic Principles for Successful Financial Life

EasternExpress Advisors LLP

Four levers that create wealth for you

Most of us feel that increasing our income will make us wealthy, and that is why we focus most of our energy on getting a higher salary or getting more profitability of our organisation. We forget that increasing our income is just one of the levers to wealth creation, and NOT a very significant one. Ignore the other three levers at your own peril...read on...

It was 9 AM right now. Vinay was anxiously waiting for the phone call. His supervisor was supposed to call him up at 11 AM. Today. He made sure that he reached office an hour earlier, out of sheer excitement and curiosity of the upcoming promotion declaration. After 2 hours, he would be the Vice-President of the company - a dream he had cherished over the last few years. His mind started venturing to the kind of hard work that he has been doing over the last 12 months for this promotion. Out station trips to get new contracts, sitting late in office and at client sites to make sure that nothing can go against the deal, working  over weekends to stay ahead of his competition, spending time and effort on building a great relationship with his supervisor - in and outside the office. And then, once the promotion goes through, he can spend some time with his family and on his fitness, and all the other important things that he neglected over the last few years. Everything was going as per the plan, he thought.

His train of thoughts were interrupted by the telephone ring. He picked it up with childish excitement. It was his supervisor on the other side. Vinay listened on, as his face played all possible emotions from exuberance to maturity to anger to depression. He kept the phone down after 3 minutes, and kept looking at the telephone instrument for a long time.

Sneha, his colleague in office, had just arrived at her desk. She saw an unusually depressed Vinay and asked him to join her for tea. Vinay obliged. Over tea, Vinay shared the entire event with Sneha, and how depressed he feels right now, after 20 years of hard work with this company.

Sneha consoled him, and said

“Vinay, that is the problem with most of us who are in this race to earn more money and strive for better positions. We think this is the only way to get wealthy.”

“What do you mean? I mean how else can you get wealthy if you don't get promoted and earn more money?”

“I had exactly the same mindset till 6 months back. Then, I met an author in one of the workshops I attended and he explained me something that changed my entire outlook towards wealth building. Let me help you with some of that.”

“Please do that Sneha. I would be so thankful if you can give me some alternatives.”

“Sure, here we go. There are four (4) levers that catapult our wealth in the long run, and increasing our income is just the first of them. Also, this lever, does not have the biggest impact on our wealth.”

“Are you saying that, while staying in a job, I have other ways to increase my wealth than to just focus on increasing my income?”

“Yes Vinay, you are absolutely correct, and those levers are equally powerful, if not more, vis-a-vis just increasing your income. Hold on and let me explain you all the levers”

Vinay was back this childish excitement, as he listened on to Priya.

Lever 1 (Increase your income)

This is where most of us are focussed on. Probably, this is the only lever most of us are aware of. While this is a good lever to increase your wealth, the impact of this lever on your overall wealth is just ‘Medium’. So, while we must pay attention to this lever, but only to its fair share. We should not be burning all our energies on this lever.

Lever 2 (Increase your net income)

Most of us struggle for a 5-10% increment every year and we conveniently forget or ignore the fact that we pay close to 30% of our income to the government via taxes. The money that we take home is far less than what the company gives us. On the top of that, most of us feel that we do whatever we can do about taxes, but the fact is that a vast majority of us do not spend enough time to understand the nuances of smart investing which can save us good amount of our taxes. If we invest some of our time in getting smarter about taxes and how to reduce some of those, it is very easy to contribute the same amount of money to our corpus, as we get in our annual increment. This lever also has a medium impact on our wealth, but needs much lesser effort than Lever 1. It is worth spending a fair portion of our time on this lever.

