Cover Story

2017: A year of reform

A closer look at how the year 2017 was for electrical equipment industry

The advent of various programmes launched by government like smart cities, UDAY, DDUGJY, UJALA, SAUBHAGYA and Power for All, has created huge opportunities for the electrical equipment sector. These initiatives have helped domestic manufacturing segment to raise the products standard at par with global level. All these initiatives clubbed together have brought revival in the electrical equipment sector.

By overcoming many challenges today India is a power surplus country and is set to redefine the electrical equipment sector. In this exclusive story let us have a close look at what has reformed the electrical equipment sector.

Redefining Electrical Equipment industry
The government’s focus on the infrastructure segment is expected to help the electrical equipment industry to gain good business and investment believes Amit Jain, MD, CMI Ltd. He comments, “The focus of the government on infrastructure development is unabated and our industry is going to be the obvious gainer from any infra investments. Moody’s upgrade of Indian Sovereign Ratings and the rise in World Bank’s Ease of Doing Business ratings will also have a far reaching impact on Infrastructure development and will reinforce the government’s commitment to better infrastructure.”

Informing about what will redefine the electrical equipment industry Dr Harald Griem, Executive Vice President and CEO – Energy Management Division, Siemens Ltd states, “Government programs such as UDAY, Power for All as well the latest technologies will drive further investments in the electrical equipment industry.”

Implementation of a few large trial-blazing smart metering projects that demonstrate benefits of AMI to consumers and utilities will change the face of metering in India – not just for electricity, but gas and water too, believes Dr. Naagaraj Subramanya, Managing Director of NSOFT (India) Services Pvt Ltd. He says, “It will pave the way for nearly 220 million electrical meters to become smart, and a national savings of Rs 55,000 crore per annum. There would be no unfairness towards honest paying consumers and taxpayers. It would shift the platform for operation for utilities by enabling them to improve revenues and profitability, improve their credit rating and thereby borrow money for further infrastructure modernisation, thus leading to customer service, quality of power and also higher standards of living for the utilities’ own employees.”

He adds, “Industry and commercial establishments will find energy conservation and sustainability very useful to drive down energy costs, gain visibility into consumption patterns. Improved data collection and analytical abilities and use of IOT to use electrical parameters in unrelated areas such as equipment maintenance will help them chart the path to energy auditing and green branding.”

Since the technology has matured to very higher levels, production and operation efficiencies have increased a lot. Also, the R&D processes involved in the electrical equipment industry have gained pace, observes Parag Yelegaonkar, Business Development, Manager, Testo India Pvt Ltd. He says, “Even the government policies have become flexible which will in turn accelerate the implementation processes and we foresee narrowing gap in supply and demand of these instruments. Another aspect is that the electrical industry is now inclined towards smart solutions which will surely give huge cost savings and safety in the equipment functionalities.”

For example, The Testo SMART Clamp Meters, due to its unique, advanced features and having connectivity with Testo thermal imagers and Testo SMART probe app is a definite choice of energy conscious electrical contractors and engineers, energy auditors and service technicians.

Sharing his views on what will redefine the electrical equipment industry Harish Agarwal, Vice President, IEEMA says, “The changing requirements of the transmission system are driving technology developments in the area. High performance conductors (HPCs) are already being used, while R&D is being carried out on superconducting cables. Towers are being designed to lower RoW requirements. FACTS and HVDC transmission technologies are offering increased flexibility in meeting transmission challenges.”

How was the year 2017 for electrical equipment industry?
Every year there are ups and downs in the electrical equipment industry. Some segments may get positive and some may get negative response from the industry. As the new day brings new life, similarly it is expected that a new year too will bring new life to the electrical equipment industry.

