Industry analysis report Electricity Michenary

8/9/2019 Industry analysis report Electricity Michenary

1/36

Electrical Machinery Industry

Electrical Machinery profile:

Electrical machinery industry accounts for nearly 6% of the total output of the

manufacturing sector

Industry caters to most of the domestic demand, except for highly sophisticated

equipment

Electrical machinery market estimated Rs. 10,200 crores (crs) - US $ 2,370

million

Switchgear sector the fastest growing segment

Electrical Machinery

Transformers

Electrical

Generators Switchgear Capacitors

Electric

Motors

Power Portable HT Power FHP

Distribution Stationary LT Electrolytic Flameproof

InstrumentMotor

Starters,Contractors

Induction

Furnance,etc.

Squirrel

Cage

Slipring

DC Motors

Transformer Industry : Features

Industry

APGCCS, Rajampet 1


2/36


Market estimated at Rs. 1400 crs. (US $ 325 mn)

One of the most essential components in transmission and distribution of

electricity

36 units in the organised sector manufacturing power and distribution

transformers. Over 400 units all India manufacturing distribution transformers

Industry capable of supplying generating transformers upto 500 MW unit

Special type of transformers for welding, traction, etc. also produced in India

Fully developed industry

Many players have technical collaboration with world majors

Affected by the fall in growth rate in power including the fast track projects

Products :Distribution transformers:

REC range - 25, 63 and 100 kVA

200 kVA to 2500 kVA mainly for urban and industrial areas

33 kV class from 3.15 MVA to 15 MVA

Power transformers:

In the range of 15 MVA to 500 MVA of Cband 132 kV

Above 50 MVA and upto 400 kV class

New technologies being developed - amorphos core transformers for the REC

range. SFC gas and vacuum technologies being considered

Instrument transformers :

Current transformers and voltage transformers both indoor and outdoor of variousclasses manufactured

Upto & including 660 V and above 660 V

User Segments :

APGCCS, Rajampet 2


3/36


Electricity Boards, Power distribution companies major users

Demand proportional to the addition in generating capacity and investment in

transmission & distribution sector

Major players - BHEL, GEC Alsthom, Andrew Yule, NGEF, Crompton Greaves,

Vijay Electricals, Bharat Bijlee and Kirloskar Electric Co (KEC)

Transformer Industry : Trends

Power Transformers

Industry passing through a bad phase -

delay in implementation of power

projects

Imports around Rs. 47 crs.

(US $ 10 mn) and exports around Rs. 16

crs. (US $ 3.7 mn)

Distribution Transformers

Industry closely linked to the

investments in the transmission

& distribution sector

Imports - Rs. 30 crs. (US $ 6.9 mn)

Exports - Rs. 2.90 crs. (US $ 0.7 mn)

APGCCS, Rajampet 3


4/36


5/36


Dominated by Shriram Honda and Birla Yamaha.

Other Players - Greaves, Kubato 3 to 15 kVA

Simple technology hence dominated by the small scale sector. Most alternators

use slip rings hence easily assembled by dealers

Units concentrated mainly in Agra - market either unbranded or local brand

generators

Other SSI centres - Delhi, Rajkot, Kolhapur, Mumbai and Calcutta

Major brands in the organised sector for engines - Kirloskar Electric and

Crompton Greaves

15 - 125 kVA

Use brush type and brushless alternators. Quality control higher. Original

Equipment Assembler (OEA) has to invest in factory infrastructure

No prominent brands here. Brands in diesel engines & alternators

> 125 kVA

APGCCS, Rajampet 5


6/36


OEAs have exclusive understanding with engine manufacturers

Major OEAs - Powerica, Mumbai; Jakson, Sudhir and Bhaskar, Delhi; Power Electrics,

Chennai and DPK, User Segments

Portable gensets used mainly by shops, restaurants, small offices and business

establishments

Stationary generators < 125 kVA used in large residential & commercial

complexes, hotels, hospitals

> 125 kVA - large core sector industries, process industries

Bangalore User Segments :

Portable gensets used mainly by shops, restaurants, small offices and business

establishments

Stationary generators < 125 kVA used in large residential & commercial

complexes, hotels, hospitals

> 125 kVA - large core sector industries, process industries

Capacitors : Industry

Products :

Capacitors are used for correcting power factor at the consumer end. This

improves the efficiency of the system, reducing unwanted looses

LT capacitors, HT capacitors, Starting running capacitors, Electrolytic motor,

starter capacitors, Induction furnace capacitors are some of the capacitors

manufactured in India

Industry

APGCCS, Rajampet 6


7/36


Market estimated at Rs. 300 crs. (US $ 69 mn)

Major design factors for capacitors are application area, rated voltage, voltage

variation, presence of harmonic frequencies

Around 30 - 35 players in the organised sector account for nearly 85% of the

market

Imports for the balance

User Segments :

Usage wide and varied

Used by utilities, panel board manufacturers, industries, etc.