Lever 3 (Reduce your expenses)

Do not get me wrong here. No where, I am saying that you must lead a saintly life and stop spending money. What I am only saying here is that we should eliminate the unwanted expenses and get wiser about spending. One of the techniques that has worked for me here is tracking my expenses on a daily basis. Did you know that just getting into this habit of spending 2 minutes every evening and tracking your family expenses can reduce your expenses by as much as 15-18%? Yes, this is scientifically proven. And do not underestimate the power of this 15-18%, remember that one rupee saved is equivalent to five rupees earned because typically you save only 20% of your earnings. The contribution of reduced expenses to your wealth corpus can be humongous in the long run, much much more than your increased income. What we need is to inculcate good habits and discipline of tracking our family expenses every day.

Lever 4 (Get your money to work hard for you)

This is where most of us get it wrong. And this lever has the biggest impact on your wealth. Let me explain you. Over the last 20 years, you must have earned and saved a lot of money. Do you know how your saved or invested money has been performing year on year? Don't only consider the real estate that you invested 5 years back and got decent returns on. I am talking about your entire portfolio comprising FDs, RDs, Mutual Funds, Equity Stocks, PPF, EPF, Gold, Real Estate, Insurance and every other investment that you have done until now. Do you have a documented list of how much money is invested where? What is the performance of each of your investment? What are your returns from each of your investments and your overall portfolio last year, and a year before that? If you do not know the answers to all these questions, you are missing out on the biggest lever in your hand. Look at it this way. You are the CEO of your life, and each invested asset is your employee. You got to monitor the performance of each of your employees, and make them work hard for you. If some of them are not giving great results, you must replace them with more productive assets  - employees that can get you better returns. All this will happen if you invest some time on this lever, and start tracking the performance. A 2% increase in your portfolio returns by getting smarter about your portfolio can far exceed the impact of 20% increase in annual income.

“So, what do you say Vinay?”

“To be frank Sneha, I had never ever looked beyond Lever 1 in my life. I think you are right. Can you help me get started?”

“Of course I can Vinay. Getting aware of these 4 levers, and getting smarter about using these 4 levers in my life has, in fact, helped me earn back time in my life, while increasing my overall wealth. I have more time now to spend on my relationships and myself. I spend more time with my kids. I know what they study in school. I am also able to spend time on my fitness and health. I also have some time to help you. Lets get on to this today itself.”

Source: http://elevate-your-life.blogspot.in/2015/03/four-levers-that-create-wealth-for-you.html (Author: Mr. Manoj Arora)

High Dividend Stocks as an Investment Strategy

Champion investors love dividend paying stocks. They love the feel of passive income and positive cash flow. What about you? Do you love the feeling of tax free dividend income making its way right into your bank account while your stocks continue to do well?

Investing in high dividend stocks is a great long term investment strategy, but it is always better to understand its pros and cons.

Ready to invest? Then find out what are the best high dividend stocks to invest in...
Read on..

What is Dividend?

A dividend is a distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders. Dividends can be issued as cash payments, as shares of stock, or other property. Since it is shared from the company's cash reserves or profits, it generally indicates a healthy stock that you are holding.

Tax on Dividends

Dividends is a 100% tax free income in the hands of the shareholder. However, Dividend Distribution Tax (DDT) is usually paid by the company when they declare the dividends. As far as you, as an investor is concerned., you are not liable to pay any taxes on dividends. Your dividend income is 100% exempt fromincome tax. Read more about DDT (Dividend Distribution Tax) by clicking here.

Div Yield Vs Dividend %

As an investor, you should be usually focused on the Dividend Yield. Dividend Yield essentially tells you the % return on your investment (at the current stock price). Do not get confused with the Dividend % that the companies usually declare - which can be higher than 100% also in some cases.

As an example, if a stock's Face Value was Rs. 10 when it was introduced, maybe 10 years back, and now the stock price has reached Rs. 1,000/-, and the company declares 100% dividend, then this means a dividend of Rs. 10/- per stock (100% of the face value of stock price). But if you have purchased the stock for Rs. 1,000/-, your Dividend Yield would be only 1%. This is the actual Return on your investment, and this is what matters for an investor. This also means that your Dividend Yield may vary depending on the price at which you buy the stock. So, the yield could be different for 2 different investors buying the stock of a same company on two adjacent days.

