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Trend | October 2013

Metering and Control Instrumentation-Electrical equipment industry on comeback trail?

After four consecutive quarters of negative growth, India's Rs 1.30 lakh crore electrical equipment industry has shown a marginal growth of two per cent growth in the first quarter of the current fiscal, mainly due to increased exports order.

However, domestic orders continue to be negative as compared to the corresponding period last year. The sluggish growth in the country's power sector and delays in project execution, and the precarious financial situation of the state power distribution companies continues to severely hit the domestic electrical equipment manufacturers.

The industry has been staying somewhat afloat on account of ongoing transmission and sub-station projects, power generating stations especially of renewable energy like wind, and R-APDRP projects. Despite this, the top and bottom-line of most manufacturers are under pressure and showing continued declining trends.

Over and above this, electrical equipment industry continues to face very severe credit availability, enormous delays and non-adherence of payment terms by customers, mainly power utilities, resulting in unmanageable cash flow problems across the sector.

Further, the depreciating rupee has made critical imported raw material and inputs for electric equipment more costly, but given the continued threat from imports of electrical equipment in the Indian market, domestic manufacturers are being forced to absorb this additional cost to remain competitive.

While the rotating machines and transformers sectors have seen a negative growth in production of 4.5 per cent in Q1, the switchgear sector has witnessed a negative growth of 6.7 per cent in its production. Capacitors and energy meters have seen a robust growth of 20.8 per cent and 14.6 per cent in Q1FY14, followed by 8.6 per cent and 4.9 per cent growth by the transmission lines and cables sectors respectively.

Although, overall imports have shown some decline during Q1FY14 as compared to Q1FY13, imports of power transformers, insulators (mainly through power project imports route) and AC motors and generators have continued to increase and are capturing a larger and larger share of the domestic market for these products even as domestic demand remains depressed.

Exports growth is visible in developed countries like US, Germany, UK, Australia and Canada, apart from UAE, Saudi Arab, Nigeria and Kenya. This clearly shows the increasing greater acceptability of 'Made in India' products with desired quality and competitive cost in both developed and developing countries.

'After intensive consultations with all stakeholders, the Government of India launched the 'Indian Electrical Equipment Industry Mission Plan 2012-2022' last month and we now look forward to the implementation of the policy and strategic interventions outlined in the mission plan to put back our industry on a high growth trajectory,' said JG Kulkarni, President, IEEMA.

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