Production

Units MW/MVA

Particulars 96 -97 97 -98 98 -99

LT Capacitors

HT Capacitors

Electrolytic Motor Start

Capacitors

Starting / Running

Capacitors

2,760

5,505

975

7,990

2,559

5,887

870

7,591

2,133

6,986

776

14,636

Imports in 98 -99 around Rs.65 crs. (US $ 1.5 mn)

Major Players :

Asian Electronics, Bharat Heavy Electricals Ltd., Asea Brown Boveri, Keltron

Component Complex, Punsumi India, India Nippon Electricals, CTRManufacturing Industries, Elnet Saha Keil, Crompton Greaves, GEC Alsthom

Switchgear Industry : Features

Industry

APGCCS, Rajampet 7


8/36


Around Rs. 3,000 crore (US $ 698 mn) market

Three types of product markets - HT circuit breakers, LT circuit breakers, Motor

controllers & Contactors

Switchgear are devices used to regulate transmission and distribution of power

both at the generation as well as consumption end

India produces the entire range of circuit breakers from bulk oil, minimum oil, air

blast, vacuum to SF6 circuit breakers

In the low tension category MCB, Air circuit breakers, switches, HRC fuses are

produced in different versions

Industry caters to the demand of the domestic market and is in the process of

establishing itself in overseas markets

Over 30 players in the market

Small scale sector activity high in LT switchgear, motors, starters & contactors

User Segments :

State Electricity Boards, Industries major user segments

Panel board industry a major user of LT switchgear

Non electrical machinery another large user of LT switchgear

Major Players :

High tension circuit breakers - Bharat Heavy Electricals Ltd.(BHEL), Asea

Brown Boveri (ABB), Crompton Greaves, GEC Alsthom

Low tension circuit breakers - Larsen & Toubro(L&T), Siemens, GEC Alsthom,

ABB, Crompton Greaves, MDS Switchgear, Havells, Indo Asian, Bhartia Cutler

Hammer, Telemechanique

Motor, Starter & Contractors : Siemens, L&T, GEC Alsthom, Andrew Yule; L&T

the market leader

Switchgear Industry : Trends

Particulars 96 -97 97 -98 98 -99

APGCCS, Rajampet 8


9/36


Relays

o Aux Relays & timers

o Over Current & Earth Fault Relays

o Measuring & Protection Relays

Motor Controlgear

o Starters

o Aux Contactors

o Power Contactors

o HT contactors

LT Switchgear

o MCB

o Other circuit breakers

o Switchfuse / Fuseswitch units

o Power switches

HT Switchgear Circuit Breakers

o 0.66 KV - 36 KV

o above 36 KV

Isolating switchers

o 0.66 KV - 36 KV

o above 36 KV

HRC Fuses

o Upto & incl. 1000 V

o Above 1000 V

Overload Relays

o Upto & incl. 1000 V

132,889

26,178

69,166

975,361

535,347

1979,123

252

10872,054

323,052

459,343

266,799

20,818

1,902

1,376

2,018

8276,217

41,733

1517,070

165,517

29,208

79,894

851,979

417,771

1683,085

400

13102,999

312,436

528,932

208,362

20,833

2,157

910

2,158

7785,154

47,661

1419,249

150,043

76,451

57,981

890,114

358,534

1702,719

325

13597,470

349,650

598,714

174,688

21,946

2,112

1,179

1,678

7012,857

49,809

1315,163

Electric Motors : Features

User Segments:

APGCCS, Rajampet 9


10/36


Major market for lower HP motors is in the agricultural sector - used in irrigation

pumpsets

FHP used in Water coolers, ACs, Deep freezers, Pumps, Washing machines, Wet

grinders, Garage compressors, Sewing machines, etc.

Other motors - used primarily in the industrial sector

Major Players :

FHP motors : Crompton Greaves, DLF major players. Also manufactured by

compressor and fan manufacturers. Unorganised sector activity high.

Flame proof motor : ABB, Bharat Bijlee, Crompton Greaves, BHEL, NGEF,

Kirloskar, Electric

Squirrel cage motors : BHEL, Crompton Greaves, GEC Alsthom, Kirloskar

Electric, Jyoti Ltd.,ABB, Bharat Bijlee

Slipring motors : GEC Alsthom, Jyoti Ltd., BHEL, NGEF, Siemens

DC Motors : Crompton Greaves, Kirloskar Electric, NGEF, BHEL, Oxford Engineering

Industries

Electric Motors : Trends

Trends

Marginal growth in the production of small motors and HT squirrel cage motors.

Substantial decline in production of large and medium sized motors - market

diverted to squirrel cage motors because of availability of AC drives for speed

control.

FHP motors showing positive growth.

Affected by the inverted duty structure

Production

(Units MW/MVA)

Particulars 96 -97 97 -98 98 -99

APGCCS, Rajampet 10


11/36


AC Motors

Flame Proof

DC Motors

4913

175

32

4732

147

32

4654

159

25

Imports in 98 -99 around Rs.95 crs (US $ 2.2 mn) and

exports around Rs. 50 crs (US $1.2 mn)

Electrical Machinery : Characteristics

User segments :

Electricity Boards single largest user of most products. Others used both by the

utility sector and industries

Panel board manufacturers large users of switchgear products

Distribution :

Generators, Switchgear, distribution driven businesses

High end equipment machinery sold directly - power, distribution transformers

and high rating motors

Prices:

Prices of unorganised sector manufacturers quite lower than those of organised

sector manufacturers. Eg. 5 kVA generators cost Rs. 4,500, 20 kVA around Rs.

11,000

Duty structure : Basic - 25%; Surcharge -10% (on basic); CVD - 16%; SAD - 4%

Key Success Factors :

Technology and product quality key success factors

APGCCS, Rajampet 11


12/36


Need to re-engineer businesses in order to counter imports

Need to offer business solutions better than products

Business Concerns:

Additions to power generation has slowed down and this has adversely affected

the electricals sector

Slowdown in the industrial sector as a whole during 1997-99 had also affected

this sector

Switchgear industry affected by the spurious market

Demand Drivers:

Demand for most products dependent on the additions to power generating

capacity and industrial expansion

Demand for products like switchgear also driven by the replacement demand

EXPORTS AND IMPORTS OF ELECTRICAL MACHINERY

Exports of electrical machinery from India have registered continuous growth

over the period FY01-05. A key driver for exports has been increasing outsourcing ofmanufacturing goods from India, in addition to other factors like low labor costs and

improvements in capability and technology of domestic players. The following charts

depict in detail the exports of electrical machinery from India. The overall exports have

increased at a CAGR of about 42 per cent. Exports of transmission equipment had dipped

till 2002-03, but have been since been growing at a 27 per cent CAGR. Exports of wires

and cables have gone up over four times during 2000-05, at a CAGR of 45 per cent.

