The past year has been filled with low visibility and tremendous challenges for Indian business. Forecasting and planning has never been more difficult. After facing a deep recession, the Indian economy bounced back in Q3 of 2020-21. The recovery, however, has been uneven with the unorganized sector having borne the brunt of the effects of the pandemic. Unfortunately the OECD has now cut its growth projection for India in FY 22 from the 12.6% estimated in March to 9.9% as new waves of infections threaten economic recovery. While India is projected to be the fastest growing G20 economy, it will also be the country furthest away from its pre-crisis GDP trend.
In our Transformer division revenue in the financial year ending March 2021 was down about 35% owing to various issues related to the pandemic. Despite trying conditions we have been able to book some large orders from state electricity boards. This has helped our unexecuted order book to remain at an all time high. The division has worked hard to ensure that enquiry generation during the year has been at the same level as in pre-COVID times. We have made a major breakthrough with the supply of high rating transformers to certain private utilities that have long been targeted. Challenges with collection and the supply chain still abound but we are dealing with them.
In the Motor division, the top line was down about 10%. This itself is an achievement given the prevailing circumstances last year. Building on a strong unexecuted order book, we enhanced capacity utilization and focused on execution. What resulted was some of the best quarters in the history of the motor division. We have commissioned an automatic winding plant that will bolster our quest for continuous quality improvement. Another achievement has been to expand our range of medium voltage motors that have been developed entirely in-house. Increasing prices of raw material pose a big challenge and will put substantial pressure on our margins. This is true for our other divisions as well.
The Projects division has had a tough time booking orders in this environment. We have been focusing on the private sector, but demand has been sluggish with most industrial customers deferring investment at this juncture. The division has been working towards widening the funnel through which we screen potential orders. In spite of tough conditions the orders under execution were completed on time and within budget.
Our Drives and Automation division was able to clock 8% year on year growth. Focus on new customer acquisition, and new application development, have helped us achieve these results. We have made good progress in selling the package of the drive along with our servo motor. The response from the market has been very encouraging.
The Magnet Technology Machines division has done well to see a marginal increase in its top-line in spite of the extremely tough business climate. This was due to the fact that we were able to execute all our export orders throughout the pandemic. Given the positive response to our products from the market, we will be expanding our manufacturing capacity shortly.
History has shown that a post-pandemic period is usually followed by a boom. People spend more and take increased risks. The IMF has projected that the world economy will grow by 6% in FY 22. It has forecasted that the USA will grow at 6.4%. For the USA, that is about 3% faster than its pre-pandemic growth rate. The situation seems to be so unfamiliar that economists are turning to history for what will happen next. IMF Chief Economist Gita Gopinath recently said, “Even with high uncertainty about the path of the pandemic, a way out of this health and economic crisis is increasingly visible”. Let us hope this is the case.
In India, the uncertainty created by the pandemic lingers. Supply chain, inflation, and labor issues persist. Inflation in raw materials prices is becoming a major impediment across sectors. It will be speculation to predict which way things will go in the short run. Our government has recently taken the important step of proposing amendments to the Fiscal Responsibility and Budget Management Act 2003. It shows positive fiscal intent and that the government is ready to allow the fiscal deficit to slide. A number of other steps to reduce the revenue deficit have also been proposed. The issue is now execution and we will need to see whether the government delivers. As always we remain hopeful and look to the future.