Slowdown hits electrical industry growth in FY08

Slowdown hits electrical industry growth in FY08

The Indian electrical and electronics equipment industry, suppliers to
the power sector, registered a moderate growth of 15 per cent in
2007-08 at Rs 38, 920 crore compared with the average 15.5 per cent
consistent growth recorded in the past five years.


According to the Indian Electrical and Equipment Manuafacturers
Association (IEEMA), the apex association of electrical and
electronics equipment industry, the drop in growth was mainly due to
an apparent slowdown experienced by the industry during the second
half of the financial year, particularly the last quarter of the year,
where the growth was only about 12.5 per cent. Whether the downfall
continues or is arrested will only be clear after the results of the
first quarter are known.

IEEMA, which compiles information on a regular basis, said the growth
is in actual quantitative or volume terms and is based on the compiled
and monitored production and sales data.

The strongest growth in the sector for the year was shown by the cable
industry, which grew by 28.3 per cent to Rs 11,000 crore a year, and
the PVC power cable sector, which grew by 21.2 per cent to Rs 7,500
crore.

The transmission line industry has reported an above-average growth of
18.2 per cent (Rs 6,000 crore).

"Power Grid Corporation, which is the major driver for the
transmission sector, has really got into action from the third quarter
by finalising new orders and this was the reason for growth in this
sector," said IEEMA sources.

The transformer industry registered an average growth of 15 per cent
to Rs 8,100 crore, with power and distribution transformers reporting
18.2 per cent and 12.8 per cent growth respectively.

Evacuation and transmission of power generated mainly at 220 kv and
132 kv levels were the key reason for this growth. However, growth has
decelerated in the last quarter by about 2.3 per cent. This is a
relatively new trend since the production levels are generally higher
during the last quarter, said IEEMA.

The switchgear and control gear sector (Rs 6,475 crore) posted a below-
average growth of 12.3 per cent. This was mainly powered by the HT
Switchgear demand at 220 kv level. Imports of MV Breakers have
increased substantially and with low cost and quicker deliveries, they
are now competing successfully with the domestic industry, observed
the organisation.

IEEMA predicted the future could be uncertain because of factors such
as an unprecedented rise in prices of crude oil, price hike of all raw
materials especially steel, copper and aluminium, inflation and
shortage of skilled manpower.