Automobiles etc. While India produces a range of furnaces, significant volume of imports

in this segment indicate gaps in domestic capacity and capability. Apart from meeting

domestic demand, electric furnaces are also exported from India. Exports and imports of

electrical furnaces have increased in the FY03-05 period. Exports have increased at a

CAGR of 79 per cent, while imports have grown significantly from US$ 6.59 million in

FY03 to US$ 36.08 million in FY05 (CAGR of 233 per cent). In 2005-06, imports and

APGCCS, Rajampet 12


13/36


exports of electrical furnaces have further gone up to around US$ 42 million and US$ 25

million, respectively.

Exports of electrical machinery from India have registered continuous growth over the

period FY01-05. A key driver exports has been increasing outsourcing of

manufacturing goods from India, in addition to other factors like low labor costs and

improvements in capability and technology of domestic players.

Industrial Units manufacturing large plant and machinery required for powerf generation,

transmission, distribution and utilisation are covered under the category "Heavy

Electrical Industry". These include turbo-generators, boilers, various types of turbines,

transformers, motors switchgears and other such items.

Electrical equipments such as motors, transformers, switchgears etc. are used by all

sectors of the Indian Economy. Some major areas where these are used are the multi-

crore projects for power generation including nuclear power stations, petrochemical

complexes, chemical plants integrated steel plants, non-ferrous metal units etc. The

industry has been upgrading the existing technology and is now capable of taking up

turn-key contracts also for export markets. The Industry has been delicensed.

The existing installed capacity in the industry is of the order of 4500 MW of thermal,

1345 MW of Hydro and about 100 MW of gas based power generation equipment per

annum. There also exists capability for manufacture of equipment for nuclear power

plants in the country. The share of domestic equipment is about 66% in the countrys

power generation capacity.

The Heavy Electrical Industry is capable of manufacturing transmission and distribution

equipment up to 400 KV AC and high voltage DC. Steps have also been taken to upgrade

the technology to the next higher system voltage level of 800 KV. Large electrical motor

used in Steel plants, Petrochemical complexes and other such heavy industries are also

being manufactured in the country.

APGCCS, Rajampet 13


14/36


The domestic Heavy Electrical equipment manufacturers are making use of the

developments in the global market with respect to product designs and upgrading of

manufacturing & testing facilities.

Year Imports Exports

2000-01 0.43 2.70

2001-02 0.19 9.90

2002-03 3.28 5.00

2003-04 0.10 7.70

2004-05 0.05 7.22

2005-06 14.60 20.00

2006-07 4.0 21.0

Future Outlook:

Most electrical industries have recorded growth rates of over 15% per annum

during 1998 - 99

But power sector prospects likely to determine future growth - at the moment,

long term policies for the power sector continue to be in a flux

Hence, electrical industry likely to grow at 6 - 7 % per annum (compounded)

during the next few years

Talks of revival in the power sector likely to boost demand further

Companies likely to focus on technology.

Raw Materials Required:

Other ways exist as well. The commodities expert says an aggregated buying techniqueused by automotive OEMs and large diversified manufacturers has "started to trickle

down" to some of Ariba's midmarket clients (companies with annual sales of $500

million to $2 billion). That is, companies' own central procurement departments are

trying to lock in raw material prices not only on their own behalf, but also on behalf of

suppliers that make parts for them. Not only does it aggregate buying power, but it is also

APGCCS, Rajampet 14


15/36


"locking in the raw material portion of the suppliers' price so you don't have to worry

about your supplier coming to you every four months saying, 'I got another increase in

steel, so I need to increase your prices on the stampings accordingly,'" Furey says.

Today's extreme price volatility also has spawned creative clauses regarding raw material

prices in quote requests and contract language. Prompting this language is suppliers'

desires not to commit to long-term, fixed priced contracts at a time when their raw

material costs could skyrocket, as well as manufacturers' desires not to lose or scare off

desirable supply sources.

Alternative Materials

Then there is simply designing products with the specific goal of introducing less-

expensive materials. Goodyear Tire & Rubber Co., for example, reports that it has

increased its ability to substitute synthetic rubber for natural rubber, thus taking

advantage of the price differential between the two materials. The Akron, Ohio-based

manufacturer says it can replace more than 15% of its natural rubber usage without

affecting performance.

Goodyear's efforts to increase its substitution flexibility date back to 2004, when

escalating prices for natural rubber already were making their presence felt.

VISION

APGCCS, Rajampet 15


16/36


To be the first option for everyone who wants to study Electrical Engineering in

Puerto Rico and the Caribbean due to its outstanding recognition and

educational achievements.

MISSION

To provide educational and practical experience that prepares individuals for

graduate studies and to practice engineering in a competitive environment. The

program provides a curriculum with fundamental and advanced topics in

Electrical Engineering, mathematics, science and humanities with the

development of analytical, experimental and computational skills. The curriculum

provides graduates with the skills and competencies necessary to understand

todays technology trends and become leaders in designing tomorrows

technologies.

