Forward looking statement -
Statements in this Management Discussion and Analysis of Financial
Condition and Results of Operations of the Company describing the Companys objectives,
expectations or predictions may be forward looking within the meaning of applicable
securities laws and regulations. Forward looking statements are based on certain
assumptions and expectations of future events. The Company cannot guarantee that these
assumptions and expectations are accurate or will be realized. The Company assumes no
responsibility to publicly amend, modify or revise forward looking statements, on the
basis of any subseguent developments, information or events. Actual results may differ
materially from those expressed in the statement. Important factors that could influence
the Companys operations include changes in government regulations, tax laws, economic
developments within the country and such other factors globally.
The financial statements are prepared under historical cost convention,
on accrual basis of accounting, and in accordance with the provisions of the Companies
Act, 2013 (the Act) and comply with the IND AS Accounting standards. The Management of
Salzer Electronics has used estimates and Judgments relating to thefinancialstatements on
a prudent and reasonable basis, in order that thefinancial statements, reflect in a true
and fair manner, the state of affairs and profit for the year.
The following discussions on ourfinancial condition and result of
operations should be read together with our audited consolidated financial statements and
the notes to these statements included in the annual report. Unless otherwise specified or
the context otherwise reguires, all references herein to "we", "us",
"our", "the Company", "Salzer" are to Salzer Electronics
Limited and its subsidiaries and associates.
Global Economic Overview
Global growth is expected to decelerate sharply to 1.7 percent in
2023the third weakest pace of growth in nearly three decades, overshadowed only by the
global recessions caused by the pandemic and the global financial crisis. This is 1.3
percentage points below previous forecasts, reflecting synchronous policy tightening aimed
at containing very high inflation, worsening financial conditions, and continued
disruptions from Russias invasion of Ukraine. The United States, the euro area, and China
are all undergoing a period of pronounced weakness, and the resulting spillovers are
exacerbating other headwinds faced by emerging market and developing economies [EMDEs).
The combination of slow growth, tightening financial conditions, and heavy indebtedness is
likely to weaken investment and trigger corporate defaults. Further negative shockssuch as
higher inflation, even tighter policy,
financial stress, deeper weakness in major economies, or rising
geopolitical tensionscould push the global economy into recession. In the near term,
urgent global efforts are needed to mitigate the risks of global recession and debt
distress in EMDEs. Given limited policy space, it is critical that national policy makers
ensure that any fiscal support is focused on vulnerable groups, that inflation
expectations remain well anchored, and that financial systems continue to be resilient.
Policies are also needed to support a major increase in EMDE investment, which can help
reverse the slowdown in long-term growth exacerbated by the overlapping shocks of the
pandemic, the invasion of Ukraine, and the rapid tightening of global monetary policy.
This will require new financing from the international community and from the repurposing
of existing spending, such as inefficient agricultural and fuel subsidies.
Global inflation has been pushed higher by demand pressures, including
those from the lagged effects of earlier policy support, and supply shocks, including
disruptions to both global supply chains and the availability of key commodities. In some
countries, inflation has also been spurred by large currency depreciations relative to the
U.S. dollar, as well as tight labor market conditions. Inflation remains high worldwide
and well above central bank targets in almost all inflation targeting economies. Although
inflation is likely to gradually moderate over the course of the year, there are signs
that underlying inflation pressures could be becoming more persistent. In response,
central banks around the world have been tightening policy faster than previously
expected. Monetary policy tightening in advanced economies, a strong U.S. dollar,
geopolitical tensions, and high inflation have dampened risk appetite and led to
widespread capital outflows and slowing bond issuance across EMDEs. Financial conditions
have particularly worsened for less creditworthy EMDEs, especially if they are also energy
importers.