Read more about Dividend Yield here...

Stocks that offer high dividends in India

There are thousands of companies paying high dividends, but you must be careful here. Investing for gooddividends should not be at the risk to your principle investment. You can see a list of most of the Dividend Paying companies along with their track record of dividends at the below link:

http://www.moneycontrol.com/stocks/marketstats/bsetopdiv/

To counter this risk, the most common investment strategy is to look for blue chip companies paying high dividends. Below is the list of the Top 30 Blue Chip companies in India that pay high dividends:

Merits of High Dividend Stocks

1. Dividend paying stocks are usually more stable. When stock market crashes, dividend stocks stands tall. When everywhere there is panic, dividend stocks provides stability. People continue to hold on to dividend stocks even during market crash. The reason is simple, they continue to earn dividends even during market crash. In fact, champion investors end up buying more when such stocks crash because they can lower the average cost of purchase and therefore increase the Dividend Yield.
2. If equity can generate regular income, there cannot be a better investment. And earning Dividends is the best way to generate stable passive income. Once investors get hold of a good dividend stocks, they never sell them. This gives dividend paying stocks its price stability.
3. Value investors considers high dividend yield as a strong value indicator. Improving sales and profit figures are one of the strongest fundamental indicators of quality stocks. Companies which shares its profits consistently (dividends) are confident companies.

Demerits of High Dividend Stocks

1. Now, this is Catch 22. If a company is paying majority of its profits to its shareholders, it is obviously not keen on investing this profit for business expansion and further growth. This sometimes limits the capital appreciation of your stock, since the growth of the company is constrained.
2. Beware of companies with fluctuating dividends and weak fundamentals. These could be new players trying to attract investors.
3. Needless to say, Dividends cannot be the only criteria for you to buy a stock. The value analysis of a stock is equally essential to buy it at the right price.

Summary

If you are a champion investor and looking for long term regular passive income, High Dividend Yield Blue Chip Stocks are your best bet. But if you are looking for high growth stocks, you better look out for value stocks that re-invest their profits for growth. Personally, I favor the former.

Source: http://elevate-your-life.blogspot.in/2015/09/high-dividend-stocks-as-investment.html (Author: Mr. Manoj Arora)

4 Sure Shot Tips to Remove Fear of Anything

f your child is afraid of anything at school or at home, if you are afraid of any situation in your personal life or at workplace, here are 4 sure shot tips that can reduce your fear instantly. Try it out and let me know how it worked for you. It is a true story and has worked for me just last week..yet again...Read on..

Sunday morning, 8:30am, I was back after my daily morning fitness drill and was just relaxing on my bed. Lying upside down on my stomach, with my face staring the bedroom wall, I was thinking about the important tasks of this beautiful weekend day.

Just when I was about to get up to get going on my To Do list for the day, my daughter came by the side of the bed and also lay down along side me, in the same upside down straight pose - staring at the wall. After a few seconds, both of us looked at each other and smiled. She is used to getting up early even on a weekend, unlike her younger sibling, who sounded us yesterday night itself that no disturbance till 11 am today. Each child is so beautifully different. Enjoy every difference --> http://elevate-your-life.blogspot.in/2015/06/enjoy-differences.html

"Yes dear, how can I help you?" I knew it instantly that she has a situation at hand else she will not usually come and lie down relaxed. 

"I have a question." She asked, with both of us still facing the wall in front of our bed.

"Go ahead please."

"Dad, I have a speech to deliver on Monday morning. Though I have prepared for it well, I am not sure why I am still tensed?"

"That's just so normal. Everyone has an element of fear at some stage of our life. However there are a few things you can ponder on - which can make you feel a bit more relaxed. These fundamental principles of life are relevant not only to eliminate the fear of speech but any kind of fear in life."

"Wow, what are those?"

