Analyst (VAdv) Template - EPR KC - ST

2010
Power Equipment Market in

India
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Table of Contents
Executive Summary...............................................................................................3
INDUSTRY OVERVIEW............................................................................................3
Key Players............................................................................................................7
Competition situation..........................................................................................13
Key Drivers..........................................................................................................14
Key Oppurtunities & Challenges..........................................................................17
Distribution System & structure..........................................................................23
Key Distributors...................................................................................................25
Market Entry Strategy..........................................................................................27
Key Success factors.............................................................................................28
Financial Analysis................................................................................................33
ABB Ltd.(INDIA).................................................................................................33
Crompton Greaves............................................................................................33
Alstom Limited India.........................................................................................34
Country Advantage..............................................................................................35
Regulatory Advantage & legal frameworks.........................................................36
Recent Mergers & Acquisitions............................................................................40
Major Deals.......................................................................................................43
Crompton Greaves Limited Delivers India’s First 1200 KV Power Product, a
Proud Moment for CGL & India.........................................................................44
New Delhi permits import of Chinese power equipment......................................45
Names of industry bodies....................................................................................50
Industry SWOT.....................................................................................................51
Government Stimulus packages to boost the industry........................................53
Incentives entice investors into India power market.................................53
Submitted By: Sandeep
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Global & Regional market for the products in the industry..................................59

INDIA'S POWER EQUIPMENT IMPORTS SURGE ON DOMESTIC MKT'S FAILURE.....60
Singh
PGDM(G)
LBSIM
Annexure...............................................................62
List of charts & tables......................................62
Bibliography.....................................................62
Bibliography
Executive Summary
This report deals with understanding of the Power
Equipment Industry in India. The changing scenario
of industry since independence.
The report talks about key players in this segment

and their market share, how all competitors stand
against each other. The various challenges faced by
industry such as decline in growth of industry due to
recession. Apart from this it also talks about key
oppurtunities that lies in this industry which key
players can exploit for profitability and market
share.
In the next part report covers the market entry

strategy and key success factors. Along with this
financial analysis of key players in market are also
done so as to ascertain their position in market.
Recent mergers & Acquisitions which can make or

break a company are also covered. This includes
the major deals done in industry. Along with SWOT
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analysis it represents the study of the stimulus

packages offered by the government to give boost
to the industry.
Write-Snapshot
• Half yearly growth

registered is 8.57%
• Growth rate down from
19.6% of last financial year
INDUSTRY OVERVIEW
India produces the full range of electric power generation
and transmission machinery. The electrical machinery
industry consists of four key product categories, based
on their use.
➢ Generation machinery - Key products in this

category include generators, boilers and turbines.
➢ Transmission machinery – This primarily includes
different types of transformers and transmission
towers.
➢ Distribution machinery – Circuit breakers, switch gears and control gears
are key products in this category.
➢ Others – Electric motors, wires and cables.
The small and medium size sectors have a significance presence in the electrical
machinery industry, with an estimated share of around 35 per cent.
Indian Electrical Equipment Industry, though growing still, is showing signs of

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slowdown during the second successive quarter of the current financial year. The
industry, which indicated reversal of trend even before the global financial crisis
with a posting of an overall growth of 11.8% in the 1st quarter down from 14.5%
in the 1st quarter of last fiscal. The growth has now further decelerated to 6.6%
in the 2nd quarter. Consequently, the half yearly growth registered is 8.57%
down from 19.6% of the previous financial year.
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Key Players
1. ABB Ltd. India
2. BHEL
3. Crompton Greaves
4. Alstom India
1. ABB Ltd. India
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Total Market size of ABB is $ 25 Bn & Market
share is 18%.
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2. Crompton Greaves
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The stampings division, transformers business and
fan business are market leaders with 23%, 18% and
21% market share respectively.
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3. Alstom Projects
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Competition situation
Indian Power Sector is poised to witness severe competition amongst the
bigwigs of Power Generation and Transmission. Not that the competition is not
taking place as of now. But the race for the pie which Indian market is going to
offer is going to get competitive as the time unfolds. NTPC Ltd shall be
finalizing 11 sets of 660 MW Super Critical BTG orders soon.
Reliance Power has already announced a 10 Billion USD order to Chinese
company SEC at a price which it is learnt that no western companies can
match. It was really a shrewd move by Reliance Power. And it created a win win
situation for both Reliance Power and Shanghai Electric Corporation China.
Reliance Power, not long before this deal, announced signing of another deal
with GE for its Samalkot plant for Gas based power plant. The order value was
about $2 Billion. India is set to gain a lot from the increased competition as the
price of main equipment registers steep fall.
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India thus can keep both West and China happy by placing the coal powered
power plants on Chinese companies while awarding Gas based power plant to
US and EU companies, where better domain knowledge exists for gas based
power plants.
China’s over capacities might force them to offer very low prices to the buyers
of such equipment in India. An important fact which Indian companies should
be aware of relates of quality of coal. Indian coal is quite abrasive and has very
high ash content. Chinese companies may have to redesign their Boilers based
on Indian conditions or otherwise their equipment may not perform to the
satisfaction of IPPs in India.
The journey has just begun. The things would be more clear in coming days,
may be months.
Key Drivers
Key drivers in this segment are:
1) BHEL =>
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BHEL is one of the largest engineering and

manufacturing enterprises in India ranked among
the leading Power Plant Manufacturers in the world.
• The company’s current order book stands at Rs.1,
34,000.00 cr which represents 4.9x of FY09 revenue
and provides strong revenue visibility for the nearto-medium term.
• BHEL is in talks with global players, including Alstom
and Toshiba, for manufacturing nuclear reactors to
provide end-to-end solutions. Its initiative in nuclear
power and super critical segment as key positives
for future growth.
• BHEL plans to expand its manufacturing capacity
from 10,000 MW to 15,000 MW and are planning
20,000 MW plant by 2011-2012.
• BHEL becomes the largest supplier in the world for
high-rating Disc Insulators for 800 kV HVDC
Transmission Lines.
• The top line and bottom-line of the company are
expected to grow at a CAGR of 20.60% and 13.69%
over FY08 to FY11E.
2) Crompton Greaves =>

Credit Suisse maintains `Outperform’ rating on Crompton Greaves.
September quarter reflected a mixed trend for Crompton Greaves. While
consolidated PAT (10.5% Y-o-Y) was marginally below CS estimates, it was
in line with a toned down consensus estimate. Sales were impacted by
slower growth in domestic T&D (transmission and distribution) and the
translation impact of Euro depreciation on international sales. Sales
growth in domestic T&D wasmuted.
With management having highlighted a likelihood of slower sales booking

in domestic T&D in Q1 continuing into Q2, weak revenues in Q2 may not
surprise the Street. A catch up is however anticipated in H2, as per prior
management guidance. International T&D performance is tracking ahead
with sales up 13% Y-o-Y in H1, as against a guidance of 5% growth.
Domestic consumer business is also tracking ahead of guidance.
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3) ABB =>
ABB, the leading power and automation technology group, announced
today that 11 of its local businesses have been ranked among China’s Top
100 Electric Companies by Electric Age, the influential trade magazine.
ABB has retained the No.1 position in terms of number of companies for
the sixth consecutive year. ABB Xiamen Switchgear was named one of
China’s Top Ten Electric Industrial Companies in terms of
Competitiveness, and ABB Beijing Drive Systems was among the Top Ten
Electric Companies in terms of Industrial Innovation. With more than 10
companies on the list each year since 2006, ABB is one of the key drivers
in the development of the domestic electric industry.
Isabelle Liu, Vice President of Corporate Communications, ABB North Asia

and China said at the forum of China’s Top 100 Electric Companies, “ABB’s
achievement would not have been possible without our excellent
performance in energy efficiency. We have expended great effort to
improve industrial productivity and power reliability, while at the same
time remaining committed to local development. We are pleased to see
that these efforts have enabled ABB to stay in close contact with our
customers. More importantly, we are making real and tangible
contributions to the quality of China's industrial infrastructure while
supporting the sustainable development of society.”
ABB companies on the list of China’s Top 100 Electric Companies include:
ABB Xiamen Switchgear Co., Ltd., ABB Beijing Drive Systems Co., Ltd., ABB
Chongqing Transformer Co., Ltd., ABB High Voltage Switchgear Co., Ltd.
Beijing, ABB Hefei Transformer Co., Ltd., ABB Engineering (Shanghai) Co.,
Ltd., ABB Xiamen Low Voltage Equipment Co., Ltd., ABB Zhongshan
Transformers Co., Ltd., Shanghai ABB Motors Co., Ltd., ABB Xinhui Low
Voltage Switchgear Co., Ltd., and Shanghai Transformer Co., Ltd. All of
these enterprises have won the prize several times, with most of them
improving their annual ranking.
In 2009 alone, ABB has invested $150 million to expand and develop its
facilities in China and its total investment now stands at $1.16 billion.
ABB’s annual purchasing in China exceeds $3 billion.
Currently, ABB operates 27 local companies, including over 20 joint