Investment growth after the pandemic -
Investment growth in EMDEs is expected to remain below its average rate
of the past two decades through the medium term. This subdued outlook follows a
geographically widespread investment growth slowdown in the decade before the COVID-19
pandemic. During the past two decades, investment growth was associated with strong real
output growth, robust real credit growth, terms of trade improvements, growth in capital
inflows, and investment environment reform spurts. All of these factors have seen a
declining trend since the 200709 global financial crisis. Weak investment growth is
a concern because it dampens potential growth, is associated with weak
trade, and makes achieving development and climate-related goals more difficult. Policies
to boost investment growth need to be tailored to country circumstances but include
comprehensive fiscal and structural reforms, including repurposing of expenditure on
inefficient subsidies. Given EMDEs1 limited fiscal space, the international
community will need to significantly scale up international cooperation and official
financing and grants as well as help leverage private sector financing for sufficient
investment to materialize.
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Indian Engineering & Electrical Sector
In FY21, Indias heavy electrical equipment production stood at Rs.
168,949 crore [US$ 21.15 billion]. The electrical equipment market is forecasted to grow
at 12% CAGR to reach US$ 72 billion by 2025 from US$ 48-50 billion in 2021. The electrical
equipment export market is forecasted to reach US$ 13 billion by 2025, from US$ 8.62
billion in 2021.
Indian machine tool production and consumption were estimated at Rs.
6,602 crore [US$ 879.38 million] and Rs. 12,036 crore [US$ 1.6 billion], respectively, in
FY21, while exports stood at Rs. 531 crore [US$ 66.48 million].
The boiler industrys market size stood at US$ 146 million in 2019 and
is expected to grow at a CAGR of 6% to reach US$ 194 million by 2025. Export of boilers
stood at US$ 106.53 million between April- November 2020, with around 72 million units
exported.
The market size of high voltage switchgear [including panels] and low
voltage switchgear [including panels] stood at Rs. 4,793 crore [US$ 679.95 million].
In FY22, India exported engineering goods worth US$
111.63 billion, a 45.51% increase YoY. India exports engineering goods
mostly to US and Europe, which account for over 60% of the total exports.
Global Switchgear Industry
The global switchgear market size will grow from $78.4 billion in 2022
to $85.37 billion in 2023 at a compound annual growth rate [CAGR] of 8.9%. The
Russia-Ukraine war disrupted the chances of global economic recovery from the COVID-19
pandemic, at least in the short term. The war between these two countries has led to
economic sanctions on multiple
countries, a surge in commodity prices, and supply chain disruptions,
causing inflation across goods and services and affecting many markets across the globe.
The global switchgear market size is expected to grow to $114.89 billion in 2027 at a CAGR
of 7.7%.
The demand for electricity generation is projected to drive the
switchgear market. The availability of electricity has become essential for economic
development and poverty alleviation. Development of industrialization, urbanization
requires continuous electricity supply, and the reliability of the electrical supply
depends heavily on the performance of the switchgear. Therefore, the demand for
electricity generation is driving the demand for switchgear in the forecast period. For
instance, global demand for electricity rises at 2.1% per year to 2040 in the Specified
Policies Scenario, double the rate of primary energy growth by 2040.
Unstable prices of raw materials are restraining the growth of the
switchgear market. Price fluctuation is due to the availability of low-quality materials
at cheaper prices. The use of low-quality products increases the risk of breakdown of
insulation layers or short circuit conditions and other failures. Thereby inconsistent
pricing in raw materials of the switchgear is expected to hinder the market growth. For
instance, in May 2020, according to an article published byTTI, Inc., a US-based
electronic company, the most expensive variable cost involved with the fabrication of
passive electronic components is raw materials.
The last few years witnessed a rising demand for installation of
electric substations to restore normal power supply as fast as possible in case of
emergencies. The installation of mobile substations enables the restoration of electricity
under outdoor conditions or in unforeseen circumstances and is functionally designed to
provide temporary power supplies as soon as possible. Also, these mobile substations
incorporate generator, transformer, metal-clad switchgear, outdoor load break switches and
breakers, which are used for network extensions, and temporary switching stations. For
instance, Siemens delivered two mobile substations for national grid SA, and Aktif group
delivered 10 mobile substations to the ministry of electricity Iraq. Therefore, increasing
the adoption of mobile substations is one of the latest trends that will positively impact
the switchgear market.