Assets


Rs. Crore (Non-Annualised) Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08

APGCCS, Rajampet 16


17/36


Gross fixed assets 16692.83 16920.79 17572.22 18669.93 20441.39 21869.23

Land & building 4117.23 4254.92 3410.6 3698.73 4169.18 4738.63

Plant & machinery 10859 10933.37 11432.37 12010.04 12531.56 13031.65

Transport & comm. equipment/infrastructure 194.97 223.33 218.71 218.35 270.75 304.77

Furniture,amenities & other fixed assets 749.68 754.32 860.22 917.34 844.77 915.88

Capital work-in-progress 477.8 453.83 740.52 846.08 1592.31 1863.13Intangible assets 165.64 196.33 938.09 993.19 1066.68 1051.56

Net pre-operative expenses pending allocation 128.26 91.97 2.96 16.1 47.6 55.56

Net lease reserve adjustment -1.86 0 0 0 0 0

Less: Cumulative depreciation 6943.46 7578.62 8110.81 8590.24 8576.46 8888.6

Less: Arrears of depreciation 0.29 0.18 0 0.58 0.62 0.67

Net fixed assets 9747.22 9341.99 9461.41 10079.11 11864.31 12979.96

Investments 1508.03 1528.87 1835.36 2467.99 2852.79 3760.81

Equity shares 945.83 877.08 1039.48 1532.79 1855.03 2197.24

Preference shares 107.3 110.69 108.33 96.26 67.28 48.97

Mutual funds 265.94 380.73 422.84 527.79 658.36 1080.12Debt instruments 68.8 218.09 281.06 330.11 303.28 292.73

Approved securites (slr/statutory req.) 0 0 0 0 0 0

Assisted companies 0 0 0 0 0 0

Others 174.11 33.09 32.22 34.74 49.52 209.84

Less: Provision for dimunition in value of

investments 53.95 90.81 48.57 53.7 80.68 68.09

Group companies 935.55 959.78 1094.08 1516.06 1827.84 2145.01

Non-group companies 451.4 625.92 740.69 954 1039.4 1457.34

Market value of quoted investments 449.68 641.18 807.32 1364.06 1324.12 1656.01

Deferred tax assets 627.2 633.42 619 617.25 653.81 627.87

Current assets 14536.68 15762.29 18314.54 24176.93 30687.63 38677.8

Cash & bank balance 1598.03 1975.83 2242.75 3373.28 3523.44 3999.72

Inventories 4029.7 4298.48 5139.1 6613.64 8300.57 10277.35

Receivables 7908.44 8324.09 9638.8 12627.62 16940.55 21792.08

Expenses paid in advance 1000.51 1163.89 1293.89 1562.39 1923.07 2608.65

Loans & advances 725.89 718.93 481.62 533.39 718.82 996.48

Deferred revenue expenditure 382.34 219.5 146.42 134.29 97.26 51.9

Total assets 27556.49 28205 30858.35 38008.96 46874.62 57094.82

No of companies 283 296 298 281 250 220

Liabilities



Net worth 6413.87 5857.81 6351.99 9264.64 14395.38 18706.83

Authorised capital 4651.55 4767.98 5182.44 5433.24 4414.85 4162.92

Issued equity capital 3102.4 3186.88 3487.6 3661.31 2988.58 2670.39

Paid up equity capital (net of forfeited capital) 3086.49 3168.49 3469.61 3646.01 2976.85 2662.97

Forfeited equity capital 4.34 5.35 10.35 20.7 3.68 1.07

Paid up preference capital (net of forfeited capital) 408.84 430.28 492.11 657.82 388.15 379.61

Capital contibution, suspense and application money 90.06 94.5 74 104.3 100.87 69.22

APGCCS, Rajampet 17


18/36


Reserves & surplus 2824.14 2159.19 2305.92 4835.81 10925.83 15593.96

Free Reserves 6504.46 6945.34 7859.03

10341.3

2 14020.63 18023.93

Security premium reserves (Net of deductions) 2070.07 1882.15 1929.85 2585.16 3506.74 4267.55

Other free reserves 4434.39 5063.19 5929.18 7756.16 10513.89 13756.38

Specific Reserves 657.98 628.96 720.97 704.15 698.17 646.94Revaluation Reserves 1006.34 1013.34 733.38 720.21 575.05 542.4

Less Accumulated losses 5344.64 6428.45 7007.46 6929.87 4368.02 3619.31

Total borrowings 10289.44 10159.62

10527.8

6

10364.6

2 10896.39 11211.13

Bank borrowings 5109.17 5264.75 4716.18 5563.75 6418.24 7016.2

Short term bank borrowings 3805.63 3857.94 3600.61 3974.04 4300.74 4866.55

Long term bank borrowings 1303.54 1406.81 1115.57 1589.71 2117.5 2149.65

Financial institutional borrowings 1423.51 1289.24 1270.01 1025.33 752.08 692.78

Central & state govt. (usually sales tax deferrals) 172.24 186.17 372.58 391.8 199.53 156.03