Explaining on how was the year 2017 for wire and cables industry Agarwal informs, “Power-evacuation constraints are a major problem today due to the shortage of required transmission line. Also, high T&D losses have attracted the attention of policy-makers for more investment in transmission infrastructure to match the investment in power generation. A capital expenditure of Rs 2.6 trillion (Rs 1.0 trillion in substation and Rs 1.6 trillion in transmission lines) is foreseen in transmission and distribution sector during the 13th Five-Year Plan. In terms of volume 62,800 ckm of transmission lines and 128,000 MVA of transformation capacity will be needed during this period. Considering the same, the outlook for the transmission sector for the next 5-7 years is bright. The estimated private sector investments in T&D is expected to reach Rs 3 trillion by 2019 including government support of Rs 1 trillion through Deen Dayal Upadhyay Gram Joyoti Yojana (DDUGVY) and the Integrated Power Development Scheme (IPDS).”

He adds, “A lot of smart technologies are being developed to ensure that the traditional thermal generation, the transmission and also the intermittent renewable in different parts of the country can be integrated into the grid. A lot of smart technologies are being deployed and can be expect a good uptick. By the end of 12th Five-Year Plan it is expected that the national grid inter regional power transfer capacity will be 72,250 MW.”

Rural electrification is not a new agenda and has remained one irrespective of the political party ruling at the centre. The profile of rural electricity has seen significant positive changes over the last few years. Recently, Prime Minister declared an ambitious target to electrify 18,452 rural areas through “SAUBHAGYA”. This has been touted as a much-needed policy to go a step further towards facilitating the last mile connectivity. SAUBHAGYA budgets for Rs 14,025 crore for rural areas covering for CAPEX on critical equipments enroute power supply from high voltage lines to last mile consumer consumption. For very remote villages, the SAUBHAGYA scheme provides solar power packs, battery back, with LED lights, and a direct current driven fan.

“Rural electrification has unlocked significant business avenues for electric appliances such as LED bulbs and electrical consumer durable products. So far, nearly 80 per cent of the villages in rural areas have been electrified and only over 15 per cent rural villages still need to be electrified as the balance 5 per cent rural areas are uninhabited. While the statistics presents an optimistic outlook, by definition, a village is being termed as “electrified” if it achieves a bare minimum of only 10 per cent of households and public institutions being connected to the grid,” informs Agarwal.

Although total sales of the industry in FY16 grew up by around 1 per cent from FY15, industry seemed to have squeezed their margins on account of low priced imports and tough competition in global market. In order to utilise its capacities which were hit by imports, industry depressed their prices and simultaneously increased exports (where also benefit was not high). Decline in PBT was therefore, inevitable; the same decreased by around 22 per cent from FY15 to FY16.

Jain says, “The year 2017 was good for the wire and cable industry. The slew of announcements from the government on electrification, railways and infrastructure development added to the growth story.” Jain shares some of the main initiatives such as:
• SAUBHAGYA scheme: Government is looking at installing electric meters in every single rural household by 2022, with a proposed investment of Rs 16,320 crore.
• Electrification of Railways: A budget of Rs 36,000 crore has been earmarked for electrifying around 35,000 Km by 2021-22.
• Highways development: Rs 7 Lakh crore for 83,000 km of Highways have been announced.
• Affordable housing: Policy interventions, subsidies and PPP model make this a very high activity segment.

He adds, “These (SAUBHAGYA, Electrification of Railways, Highways Development) were the main announcements made in 2017 impacting our sector. In addition, the schemes such as Electricity for All, focus on renewable energy and the digital India campaign etc will continue to provide impetus for growth to the sector.The pace slowed a little during demonetisation last year and GST implementation this year, but these were minor hiccups for the industry as a whole and the organised sector in particular.”

Subramanya believes that utilities across India are showing more interest in smart metering since it is now clear that they need to improve last mile efficiency and become profitable. A number of pilot projects done by MNC smart meters had fizzled out mainly due to the unfeasible cost of smart meters. But now with innovative India-made AMI technology, utilities are actively trying out pilot projects. Made in India technologies for smart metering from companies like Nsoft India are gaining visibility and acceptance due to successful pilots. This has led investors to take greater interest in large smart meter roll outs, using India designed and manufactured end-to-end solutions.

