Transformer industry is in poor health

Sahaj J Patel, Managing Director, JDS Group of Companies

The government has taken a lot of initiatives to revive the transformer industry. However, Sahaj J Patel, Managing Director, JDS Group of Companies believes that, there are still policy issues which have to be rectified before we can see the initiatives delivering.

He adds, “Many of the projects which were initiated in pre-GST time have been stuck as these contracts need to be amended. Anti-Profiteering clauses along with cash flow problem aggravated by the introduction of GST is still holding back the industry.”

Further, he says, “The changes in the quality benchmarks and policies have forced the companies to invest in improving the standard of their products and infrastructure. This has left the companies cash stripped. As the changes in quality standards were mandatory and also frequent, it did not give companies sufficient time to recover their investment.”

DDUGJY & IPDS: The potential game changers
While sharing about initiatives that will change the game in 2017, Sahaj says, “The recently launched schemes Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) and Integrated Power Development Scheme (IPDS) have the potential to change the game.”

These schemes have a planned investment of Rs.1,14,000 crore to strengthen power supply and availability over FY17-22E. This investment is bound to trigger about Rs 15,000 crore demands for power and distribution transformers (11-66 kV) over FY17-18E. “The overall transformer industry demand to grow at 10-11 per cent CAGR range over FY17-18E versus negative growth reported during FY11-15,” predicts Sahaj.

He thinks that the power transformer manufactures (product range above 33kV to 756kv) will be benefited due to limited number of players in the segment, strong demand from transcoms, sustained PGCIL spending and distribution transformer manufacturers, (product range below 11 kV) will be beneficiary due to DDUGJY and IPDS.

Need to stabilise health of the industry Briefing on the major changes observed during the past one year in terms of improving the health of the industry, Sahaj says, “As of now there is no measured or noticeable changes as far as the health of the industry is concerned. In-fact, it has deteriorated over the last couple of years due to the regular changes. Let’s hope it stabilises and improves in the future.”

Doubling the figures
Sahaj reveals that the last year was tough for his company especially due to various policy decisions from demonetisation to GST to mandated quality standards, all taking a toll on the industry. “In spite of these setbacks we performed ‘Ok’ and grossed about Rs 8 crore. We expect to double that this year.”

Describing about strategies to remain competitive in the market Sahaj says, “We are accredited by NABL. There are only 7 players PAN India with this accreditation which differentiates us from the market. There are several quality initiatives we have taken up which will greatly benefit us in the short-and long-term.”