In January 2020, Siemens Ltd., a Germany-based engineering and
electronics company acquired C&S Electric Limited for Rs 2,100 crore [294.4 million].
With this acquisition, Siemens aimed to cater to the demand for reliable and efficient
power supply in India.
C&S Electric Limited is an Indian-based switchgear and power
equipment manufacturing company.
Major players in the switchgear market are Schneider Electric, Siemens
AG, ABB, General Electric, Eaton Corporation, Hyosung, CG Power, Mitsubishi, Alstom SA,
and Bharat Heavy Electricals Ltd.
https://www.thebusinessresearchcompany. com/rep
ort/switchgear-global-market-report
COVID-19 Impact on the Global Switchgear Market
The pandemic was a big disruptor that has created challenges and
opportunities for the sector. The impact of Covid-19 has also highlighted the need for
better risk management, greater preparedness and resilience. Switchgear manufacturers
continued to face many supply chain constraints, especially in base metals [ Copper,
Aluminum, steel], plastics, semiconductors and transportation services.
Indian Switchgear Industry
The India switchgear market size reached US$ 10 Million in 2022.
Looking forward, IMARC Group expects the market to reach US$ 16.5 Million by 2028,
exhibiting a growth rate CCAGR) of 6.84% during 2023-2028. The growing demand for reliable
and environment-friendly switchgear, increasing need for replacing old switchgears at
sub-stations, and rising sales of generating renewable energy represent some of the key
factors driving the market. At present, the rising demand for switchgears due to the rapid
development in the power distribution sector represents one of the key factors supporting
the growth of the market in India. Besides this, the growing implementation of the smart
grid and smart
meters, along with the increasing demand for electricity among the
masses, is offering a positive market outlook in the country. Additionally, there is a
rise in the demand for reliable, flexible, and environment-friendly gas-insulated
switchgears compared to air-insulated switchgears among the masses. This, coupled with the
increasing utilization of switchgears, as they prevent electrical issues, such as overload
and short circuits, is propelling the growth of the market in India. Apart from this, the
rising awareness about utilizing renewable energy resources among individuals is offering
lucrative growth opportunities to industry investors in the country. Moreover, the
Government of India is encouraging the adoption of switchgears by rapidly investing in
infrastructure development of the country. In addition, the rising concerns for reducing
carbon footprint in the environment are contributing to the growth of the market. Besides
this, the growing energy demand and replacement of old switchgears at sub-stations are
positively influencing the market in the country. Furthermore, the rapid integration of
smart monitoring and control units in power grid infrastructure is strengthening the
market growth in India.
With economic and infrastructure development, Indias generation and
consumption of power and electricity is steadily rising. The nations power sector is one
of the most diversified in the world sources of power generation range from traditional
sources like coal, lignite, natural gas, oil, hydro and nuclear power to renewable
non-conventional sources such as wind, solar, agricultural and domestic waste. Switchgears
are applicable across all types of production and delivery of electricity to end users.
Source: https://www.imarcgroup.com/india- switchgear-market
Revenue opportunity size for defence, electrification and automation
could grow by around 2.9x by FY30E, while the profit pool, driven by revenue growth and
operating leverage, may grow by around 3.6x over the same period
L.V electrification, motors/drives and process automation could lead
growth for the electrification and automation segments over the next 6 to 8 years
Market sizing Electrification & Automation CINR bn]
Global Wires & Cables Industry
The global wires and cables market size was estimated at USD 202.05
billion in 2022 and is projected to grow at a compound annual growth rate [CAGR] of 4.2%
from 2023 to 2030. Rising urbanization and growing infrastructure worldwide are some of
the major factors driving the market. The said factors have impacted the power and energy
demand in commercial, industrial, and residential sectors. Increased investments in smart
upgrading the power transmission and distribution systems and development of smart grids
are anticipated to drive the markets growth. Implementation of smart grid technology has
met the increasing need for grid interconnections, thus resulting in rising investments in
the new underground and submarine cables.