Debentures / bonds 1145.46 748.91 544.11 499.08 408.94 277.25

Convertible 18.58 20.28 16.37 0.84 7.96 0.64

Non-convertible 1126.88 728.63 523.97 456.23 366.23 159.68

Fixed deposits 240.86 178.47 163.93 105.04 73.49 67.73

Foreign borrowings 165.77 294.21 1289.65 1008.43 1347.84 1225.1

Of which : euro convertible bonds 0 0 0 0 183.57 168.18

Borrowings from corporate bodies 591.3 690.47 465.96 467.32 438.07 718.54

Group / associate cos. 349.93 397.99 142.02 112.35 61.17 76.09

Borrowings from promoters / directors 55.68 124.12 473.21 248.68 235.7 98.95

Commercial paper 70 0 50 0 0 0

Hire purchase borrowings 19.78 22.69 12.81 10.86 10.59 12.55

Deferred credit 659.04 570.59 462.37 488.28 488.3 493.81

Other borrowings 636.63 790 707.05 556.05 523.61 452.19

Secured borrowings 7959.2 7620.02 7646.33 7662.97 8233.23 8777.69

Unsecured borrowings 2330.24 2539.6 2881.53 2701.65 2663.16 2433.44

Current portion of long term debt 636.36 381.32 457.17 552.36 592.98 585.76

Current liabilities & provisions 10036.05 11318.4

13109.9

4

17536.4

8 20685.72 26275.79

Sundry creditors 5114.3 5405.33 6162.63 8632.52 10084.17 12995.52

Acceptances 632.91 728.98 897.91 1097.61 1416.07 1821.47

Deposits & advances from customers & employees 986.02 1158.13 1425.49 2294.76 2526.84 2868.48

Interest accrued 872.48 1081.03 1344.68 1491.8 1376.72 1336.85

Share application money 0.61 0.93 0.49 1.15 2.2 3.64

Other current liabilities 1016.11 1123.04 1216.64 1322.64 1883.78 2591.35

Provisions 1413.62 1820.96 2062.1 2696 3395.94 4658.48

Deferred tax liability 817.13 869.17 868.56 843.22 897.13 901.07

Total liabilities 27556.49 28205

30858.3

5

38008.9

6 46874.62 57094.82

Net worth (net of reval & DRE) 5025.19 4624.97 5472.19 8410.14 13723.07 18112.53

Contingent liabilities 3795.26 4342.62 3867.25 5625.76 7037 7992.83

No of companies 283 296 298 281 250 220

APGCCS, Rajampet 18


19/36


Income & expenditure



Total income 25696.41 28766.49 35805.82 46023.83 62556.6 75850.88

Sales 24691.07 27711.14 34915.62 44842.8 61202.29 74276.96

Industrial sales 22548.94 24482.53 30553.62 39864.26 54068.42 65104.28

Income from non-financial services 2142.13 3228.61 4362 4978.54 7133.87 9172.68

Income from financial services 373.26 375.47 312.07 409.43 570.81 797.56

Interest 190.45 136.48 115.01 161.95 201.92 270.18

Dividends 57.83 79.38 110.52 150.55 102.45 62.28

Treasury operations 95.63 144.28 76.2 87.86 254.75 442.74

Other income 127.12 140.72 154.43 140.01 143.04 166.78

Prior period income & extraordinary income 504.96 539.16 423.7 631.59 640.46 609.58

Change in stock 4.68 -85.34 473.78 847.67 1032.74 1222.84

Total expenses 26261.35 29259.06 35716.24 45162 60173.05 72618.29

APGCCS, Rajampet 19


20/36


Raw material expenses 11740.54 13040.01 17159.33 22238.23 29861.7 36178.91

Packaging expenses 115.47 124.4 159.67 223.01 229.75 291.46

Purchase of finished goods 2219.57 3260.09 4349.98 5280.47 6787.82 9049.69

Power, fuel & water charges 592.73 579.59 595.67 703.12 790.6 851.82

Compensation to employees 2286.72 2397.99 2340.57 2640.59 3033.37 3608.61

Indirect taxes 2426.5 2597.17 3327.36 4142.44 5378.97 6607.44

Royalties, technical know-how fees, etc. 49.03 48.78 61.87 89.7 147.74 202.76Lease rent & other rent 133.68 119.81 117.96 137.27 146.35 198.97

Repairs & maintenance 229.84 239.83 255.7 293.71 342.01 394.3

Insurance premium paid 62.73 65.83 68.79 82.14 108.73 113.21

Outsourced mfg. jobs (incl. job works, etc.) 228.33 245.97 290 281.48 412.75 502.79

Outsourced professional jobs 117.35 135.33 136.87 188.93 255.14 348.77

Directors' fees 0.72 0.82 1.16 1.31 2.78 3.27

Selling & distribution expenses 1400.06 1518.58 1661.16 2009.87 2483.69 2985.14

Travel expenses 301.75 333.97 364.42 426.8 486.98 586.42

Communication expenses 94.84 96.11 103.84 109.54 122.11 129.72

Printing & stationery expenses 26.11 27.53 30.4 35.06 40.72 46.54

Miscellaneous expenses 435.52 474.77 516.6 623.92 708.55 801.38

Other operational exp. of indl. enterprises 647.62 707.31 1194.17 2081.41 4846.28 4766.57

Other oper. exp. of non-fin. service enterprises 17.56 32.85 33.49 1.43 1.79 3.35