"Here you go:

1. Action Will Remove Fear.

The biggest antidote to fear is action because the first thing action does is, that it kills procrastination.

Action..action..action.

Rigorous action will remove any kind of fear. If you are afraid of going to the doctor, just pick up the phone and book your appointment. This simple act will result in instant fear reduction. Go and meet the doctor at the prescribed time, take the medicine - your fear is all gone. Try it out. It is simple, yet we make it complicated by thinking too much about it. If you are afraid of your exam, pick up your toughest subject and start practising that. If you are afraid of entering into a meeting with the client, just get to know more about the subject of the meeting or the background of the client and participants. Here is why action works so well against fear.

Our mind needs to focus somewhere. 

By taking action, you are directing your mind to focus on the solution, else it is natural for the mind to continue to focus on the problem. And mind is a very faithful slave. Wherever it focusses, it enlarges the situation. If it is focussed on the problem, the problem may sound too big, much bigger than what it actually is. Similarly, if you make it focus on the solution, it can come up with awesome ideas, which you never thought possible earlier.

So, if you are afraid of going to the stage and speak in front of a large audience, just start writing your speech script, just start practising your speech in front of me, your sister, your teacher, friends - who so ever - Every action that you take in the context of your situation will remove fear - almost instantly.
"Isolate your fear. Know exactly what you are afraid of, and then take immediate remedial action." ~ Dream On

2. Practise Being in the Present

This is a golden rule to eliminate all your worries, stress and anxiety. This is one of the keys to Happiness Unlimited - a state of endless joy where nothing external can snatch away your beloved happiness.

Life, and time, as they say, is only right now. Yesterday is dead and tomorrow is not even born. Make the best use of this very moment. 
We suffer from anxiety when someone dear is hospitalised because we tend to rush our thoughts to the future, trying to imagine unforeseen circumstances. We suffer from frustration when we remember our past school and college life, and start comparing it with our life today. Past and Future will hold all the negativity, never your present. So, practise as much being in the present and you will enjoy and love every moment of life, as it unfolds in front of you.
When you are practising for your speech tomorrow, don't bother about the things that happened during the last speech. Also, try and insulate yourself from what is likely to happen in the future if you are unable to deliver a great speech. Such negative thoughts are all in the future or in the past. Happiness resides in the present. Fear resides in past and future.

It is the same with all other aspects of life too !! Try dragging your thoughts from past and future, back into the present.
"Today is your whole life and you must make sure that you live well today" ~Happiness Unlimited

3. Focus on Effort and not on Results

In spite of our best intent, technique, skill and hard work, it is only the effort that is in our control and never the result. A mundane activity like reaching office in time may not always bear a positive outcome in spite of the same effort being put in. Result, since it is not in our hand, should never be the focus of our attention. Much against the popular norm, Result should never be a criteria of celebration. It should always be the effort, because that is the only thing you control. 
Remember your school exams wherein we always go out and celebrate your efforts rather than your results - much before your results are even announced.
If you focus on the effort, and not the result, the fear will just vanish -in a flash. Fear grows from the unknown and uncertainty. Result has all the uncertainty. Effort is more certain, more sure, more known - so bears less fear.
For your speech, therefore, focus on your effort that is required to give the best speech in the world, get equipped, get trained, practise hard and then be satisfied with your effort and celebrate it too - even before you actually deliver the speech. What is the final result should not be your botheration. Best speech or worst speech or anything in between is all relative, and not in your control.

More abour Results Vs Effort here --> http://elevate-your-life.blogspot.in/2015/03/is-it-celebration-time.html

4. Believe that Everything will happen for the good only

There is nothing that happens in this world for no reason. Even if your speech is a fiasco, remember that it was a good result. It was the intended result. HE wants to teach you something. Learn from it. Move forward. 

"Every setback is a little nudge from HIM for us to Dream On" ~ Dream On

HE does not have the time to do casual things in HIS world. Everything is planned in this universe. HE is giving his evidence as a teacher to come and personally guide you in your journey of life. Take his teachings and make the best use of them.
As long as you truly believe that the end result is always for the good, there is no question of any fear.