ventures. By providing its local partners with its world leading technology
and business wisdom, ABB has consolidated its leadership in the domestic
industry. Many ABB local companies play leading roles in the power and
automation fields. For example, ABB Xiamen Switchgear is the world's
largest manufacturer of medium voltage switchgears and vacuum circuit
breakers. Additionally, ABB Xiamen Low Voltage Equipment is the group’s
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largest global producer of low-voltage switchgears and air circuit breakers

while ABB Chongqing Transformer is the group's largest producer of
transformers.
As a global leader in the power and automation fields, ABB is committed to
introducing advanced products and technology to China so as to enhance
the strength of local R&D and support the development of "Chinese
Design” for the world. ABB has set up corporate research centers in
Beijing and Shanghai, important contributors to ABB’s worldwide R&D
network. In addition, ABB’s global robotics business headquarters and
research center are also located in Shanghai. Currently, over 80% of ABB
products sold in China are locally manufactured. Furthermore, ABB
products are also regularly exported to Australia, Singapore, India and
other overseas markets, promoting the influence of "Chinese Design".
In China, ABB has 15,000 employees, 99% of them local Chinese. This July,
ABB was ranked among the top 10 Employers in the Energy, Electric and
Chemical Industries by the China University Student Best Employer Survey
conducted by leading recruitment portal ChinaHR.com. In 2003, the
company was rated among the top 10 “Super Employers – the Best
Companies to Work for in China” in a survey co-sponsored by Fortune
Magazine and sohu.com. ABB was also ranked as a Top 10 most popular
employer by university students in 2005 during a survey conducted by
51.com, another leading recruitment portal.
In addition to economic development, the company is committed to

undertaking corporate social responsibility. ABB has supported poor
college students to finish their studies for five consecutive years. ABB’s
sustained charitable actions have benefited nearly 4,000 college students
in more than 30 colleges and universities across the country. The
company has also supported the anti-desertification program in Inner
Mongolia since 2007 and has carried out a three-year charitable program
to support nursing homes in Shanghai, improving the living conditions of
the elderly residents.
The list of China’s Top 100 Electric Companies has been annually compiled
by Electric Age for the past decade. This year, the program selected the
top 100 electric companies according to their 2008 revenue figures as
recorded by China’s official statistics organization.
ABB (www.abb.com) is a leader in power and automation technologies that

enable utility and industry customers to improve their performance while
lowering environmental impact. The ABB Group of companies operates in
around 100 countries and employs about 120,000 people. ABB has a full
range of business activities in China, including R&D, manufacturing, sales and
services, with 15,000 employees, 27 joint ventures and wholly owned
companies, and an extensive sales and service network across 60 cities.
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4) Alstom =>
Alstom is a large French multinational conglomerate which holds interests
in the power generation and transport markets. According to the company
website, in the years 2007-'08 Alstom had annual sales
The per-capita of over €16.9
consumption of electricity
billion, and employed more than 81,500 is only 606
people kWh/
in 70 year (2004
countries. – 2005)
Alstom's
headquarters are located which is much
in Levallois-Perret, below per-capita
near Paris.[2] Its
consumption of 10,000 kWh/ year in
current CEO is Patrick Kron.
many developed countries.
Alstom is active in the field of hydroelectric power generation; in
conventional islands for nuclear power plants; and in environmental
control systems. It is also the manufacturer of the AGV, TGV,
and Eurostar series, as well as of Citadis trams. Alstom is also present in
the urban transport market, and is behind regional train models, signalling
infrastructure equipment, and a number of associated services.
Key Oppurtunities & Challenges

Opportunities and Challenges for the Power
Equipment Industry
The growth of the Indian economy is unprecedented and calls for a

matching or greater rate of growth in infrastructure. The Indian
Power Sector is increasingly being recognized as a core component
of Indian infrastructure and its rapid expansion is essential for the
success of sustained growth of the Indian GDP at rates higher than
9% as envisaged in the XIth Five Year Plan.
The per-capita consumption of electricity is only 606 kWh/ year
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(2004 – 2005) which is much below per-capita consumption of

10,000 kWh/ year in many developed countries. The growth rate of
demand for power in developing countries is generally higher than
that of their GDP. Therefore, in order to support a rate of growth of
GDP of around 9% per annum, the rate of growth of power supply
needs to be in excess of 10% per annum.
This increasing power demand by the country's vibrant economy

would lead to a widening gap between the supply and demand if
major steps are not taken to rectify the supply side gaps. The
Government of India has an ambitious mission of ‘POWER FOR ALL
BY 2012'. This mission would require the installed generation
capacity to be at least 2,00,000 MW by 2012 from the present
installed capacity of 1,33,000 MW.
The Report of the working group on Power for the Eleventh Plan has
a target of achieving a capacity addition of 68,869 MW (revised to
76260 MW) in the 11th Plan XIth Plan and 82,000 MW in the XIIth
Plan when compared to the 23250 MW achieved in the Xth Plan.
To enhance the per capita consumption of electricity to 1000 kWh by

the year 2011 – 2012, the requirement of generation works out to
1038 billion kWh from the utilities alone and to a level of 1470 billion
kWh by 2016 – 2017.
In line with GOI’s commitment, the annual Budget for 2007-2008 has
increased the budgetary support for power reforms and
development from Rs 650 crores ($148 million) in 2006-07 to Rs 800
crores ($180 million). It has also given emphasis on Ultra Mega
Power Projects (UMPP).
These projects involve huge investments in the region of Rs 20,000

crores ($4.5 billion) for each plant with a capacity of 4000 MW. Two
units at Sasan and Mundra have been cleared and two more are
expected to be cleared out of seven UMPPs.
Evacuation of the power generated is the other high priority for

India. The generation resources in the country are unevenly located,
hydro in the northern and north-eastern states and coal based
power being mainly in the eastern part of the country. Development
of a strong National Grid is a necessity to ensure reliable supply of
power to all. Formation of a strong National Power Grid has been
recognized as a flagship endeavour to steer the development of
Power System on a planned path leading to cost effective fulfillment
of the objective of ‘Power for All’ at affordable prices.
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During the XIth Plan period new inter-regional capacities of 20,700

MW at 220kV and above are envisaged to be added. This would
increase the total inter-regional transmission capacity of the
National Power Grid at 220 kV and above from 16,450 MW of XIth
Plan beginning to 37,150 MW by 2011-2012.
It is envisaged that the total fund requirement for transmission

system development and related schemes would be Rs 1,40,000
crores.
Hence the XIth Plan and the XIIth Plan period is going to witness a
lot of investments in the power sector in the generation,
transmission and distribution projects. It is a well known fact that
60% to 70% of the project cost comprises of Capital Goods
equipment, raw materials & components.
It is with this in view, that the CII National Committee on Capital

Goods & Engineering is organizing a National Seminar on the
“Opportunities for growth & Challenges for the Power Equipment
industry” to sensitize the Capital Goods and related goods and raw
material manufacturers and service providers to the opportunities
likely to unfold in the XIth Plan. It will also highlight the challenges of
the GOI to add nearly three times the capacity in the XIth Plan, as
was added in the Xth Plan. In this challenge equipment industry in
India needs to gear itself to support the initiative by enhancing its
capacity and capability.
With the huge investment planned by the Central, State Utilities as

well as by the private players, this area would undoubtedly open up
a floodgate of opportunities for the companies manufacturing
boilers, turbines, transformers & switchgears, generators,
capacitors, transmission towers, high voltage equipment, rotating
electrical machinery as well as for the manufacturers of balance of
plants, like coal handling & ash handling plant, demineralised water
plants, cooling towers, chimneys, fuel oil systems, pipes, valves,
pumps, air-conditioning systems, fire fighting systems, computers
and telecommunication systems, instrumentation and automation
systems, without which a project cannot be complete. Apart from
the auxiliary equipment, there are other services of critical nature
like erection & commissioning, construction and allied services like
logistics which play a large role in the timely completion of the
projects.
This Seminar aims to organize an interaction between the suppliers