Source: https://www. grandviewresearch.com
/industry-analysis/wire-and-cable-market-analysis- market
Growth of the Wire and Cable Industry Global and Indian Context
Wire and Cable Industry in India Industry 4.0 and the Widening Scope
The last two to three decades are probably the fastest infrastructure
growing years of India, and so it is for the Wire & Cable industry. The rapid
urbanization and industrial development have contributed to the exponential growth of the
electrical cable industry in the country. According to
a study the global wire and cable market is growing at a CAGR of 6.45%.
It predicts that the global market size of this industry is expected to reach USD 332.65
bn by 2026 from USD 201.76 bn in 2018.
The Indian wire and cable market is growing at an even faster pace.
With a whopping CAGR 15% growth rate, the rising Indian market reflects the rapid
developments in the power and infrastructure sector. And its not going to slow down any
time soon. With the advent of industrial revolution 4.0, global investors are eying the
potential Indian market specific to the high-voltage CHV) and extra-high- voltage CEHV)
cables product line.
The boom in the telecom sector and the central government-led PLI
schemes are another reason behind the upscaling in the manufacturing of commercial-grade
electrical equipment and high- intensity cables. The wires and cable sector is a
significant 40% of the electrical industry in India and will benefit from the development
in the power generation, distribution, and industrial equipment sector.
A few days prior to the presentation of the Union Budget, the Cabinet
approved a Rs 12,195 crore PLI scheme for the telecom sector including localized
production of core transmission equipment as well as access and customer premise products,
routers and switches. The government aims to draw large overseas investments to help
domestic companies seize the emerging opportunities and become dominant players in the
export market.
The wires and cables sector is a direct beneficiary of development of
power generation and distribution infrastructure, as the market comprises nearly 40 per
cent of the electrical industry in India. According to a CRISIL report, in volume terms,
the domestic wires and cables industry registered a CAGR of 22 per cent CAGR over the last
five fiscals to reach about 17 million km in FY 2018-19. The report expects the industry
to reach a volume of about 27 million km by FY 2023-24 with a CAGR of 10 per cent. Source:
https://www.glostercable.com
/blog/widening-the-scope-of-wire-and-cable- industry-in-india.html
https://engmag. in/wire-and-cable-industry-to-
register-significant-growth-in-next-five-years/
ABOUT SALZER ELECTRONICS LIMITED
Salzer Electronics Limited is among leading players offering Total and
Customized Electrical Solutions in Switchgears, Wires & Cables and Energy Management
business in India. The Company is the largest manufacturer of CAM Operated Rotary switches
& Wire Ducts in India, with a market share of 25% & 20% respectively. The Company
caters to a wide range of products with five In-house manufacturing facilities located in
Coimbatore.
The Company has a wide distribution network locally
and globally, exporting to more than 50 countries. In India, Salzer
markets its products through its own distributors and more than 350 local distributors of
L&T. The Company has a strong R&D team that focuses on developing and
commercializing the technologies of the products, and as a result, can offer total
customized electrical solutions to its customers.
FINANCIAL OVERVIEW
The standalone financial performance of the Company for the financial
year ended March 31st, 2023, is as follows:
Total revenue from operations at Rs. 1013.08 crore for the year ended
March 31st, 2023, as against Rs. 783.63 crore for the corresponding previous
period, an increase of 29.28%, mainly driven by strong demand for almost all products, on
the back of better market conditions both in India and global markets. The Contribution
from Export Sales was 25.57%, mainly on account of higher sales in North and South America
and increased sales to SEZ/EOUs.
The Breakup of revenue for the Electrical Installation Products:
Industrial Switchgear 54.33% of net revenues
Wires & Cables 38.44% of net revenues, YoY increase of 15.0%
Buildings Products 7.23% of net revenues
The raw materials consumed for the financial year ended March 31st,
2023 were Rs. 798.63 crore as against Rs. 621.79 crore for the corresponding previous
period, an increase of 28.44%.
The staff expenses for the financial year ended March 31st,
2023 were Rs. 35.15 crore as against Rs.
29.40 crore for the corresponding previous period, an increase of
19.55%.