Share of loss in subsidiaries/JVs,etc. 0.75 0.68 0.33 0.3 0 0.27

Lease equalisation adjustment 1 0.81 0 0 0 0

Loss on securitisation of assets/loans 0 0 0 0 0 0

Fee based financial service expenses 119.99 112.67 125.84 142.23 183.39 215.16

Treasury operations expenses 37.44 29.48 51.14 33.4 34.25 184.78

Total provisions 167.2 152.05 103.47 196.14 126.28 145.77

Write-offs 127.71 171.29 153.95 177.95 151.13 211.92

Less: Expenses capitalised 13.83 7.27 13.04 19.75 66.76 106.27

Less: DRE & expenses charged to others 1.19 1.36 5.53 7.85 26.58 41.86

Prior period & extraordinary expenses 211.38 326.48 78.33 175.23 79.54 62.65

PBDITA 1923.97 1849.58 3016.1 4583.42 6920.26 8730.18

Interest paid 1243.26 1115.01 1005.29 1042.74 1034.09 1250.39

Financial charges on instruments 1.52 0 0.42 0 0 0

Expenses incurred on raising deposits/debts 0.02 0 0.03 0.03 0 4.66

PBDTA 679.17 734.57 2010.36 3540.65 5886.17 7475.13

Depreciation 852.22 847.53 859.22 900.72 917.11 964.31

Amortisation 70.25 73.89 37.11 36.81 23.56 6.06

PBT -243.3 -186.85 1114.03 2603.12 4945.5 6504.76

Provision for direct taxes 316.96 391.06 550.67 893.62 1529.21 2049.33

PAT -560.26 -577.91 563.36 1709.5 3416.29 4455.43

No of companies 283 296 298 281 250 220

APGCCS, Rajampet 20


21/36


Profits



PBDITA 1923.97 1849.58 3016.1 4583.42 6920.26 8730.18

Depreciation 852.22 847.53 859.22 900.72 917.11 964.31

Amortisation 70.25 73.89 37.11 36.81 23.56 6.06

PBIT 1001.5 928.16 2119.77 3645.89 5979.59 7759.81

Interest paid 1243.26 1115.01 1005.29 1042.74 1034.09 1250.39

Financial charges on instruments 1.52 0 0.42 0 0 0

Fee based financial services expenses 0.02 0 0.03 0.03 0 4.66

PBT -243.3 -186.85 1114.03 2603.12 4945.5 6504.76

Provision for direct tax 316.96 391.06 550.67 893.62 1529.21 2049.33

Corporate tax 268.71 327.07 529.27 842.02 1378.28 1926.2

Deferred tax 76.18 86.07 65.73 89.82 137.19 158.82

Less: Deferred tax assets / credit 29.02 23.48 48.83 99.83 52.59 111.28

Other direct tax 1.09 1.4 4.5 61.61 66.33 75.59

Fringe benefits tax 0 0 3.51 60.29 65.16 74.51

PAT -560.26 -577.91 563.36 1709.5 3416.29 4455.43

PAT (as reported by the Co.) -574.86 -591.05 567.41 1715.29 3373.55 4444.15

Prior period & extra-ordinary income 504.96 539.16 423.7 631.59 640.46 609.58

Prior period & extra-ordinaryexpenses 211.38 326.48 78.33 175.23 79.54 62.65

Net prior period & extraordinarytransactions -293.58 -212.68 -345.37 -456.36 -560.92 -546.93

PBDITA net of P&E 1630.39 1636.9 2670.73 4127.06 6359.34 8183.25

PBIT net of P&E 707.92 715.48 1774.4 3189.53 5418.67 7212.88

APGCCS, Rajampet 21


22/36


PBT net of P&E -536.88 -399.53 768.66 2146.76 4384.58 5957.83

PAT net of P&E -853.84 -790.59 217.99 1253.14 2855.37 3908.5

Distribution of profits (%)

PBDITA 100 100 100 100 100 100

Depreciation & Amortisation47.946173

8 49.8177965 29.7181791 20.454813213.592986

4 11.1151202

Financial charges64.699553

5 60.284497 33.3457113 22.750915314.942935

7 14.3759922

Tax16.474269

3 21.1431785 18.2576838 19.49679522.097580

1 23.4740864

PAT29.119996

7 -31.2454719 18.6784258 37.297476649.366497

8 51.0348011

Non--provisions for: 152.08 227.29 186.86 186.13 248.1 221.86

Diminution in investement 0.59 0.35 0.08 0 0 0

Sundry debtors 16.61 38.49 23.49 24.06 16.81 3.87

Loans & advances including NPAs 21.04 15.96 13.34 4.63 6.4 5.79

Loans & advances to group cos. 0 66.02 65.96 65.96 65.96 0

Interest expenses 107.25 99.44 79.76 87.5 157.72 211.39

Power expenses 0 0 0 0 0 0

Gratuity 0.6 1.77 1.34 0 0 0

Others 5.99 5.26 2.89 3.98 1.21 0.81

No of companies 283 296 298 281 250 220

TOOLS OF ANALYSIS

1. Cost Structure:

Cost structure shows the percentage of cost incurred to a

product. It is the relationship between fixed charges and value added. Here value added

means sales-(raw material expenses + power, water& fuel consumption).Fixed charges

means compensation paid to employees, interest paid and depreciation.

Cost Structure = Fixed Charges

Value Added

2. Operating Performance:

Operating performance shows the relationship between operating profit and net

assets.

Operating Performance = EBIT X 100

Net Assets

3. Financial Performance:

APGCCS, Rajampet 22


23/36


Financial performance shows the relationship between profit after tax and net

worth.

Financial Performance = PAT X100

Net Worth

4. Growth Rate:

Growth rate of sales represents how much percentage of sales are increased or

decreased in a year as compared to the previous year.

5. Trend analysis:

Trend analysis is used for estimating the future value of the industry or company.

Straight line trend is represented by the equation.

Y= a+bx

In order to determine the values of the constants a and b the following normal equations

are to be solved.Y=Na+bX

XY=aX+bX2

6. Coefficient of correlation:

Correlation is the degree of association between two variables and it represented in

terms of a coefficient known as coefficient of correlation. The range of correlation

coefficient is-1and+1.If the coefficient is negative, then the variables are inversely

proportional and maximum when it is -1. If it is 0, there is no association between the

variables. If the coefficient is positive then the variables are associated directly and it is

maximum when it is =1.

APGCCS, Rajampet 23


24/36


7. Return on investments (ROI):

This ratio is called as overall profitability ratio or return on capital employed. It

measures the sufficiency or other wise of profit in relation in capital employed.