of all the manufactured goods required in the power sector and
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service providers with the user segment wherein each can highlight
their expectations from other. The manufacturing industry could
reap the benefit by taking proactive steps as guided by the power
generating & the transmission and distribution industry. This
seminar would act as a platform for all the related manufacturers
and service providers catering to the power sector to showcase their
abilities and capabilities which can help the power sector to avoid
cost and time over run in implementation of their projects. The
Seminar would also showcase the opportunities to all the
stakeholders of these industries i.e. both the Power industry and the
Capital Goods industry including the EPC Companies.
Risks and challenges
As the Indian power sector is embarking on increasing the generation and

transmission capacities, key challenges lie ahead which also resulted the
historical underperformance.
Project Execution – Needs to be expedited India has historically failed to meet its
power sector targets
by a significant margin and with tremendous opportunities ahead, the power

sector continues to be affected by the shortfall both on generation as well as
transmission side.
For example, for the current installed capacity of around 152 GW, the inter-
regional transmission capacity is only about 20 GW (13 percent of the installed
capacity).
The various proposals in generation and transmission are currently under

different implementation stages. However, the power sector in India has been
plagued with a set of problems for meeting the planned targets. Although
measures have been defined by the policymakers and stakeholders in a sense of
complacency that the issues will indeed be resolved and India will plug the
supply
deficit of power to resolve the same but looking at the past record, it can be
estimated that the resolution measures may not be implemented.
1. Fuel Availability
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While additional gas supply from KG Basin has eased shortage to a limited
extend, supply constraints for domestic coal remain and are expected to
continue going forward. Consequently, public and private sector entities have
embarked upon imported coal as a means to bridge the deficit. This has led to
some Indian entities to take upon the task of purchasing, developing and
operating coal mines in international geographies. While this is expected to
secure coal supplies it has again thrown upon further challenges. For
example, the main international market for coal supply to India – Indonesia,
poses significant political and legal risks in the form of changing regulatory
framework
towards foreign companies. Similarly, coal evacuation from mines in South

Africa is constrained by their limited railway capacity and the capacity at
ports is controlled by a group of existing users making it difficult for a new
entrant to ensure reliable evacuation9 In this case it is essential to manage .
the risk of supply disruption by different options like – diversification of
supply, due diligence on suppliers, unambiguous contracting and strict
monitoring among others.
2. Equipment Shortage
Equipment shortages have been a significant reason for India missing its
capacity addition targets for the 10th five year plan. While the shortage has
been primarily in the core components of Boilers, Turbines and Generators,
there has been lack of adequate supply of Balance of Plant (BOP) equipment
as well. These include coal-handling, ashhandling plants, etc. Apart from
these, there is shortage of construction equipment as well. The Working
Group on Power for 11th Plan has outlined the requirement for construction
equipment for Hydro and Thermal power plants.
3. Land Acquisition and Environment Clearance
Land Acquisition poses an increasingly significant challenge in the Indian

Power sector. Power plants and utilities face major constraints and delays
regarding the availability of land and obtaining the requisite environment and
other clearances for the projects. The new Bill relating to land acquisition has
continued to face political opposition. While it provides for acquisition by
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project development agencies to the extent of 70 percent of the land required

for a project, with the balance to be obtained by the Government. In addition,
it has been reported that in some cases, even after land owners were asked
to sell and handover their land in ‘Public Interest’, the project was not
completed for several years due to other delays, a fact that eroded the
credibility of both the industry and the government. Consequently there is a
significant mismatch of expectations from the Project Affected Persons (PAP).
Stakeholders or other land owners may collectively object of the project
execution. In such cases, it is essential to proactively manage the
environment and stakeholders’ expectations.
3. Financial
Rapid build up of the generation capacity is being aided by setting up of Ultra

Mega Power Projects (UMPPs) each of which is 4000 MW. However, the
execution of the Ultra Mega Power Projects (UMPP) is a significant challenge
as India has not witnessed an execution of such a large scale
power project before. Furthermore, with each UMPP costing above INR 16,000
Crore, financing such a large project is a critical constraint for any developer.
In addition, considering the high financial stake involved through private
investments, delay in payments may put severe pressure on
developers/suppliers to meet the performance commitments.
5. Manpower Shortage
There is a general consensus that shortage of talent in the construction

sector is a long term problem and is likely to continue to push up project
costs and risks. The flow of talent into construction and power sector has
been gradually drying up as candidates have sought an alternative – and
often more lucrative – career options. The Government, which is the biggest
buyer of the capital projects, has also not done enough to address this
challenge. The education system is often not delivering the required number
of specialists across project management, engineering, estimating, surveying
and contract management. Facing a desperate game of catch up, the industry
needs a genuine collaboration between project owners, contractors and
governments to attract more school leavers and graduates. Companies
should also seek to stay in touch with changing employee aspirations. By
encouraging diversity in its employment practices and by offering greater
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flexibility in working hours, the sector can reach out to a wider potential
audience that perhaps would not previously have considered such a career.
Investment in existing employees is also crucial in order to offer better-
defined career structures, with a greater focus on training and higher salaries
where possible.
Advantages or key drivers towards the sector
• Increasing importance of the industrial sector – The industrial sector in
India is growing at over 10 per cent,as compared to the overall GDP growth
of 8 per cent, indicating the increasing significance of this sector in the
economy. As industry is one of the largest consumers of power, growth in
industry is driving demand for power,which in turn drives demand for
electrical machinery.
• Infrastructure development – The Government of India has taken up
infrastructure development as a priority area and large investments continue
to be made in this area. Growth in housing and retail construction, which are
major consumers of electricity also indicate a sustained demand in growth
for power in the future.
• Increased electrification – The Government is focusing on increasing the
penetration of power supply in villages. Along with reach, the focus is also
on improving the quality of power supplied. The Indian Railways is looking
at increasing the share of electric locomotives and trains in an effort to
reduce costs and pollution.
• Investments planned in expanding capacities in the power sector - The

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investments in the Indian electrical machinery industry by 2012 are expected
to be about US$ 105 billion. The bulk of the new investment is expected to
be in increasing generation and transmission capacity, as depicted in the
chart below.
************************************************************************
Distribution System & structure

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Electricity distribution is the final stage in the delivery (before retail)

of electricity to end users. A distribution system's network carries electricity
from the transmission system and delivers it to consumers. Typically, the
network would include medium-voltage (less than 50 kV) power lines, electrical
substations and pole-mounted transformers, low-voltage (less than 1 kV)
distribution wiring and sometimes electricity meters.
The modern distribution system begins as the primary circuit leaves the sub-
station and ends as the secondary service enters the customer's meter socket. A
variety of methods, materials, and equipment are used among the various utility
companies, but the end result is similar. First, the energy leaves the sub-station
in a primary circuit, usually with all three phases.
The actual attachment to a building varies in different parts of the world.
Most areas provide three phase industrial service. There is no substitute for
three-phase service to run heavy industrial equipment. A ground is normally
provided, connected to conductive cases and other safety equipment, to keep
current away from equipment and people. Distribution voltages vary depending
on customer need, equipment and availability. Delivered voltage is usually
constructed using stock transformers, and either the voltage difference between
phase and neutral or the voltage difference from phase to phase.
In many areas, "delta" three phase service is common. Delta service has no
distributed neutral wire and is therefore less expensive. The three coils in the
generator rotor are in series, in a loop, with the connections made at the three
joints between the coils. Ground is provided as a low resistance earth ground,
sometimes attached to a synthetic ground made by a transformer in a
substation. High frequency noise (like that made by arc furnaces) can sometimes
cause transients on a synthetic ground.
In North America and Latin America, three phase service is often a Y (wye) in
which the neutral is directly connected to the center of the generator rotor. Wye
service resists transients better than delta, since the distributed neutral provides
a low-resistance metallic return to the generator. Wye service is recognizable
when a grid has four wires, one of which is lightly insulated.
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Many areas in the world use single phase 220 V or 230 V residential and light
industrial service. In this system, a high voltage distribution network supplies a
few substations per city, and the 230V power from each substation is directly
distributed. A hot wire and neutral are connected to the building from one phase
of three phase service.
In the U.S. and parts of Canada and Latin America, split phase service is the
most common. Split phase provides both 120 V and 240 V service with only three
wires. Split phase has substations that provide intermediate voltage. The house
voltages are provided by neighborhood transformers that lower the voltage of a
phase of the distributed three-phase. The neutral is directly connected to the
three-phase neutral. Socket voltages are only 120 V, but 240 V is available for
heavy appliances because the two two halves of a phase oppose each other.[1]
Japan has a large number of small industrial manufacturers, and therefore

supplies standard low voltage three phase service in many suburbs. Also, Japan
normally supplies residential service as two phases of a three phase service, with
a neutral.
Rural services normally try to minimize the number of poles and wires. Single-
wire earth return (SWER) is the least expensive, with one wire. It uses high
voltages, which in turn permit use of galvanized steel wire. The strong steel wire
permits inexpensive wide pole spacings. Other areas use high voltage split-phase
or three phase service at higher cost.
The least expensive network has the fewest transformers, poles and wires. Some
experts say[2] that this is three-phase delta for industrial, SWER for rural service,
and 230 V single phase for residential and light industrial. The system of three-
phase Wye feeding split phase is flexible and somewhat more resistant to
geomagnetic faults, but more expensive.
Two frequencies are in wide use. Using 60 Hz permits slightly smaller

transformers and is usually associated with 120 V wall sockets. Outside North
America 50 Hz is more common and is associated with 230 V wall sockets. Large
electrical networks tightly control the line frequencies. The short term accuracy
is normally better than 0.1 Hz. The long term accuracy is controlled by making
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up "lost" cycles so that electric clocks maintain correct time.

