Lower power demand during lockdown to increase DISCOM dues: Kotak

New Delhi: The 17 per cent drop in power demand under the current lockdown, will further expose the weakness in the business model of distribution utilities, leading to a further spike in outstanding dues that have risen to Rs 86,600 crore in January 2020 from Rs 41,900 crore in January 2019, Kotak Institutional equities said.

While most utilities under coverage operate under the cost-plus tariff mechanism (not volume-linked), we will likely continue to see a receivables build -up and lower cash generation, the brokerage said in its latest report on electric utilities.