The Hindu Business Line : Sluggish power generation sector slows electrical equipment cos’ growth

Mumbai/Pune, March 14 Tracking the electricity generation sector’s slowdown in growth, the electrical equipment manufacturing industry is also witnessing a fall in growth rate. The electricity generation sector recorded a growth of 3.3 per cent in January 2008 against 8.3 per cent in January 2007, as per the latest data on Index of Industrial Production released by the Government on Wednesday.

The electrical equipment industry produces a wide range of equipment including motors, switch gears, transformers, capacitors, etc needed by the power sector and certain segments of the industrial sector.Mr Sunil More, Director General of Indian Electrical and Electronics Manufacturers Association (IEEMA), said the growth rate of the industry in the third quarter of last fiscal was about 8 to 9 per cent, as against the growth rate of about 20 per cent in the corresponding period of the previous fiscal.

“It is not that there has been a negative growth. But there has been a slowdown in the growth rate due to many factors,” he told Business Line.

One reason, according to him, was that the Power Grid Corporation, which is a major consumer of these products, could not finalise the scheduled tenders last fiscal, due to “some issues related to World Bank and other financial institutions.”

“However, the corporation has now begun to finalise the tenders and hence there may be a pick up in the growth rate in the ensuing financial year,” he said.

Also, whenever the manufacturing base expands, the growth rate usually tapers down as compared to earlier rates. “And this was what happened to the electrical and electronics sector,” an industry representative said.

Diesel engines

Meanwhile, another critical part of the capital goods sector is reporting business as usual. Manufacturer of diesel engines and generator sets Kirloskar Oil Engines Ltd denies that demand has declined.

Mr Vijay Varma, senior Vice-President, Business Development said, “Our order books for January and February did not reflect any decline compared to the same months last year. In fact, the order book has improved, and we are not able to meet the demand.”

However, he refused to give any numbers, stating that since the statistics had not yet been given to the stock exchange, he could not divulge them.

Boiler and power-plant manufacturer Thermax Ltd says that the order book for Jan-Feb 2008 has seen no major growth, but is marginally better than that during the same months last year. Mr M. S. Unnikrishnan, Managing Director, said, “My overall carry forward order book is constant between last year and this year. The new order book has improved marginally.”

However, he points out that given the 9-12 month lead time in the capital equipment industry Thermax is currently executing orders placed last year. “We support the consumer industry, and if that is slowing down, we will begin to see the effects of that slow down only by next year.”

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