GB Ravichandra | Director - Network Connectivity, Schneider Electric India
How advanced we in terms of technology?
The capacitors market has undergone major transformation in the last 3-4 years. While market for technologies like APP (all polypropylene) is shrinking, the market for MPP capacitors and allied products like reactors and thyristor switches is expanding. Home grown players who banked on APP in the past will have to revisit product portfolio and look for PF improvement, which was not addressed earlier. Imports from Chinese manufacturers are limited and a major part of the market is still untouched from the influx of cheap imports.
Are we on par with international products?
Only a few smart Indian companies and start-ups are boarding the power quality management business. You know, this industry is well developed globally, so if local companies don´t keep their eyes on innovation, focus on trends and changing customer expectation etc., they may become irrelevant. I´m not saying that they are not doing that, but they are less, as this is an emerging trend and there is still a lot of gap in understanding this scenario.
This space is very small and the economies of scale, volume etc. still don´t exist. So, it is early to say if Indian manufacturers will be successful tomorrow or not. They may, or they may not be, but they are beginning.
What are the major challenges?
While there is a huge capacity in the industry, the demand isn´t as much, so, as far as the price point is concerned we are very competitive, thus this does not result in a price war. Secondly, most capacitor manufacturers import a major amount of raw materials and do not have very high quality gear manufactured in India. In import, there are duties and the global prices also keep changing, so there is a huge profitability issue. There is a price cut due to the demand-supply gap, the cost is moving because of the fluctuation and there is an impact on the profitability and stretch on margins. Local companies have to be more technically compliant and prepared with latest international standards, otherwise they may become irrelevant.
What is your growth expectation in short, medium and long term for capacitors?
The capacitor industry is expected to remain fragmented in the near future with multiple players from domestic and global market retaining their presence. The industry has not reached a level where consolidation can happen in the near future. Overall, the industry has higher installed capacity and is facing under-utilisation of manufacturing facilities. It has kept market prices under check and manufacturers are facing margin erosion due to increased costs. The industry is expected to have conservative growth from core capacitor products. However, major growth engines are expected to be allied products like detuned reactors, thyristor switches, automatic power factor correction relays and active harmonic filters.