The other expenses for the financial year ended March 31st,
2023 were Rs. 88.16 crore as against Rs. 68.66 crore for the corresponding previous
period, an increase of 28.40%.
The EBIDTA [earnings before interest, depreciation, and tax] was Rs.
91.14 crore for the year ended March 31st, 2023, as against Rs. 63.78
croreforthe corresponding previous period, an increase of 42.89%
The depreciation for the financial year ended March 31 sc,
2023 was Rs. 16.11 crore, as against Rs. 16.01 crore for the corresponding previous
period, an increase of 0.67%.
The EBIT [earnings before interest and tax] were Rs.
76.40 crore for the year ended March 31st, 2023, as against
Rs. 49.95 crore for the corresponding previous period, an increase of 52.9%
The interest for the financial year ended March 31st, 2023
was Rs. 26.06 crore as against Rs. 19.81 crore for the corresponding previous period,
increase of 31.6%
The profit after tax for the financial year ended March 31st,
2023 was at Rs. 36.36 crore as against Rs. 22.48 crores for the corresponding previous
period, an increase of 61.74%.
The EPS [Earning per Share] for the financial year ended March 31st,
2023 was Rs. 22.74 for a face value of Rs 10 per share, as against Rs. 14.07 for the
corresponding previous period.
The consolidated Revenue for FY23 was Rs. 1037.09 crore with EBITDA of
Rs. 95.90 crores and PAT of Rs. 39.60 crores.
RESOURCES AND LIQUIDITY
As on March 31st, 2023, the total net worth stood at Rs.
402.89 crore and total debt was at Rs. 272.55 crore.
The net debt to equity ratio of the Company stood at
0.65 as on March 31st, 2023.
BUSINESS PERFORMANCE
Salzer primarily operates in four divisions, viz. Industrial
Switchgears, Copper Business, Building division and Energy Savers.
Industrial Switchgear
This business division occupies the first place in contribution to the
total business of the Company. This division includes transformers, terminal blocks,
rotary switches, isolators, general purpose relays, wiring ducts, MPCBs, contactors,
control panels, and overload relays etc. The products are mainly targeted for the Original
Equipment Manufacturers [OEMs] like Engineering Conglomerates Larsen & Toubro Limited
etc., Panel Builders, special Machine Manufacturers etc. The Company commenced its
operation in 1985 with this division which now has both domestic and export markets
considerably. These products have all the necessary international certifications like UL
[Underwriters Laboratories Inc], CSA [Canadian Standards Association], Intertek Semko
certification and CE [Conformite Europeanee], During the year, this division posted
revenue of Rs.
550.40 or against Rs. 393.50 or in FY23 and contributed 54.33% to the
top-line.
Copper business
The copper division comes second in contribution to the business. In
this division, Larsen and Toubro plays a major role in the off take. This vertical
commenced some 17 years back and focusing more on domestic market. After few years of flat
performance, the division witnessed robust recovery and during the year, the division
reported business revenue of Rs. 389.50 cr as against Rs. 338.58 cr in FY22 with year on
year rise of 15.0%.
The copper division includes wires and cables, flexible bus bars,
enameled wires, bunched conductors and tinned wires.
Building Division
Salzer has a wide range of products under this division including
modular switches, wires and cables, changeovers and MCBs. Modular Switches drives this
division in a major way.
Some of the features are:
The Breakup of revenue for the Electrical Installation Products:
Industrial Switchgear 54.33% of net revenues
Wires & Cables 38.44% of net revenues, YoY increase of 15.0%
Buildings Products 7.23% of net revenues
The raw materials consumed for the financial year ended March 31st,
2023 were Rs. 798.83 crore as against Rs. 821.79 crore for the corresponding previous
period, an increase of 28.44%.
Energy Savers
The energy saving division is a new business vertical and expects to
further boost growth by focusing on the manufacturing and installation of energy saving
and efficient products like street light controllers and energy saving panels.