If you follow the above 4 tips and apply them in your area of fear, I can assure you of positive outcomes. Do let me know how your speech went about.

After 5 days of these tips 

My daughter proudly came home and announced that she won the 1st prize in the Speech that she delivered at school. 

"That's just awesome. We are all so happy for you dear. When will we see your trophy?"

"Very soon Dad, but I now realise that 1st prize or not, it was my effort which was worth the celebration."She smiled.

Not that she was not excited about winning the 1st prize, but she had learnt a very subtle life skill on conquering fear.

Source: http://elevate-your-life.blogspot.in/2015/10/4-sure-shot-tips-to-remove-fear-of.html (Author: Mr. Manoj Arora)

Off-grid solar power is gathering steam in Africa, what's next?

For years solar seemed like a potential solution for millions without access to electricity in Africa, but high costs and slow technology left it largely out of reach.

In the past few years, however, that has changed. With increased investment, cheaper products and innovative business models, solar is not only on the rise, but could transform the way the continent is powered.

It will be used to boost economic activity as businesses stay open late and students are able to study after dark, but it may also be used for unexpected purposes such as lighting a goat hut to keep prized animals safe from predators. And this growth is being driven by private companies who look at the 600 million people in Africa, or the 1.3 billion people in the world who lack access to power and see the vast market opportunity.

“Energy access and infrastructure are fundamental to eliminating poverty and improving people’s lives,” said Russell Sturm, global head for energy access at International Finance Corp. Advisory Solutions. “Building an electric grid and having centralized power is untenable for much of the world — particularly Africa.”

It’s a sentiment that seems to be echoed more widely these days. And there are examples across the spectrum — from inexpensive solar lanterns, to home solar systems, to microgrids or commercial-scale projects. Just in the past week the U.S. government announced millions of dollars in new commitment to off-grid solar and the U.K.’s Department for International Development launched a new Energy Africa initiative. And this week the off-grid solar industry is gathered for the 4th International Off-Grid Lighting Conference, organized by the Global Off-Grid Lighting Association.

Incredible progress

What’s helped create this progress is a mix of factors: technology costs have dropped making pricing more competitive, investment has increased and, in some cases, governments have created favorable environments for progress.

When IFC first began working to explore solar technology 15 or 20 years ago, home solar systems cost $500 to $1,000, which even with the most creating leasing model was still unaffordable to those living on less than $2 a day.

But between 2000 and 2013 the efficiency of these systems improved by about 10,000 percent and the costs of batteries, LED lights, and photovoltaic cells, all dropped more than 80 percent, according to Sturm.

LED lights, along with an an emerging set of appliances, are also dramatically more efficient. This means the same 40 watt solar panel that 10 years ago could power one 25 watt light bulb can today power four LED lights, a color tv, a phone charger and a radio.

As those prices went down and efficiency went up, a market opportunity emerged. If only those products could be marketed in a way that competed with products people were using (which in most cases were kerosene or battery-powered flashlights). That’s where some early funding from the development industry helped — IFC started working on setting quality standards, providing market intelligence, business assistance and education programs for consumers.

Dynamic developments

Several years ago innovation really started around solar lanterns and donor darlings like d.light drew attention and funding. While some might dismiss these solar lanterns — Sturm describes them as “underappreciated” — they are an important “first rung on the energy ladder,” he said.

From solar lanterns, consumers can step up to home solar panels or to microgrids, though their set up has proven more complex.

“What we see is governments slowly picking up that there is more to access than grid extension,” said Koen Peters, executive director of the Global Off-Grid Lighting Association. “The market is developing in a very dynamic way.”

And this shift on the part of local governments — perhaps too for donor governments — has led to a slew of recent announcements and commitments designed to bring more funding and attention to the industry.

