Fiscal 2011-12 will be remembered
as one of the worst periods
that the domestic transformer
industry has ever
seen. Many key players in the private
sector, including TELK, have
reported sharp decline in their
EBITA from 73 per cent to 24 per
cent while some have even reported
losses. This was largely due to
two reasons. First, the delay in the
decision-making process by the
government led to stagnation in
the growth of power sector, which
drives the electrical equipment
industry. Second, the entry of
many Chinese and Korean companies
which are exporting their
transformers and reactors to India
at much lower prices compared to
the domestic prices. This is due to
a lot of export subsidies available
to them in their countries and
cheap working capital in China
and Korea.
This disparity has created an
imbalance in the level playing
field and domestic transformer
manufacturers are losing their
market share. GoI is mulling over
this issue for a long time and
unless this disparity is removed by
levy of some kind of anti-dumping
duty, there may not be an immediate
respite in the near future.
To make matters worse, the
shortage of coal supplies to the
existing generating stations and
inability of coal companies to provide
adequate fuel linkages to the
upcoming generating stations
also seriously hampered growth
which in turn affects the growth of
the electrical equipment industry.
NTPC alone has reported a loss
of about 8 billion units during the
year on account of coal shortages.
This scenario is sending wrong
signals to financial institutions
which are revisiting their exposure
to power sector and have
recently restructured about 11 per
cent of their total loan portfolio for
the power sector. Rising inflation,
continuous fall of the rupee and
poor economic growth in the last
year coupled with fall in international
prices of crude oil and base
metals like copper and steel are
signalling yet another year of poor
growth and serious concern.
Way ahead
TELK is gearing itself to mitigate
these risks and meet the challenges
by taking up various
initiators like increasing the productivity
levels, improvement and
optimisation of design using latest
design software, and reduction of
costs at every stage from procurement
of raw material by E-procurement
up to the final stage
of manufacture by reducing overtime
expenses to zero and deployment
of skilled workmen on
short-term contract basis. Besides
these cost cutting initiatives,
TELK is also exploring to enter the
EPC space to offset some of its
losses in the main transformer
manufacturing.
Future transmission highways
in 765kV and above range are the
answer for facilitating bulk power
transportation from one region to
the other. As per the projections
made by CEA for the 12th Plan
period, PGCIL alone may develop
a transmission capacity of over 2
lakh MVA in 765kV voltage level,
entailing an investment of
150,000 crore. Thus, the future
lies in this voltage level and,
accordingly, TELK is now preparing
to upgrade its technology from
400kV to 765kV.
Discussions are going on with
Hitachi Ltd, Japan, for a possible
tie-up through joint venture route.
Minister for Industries and IT P.K.
Kunhalikutty is now overseeing
this strategic partnership with
Hitachi and a favourable outcome
is expected in near future. If this
alliance becomes a reality, a
new chapter of growth will be ushered
in TELK. This would mean
an infusion of fresh capital of
about
350 crore for creating
the new facility in Angamally
which would translate into higher
orbits of growth for the company
and more employment for the
local people.
(Arun Kumar Gupta is Managing
Director, Transformers and
Electricals Kerala Ltd, a joint venture
of Government of Kerala and
NTPC Ltd.)