Growth in power equipment industry dips

Growth in the Indian power transmission and distribution (T&D) equipment industry has halved from 26 per cent in the first half of last year to about 12.2 per cent this year due to the delay in execution of projects and increasing cost of raw materials.

The industry grew by 22- 25 per cent in value terms and by 12.2 per cent in quantity terms in the first six months of 2007-08 compared with 26 per cent during the first six months of 2006-07 in quantity terms and about 45 per cent in value terms, said sources with the Indian Electrical and Electronics Manufacturers' Association (IEEMA).

The industry had posted almost 50 per cent growth in value terms during the last year (2006-07), from Rs 26,000 crore turnover in the previous year to Rs 41,000 crore.

Appreciating prices of raw materials such as transformer oil, steel, copper and aluminium and delay in execution of government-funded projects have curtailed the growth rate, the association said.

The price of copper has almost doubled from Rs 1.8 lakh a tonne to Rs 4 lakh during the last one year and that of steel went up from Rs 1 lakh a tonne to Rs 1.5 lakh, and then steadied to the current levels of about Rs 1.2 -1.3 lakh per MT.

Transformer oil prices have gone up from Rs 28,000 a kilo litre to about Rs 40, 000 during the last one year period.

"The order book backlog of T&D companies are filled mainly from the rural electrification projects by the government. Inability of state governments and related authorities to utilise the budgetory allocation within the allotted period and then claim for the next allocations have delayed the rural projects," said Sunil More, director-general of IEEMA.

Similarly, delay on the part of Power Grid Corporation to finalise large T&D projects also adversely impacted the supplier industry, he added.

The major projects of the government in these areas are the Rajiv Gandhi Grameen Vidyuthikaran Yojana, for rural electrification, and the Accelerated Power Development and Reforms Programme (APDRP), launched since 2000-01 to contain the losses of state electricity boards and to revamp the T&D sector.