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Indian electrical equipment industry faces a grim situation; registers double digit negative growth for the first
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  • Indian electrical equipment industry registers a negative growth of 10.5% in Q3 FY13
  • This is the first time that the industry has registered a double digit negative growth
  • Witnesses a negative growth of 6.14 % in the first nine months of current fiscal
  • Transformer, Power Cable, Capacitor and Switchgear, which represent 60% weightage in overall industry growth, have witnessed negative growths of 9.6%, 29.1%, 25.7% and 3.6% respectively compared to the corresponding period of last year

The industry has seen a negative growth for the third consecutive quarter in FY13. It has witnessed a negative growth of 10.5% compared to the corresponding period of FY12.

Almost all sectors decelerated during 3rd Quarter FY13. Only, Transformers & Capacitors were able to arrest their declining trend to some extent. Power Cables and Energy Meters sectors were largely hit during Q3 FY13.

Mr. J. G. Kulkarni, President – IEEMA commenting on the Q3 FY13 results, said “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.  We were hoping for some corrective measures in the union budget proposals to revive the downturn in the domestic electrical equipment industry which is reeling under the twin onslaught of the slowdown in the country’s power sector, which has depressed domestic demand. Additionally the rapidly escalating imports of electrical equipment have resulted into under-utilisation of the manufacturing capacity for electrical equipment”.

The Transformer industry has seen a negative growth of 9.6% in Q3 against the negative growth of 16.05% for the sequential period of Q2 FY13. 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% negative growth 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.

The Rotating machines segment that had recovered slightly, witnessing a positive growth of 0.82% in Q2 FY13 against a negative growth of 2.6% in sequential quarter Q1 FY13 has once again slipped and witnessed a negative growth of 4.4% in Q3 FY13.

Compounding the grim situation of the industry, the Energy Meter industry that had recovered in Q2 FY13 by registering a positive growth of 2.8% vis-à-vis a negative growth of 3.1% in Q1 FY13 had nose-dived to a negative growth of 7.9% in Q3 FY13.

During the 3rd Quarter of FY13, only Conductors, MCBs and Power Contactor product segments have shown an improvement over Q3 of FY12.; thanks to the development in the Realty sector.

Select low voltage Switchgear products like MCBs, Motor Starters and House wiring cables are showing some resilience due to orders from realty sector. On the other hand, exports are growing for products like TLT, Energy Meters, LV Control Panel, MCCs/PCCs etc.

On EXIM front, 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 growth for export market.

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 S. Korea.

The negative growth trend has not spared the Transmission Line Towers (TLT) & 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. While the TLT sector plummeted to a negative growth of 4.6%, the Conductors sector growth lost some steam and registered a 19.6% growth vis-à-vis the 29% growth in Q2 FY13.

The delays in project/order finalizations due to precarious financial health of state distribution utilities, coupled with uncertainty and credit crunch and high borrowing costs for private sector buyers. Adding to this is the piling up of equipment stock due to non acceptance of the ordered material.

All this has put tremendous pressure on the cash flow position of equipment manufacturers, who are already under severe burden of underutilization of capacities, escalating imports, lack of testing & calibrating facilities in India, lack of skilled manpower, non-uniform & outdated procurement practices of utilities, etc.

Growth Indices for Electrical Equipment Industry
Cumulative Growth Compared to same period of previous year
Product Weightage April – December 2012-13 (% Growth)
Rotating Machines 10.0 -1.9
Switchgear 15.2 -1.3
Cables 27.3 -21.1
Transformers 19.3 -11.7
Capacitors 0.9 -30.4
Energy Meters 3.9 -2.8
Transmission Lines 23.4 11.3
Overall IEEMA Electrical Equipment Growth Index 100 -6.14
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