Several of these new investments by the U.S. government fall under the Power Africa Initiative, which with these announcements and other funding, is clearly now going to support solar, off-grid power. That’s a big of a departure from the early days of the initiative. While the launch of Power Africa included included both megawatt and access targets, many of the early announcements focused on large-scale, grid-connected generation.

“What I think has happened is there has been a maturity of business models for OPIC to credibly finance,” said John Morton, the Overseas Private Investment Corp’s chief operating officer. “We want to grow the access piece of our portfolio.”

Business models

While all those advancements in technology and plunging costs have opened up the market, what’s making it possible and leading to exponential growth for some companies is the innovation around business models.

Companies like M-KOPA Solar, which installs home solar systems and hit 250,000 sales in September, uses a pay-as-you-go system integrated with the M-pesa mobile money platform. This allows customers to sell solar power on a monthly, daily, weekly or even hourly basis.

The model seems to be working — the company had 60,000 customers in April 2014 — so there is a fast pace of growth.

In Tanzania, Off Grid Electric — which guarantees service for the lifetime of the product and operates a 24/7 call center to respond to customer needs — has deployed a leasing model and is adding 10,000 customers a month. The company estimates that 80 percent of the Tanzanian population could be potential customers and that their pricing is not only competitive with kerosene and phone charging, but is possible even for those living on less than $2 a day.

The company is now in its 10th cohort and recently expanded to a large new office building in Arusha, Tanzania. This was in part to house the Off Grid Academy: as they started building their workforce they recognized a need for more skilled employees, so they built one in-house and around 500 people have been hired through the training program.

“We’re hoping gather support around that, because it’s quite new to business,” said Jessica Eastling, business development manager at Off Grid Electric, adding that they are still working to improve it and get it right.

There are also many others, though most of the early success stories are coming from East Africa, which according to Peters is in part due to demographics but also as a result of market conditions. The pervasiveness of mobile money systems has made business models easier to develop.

Nova Lumos, which just received a $15 million loan from OPIC to finance its expansion, is one of the companies testing the waters in West Africa. The company works in Nigeria for a fairly simple reason — it’s the largest market in Africa. But what’s needed in the Nigerian market is somewhat different than the smaller home solar systems that have been succeeding in East Africa. Many potential consumers in Nigeria use diesel-powered generators instead of kerosene and have greater power needs. The Nova Lumos system provides the added capacity — it uses bigger panels — and the company has set up a unique arrangement with the country’s largest mobile network operator MTN. The systems are shipped directly to MTN storefronts and are sold through its existing distribution networks, with marketing also done by MTN.

In a country where mobile payments aren’t often used, Nova Lumos is allowing consumers to use phone credit to pay for electricity.

Looking forward

The industry is still young and the market opportunity is massive. That means that issues of financing, ensuring quality standards, developing metrics and enabling scale all need to be on the agenda.

And they are at the GOGLA conference.

Financing, particularly debt financing and working capital financing will be important. Many of the companies operating today need to reinvent their business models repeatedly in order to grow. “This sector is growing but is not fully commercial yet … [they] still need public sector support,” Peters said. “They don’t necessarily need subsidies anymore but they do need the public sector to help mobilize investment and build capacity.”

Nir Marom, Nova Lumos co-founder, said that the OPIC investment is important, not just for the money but as a commitment to prove that debt investments in the space can be successful. “Estimates are that the market is millions, you can’t do that without debt,” he said.

Similarly, companies — particularly in the solar lantern sector — are hamstrung by their ability to get access to working capital, Sturm said. In fact, sales of quality-verified solar products were flat based on a June year-on-year comparison.

So what’s the problem?

It’s not growth. There is money out there from investors, especially for the frontrunners who have shown they can deliver returns, but what’s been lagging is working capital. For companies that rely on cash sales and are selling devices to retailers it’s a critical component to operating and growing business. Companies have told Sturm they expect they could continue on the path they were on a year ago with 100 percent year-on-year growth if they had working capital.

