The Indian economy seems to be recovering slowly from the two jolts it received in recent times with respect to demonetization and the implementation of a much needed GST (Goods and Service Tax). The increased pace of growth achieved in Q3 2018 re-establishes India as one of the fastest growing economies in the world. Fortunately inflation by and large has remained in check.
In January 2018, The World Bank released its ‘Global Economic Prospects’ report and stated that it expects India’s growth rate to hit 7.3% the coming financial year. Despite these expectations and positive outlook, the fact remains that the corporate capital investment cycle, which has remained depressed for at least the last 5 years, has yet to pick up.
The Transformer division has managed to retain market share in a flat market with increased competition. Focus on increasing business in the non-tendered segment and improved reach in utilities has enabled us to have one of our best years in terms of production and dispatches. This has resulted in sales turnover increasing by 18%. The export market, one of our focus areas, has proved difficult to penetrate with sporadic success. Our efforts to break in to this market are ongoing. The Motor division has achieved significant revenue growth, and has successfully managed the operational and supply-chain transition to comply with the Government’s Quality Control Order that permits only the manufacture and sale of energy efficient motors after January 2018. The division received its largest ever order from a PSU (public sector undertaking). Our increased geographical reach has bolstered performance.
The Projects business has for the first time successfully bid for, executed, and commissioned a transmission line. We will continue to stay away from risky projects and grow in a cautious manner in this business. Our focus will remain on projects from the private sector. To increase our order input we will also consider select projects in EBOP (Electrical Balance of Plant), lighting, and GIS (Gas Insulated Substations) segments of the market. The Drives and Automation division has achieved a major milestone in delivering their 10,000th drive last year. Our focus area will be on the development of the solution partner network, and to leverage synergies by offering solutions with products developed by our Magnet Technology Machines division. One area of concern remains the recent depreciation of the rupee against the Euro and the USD. The Magnet Technology Machines (MTM) division inaugurated a state-of-the-art manufacturing plant to cater to increased demand. While endeavoring to maintain our leadership position for elevator applications in the domestic market we are also working hard to grow exports. Our efforts in exports have yielded results through our overseas partner.
Overall the world economy seems to be improving having had one of its better years in recent times with Europe and the US showing positive signs. Let us hope this upward trend continues. Chinese growth however is expected to slow down due to its problems of excess industrial capacity and debt overhang.
What India needs now is good fiscal stimulus to kick start the Capex cycle. The bad loan problem also needs to be resolved. The government will have to inject a large amount of money into the banking system to resolve the growing number of NPAs. The new Insolvency and Bankruptcy Code is definitely a step in the right direction. However, the process of recovery and restructuring is a long and tedious one. It seems unlikely that anything is going to change dramatically before the next election.