Operating profit

ROI = ------------------------------ x100

Capital employed

1.Cost Structure:

The Cost structure indicates that how much cost had incurred for obtaining theoutput. On awareness of the cost structure of the industry we can able to take furthersteps to decrease the cost structure in the coming years. The cost structure had establishedwith the relationship of fixed charges and value added.

Fixed chargesCOST STRUCTURE = --------------------------------

Value Added

Table:1

S.no particulars 2003 2004 2005 2006 2007 2008

1. Sales 24691.07 27711.14 34915.62 44842.8 61202.29 74276.96

2. Raw materials 11740.54 13040.01 17159.33 22238.23 29861.7 36178.91

3. Power& fuel 592.73 579.59 595.67 703.12 790.6 851.82

4. Compensationto employees

2286.72 2397.99 2340.57 2640.59 3033.37 3608.61

5. Interest paid 1243.26 1115.01 1005.29 1042.74 1034.09 1250.39

6. Depreciation 852.22 847.53 859.22 900.72 917.11 964.31

7. Value added 12357.8 14091.54 17160.62 21901.45 3054.99 37246.23

8. Fixed charges 4382.2 4360.53 4205.08 4584.05 4984.57 5823.819. Cost Structure 0.354 0.309 0.245 0.209 0.631 0.156

APGCCS, Rajampet 24


25/36


26/36


Interpretation:

From the above table it is observed that Operating Performance of electrical

machinery industry is showing fluctuations during the study period of is showing

fluctuations during the study period of 2003-2008. This is due to the fluctuations in

EBIT. In the year 2008 it was very high (0.135) due to increase in total assets & EBIT. In

the year 2004 it was very low, due to the decrease in EBIT.

3. Financial Performance:

The Financial performance had established with the relationship of profit after tax

(PAT) and Net worth. It represents how much net worth is lying for acquiring the profit

after tax (PAT), and we can able to aware the financial performance of the industry.

PAT

FINANCIAL PERFORMANCE = ---------------------

Net worth

Table: 3

APGCCS, Rajampet

YEAR PAT NET WORTH FINANCIAL

PERFORMANCE

2003 -560.26 6413.87 -0.087

2004 -577.91 5857.81 -0.0982005 563.36 6351.99 0.088

2006 1709.5 9264.64 0.184

2007 3416.29 14395.38 0.237

2008 4455.43 18706.83 0.238

26


27/36


Graph:3

Interpretation:

From the above table it is observed that Financial Performance of electrical

machinery industry is showing fluctuations during the study period 2003-2008. This is

due to the fluctuations in PAT & Net worth. In the year 2008 it was very high (0.238) due

to increase in PAT, Net worth. In the year 2003 it was very low, due to the decrease in

PAT of electrical machinery industry.

4. Growth Rate of sales:

Growth rate of sales represents how much percentage of sales are increased or

decreased in a year as compared to the previous year.

Current Year

Growth Rate =-------------------------- -1Previous Year

Table.4

APGCCS, Rajampet

year Total sales Growth Trend

2003 24691.07 ----

2004 27711.14 12.232005 34915.62 25.99

2006 44842.8 28.43

2007 61202.29 36.48

2008 74276.96 21.36

27


28/36


Graph.4

Interpretation:

From the above table it is observed that growth rate in Sales of Electrical

Machinery Industry year by year during the study period of 2003-2007 due to theincreasing sales in the year 2008 it was decreasing due to change in Total Sales.

Trend analysis of Sales:

Trend analysis is used for estimating the future value of the industry or company.

Straight line trend is represented by the equation. Y= a+bx

In order to determine the values of the constants a and b the following normal equations

are to be solved. Y=Na+bX

XY=aX+bX2

Table:5

Year Sales

2003 24691.07

200427711.14

2005 34915.62

2006 44842.8

2007 61202.29

2008 74276.96

2009* 92044.95

APGCCS, Rajampet 28


29/36


2010* 115877.73

2011* 145881.42

Graph:5

Trend Values of Sales

0

20000

40000

60000

80000

100000

120000

140000

160000

2003 2004 2005 2006 2007 2008 2009* 2010* 2011*

Years

Valu

Years

Interpretation:

From the above table it is observed that trend analysis electrical machinery

industry was increased year by year during the study period of 2003-2011 because of the

increase of sales.

Correlation between income &expenses:

Correlation is the degree of association between two variables and it is

represented in terms of a coefficient known as correlation. The range of the correlation

coefficient it is in between -1and+1. If the correlation coefficient is negative, then the

variables are inversely proportional and maximum when it is-1;if the coefficient is 0,

there is no association between the variables. If the coefficient is positive then the

variables are associated directly and it is maximum when it is+1.

Table : Calculation of income &expenses during 2003-2008. (Rs in Crores)

APGCCS, Rajampet 29


30/36


Co-efficient of correlation: 0.999

Interpretation:

From the above table, it is observed that there is a strong relationship between

income& expenses. Because 1% change in total expenses that must be lead to 0.999%

change In income. It is showing positive relationship between income and expenses.

Correlation between Sales & Total assets:

Correlation is the degree of association between two variables and it is

represented in terms of a coefficient known as correlation. The range of the correlation

coefficient it is in between -1and+1. If the correlation coefficient is negative, then the

variables are inversely proportional and maximum when it is-1;if the coefficient is 0,

APGCCS, Rajampet

Year Income Expenses

2003 25696.41 26261.35

2004 28766.49 29259.06

2005 35805.82 35716.24

2006 46023.83 45162.0

2007 62556.6 60173.05

2008 75850.88 72618.29

30


31/36


there is no association between the variables. If the coefficient is positive then the

variables are associated directly and it is maximum when it is+1.

