Power T&D projects help equipment companies revive sales

A turnaround in the power transmission industry has helped makers of electrical equipment such as power cable and high-voltage switchgear increase sales in the second half of this fiscal. The Indian Electrical and Electronics Manufacturers’ Association (IEEMA) stated that electrical equipment industry has shown some revival in the first half of the current fiscal, after a negative growth of 7.8 per cent in production in 2012-13.

Industry insiders said they are confident that the trend will continue next fiscal despite the country’s sluggish improvement in adding power generation capacity, on the back of growth in demand from ongoing and upcoming transmission projects. “The transformer industry, both power and distribution transformers, has seen a turnaround in growth from -4.5 per cent in first quarter to 18.76 per cent in second quarter of this fiscal. Power cable, capacitors, energy meters, transmission line towers, high-voltage switchgear etc have also improved their growth numbers,” IEEMA director-general Sunil Misra said.

State-run Power Grid Corporation of IndiaBSE 2.04 % (PGCIL), which dominates transmission activities, has revised its budget outlay by 15 per cent for the 13th Five-year Plan while state utilities, too, are augmenting their respective networks to reduce transmission losses. “In view of the new projects undertaken by the corporation, we revised our investment targets from Rs1 lakh crore to Rs1.15 lakh crore for the 12th Five-year Plan,” a company official said. “Besides connecting to the upcoming power projects, we also have to strengthen connectivity of the existing power projects through fresh investments in revamping the electricity transmission grid network,” the person added.

While developers are struggling to commission and operate their power projects due to rising costs of fuel and inability of electricity purchase by distribution companies whose losses are accumulated to nearly Rs2 lakh crore, equipment makers that built their capacities in the past few years are eyeing opportunities in transmission projects. AlstomBSE 1.67 % Grid, a power equipment division of French conglomerate Alstom, expects investments in grid to grow fastest in the value chain of power sector by 2020. “I am convinced that GDP growth will pick up in India after the general election and it will come back to 9 per cent. We continued to invest in India even during slowdown and commissioned facilities in India for production, testing and research.

It will enable us to cater to domestic and international demands from Indian facilities,” Alstom Grid president Gregoire Poux-Guillaume told ET recently. Out of 51 billion to be invested in the global power sector by 2020, 32 billion will be invested in grid projects, estimated Alstom that invested over Rs1,000 crore in the past five years in India. Alstom expects PGCIL and state utilities to make significant investments in their transmission projects to prevent repetition of grid collapse that resulted in blackout for almost one-third of the Indian population in July 2012.