IFC is working to help leverage additional financing, in part through its $10 million investment in ResponsAbility’s Energy Access working capital debt fund. The World Bank Group member would like to invest more in this area, according to Sturm, and is interested in working with local banks to create new types of financing to support customers who want to buy these products.

Government regulations can have a big impact on market growth. Countries that are not corrupt, have supportive business environments, don’t have a high kerosene subsidy, generally have low tariffs and import fees, and decent infrastructure will be the most appealing. Working with countries to change bad policies and encourage favorable ones will help future industry growth.

As an industry association GOGLA is also working to identify minimum quality standards and will look for ways to hold those not in compliance accountable. IFC has been working on quality assurance for years and has worked to build its quality-verified system, which can be and is used as a benchmark, particularly for products like solar lanterns.

Having standardized measurement, particularly of social impact, will help get all companies on the same page when it comes to reporting. It’s an issue also likely to be discussed at this week’s meeting. And while innovation may happen at a slower place, there’s plenty of room for more — particularly in products and appliances like low-watt televisions and fans that consumers are demanding.

Because as people gain access to electricity they tend to want to move up the energy access ladder pretty quickly. So making that affordable, and providing the finance and the business models to make it happen, will be important.

Source: Devex

Foreign investment push into renewable energy segment

Investments of up to Rs 40,000 crore expected in next 2 years; however, implementation challenges need to be addressed, caution many

There seems a rush of foreign investors in India’s renewable energy (RE) sector, following the government’s stated ambition to add 175 Gw of capacity in this segment by 2022, to the existing 36.3 Gw.

Italian energy renewables entity ENEL Green’s $33 million buy-out of a majority stake in BLP Energy has followed US-based SunEdison acquiring Continuum Wind Energy for $650 mn three months earlier.

Ambit Corporate Finance, which is advising foreign strategic and institutional investors to invest in the sector, says Rs 40,000 crore of investments are expected in the next two years. This will be to build 7-8 Gw annually, at an average cost of Rs 4-5 a Mw.

"What is attracting investors is that rates are fixed for the useful life of an RE plant, usually 25 years," says Rahul Mody, managing director of Ambit.

UBS Investment Bank, financial advisor to BLP Energy for the investment from ENEL Green, is also expecting a surge. “We have already seen a significant fall in cost of power generation from RE sources,” says Sawan Kumar, executive director. “As the technology improves, economy of scale comes and efficiency improves. The hope is that cost of renewable power will become equivalent to that of conventional power in the next two to three years. It would also depend, he cautioned, on the behaviour of coal prices.

“Risk is not being appropriately considered right now. People are assuming the government is going to deliver on the challenges plaguing the power industry for long. if they do not, there will be a similar situation to that on the conventional side,” says Sumant Sinha, founder and chief executive officer at Goldman Sachs-backed ReNew Power. This entity claims to be the largest Indian player in the space, with 1,000 Mw in construction and operational wind and solar energy projects.

”There are concerns such as grid evacuation and financial health of distribution companies.  If these are not addressed simultaneously to the expected capacity addition, then perhaps the payment issues will start,” says Sinha.

The rush of foreign investors is also because India is attractive for large companies in the segment looking to diversify geographically into Asia. The Indian market is considered easier to enter than the Chinese one.

Renewable	Current Capacity (MW)	Target by 2022 (MW)
Wind Power	23,763	60,000
Solar Power	4,061	1,00,000
Small Hydro Power	4,102	5,000
Biomass power	4,419	10,000
Total	36,344	1,75,000
Source: Care Ratings

"Currently, the Indian energy generation market is considered risky, considering almost all of the Indian utilities are severely in debt; paying developers on time can make or break the market,''says Raj Prabhu, head of Mercom Capital Group, a global clean technology communications and research entity.

Source: http://www.business-standard.com/article/companies/foreign-investment-push-into-renewable-energy-segment-115092800464_1.html