The impressive growth of 17.42% during the first quarter of 2010- 2011 compared to just 1.24% a year before echoes the confidence about sustainability of growth of the electrical equipment industry. From 6.02% in 2005/06 to 17.42% in Q1 2010-11, the industry has reported a whopping progress on back of substantial improvement in demand led growth, healthy competition in the market both domestic and international, large infrastructure opportunities and the government funded schemes like R-APDRP and RGGVY and IPPs along with institutional electrical expansions.
“The Rs52,000crore Indian electrical equipment industry is likely to sustain a more than moderate growth rate,” says Murali Venkatraman, President, Indian Electricals & Electronics Manufacturing Association (IEEMA).
Adds PV Krishna, Director General, IEEMA, “Substantial improvement in demand led growth experienced in the 2nd half of 2009- 10 resulted in a sharp rise in the overall performance for this year of about 15%.”
Addressing the 65th Annual General Meeting of Larsen & Toubro, Chairman, AM Naik said, “After the sluggish growth experienced during the previous year, the Electrical & Electronics Business of L&T witnessed a healthy turnaround in both growth and profitability in FY10 and is expected to maintain its leadership position in the domestic market in FY11.”
Says G Bala Reddy, Chairman & Managing Director, ICSA India Ltd, “FY10 has been as per our expectation. We expected IPS business to dominate and so was the case. IPS contributed almost 65% of the revenues in FY10.”The profit is on the expected lines and we target a growth of about 15% in FY11, he adds.
The study by Frost & Sullivan estimates the switchgear market to reach Rs21,123.93crore ($4173.2 million) by 2015, growing at a CAGR of 14.2%.
This can be accomplished looking at the market growth rate of 15%, opines an official from Siemens India on the basis of anonymity. “Last year the industry has witnessed growth of more than 25% and observing the trades I think that the switchgear market will continue to grow at the CAGR of 14-15%,” he adds.
Moreover the industry players have ramped up their production capacities and are fully equipped to provide quality products at competitive prices. The companies have also achieved milestones by launching new technology or acquiring stakes thus positioning themselves as ‘a one company hundred product offerings and solutions’.
Expanding horizons
The global players with huge pockets have shifted their focus to the emerging Indian market to cash in the opportunities available. Earlier, in March, the French based Schneider Electric acquired two units of Mumbai-based Zicom Electronic Security Systems, for Rs224.7 crore. Also, Alstom and Schneider Electric have concluded the transaction with Areva for the acquisition of Areva T&D, its transmission and distribution businesses.
According to MuraliVenkatraman, we should not be surprised to see more of such arrangements/takeovers in future.“The growing demand from non-government/industrial sectors like housing/building sector, telecom, infrastructure projects and IT etc., have compelled the global giants to increase their investments in India,” he adds.
“Infrastructure industry and the machineries like concrete mixers, cranes, and excavators etc., needed for executing the projects are the major growth drivers,” echoes spokesperson from Siemens India. “The massive investments lined up in power segment, upcoming power plants, steel and cement industry will add to the growth,” he adds.
Even Indian Companies have made sizeable investments in the international market. One such example in electrical industry is the recent acquisition of UK-based Power Technology Solutions Group Inc., or PTS, by Crompton Greaves Ltd. The domestic business of Crompton Greaves is expected to benefit owing to indigenization efforts in the high-voltage transformers (400kV) segment.
“Our acquisition of medium voltage switchgear company (TAMCO) in Malaysia has helped the company fill the void inits range of offerings in the Indian market thereby exploiting a larger spectrum ofIndian Switchgear market,” adds Naik.
Technology Trends
The Indian industry today with its innovative products and technology is competing in many international markets. The presence of international players in the Indian market has also compelled industry to be on par on technology and product design.
According to Murali Venkatraman, the technology level in Indian switchgear industry is considered to be contemporary. “IEEMA International seminar on Switchgear – SWICON, held every four years has also helped in creating awareness about the latest technology options. However, more investment is desirable in R&D and innovation.”
Leading power and automation technology group,ABB India have added new products to its portfolio such as hybrid switchgear, that is plug and play and hence easy to install, also uses up to 60% less space compared to conventional switchgear.
The company recently inaugurated global wind power generator factory in India to meet the rising demand for energy-efficient wind power generation components in India and world markets.
“We have recently inaugurated the fourth global wind power generator factory in Vadodara which will make the Wind power generators for use in windmills,” says PitamberShivnani, Local Division Manager for Power Products Division, ABB India. “We now have facilities to cater the 765 kV markets and we are also working towards locally manufacturing the Gas Insulated switchgear and the hybrid switchgear,” he adds.
At the Elecrama2010, Siemens provided answers to some of the burning questions facing the industry and energy industries, such as reconciling productivity, safety, security, and cost cutting withsaving energy, and also the deployment of green technologies.
Locally manufactured 145kVGas Insulated Switchgear (GIS), SF6 insulated 420kV Instrument Transformers, Sirius Innovation, a new modular and space-saving range of contactors and bi-relays, Sinamics drives, H-compact Plus HV motors were some of the products that were unveiled at Elecrama 2010.
Hyderabad based ICSA (India) Ltd, has launched its smart energy meter (SEM) manufacturing facility at Pashmailaram, Patancheru, Medak in Andhra Pradesh.
In the interim, Schneider Electric has unveiled Sympholux, a comprehensive, customised lighting control solution based on the company’s three energy-efficient lighting control systems: KNX, C-Bus and DALI Control.
Concerns & Need for Government action
An official from Siemens India points out few concerns for the industry. According to him, even though the market is growing at quick pace, the price pressure continues. The reason could be the over installed capacity from the manufacturers because of which they are willing to take orders at any price.
The electrical equipment particularly the low voltage market is largely crowded by unorganized players,opines Venkatraman, because many of the products are perceived to require low technology, less investment to manufacture. The CMD of Cable Corporation of India feels that government policies should provide fair playing field, and encourage local industry in terms of increasing the special import duty on Chinese products or give preference of price for local players in tenders against international companies as in the case in many countries.
IEEMA has already welcomed the Hon. Mr. Vilasrao Deshmukh, Minister of Heavy Industries stand on imposing safeguards duty on imported Chinese power equipment.
“We are facing competition from local players and Korean companies; in fact we always have had stiff competition in the market,” says Pitamber Shivnani. “However customers keep coming back to ABB because of our high quality products, strong customer relationships, and state of the art products.”
Echoing Shivnani’s view, Hiten Khatau says, “The Indian cable industry is highly fragmented and the size of the unorganized sector cannot be ignored either. In India, CCI is not only the oldest manufacturer of EHV cables in India but also the only Indian Company who has secured the single largest order for 230 KV cables. In India, we are the leader in EHV Cable, he adds.
Tighter product performance standards and strict implementation of quality compliance in procurement procedures would help in improving reliability performance in the institutional sector.
In the case of retail segments, the expectation and “willingness to pay” for quality is the biggest driver in improving general levels. Also the change process is assisted through campaigns both by private sector and BEE with increasing awareness on quality and safety. BIS, the national standards body needs to play a more pro-active and aggressive role in this regard.
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