Developments in Businesses during the Year:
Set up a new manufacturing rented facility with 8 acres of land
strategically located in Hosur, Tamil Nadu
Y First phase of commercial production expected to commence in March
2023 where the Company will use 15,000 sq. ft of land and balance in the second phase
Y Plant to manufacture high demand products like Wire Harnesses and
Toroidal Transformers in the first phase
Y Initial investment cost of Rs. 15 Cr through internal accruals
Salzer received patents for Integral Cam Operated Rotary Switches and
Motor Protection Circuit Breaker CMPCB) with increased air gap
RISKS AND CONCERNS
The Company faces the following Risks and Concerns: Commodity risk
A part of the business is substantially dependent on copper. Factors
that could affect the copper business include rising copper prices. However, this increase
in prices is passed on to the customer, and as the Company operates on a monthly average
pricing mechanism, it does not expect to be significantly affected by this risk.
Competition Risk
This risk arising from more players wanting to be a part of this
business. Like in most other industries, opportunity brings with itself competition. In
each individual business division the Company faces different kinds of competition risk
from both domestic manufacturers and bigger international companies. However, Salzers
strong reputation, its brand goodwill and ability to customize orders as per its customers
has differentiated the Company from its competition. Over the years, the Company has
expanded its presence geographically and added more customers. It also offers total and
customized electrical solutions to its customers.
As a result, the Company has achieved a Preferred Supplier status
with GE and Schneider who source their products from Salzer on a global basis. The Company
also has a substantial advantage over others due to the superior quality of
infrastructure, customer-centric approach and highly innovative approach. Thus, the
Company does not expect to be significantly affected by this risk.
Regulatory Risk
If the Company is unable to obtain the required certifications and
approvals for existing and new products, growth will be affected. However, the Company has
all the necessary international certifications for existing products. Moreover, with the
previous experience of obtaining the necessary
certifications for new products, the Company does not expect this
riskto affect it in the coming years.
Execution risk
The Company is planning to expand its product range as well as add
technologically-advanced new products. The execution of the project is dependent on land
purchase and project management skills. However, land acquisition is not a concern as the
Company has a sufficient land-bank to increase capacity and support the addition of new
products.
Concerns like unprecedented natural calamities, political/ social
turmoil may remain. However, these threats are faced by the whole industry. With improved
and efficient processes in place, the Company is well-positioned for sustainable growth.
Forex risk
Given the volatile global economy and fluctuations in the foreign
exchange market, the Company does face forex risk. In order to mitigate this, hedging
tools have been adopted to arrest the negative impact. Importantly, Salzer has a natural
hedge having both import and export at appropriate value and as the result, any volatility
in the forex market does not have a significant material impact on the business.
OPPORTUNITIES
Ongoing investments across commercial and residential sector will
complement the industry statistics - Rising space constraints along with ongoing
investments in R&D sector for the enhancement of smart and compact control equipment
will further complement the industry scenario. Continuous investments across commercial
and residential establishments including public and private apartments, offices, and
restaurants will further fuel the product demand. Moreover, ease-of-operation, longer
product life cycle and enhanced equipment safety are the essential features which will
accelerate the product adoption.
Growing inclination toward energy efficient systems will complement the
industry outlook
Increasing demand for safe & reliable systems coupled with the
increasing demand for HVDC systems across the T&D network will complement the demand
DC switchgears. Expansion of extra high- tension transmission networks to cater to the
growing energy demand across the manufacturing and industrial sector will further
stimulate the product demand. In addition, rising fund allocation toward solar and
offshore wind farms across
developed and developing countries will further complement the
switchgear market growth.
Ageing Equipment in many countries - The installed base of switchgear
in many countries either has exceeded or is nearing their recommended operational life.
Such conditions provide good prospects for the replacement market. There are possibilities
for switchgears to explode if at all they fail, causing potential damages to other
equipment, facility and environment. This may involve liabilities such as compensation,
environmental cleanup and legal action. Presently the nature of the load has changed to a
large extent, mainly due to growth of electronic equipment that is being used. Therefore,
in order to ensure high power quality, improved efficiency and to meet the load demand the
existing aged switchgear should be replaced the new ones.