Table : Calculation during sales& total assets 2003-2008. (Rs in Crores)

Co-efficient of correlation: 0.995

Interpretation:

From the above table, it is observed that there is a strong relationship between

Sales & Total assets is 0.995 because 1% changes in total assets that must lead to 0.995

changes in sales. It is showing positive relationship between Sales & Total assets.

APGCCS, Rajampet

year Sales Total assets

2003 24691.07 27556.49

2004 27711.14 282052005 34915.62 30858.35

2006 44842.8 38008.96

2007 61202.29 46874.62

2008 74276.96 57094.82

31


32/36


7.Return on investments(ROI):

This ratio is called as overall profitability ratio or return on capital employed. It

measures the sufficiency or other wise of profit in relation in capital employed.

Operating profitROI =------------------------------- x100

Capital employed

Table : Calculation during ROIduring the year 2003-2008. (Rs in Crores)

Years Operating profit Capital employed ROI

2003 1001.5 6413.87 15.6145

2004 928.16 5857.81 15.8448

2005 2119.77 6351.99 33.37172006 3645.89 9264.64 39.3527

2007 5979.59 14395.38 41.5382

2008 7759.81 18706.83 41.4811

Graph.

Interpretation:

From the above table it is observed that the return on investment ratio is shown

continuously increasing from the year 2003-2008 due to increase in operating profit &

increases in capital employed

APGCCS, Rajampet 32


33/36


SWOT ANANLAYSES

Strengths:

A strength mentioned was the presence of leading global players in thePhilippines. These leading firms such as Intel, Texas Instruments, etc. provide a unique

and strong foundation for the future of the industry. Another strength cited is the

abundant Filipino manpower resources. The highly skilled and English speaking

manpower resources in the Philippines still make it attractive to invest in the country. The

SWOT-analysis was based on interviews with CEOs of the top 10 firms in the industry.

Weaknesses:

A number of weaknesses have been stressed. The number one weakness is the

high cost of power in the country. IT describes current electricity charges of the

Philippines including its important neighbors. Apart from the high costs of electricity,

poor infrastructure is seen as one of the major difficulties in the further development of

the industry. Furthermore, the image of the Philippines is also noted as a hindrance to the

advancement of the industry.

The lack of government funds to support industry initiatives was also a major

factor including the lack of engineers in the Philippines with higher and advanced studies.

These weaknesses should be on the high note of a major industry roadmap if the industry

would want a responsive and efficient guide to its further improvement and constant

development.

APGCCS, Rajampet 33


34/36


Opportunities:

Among the opportunities cited were the following: 1) Higher-valued activity

through the industrys center of excellence; and 2) United and solid electronics industry.

SEIPI has established the Advanced Research and Competency Development Institute

(ARCDI) to address the widening gap between engineers skills and the industrys needs,

and increase the availability of skilled manpower for high technology industry. This is

only one of SAPIs initiatives in creating higher-valued activities in the industry.

Furthermore, the current state of the electronics industry provides a great opportunity for

the industrys advancement. A recent deal that was announced as a bellwether in the

electronic industry is seen as a big boost for the industry.

Threats:

The growing role of China as the manufacturing capital of the world in recent

years is cited as a major threat to the Philippine electronics industry. China was said to

have affected investments in the Philippine electronics industry in 2001 to 2004 (See

Table 1). Indeed, China is a huge force to reckon with in the industrys bid to further

develop and improve.

OBSERVATIONS

APGCCS, Rajampet 34


35/36


o Cost structure observed that the fixed cost as a proportion of value added has

come down year by year from 35.4% in the year 2003 to 15.6% in the year 2008

(expect in the year 2004 it was 2007 it was 63.1%). The value addition is

increased because of more increase in sales & less increase in the costs of power

fuel & water charges the fixed charges year by year due to the increase in

compensation to employees, interest paid & depreciation of electrical machinery

industry as a result the ratio fixed charges / value added decreased.

o The Operating Performance of electrical machinery industry is showing

fluctuations during the study period of 2003-2008. This is due to the fluctuations

in EBIT.

o The Financial Performance of electrical machinery industry is showing

fluctuations during the study period 2003-2008. This is due to the fluctuations in

PAT & Net worth. In the year 2008 it was very high (0.238) due to increase in

PAT, Net worth. In the year 2003 it was very low, due to the decrease in PAT of

electrical machinery industry.

o The growth rate of sales has been increased from 2003 to 2007. It is 12.23% in

2003 and it is gradually increased up to 2007 with 36.48%. It is increased for rates

to the base year 2003.

o The trend analysis of electrical machinery industry was increased year by year

during the study period of 2003-2008, because of the increase of sales.

o The Correlation shows the strong relationship between income& expenses.

Because 1% change in total expenses that must be lead to 0.999% change In

income. It is showing positive relationship between income and expenses.

o The Correlation shows the strong relationship between Sales & Total assets is

0.995 because 1% changes in total assets that must lead to 0.995 changes in sales.It is showing positive relationship between Sales & Total assets.

o The return on investment ratio is shown continuously increasing from the year

2003-2008 due to increase in operating profit increases in capital employed

CONCLUSION

APGCCS, Rajampet 35


36/36


The Growth rate of Sales and estimated values of Sales are increasing when

compared to the present value of Sales and from the cost structure is also it is observed

cost of the industry is minimising during the period 2003-2006.

Hence it can be concluded that the domestic demand for Electrical Machinery

industry is increasing in India.

Documents

Industry analysis report Electricity Michenary