Electricity meters use different equations for each distribution system.
• Many areas in the world

use single phase 220 V
or 230 V residential and
light industrial service.
• Japan has a large
number of small
industrial
Key Distributors manufacturers, and
Key Distributors in this segment are: therefore supplies
standard low voltage
1) ABB three phase service in
2) BHEL many suburbs.
3) Crompton Greaves • Using 60 Hz permits
4) Siemens slightly smaller
5) Thermax transformers and is
usually associated with
Siemens is one such company, which has seen a
120 V wall sockets.
steep rise in its order book. The company’s
unexecuted order value position as of June 30, 2006
Outside North America
was Rs 7,722 crore, a rise of 124%. This translates 50 Hz is more common
into an order of 2.81 times its September 2005 year and is associated with
ended sales; which stood at Rs 2748.48 crore. 230 V wall sockets.
Bhel has an outstanding order book position of about
Rs 39,300 crore at the end of first quarter. This
translates into an order book of 2.69 times its FY06 sales of Rs 14587.29 crore.
ABB’s order backlog has grown to Rs 31375 million from Rs 18575 million at the end of
2005H1, a growth of around 70%. This translates into an order of 1.05 times its December
2005 sales; which were at Rs 2963.05 crore.
Crompton Greaves order book stood nearly 1 time its FY06 revenues and Thermax’s order
backlog was around 1.3 times of its FY06 revenues.
Page32
Quarter ended June 06 PBIDTM Order
Company Name Basis PointsBook/
PBIDTM(%) PATM(%) Changed yoy Sale
ABB 12.04 7.38 73 1.05x
BHEL 16.50 8.91 -199 2.69x
Crompton Greaves 10.41 4.91 284 1.00x
Siemens 7.76 5.37 381 2.81x
Thermax 14.06 8.64 18 1.30x
Improved realisation:
The operating profits of the company have shown significant improvement as the realizations of the
companies have gone up on YoY basis. The raw material prices have come down in the quarter
ended June ’06 thus increasing the profitability of the companies.
Qtr ended Jun

Quarter ended Jun 06
06 (Rs
Company Name vs Jun 05 growth% yoy
cr)
Net Sales PBIDT PAT Net Profit% Net Sales%
ABB 974.22 117.31 71.91 41.71 55.12
BHEL 2656.33 438.27 236.67 44.86 15.61
Crompton Greaves 740.62 77.1 36.37 42.05 20.32
Siemens 1052.27 81.68 56.52 68.30 26.67
Thermax 318.59 44.78 27.54 122.92 59.18
Page33
Market Entry Strategy
○ Voice of the Customer: - Inputs for Services Design for a large
Page34
Energy & Environment Company: We mapped the opportunity for O&M

Type a major
services for comment
Captive Power Plants, identified Drivers & Inhibitors to
here , snapshot….
Snapshot ; snapshot
snapshot
outsourcing, compiled O&M costs across CPPs and developed possible
Business Models which helped our client assess the opportunity.
○ Market Study for <10MW Captive Power Plants for Energy &
Environment Company: Analysis of the Indian market for small solid-
fuel-fired captive power plants. Assessment of acceptability of solid fuels
and turnkey plant supply among various industries, estimation of market
potential, impact of New Electricity Act 2003 and other major
developments/trends. Strategies to boost the potential business volumes.
The client has entered this field, investing in a strong setup and necessary
resources to address the business opportunity.
○ Market Entry Planning for an Energy & Environment
Company:Analysis of the UK market for an Energy & Environment
company. Analysis of industry structure, legislative impacts, technology
levels, evaluation of channel partners and alliances for manufacturing
outsourcing. Our client acquired a local UK company as a subsequent
vehicle to expand into European markets.
○ Industry Sector Study for a Waste Heat Recovery Solutions
Provider : Analysis of the Energy conservation opportunity in Europe and
the USA for a UK based company providing waste heat recovery solutions.
Client was able to prioritize opportunities to pursue.
○ Market Entry Planning for an Energy & Environment
Company :Market entry plan for Indonesia, Malaysia and Thailand
markets. In-depth understanding of the end-user industries, fuel & energy
scenario, existing and future environmental norms and competitive
activity. Our client opened local offices in these countries to drive
marketing and support channel partners.
Page35
Key Success factors
Recalling 2009, the power equipment industry highlights the three key words:
new energy, intelligence, and special high pressure. Outlook 2010, the
development of space power equipment industry will also closely linked with
these three key words.
Trend 1
Into the new energy industry "thirty year old"
Equipment business fully shown
Review: World Climate Change Conference in Copenhagen, the new energy

investment has become the focus of world attention. Growth rate of electricity,
carbon reduction commitment, planning, and other new industry perspective,
new energy, low-carbon economy are the major highlights of the power
equipment industry.
China has the world's commitment to reduce emissions, by 2020 carbon dioxide
emissions per unit of GDP than in 2005, down from 40% to
 45%.
Recalling 2009, the Facts show that the power equipment market has clean
power equipment energy equipment manufacturing restructuring. April 9,
industry highlights the 2009, Dongfang Electric Annual Report 2008 released. The
three key words: new report shows that electricity demand by the downturn,
energy, intelligence, and corporate year 2009, new orders fell sharply in the second
special high pressure. half, especially in thermal power plunged atrophy.
 This situation confirms the earlier speculation that the

Page36
industry generally. In fact, Shanghai Electric, Harbin Power

Group, Dongfang Electric three largest power equipment manufacturer, in 2009,
new orders are not optimistic, thermal power equipment market freeze.
View: China made to the world the equivalent emission reduction targets is to
reduce the carbon intensity of China's economic development, that is less
dependent on energy consumption to economic growth, in order to fulfill this
commitment, only by reducing energy consumption and use of alternative
energy resources kind of way.
Reduce energy consumption, mainly through the promotion of domestic

industrial structure adjustment and economic means to achieve the cycle. Use of
alternative energy is another effective way to reduce carbon intensity in clean
coal technology and CCS (carbon capture and sequestration) technology
immature situation, taking into account the technical maturity and economic
costs, wind power and nuclear power is still nearly a decade the most promising
alternative energy sources.
Outlook: If the new energy industry, said before the bloom of youth
development, we can say that, after the Copenhagen meeting in 2010 will enter
a new energy in the thirties.
As the investment in thermal power peaking in 2010, thermal power equipment

production and sales will continue to shrink. Hydropower equipment and
electrical products has stabilized due to lower demand growth (5%), sales will
not be significantly increased. Shrinking demand for thermal power equipment
for wind power, nuclear power equipment and other new energy to create the
conditions for the development of new energy equipment will be fully shown in
the 2010 business year.
Wind power and nuclear power investment growth is expected to respectively

70% and 60%, and more impressive.
To reduce the proportion of fossil energy, China needs a large-scale development

of alternative energy industries (mainly wind energy, nuclear energy, biomass
and other new energy sources), the next decade wind energy, nuclear energy,
new energy in our energy structure, a proportion will be increased substantially.
Low-carbon economy, energy conservation policy is the focus of future economic
Page37
development, new promising energy-related industries, will drive the big

development of related equipment.
Trend 2
Equipment coupled with smart grid development to promote "smart heart"
Review: intelligence, promised to the grid of a better future. Smart grid has been
upgraded to national strategies in many countries high. April 2009, the U.S.
Government announced a total investment of Obama up to 45 million smart grid
plan, Obama then asked the U.S. Congress to pass the relevant legislation.
May 2009, the State Grid Corporation proposed the development of smart grid.
Smart Grid from the horizon. According to estimates by 2020 China's renewable
energy capacity will reach 570 million kilowatts, accounting for 35% of installed
capacity, to reduce annual coal consumption of 470 million tons of standard coal,
1.38 billion tons of carbon dioxide emissions. Which, wind, solar and other non-
hydroelectric renewable energy share will be greatly enhanced, and these
intermittent large-scale use of renewable energy will challenge the traditional
power grid, smart grid can solve this problem.
Point of view: the global financial crisis triggered and accelerated the pace of
China's machinery industry restructuring, electric industry is no exception.
Electric industry restructuring, transformation and upgrading of key objectives
including how to deal with climate change, and adjust the power structure, it is
an important aspect of climate change. Smart grid power supply structure for
adjusting the birth of a new direction specified.
China is in a stage of accelerated industrialization, the advantage is reflected in

the application of new technologies. Smart grid construction provides us with an
expedited access to the network the opportunity to build advanced power, but
also for China's power equipment, advanced in the world provides the
opportunity.
Smart grid equipment demanding, traditional equipment can not support the
smart grid. Therefore, the traditional power equipment how to adapt to the
construction of smart grid requirements, how to optimize the upgrade is an
important issue. This will give us space for unforeseen innovation.
Outlook: Smart power grid construction is the future direction of grid