Increase in Electricity Generation - The world electricity capacity is
expected to grow over a period of time. There has been a trend of increasing relocation of
industrial activity from developed economies to emerging economies such as China, India,
Eastern Europe and Latin America. Such a trend arises because of two reasons. Firstly, the
low- cost advantage that the companies can derive out of shifting some of their operations
in these countries. Secondly there has been a growing domestic demand in these emerging
economies for increased industrial and commercial production. To meet the growing demand
for more power, countries will require increased investments in electricity
infrastructure. Such growth in the installed capacity would require additional
infrastructure investments in switchgears. Additionally, the upgradation of transmission
and distribution infrastructure to meet the federal and state level energy efficiency
mandate is likely to boost the demand for switchgears. The impact of this driver is
expected to be medium in the short term and high in the medium and long term over a period
of time.
THREATS
Competition from local and multinational players
Execution risk
Regulatory changes
Raw Material Cost
HUMAN RESOURCES
The company has proper human resource and industry relations policies,
which are reviewed periodically. The human resource team conducts various training
sessions for employee development on an ongoing basis. These development programs are
aimed at augmenting employee potential and
represent an integral part of the overall business goals. Besides,
employees profile represents a well balanced mix of experience and youth.
As on March 31st, 2023, the Company had a workforce of646
people on rolls.
Way Ahead
Engineering sector is of strategic importance to the economy as the
sector directly or indirectly influences core infrastructure development within India. It
accounts for 27% of the total factories in the industrial sector and represents 63% of the
overall foreign collaborations. Demand for engineering sector services is being driven by
capacity expansion in industries like infrastructure, electricity, mining, oil and gas,
refinery, steel, automobiles, and consumer durables. India has a competitive advantage in
terms of manufacturing costs, market knowledge, technology, and innovation in various
engineering subsectors. Indias engineering sector has witnessed a remarkable growth over
the last few years, driven by increased investment in infrastructure and industrial
production. The engineering sector, being closely associated with the manufacturing and
infrastructure sectors, is of huge strategic importance to Indias economy.
The development of the engineering sector of the economy is also
significantly aided by the policies and initiatives of the Indian government. The
engineering industry has been de-licensed and allows 100% foreign direct investment CFDID.
Additionally, it has grown to be the biggest contributor to the nations overall
merchandise exports.
The demand for Infrastructure growing year on year as populations grow
and urbanization increases, there is a growing demand for infrastructure projects such as
roads, bridges, and buildings, governments focus on smart cities development is also
expected to spur demand for electrical products that go into construction etc. and Salzer
expects to capitalize on these opportunities. Besides, the Company also focuses on having
technical tie-ups with globally renowned players to develop technically
advanced products for its customers. With a greater emphasis on
sustainability, there is an increasing demand for renewable energy sources such as solar,
wind, and hydro power which leads to open new growth opportunities and demand for
switchgear, transformers, wires and cables.
On Electric Vehicle front, growing demand for low emission commuting
and governments supporting long range, zero emission vehicles through subsidies & tax
rebates have compelled the manufacturers to provide electric vehicles around the world.
This has led to a growing demand for electric vehicles in the market. Countries around the
world have set up targets for emission reductions according to their own capacity
Increasing investments by governments across the globe to develop EV
charging stations and Hydrogen fueling stations along with incentives offered to buyers
will create opportunities for OEMs to expand their revenue stream and geographical
presence. The EV sector across Asia Pacific is projected to experience steady growth owing
to the high demand for lower cost efficient and low- emission vehicles, while the North
American and European market are fast growing markets due to the government initiatives
and growing high-performance Passenger vehicle segment. However, relatively less number of
EV charging stations and hydrogen fuel stations, higher costs involved in initial
investments, and performance constraints could hamper the growth of global electric
vehicle market, this is where Salzer Electronics entered into two joint ventures to
explore and penetrate this sector.
Souce: UBS India Industrial & Infrastructure - Initiation of
coverage
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e/bitstreams/254aba87-dfeb-5b5c-b00a-
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https://www. ibef. org/industry/engineering-india
https://www. marketsandmarkets.com/Market-
Reports/electric-vehicle-market-209371461.html
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