He adds, “Industrial and commercial sectors have shown significant interest in implementing energy conservation projects to reduce cost.” Sub metering is another trend that is gaining traction among industrial and commercial users, who now want to install their own meters to accurately and fairly meter their tenants or production lines for budgeting and control. Data collection has increased manifold and there is keen interest to explore ways of analysing the data.

“The power transmission and distribution equipment industry in India has grown nominally by around 4 per cent in 2017 compared to last year. Transformers, switchgear and cables grew at a healthy rate,” informs Dr Griem.

Yelegaonkar believes that the year 2017 can be considered good and he foresees opportunities. He says, “Due to increasing demand in electricity for domestic, industrial sector and corresponding growth in the generation, transmission and distribution, the market for the electrical equipment and electrical instruments has grown considerably this year. 2017 can be considered good as many projects materialised and many more were initiated which are to be executed. We also foresee good opportunities coming up in the days ahead because of capacity enhancement in generation and transmission sector.”

Industry’s performance in 2017
Agarwal who is also the CEO of Supreme & Co Pvt Ltd shares details about his company’s performance in 2017. He says, “We had a good year in 2017, due to pick up in demand for DDUGVY and IPDS projects. There was significant demand from intra state transmission sector. Growth in reconductoring business created demand for more innovative ERS based bypass solutions. There was demand for monopoles for ROW constrained in transmission lines. We also saw growth in demand for aerial fibre optics for transmission line corridors. Going forward we see growth in demand for structures for solar panels and railway electrification which are high growth areas. We also have made significant breakthrough in hardware and conductor accessories for HTLS conductors.”

CMI
CMI closed the year 2016-17 with revenues worth
Rs 346.03 crore, marking an increase of 27.5 per cent over the previous year. In Q1 of 2017-18, the company’s total income stood at 105.82 crore, up around 21 per cent of the Q1 of previous year. “We are well on the path to increase our topline around 20-25 per cent YoY way above the average in the sector,” says Jain.

He informs, “In the first half of the year itself, we have made big wins and have already added incrementally to our order book both from the perspective of new clients and additional business from existing clients.”

NSOFT (India) Services
“The company performed according to expectations,” says Subramanya. He adds, “It grew by more than 25 per cent. The regular business line of billing and metering, mainly driven by Nsoft’s revenue management billing system was the growth driver.” Nsoft also invested in new product development in areas of smart meters, cloud billing software and IOT that involves integrating the head-end software with meters using a variety of communicating and sensing technologies. Advanced metering Infrastructure (AMI) pilots
in this area have also been successful. Nsoft also made progress in introducing its Real time energy management (RTEM) system in industrial and commercial establishments.

Testo India Pvt Ltd
On Testo India’s performance for the year 2017 Yelegaonkar says, “Our company performed well but the year was a mixed bag of many highs and lows. On one hand, there were certain changes in policies, GST implementation and global slowdown that impacted the functioning of the entire industry and on the other hand increasing digitisation and demand for smarter solutions supported our growth.”

Siemens Ltd
Sharing views on the performance of Siemens Ltd in 2017 Dr Griem says, “The year was good for Siemens. We dispatched the largest single-phase generator step-up transformers at 315MVA to NTPC. Our critical 1200kV transmission equipment, namely CVT, disconnector, circuit breaker, part of PGCIL test station at Bina has been energised successfully. We won the 2x1000MW voltage source converter stations, first VSC project in India, for the HVDC line between Pugalur, Tamil Nadu and Trissur, Kerala, featuring100 per cent localised IGBT based converters, HVDC transformers and so on. We secured major distribution contract with Rural Electrification Board, Bangladesh for setting up 47 Nos., 33/11kV Distribution stations. Beyond South Asia, our factories are catering to more and more customers in Middle East, South East Asia and Europe.”

Amit Jain, MD, CMI Ltd

Dr Harald Griem, Executive Vice President and CEO – Energy Management Division, Siemens Ltd

Dr. Naagaraj Subramanya, Managing Director of NSOFT (India) Services Pvt Ltd

Parag Yelegaonkar, Business Development, Manager, Testo India Pvt Ltd

Harish Agarwal, Vice President, IEEMA

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