Page38
construction. New technology always brings new demand for products. In China,
long equipment manufacturers eyeing the next emerging market. The
construction of smart grid development and stimulate domestic electrical
equipment off has been opened.
Power industry is divided into two grid-side and supply-side part of the
development of end 2010 grid smart grid-based acceleration of key construction
and supply-side focus is the development and utilization of new energy.
Specifically, the high-grade transformer, isolating switches, circuit breakers,
capacitors, transformers, automatic control equipment, wind power machine and
related basic components, nuclear and conventional islands and auxiliary
equipment demand will be significantly increased.
2010 will be the smart grid research and steady progress in building an
important year, related work will appear substantial progress. View from the
implementation phase, the initial construction of smart grid is mainly embodied
in the promotion of UHV construction, electricity end spread and intelligent
acquisition systems, new energy and network technology, digital substation
construction of the pilot.
Smart grid development in China the main beneficiaries of smart metering

equipment manufacturers and secondary business. As the smart meter
technology is relatively mature, the development of intelligent power distribution
network faster than the transmission network. The performance of smart meter
manufacturers will grow rapidly.
Trend 3
UHV GB release substantial increase in purchases of electrical equipment
Review: January 16, 2009, China's own R & D, design and construction, with
independent intellectual property rights of the 1000 KV Transmission Line -
Jindongnan - Nanyang - Jingmen UHV AC pilot demonstration project successfully
passed trial operation, the official put into operation. Operation of the project
indicates that China in the long-distance, high-capacity, low loss of the special
high-pressure core technology and equipment made a major breakthrough.
May 2009 UHV transmission technology at the International Conference on the

Page39
State Grid Corporation announced that China has fully grasped the core
technology of high voltage transmission expected to UHV in 2020 our country's
total investment over 600 billion yuan. UHV power transmission and distribution
projects for domestic enterprises to provide a rare opportunity for the rise.
December 16, 2009, the Standardization Administration of China Electricity

Council, State Grid Corporation jointly held in Beijing, the national
standardization sample cum major project of UHV AC transmission technology
standard press conference, the National Standard Committee released a 15 UHV
transmission technology national standards. This not only marks the first country
in the world to establish a special high-voltage AC transmission technology
standard system, but also means that the domestic power equipment companies
in the development of high voltage equipment, there have been more right to
speak, and enhance international competitiveness.
View: UHV power transmission project in the emergence of domestic

manufacturing enterprises to enhance their skills played a strong stimulating
role.
UHV power network by pulling, west of the CLP Group, Tianwei Group, TBEA
represented domestic power transmission manufacturing, product innovation
and access to international advanced technology, the current global economic
crisis Chiang ushered in a rare development opportunity , is expected to rise
strongly, to the world's top power transmission manufacturing companies launch
a strong challenge.
With the development of UHV power grid, the map of China's power transmission
manufacturing industry will be changed.
Outlook: 2010, special high pressure equipment is still worth the wait. More
optimistic about demand for power transmission equipment, the State Grid
Corporation of special long-distance transmission and distribution aspects of high
pressure and strong investment in building make special high-voltage
transmission input speed. Benefit from special high-voltage transmission and
distribution aspects of products competitive with the leading enterprises can still
maintain a relatively fast and stable growth.
UHV AC transmission technology standards established for the domestic power

equipment manufacturers set up barriers to entry, and provides technical
direction for guidance. Guidance in this technical standard, domestic power
Page40
equipment manufacturing enterprises will have a huge market space. In

accordance with the State Grid Corporation's long-term planning in the next 15
years, around the base of large hydropower and coal development, as well as
with Russia, Central Asian countries energy cooperation, China's Ultra High
Voltage Transmission is expected to reach 10 to 15, the total investment will
reach 400 billion yuan, which will reach 250 billion yuan investment in
equipment around. UDA1341TS is the number for products that is related with
integrated circuit.
Page41
Financial Analysis
ABB Ltd.(INDIA)
Page42
Crompton Greaves
Alstom Limited India
Page43
Country Advantage
India’s Advantages in the Sector:
India has a number of advantages in the manufacturing sector that make it an

attractive investment destination. Apart from a large and growing domestic
market, it also has a well-developed supplier base, availability of skilled
manpower at relatively lower costs, supportive regulatory
environment and good support infrastructure. All these are positive drivers or
potential investors to invest in the electrical machinery industry. Specifically, the
following factors are indicative of the attractiveness of the sector:
• Increasing importance of the industrial sector – The industrial sector in India

is growing at over 10 per cent,as compared to the overall GDP growth of 8
Page44
per cent, indicating the increasing significance of this sector in the economy.
As industry is one of the largest consumers of power, growth in industry is
driving demand for power,which in turn drives demand for electrical
machinery.
• Infrastructure development – The Government of India has taken up
infrastructure development as a priority area and large investments continue
to be made in this area. Growth in housing and retail construction, which are
major consumers of electricity also indicate a sustained demand in growth for
power in the future.
• Increased electrification – The Government is focusing on increasing the
penetration of power supply in villages. Along with reach, the focus is also on
improving the quality of power supplied. The Indian Railways is looking at
increasing the share of electric locomotives and trains in an effort to reduce
costs and pollution.
• Investments planned in expanding capacities in the power sector – The
investments in the Indian electrical machinery industry by 2012 are expected
to be about US$ 105 billion. The bulk of the new investment is expected to be
in increasing generation and transmission capacity, as depicted in the chart
below.
Regulatory Advantage & legal frameworks
BACKGROUND
Page45
With the promulgation of Electricity Act 1992 following adoption of Hydropower

Policy
in 1992, a comprehensive legal framework for the development of hydropower is
now in
place. The policy initiative and the legislation together have paved the way for
private
sector participation in the development of power sector in Nepal. Involvement of

the
private sector was necessary in view of a decline in the availability of resources

in
concessional terms, and the development of the power sector required a large
amount of
capital for investment. Since then considerable progress has been made in
installing new
hydropower facilities in the country. Khimti and Upper Bhotekosi have been in
operation
for some time now, and Indrawati is scheduled for commissioning in the first half
of
2002. Together these projects have an installed capacity of 103.5 MW. There are
few
other small projects at different stages of construction. However, a large sum of

financial
resources will still be required to meet additional domestic energy demands in

the years
to come. The level of investment required, in turn, will depend upon the overall
business
environment in Nepal and the government's efforts in addressing the constraints

for
involvement of the private sector in power development.
THE CONTEXT
Page46
Nepal's power sector is predominantly a public sector story. The Nepal

Electricity
Authority (NEA) is a vertically integrated power utility charged with the
responsibility of
generation, transmission and distribution of electric power in the country. It has

operated
virtually as a monopoly power utility. Out of the total generation capacity of the
NEA
contribution of private sector generation was very low. The private sector
generation
consisted of only a small amount of hydropower energy supplied by the Butwal

Power
Company (BPC), the first independent power producer in the days preceding
1992
Hydropower Development Policy.
1. In 1992, the government issued the Hydropower Development Policy with

a view to
encourage and involve the private sector in hydropower development. The

