The Indian Electrical and Electronics Manufacturers’ Association (IEEMA), the apex Indian industry association of manufacturers of electrical, industrial electronics and allied equipment, today released the performance of the $25 billion Indian electrical equipment industry.
Though almost all sub-sectors decelerated during the third quarter, only transformers and capacitors were able to arrest their declining trend to some extent. Power cable and energy meter sectors were hit the most during Q3 FY13. "The situation of the T&D sector is turning extremely grim and the Government needs to tackle the situation on a war-footing, failing which it will become difficult for many players to survive in the business," said J G Kulkarni, president, IEEMA.
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The industry is reeling under the twin onslaught of the slowdown in the country’s power sector, which has depressed domestic demand, and the rapidly escalating imports of electrical equipment. "Both of which have resulted in gross under-utilisation of the manufacturing capacity for electrical equipment in the country," he said.
The delays in project and order finalisation due to precarious financial health of state distribution utilities, coupled with uncertainty and credit crunch and high borrowing costs for private sector buyers, has led to this grim situation. "Adding to this is the increasing equipment stock pile up due to non acceptance of the ordered material," said a IEEMA statement.
The cash flow position of equipment manufacturers is under tremendous pressure. It said the underutilization of capacities, escalating imports, lack of testing and calibrating facilities in India, lack of skilled manpower, non-uniform and outdated procurement practices of utilities are adding on to the industry's problems.
The transformer industry has seen a negative growth of 9.6% in the third quarter against the negative growth of 16.05% for the sequential period of the second quarter. The industry has witnessed this negative growth trend across power cable and capacitor, which registered a negative growth of 29.1% and 25.7%, respectively in Q3 compared to 16.8% and 37.3% fall in sequential quarter Q2 FY13. The Switchgear industry, which registered a negative growth of 3.9% in Q2 FY13, has managed to recover slightly by arresting the negative growth to 3.6% in Q3 FY13.
Exports growth of more than 40% in terms of value has come to rescue. Sectors like AC Generators, Switchgears, Transmission Line Towers, and Energy Meters etc. have shown a good export growth.
Although overall imports have grown by about 16%; sectors like EHV Transformers, LT Switchgear, Motors & Generators and Insulators have faced alarming imports, mostly from China and South Korea.
In transmission line towers and conductors sectors either, these were the only sectors growing at a good pace of 6.5% and 29%, respectively in Q2 FY13, but both have been affected in Q3 FY13.