Electricity Act
1992 has put in place a framework that provides for the participation of the
private sector
in electricity generation, transmission and distribution. Nevertheless the NEA still
operates as a Single Buyer-Single Seller of electricity in the country. It purchases
electricity from independent power producers (IPPs), and is also the single
largest
supplier and distributor of electricity.
REGULATORY FRAMEWORK
The Electricity Act 1992 and the Electricity Regulations 1993 provide for a
framework
Page47
for the regulation of electricity distributed to the consumers. The legislation,

among other
things, deal with determination of tariffs and providing safe and quality electric
energy to
the consumers. These include:
• Licensing of the private sector for participation in electricity generation,
transmission and distribution.
• Establishment of a Tariff Fixation Commission for the purpose of fixing
electricity tariff and other charges.
• Fixing of volt level and other technical matters.
• Adoption of security measures in generation, transmission and distribution.
• Safety and precautionary measures.
• Inspection and supervision.
Institutional arrangements have been made for carrying out the above functions.
A
Department of Electricity Development (DOED), previously known as Electricity
Development Centre, has been created for licensing, promotion of private

sector and
maintaining quality standard of electricity supplied to the consumers. The Act

also called
for the establishment of an independent agency, the Electricity Tariff Fixation
Commission (ETFC) for the purpose of fixing electricity tariff and other charges.
The
government has framed rules, the Electricity Tariff Fixation Regulations 1993, in
exercise of the powers conferred under the Electricity Act. The Regulations
called for the
formation of a six-member ETFC with the Director General of the DOED serving
Page48
as the
Secretary of the Commission. The ETFC has been established as an independent
agency
under the chairmanship of a full time Chairman with the members representing
the line
ministry, private sector, regulated entities, industry and consumers. The DOED
provides
technical support to the Commission.
2. The function of the Commission is to review and approve retail electricity

tariff rates and
other charges. The Regulations provides the basis on which tariffs will be
established.
While fixing tariffs consideration needs to be given to various factors including

the rate
of depreciation, profit, change in consumer price index, royalty and

government's policy
for development of electricity. The Commission, while fixing tariffs and other
charges,
must not only consider loan agreements entered into with the financial agencies
but also
must fix at rates that can fulfill the terms of loan agreement with financial
agencies
entered into by the government or by public corporation.
Going through the provisions of the Electricity Act, one does not fail to get the
impression that the independent character of the Commission has been clearly
established. The Electricity Regulations provides for an independent person

outside the
government to chair the Commission. Similarly, the Electricity Regulations

Page49
provides a
list of factors to be considered while fixing the tariffs. It is free to determine the
tariffs
taking into consideration of all the factors and does not have to report to the line
ministry
before or after fixing the tariffs. The only problem lies with the institutional
structures
involved in water resources management. The institutional arrangement is

characterized
by an absence of a clear-cut separation of policy, implementation and

regulatory
functions. The highest policy level authority, the Minister for Water Resources, is
involved in all the three institutions that is, the Ministry of Water Resources, the
Water
and Energy Commission and the Management Committee of the NEA, an

operational
level organization.
REFORM APPROACH
Nepal's power sector has a significant private sector participation, and the
present level of
participation is bound to grow in the future as the momentum of government's

policy for
involving more and more private sector in the power sector grows. As the private
sector
grows not only in the generation but also in distribution, an independent

authority will be
essential to provide a level playing field for public as well as private sector
participants.
Page50
Such an authority is also needed to protect the interests of the consumers

against the
possibility of abuse of monopoly power by public or private companies and to
ensure the
adequate supply, safety and quality of power.
Currently the DOED, an implementation level institution id responsible for

license
processing, private sector promotion and quality control of electric power

supplied. The
34 responsibilities need to be streamlined. The separation of functions and

roles of the
DOED and the existing Electricity Tariff Fixation Commission would take the
following
approach:
• DOED to be restructured to focus on licensing and promotion of private
sector.
• The existing ETFC should be enlarged to take up the role of electricity
regulation and reorganize as Electricity and Tariff Regulatory Board. The
proposed Regulatory Board would take the responsibilities of quality control
of electricity supplied and also ensure that the license conditions are complied
with.
The above reforms are also in line with the revised policy of hydropower
development
approved by the government in October 2001. To maintain transparency, the

proposed
Board should be made to publish its report for general information. Furthermore,
accountability of the Board can be ensures if it is charged to present its report

to the
Page51
concerned committee of the House of Representatives.

Recent Mergers & Acquisitions
RECENT MERGERS AND ACQUISITIONS IN POWER EQUIPMENT INDUSTRY
BHEL
INDIA - Bharat Heavy Electricals Ltd agreed to acquire Kasargod Unit of Kerala Electrical
and Allied Engineering Co Ltd, a wholly- owned unit of Government of India.
Acquirer: Bharat Heavy Electricals Ltd

Acquirer Business Discription: Mnfr turbines,control instr
Acquirer SIC Code: 3612 - Power, distribution, and specialty transformers
Target Name: Kerala Electrical-Kasargod
Target Business Description: Manufacture,whl alternators
Target Ultimate Parent: Kerala Electrical & Allied
Target SIC Code: 3612 - Power, distribution, and specialty transformers
CROMTON GREAVES
INDIA - Crompton Greaves Ltd agreed to acquire Supervisory control & data acquisition
(SCADA), Traction electronics and Industrial drives business of NELCO Ltd, a developer of
software and manufacturer of electronic equipments for INR ### mil (USD ##.### ...
Acquirer: Crompton Greaves Ltd

Acquirer Business Discription: Mnfr electronic equipment
Target Name: NELCO Ltd-SCADA Business
Target Business Description: Dvlp software
Target Ultimate Parent: NELCO Ltd
Target SIC Code: 7376 - Computer facilities management services
Page52
UK - Crompton Greaves Ltd of India acquired Power Technology Solutions Ltd, a
Stockport-based electrical engineering company for GBP ## mil (USD ##.### mil)
approximately.

Target Name: Power Technology Solutions Ltd
Target Business Description: Mnfr electn equip
Target SIC Code: 3812 - Search, detection, and navigation equipment
INDIA - Crompton Greaves Ltd acquired the remaining ##% interest in Brook Crompton
Greaves Ltd, an Ahmednagar- based manufacturer of motors, for INR ##.### mil (USD #.##
mil).

Target Name: Brook Crompton Greaves Ltd
Target Business Description: Mnfr motors
Target SIC Code: 3621 - Motors and generators
INDIA - Crompton Greaves Ltd planned to acquire a ##% stake in Avantha Power &
Infrastructure Ltd, an electric utility company, for an estimated #.### bil Indian rupees
($##.### mil US), from Avantha Group. The board of directors approved the transaction. ...

Target Name: Avantha Power & Infrastructure
Target Business Description: Own,operate thermal plants
Target Ultimate Parent: Avantha Group
Target SIC Code: 4911 - Electric services
Page53
US - Crompton Greaves Ltd acquired MSE Power Systems Inc, a provider of electrical
substation, transmission line, collection system engineering, equipment packages, and
construction services, for an estimated $## mil in cash.

Target Name: MSE Power Systems Inc
Target Business Description: Pvd electrical substation svcs
Target SIC Code: 8742 - Management consulting services
BELGIUM - Crompton Greaves Ltd of India acquired Pauwels International NV, a

Mechelen- based manufacturer of transformers, for ##.# mil euros (#.### bil Indian rupees/
$##.### mil US).

Acquirer Business Discription: Mnfr,whl electn equip
Acquirer Ultimate Parent: BM Thapar Group
Acquirer SIC Code: 3651 - Household audio and video equipment
Target Name: Pauwels International NV
Target Business Description: Mnfr transformers
Target SIC Code: 3612 - Power, distribution, and specialty transformers
INDIA - Cummins India Ltd raised its interest to ##.#% from ##%, by acquiring a ##%
stake, in CG Newage Electrical Ltd, a generator manufacturer, a joint venture between
Crompton Greaves Ltd (CG) and Newage International Ltd, from CG (##%) and Janpath ...
Acquirer: Cummins India Ltd

Acquirer Business Discription: Mnfr combustion engine
Acquirer SIC Code: 3519 - Internal combustion engines, nec
Target Name: CG Newage Electrical Ltd
Target Business Description: Mnfr generators
Target Ultimate Parent: Crompton Greaves Ltd
Page54
Target SIC Code: 3511 - Turbines and turbine generator sets

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ABB
MALAYSIA - AA Anthony Securities Sdn Bhd, a ##.#%- unit of Multi-Purpose Holdings

Bhds wholly-owned Dynamic Pearl Sdn Bhd subsidiary acquired entire share capital of AAA
Asset Management Sdn Bhd, an investment holding company, from Lim Tiong Chin and ...
Acquirer: AA Anthony Securities Sdn Bhd

Acquirer Business Discription: Securities brokerage firm
Acquirer Ultimate Parent: Multi-Purpose Holdings Bhd
Acquirer SIC Code: 6211 - Security brokers, dealers, and flotation
companies
Target Name: AAA Asset Management Sdn Bhd
Target Business Description: Investment holding company
Target SIC Code: 6719 - Offices of holding companies, nec
Major Deals
MAJOR DEALS AND LATEST HAPPENINGS IN POWER EQUIPMENT
INDUSTRY
French power equipment major Areva plans to join hands with Indian firms for
production of nuclear power equipment in the country. The company, which is
positive about a favourable outcome of Indo-US nuclear deal, has already
initiated talks with potential partners.
Page55
It is understood that public sector power equipment major BHEL has shown
interest in joining hands with the French firm. Ms Lauvergeon, however, declined
to give names of the companies with which Areva is talking for a possible joint
venture. It is said that the company is also in talks with Reliance Energy and Tata
Power, both of which have expressed their desire to enter nuclear power
business.
Areva T&D, the Indian subsidiary of Areva France, has emerged as the number
two company in this business in the country.
The Rs 100-crore project with PGCIL involves supply of equipment to improve

sub-transmission grid in the state of Bihar.
The NTPC joint venture company Aravali Power Company has awarded a Rs 129-
crore power transformer package to Areva T&D for Indira Gandhi Super Thermal
Power Project at Jhajjar.
It would also supply equipment for small transmission projects being undertaken
by Tata Power and transmission arm of Reliance ADAG group.
Crompton Greaves Limited Delivers India’s First 1200 KV Power Product, a Proud
Moment for CGL & India
This is a moment Crompton Greaves Limited, part of the 4 billion USD Avantha
Group, will cherish for a long time to come. Today CGL is proud to announce the
despatch of their first 1200 KV product to the UHV research station of Power Grid
at Bina, Madhya Pradesh from its Nasik Switchgear Plant.
This 1200 KV Capacitive Voltage Transformer (CVT) is the first Indian product,
conceived, designed and successfully developed indigenously. With this
development CGL becomes the first Indian company to successfully develop &
deliver a 1200 KV Ultra High Voltage product to the ambitious Indian T&D
Page56
project.
By delivering the world’s highest KV class product indigenously, CGL once again
affirms its leadership position in Indian T & D arena and has taken a giant leap in
their quest to become a global leader.
1200 KV UHV AC System in India & CGL: Development of a 1200 KV UHV AC
system, the highest AC system in the world, is an Indian dream to tackle the ever
growing power demand which is expected to be over 400 GW by 2020. Although
many countries in the world like USSR, Japan, America & Italy have made great
progress in the research of 1200KV ultra high voltage AC transmission system
only China has recently established the commercial 1100 kV system
successfully.
Indian experience is rich in 420 KV and limited in 765 KV AC systems. The need
for bulk transfer at ultra high voltage levels in India in the coming years is
inevitable. Hence indigenous development of this highest transmission system in
the world is a major task with available time and expertise.The task spear
headed by Power Grid Corporation of India Ltd ( PGCIL) involves, establishing a
research station with an experimental 1200 kV transmission line (1km line at
Bina in Madhya Pradesh) to study performance of various equipments,
environmental effects and operational difficulties which are not envisaged
currently and develop the commercial lines in due course. However the real
challenge was to develop the first of its kind UHV products indigenously.
Crompton Greaves Ltd (CGL) is a major force in Indian power sector and is one of
the main partners in this Indian dream. CGL has been in the forefront of
technology development and fulfilling the new requirements of its customers in
India and abroad. When the entire world looked at the herculean task with
reservation, CGL was one of the first partners to have volunteered to take up this
challenge of developing three major products required for 1200 kV system
indigenously. The following are the products which CGL has promised to develop
here in India.
• 1200 kV, 333 MVA Power Transformer
• 1200 kV Capacitive Voltage Transformer ( CVT )
• 1200 kV Surge arrester
Today CGL is proud to deliver the 1200 kV CVT which has been indigenously
developed & manufactured at S1 division, Nasik. The product was extensively
Page57
tested for its performance characteristics at CGL’s EHV lab at Nasik and also at
Central Power Research Institute, Hyderabad.
“Talking on this achievement, Mr. SM Trehan, MD of CGL said, “Leading edge
technology and World class manufacturing are the two driving forces with which
CGL is forging ahead to be a world leader in the global T&D arena. This
successful development of 1200 kV CVT is a mile stone in our endeavor”.
“This is indeed a proud moment for us. Honoring our commitments and
delivering as promised has been our strength and this achievement only
reaffirms it”, echoes Mr. JG Kulkarni, VP- CG Power (ASIA)
“Mr. Vivek Moroney, General Manager, Instrument Transformer, Condenser
Bushing and Surge Arrestors said the delivery of this UHV class product is a
testimony to CG’s contribution to the new and advanced technologies in
generation, transmission and distribution segments of the power sector.
CGL will also deliver the other 2 products soon which are at advanced stages of
developments.
New Delhi permits import of Chinese power equipment

JULY 13, 2010
Page58
by Inchincloser
In a major reprieve to Chinese power equipment manufacturers, India on Monday

decided not to impose security restrictions on Chinese power equipment
imported into the country. Following security concerns on imported Chinese
telecom equipment, New Delhi had imposed similar restrictions on power
equipment imported from China in April this year. New Delhi had also made it
difficult for Chinese engineers to get business visa’s to work their equipment at
power plants in India.
A panel of senior officials called by the prime minister’s principal secretary and
the national security advisor (NSA) including senior officials from the power
ministry, the country’s security agencies and power companies said that the
proposed “standalone equipment for plants and power systems do not have
Page59
associated security concerns.” The panel, however, stressed the need to

introduce secured smart grid systems. A smart grid system supplies power from
the producer to the consumer through a two-way digital technology that can
control electrical appliances at homes to save energy . It checks energy theft
through smart metering and keeps track of electricity flowing in the system.
Earlier, Power equipment companies such as Adani, Reliance Power, Lanco and
JSW Energy, were up in arms against the Indian government as their bottom lines
were being severely hit with the ban on Chinese power equipment. Chinese
equipment is 20-25 percent cheaper than domestically manufactured equipment.
Indian power firms import about 50 percent of the total 92,717 MW power
equipment orders placed in the 11th (2007-12 ) and 12th (2012-17 ) five-year
Plans. Out of the total imports, the Chinese share is over 35,000 MW.
Another reason Chinese power equipment companies were restricted from

exporting to India was because since the past year, Indian power equipment
makers such as Bharat Heavy Electricals Ltd (Bhel) and Larsen and Toubro Ltd
(L&T) lobbied against cheaper imports from China which are continuously
subsidized by Beijing. Shanghai Electric Group Co. Ltd, Dongfang Electric Corp.,
Shandong Electric Power Construction Corp. (Sepco) and Harbin Power
Equipment Co. Ltd supply a majority of India’s requirements to Indian power
companies.
India’s decision to permit imports of Chinese power equipment comes just days
after China’s official media strongly criticised India’s biased ban on Chinese
telecom equipment. New Delhi had earlier released a list of 26 telecom
equipment manufacturers which could not export to India based on security
concerns since the equipment helped transfer data. 25 of the companies on the
list were Chinese, while one is Israeli. China has been voicing its concerns on
India’s lack of trust in diplomatic circles too, however most countries including
the US and EU have similar concerns against Chinese equipment.
Being restricted from importing Chinese telecom equipment and running

costly security tests on equipment imported from other nations is proving to be
Page60
highly expensive for Indian telecom companies which already offer the lowest
call rates worldwide. Tata telecommunications, the telecom arm of the Tata
conglomerate on Monday resigned from the core membership of the Cellular
Operator’s Association of India on the basis that industry lobby was not working
in the universal interest of all its members, and it was representing the views of
a few older players, namely the western equipment manufacturers.
While the governments still fix the kinks in deals between Chinese equipment
manufacturers and Indian power and telecom companies that have come to rely
highly on mainland imports, the move is a step in the right direction. India
needs cheap, quality equipment that can be installed fast for its growing
demands and China can supply it. India however needs to put in place stringent
security standards that are clear, unbiased and transparent for Chinese
equipment manufacturers to follow, and Chinese manufacturers need to provide
a quality and security assurance to India only then will the future of equipment
trade between India and China shine!
Crompton Greaves Bags Major Contracts Worth Rs 600 Crore from PGCIL
New Delhi, March 22, 2010: Crompton Greaves Limited (CG), part of the US$ 4
billion Avantha Group, long with its partner company, ZTR of Ukraine, has
bagged contracts for supply, erection, testing and commissioning of 765kV shunt
reactors to Power Grid Corporation of India Limited (PGCIL) for their various
projects across the country. The project is of strategic importance for the
company’s entry into the ultra high voltage (UHV) market. The order is valued at
Rs. 600 crore.
The contract, won against stiff global competition from both Indian and
multinational companies includes in its scope design, engineering,
manufacturing, supply, erection, testing and commissioning of 86 nos. 765 kV
shunt reactors. The project completion schedule is July 2012.
Page61
Page62
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**********
The Deal
The acquisition of Ventyx (www.ventyx.com) by ABB (www.abb.com) announced
on May 5,has the look of abellwether deal in the energy and environment sector.
This all cash deal at $1B, a 4X TTM revenue multiple, is excellent and should
inspire other sellers to test the market. This deal will be a reference point for
smaller sellers in strategic transactions. It is one of several clear signals that the
energy and environment software market is active and good deals can get done.
By coincidence, on the same day, Corum announced that the firm had launched
a new focus on serving energy technology companies. The initiative is being lead
from the Corum office in Houston. The M&A landscape looks exciting in an
energy technology industry in the midst of rapid transition.
Names of industry bodies

Central Power Research Institute (CPRI) is an autonomous society under Ministry
of Power, Government of India. Set up in 1960 by the Government of India, it
functions as a centre for applied research in electrical power engineering
Page63
assisting the electrical industry in product development, Consultancy and

quality assurance. CPRI also serves as an independent authority for testing and
certification of power equipment. CPRI's governing body includes eminent
professionals from industries, utilities, prestigious academic and research
institutions and the government.
Page64
Industry SWOT
STRENGTHS
Double-digit growth; capital goods sector @ 16.5%
• Electric power is an essential ingredient for economic growth. To sustain 8% annual GDP
growth, India’s energy needs must rise by at least 5.2% annually under the low-energy-
growth scenario; and by 5.9% annually under the high-energy-growth scenario.
• Various reform measures and other policy initiatives of the government together with positive
impulses in the economy are leading to improved business opportunities in the power sector.
In tune with the power generation capacity addition, the power Transmission and Distribution
equipment demand is also expected to steadily rise in the near and medium term.
• With rising capex plans of companies, the capital goods sector surged ahead with a growth
of 13.6% during the year 04-05 to around 16.5% in 05-06. Index of Industrial Production (IIP)
also showed an increase from 7% in 2003-04 to 8.3% in 2004-05 and 8% in 05-06.
• Within the capital goods segment; the power equipment industry registered a 16.11% growth
during April-September 2005. The industry is experiencing significant growth in areas such
as transmission lines, switchgear and rotating machinery. The industry, which earlier was
relying on exports, has seen a total shift in domestic and exports sales ratios. Currently,
domestic sales account for almost 75% of total sales.
WEAKNESS
Steep rise in the prices of inputs like ferrous & non-ferrous materials and crude oil in the
international market is a cause for concern.
OPPORTUNITIES
There is a lot of investment coming in power sector in all three segments such as
generation, transmission, and distribution. In the automation segment also there is a lot of
investment coming in the metal sector, non ferrous metals, pulp and paper, cement. The
automation product is linked to the development of construction industry. The way
infrastructure continues to come up, with shopping malls, multiplex theaters, tech parks, we
notice a lot of buoyancy in the sale of standard automation products.
THREATS:Power equipment is highly capital-intensive industry and as of now the

competition
within the industry is moderate; companies in the sector cater to different segments in the
market and size of the capex could give space for players of various sizes to participate.
ABB and Siemens are on a strong foot due to their vast product range, project execution
Page65
capability and the ability to rely on the parent company's expertise, portfolio and technology.
Siemens core business segments comprise of Energy, Industry and Buildings, Information
Technology, Communication, Transportation, Healthcare and Lighting.
Thermax is a solution provider in energy and environment engineering. It offers products and
services in heating, cooling, waste heat recovery, captive power, water treatment and
recycling, waste management and performance chemicals.
On the other hand, Crompton Greaves manufactures wide range of products such as power
& industrial transformers, HT circuit breakers, LT & HT motors, DC motors, traction motors,
alternators/ generators, railway signaling equipments, lighting products, fans, pumps and
public switching, transmission and access products. Post its capacity expansion and
acquisition of Pauwels has the largest transformer manufacturing capacity.
However, entry of new players and competition from Chinese manufacturers can affect the
profitability of the players going ahead.
The other threats in the long run could be slowdown in the economy due to rising interest
rates, which in turn would affect the capex plans of the companies.
Investment Advisor, PN Vijay is of the view that capital goods order books are good; what
was troubling them was the material cost as the commodity steel and copper prices went up
there was an erosion margins.
He further added that last quarter one saw that margin erosion had abated a bit because
commodity prices had come down a bit. So going forward the EBITDA will be intact and the
capital goods manufacturers would continue to outperform as they have been doing right
through the bull market.
Page66
Government Stimulus packages to boost the industry
Incentives entice investors into India power market
Incentives entice investors into India`s power market

To meet the modern electricity demands of its 900-million-plus inhabitants, India
turned to foreign investors to shoulder part of the load
International Environmental & Energy Consultants
India, with 900 million people and growing, is the most populous country after
China. The country is also undergoing unprecedented industrial growth and
development. The growth rate has increased from 2 to 2.5 percent in 1991 to 5
to 6 percent in 1995 and continues to rise. As growth increases, the demand for
power also increases. To meet this demand, in one of the largest projects offered
anywhere in the world, India has opened its power sector to foreign investment
with attractive incentives.
Power generation growth and its future
Since independence in 1947, India has multiplied its electricity generation
capacity nearly 60 times from a meager 1,362 MW to 81,164 MW as of March
1995 (Figure 1). Generation leaped from 4 to 351 billion units during this period.
Although per capita power consumption is still a mere 310 kWh (compared to
12,170 for the US), India faces an acute energy shortage with a supply and
demand gap of 8.5 percent, peaking at 19 percent.
Thermal plants account for 74 percent of the installed capacity, with
hydroelectric supplying 24 percent and nuclear supplying the 2 percent balance.
At 351 billion units in 1994 to 1995, power generation recorded a near-targeted
growth of 8.5 percent over the previous year. The government has estimated
that in order to keep up with the projected growth, an additional 142,000 MW will
be required by 2007. Based on an installed capacity of 69,352 MW in 1992, this
addition corresponds to a threefold increase in capacity with an average addition
Page67
of 9,500 MW per year.

At a modest installation cost of (US)$1,000/kW, this scale of expansion needs
(US)$142 billion in capital over 15 years, or (US)$9.5 billion every year. This is a
monumental task for any country, but especially so in India, where power
generation has mostly been the responsibility of the central and state
governments. Approximately 5 percent of India`s generation comes from private
sources. The government is responsible for the transmission and distribution,
including that for the private sector power supply.
The power sector of the state governments is the responsibility of the State
Electricity Boards (SEB) who generate and distribute power, set tariffs and collect
revenues. The SEBs have faced a plethora of problems over the years. Different
tariff rates (Table 1) are charged to the different consumer sectors ranging from
0.7 cents/kWh to 7.6 cents/kWh. Agriculture and industry are the two most
important consumer categories for their relative shares. SEB charges are set far
below unit cost for the agricultural sector and above unit cost for the industrial
sector. As a result, the revenue from the agricultural sector has been extremely
poor, leading to heavy financial losses. In addition, the transmission and
distribution losses are high due to sparsely distributed load over a large rural
area, where the SEBs must sell a substantial amount of electricity at low-voltage
levels. Other causes include underinvesting in the transmission systems,
inadequate billing recovery and other unrecoverable losses. The overall problem
is exacerbated by the low-capacity utilization of the thermal power plants. This
situation is largely due to deficiencies in operation and maintenance (O&M), poor
coal quality and generating equipment. These lead to enormous SEB losses,
which were more than (US)$2.25 billion in 1995 to 1996.
The central and state governments have recognized this gloomy scenario as a
formidable challenge to the nation and radically reformed the entire electricity
framework to address this.
The pre-amendment framework
Under the 1910 Indian Electricity Act and the 1948 Electricity Supply Act, the
legal framework provided for three utility types--SEBs, licensees and fully
government- owned generating companies. The SEBs were responsible for
generation, supply and distribution within the state. Licensees supplied
electricity generated from their own stations to specified areas within a state.
The generating companies, promoted and owned by the central or state
governments, supplied power to the grid without specific responsibility for retail
distribution. Fifty-seven distribution licensees and five private utilities comprised
a generation capacity slightly less than 3,000 MW or 5 percent of national
capacity.
Post-amendment framework
The governments recognized the additional capacity requirement would require
a colossal investment well outside their capabilities. They amended the two
Page68
electricity acts in October 1991 to attract domestic and foreign investment in

electricity generation, supply and distribution. They also modified the financial,
administrative and legal environments to attract private enterprise to invest in
the power sector.
Incentives under the new policy
Below is a summary of the incentive package for both domestic and foreign
investors:
- All companies will be allowed a debt-equity ratio of 4-to-1.
- The companies will be allowed to raise a 20 percent minimum of the outlay
through public issues.
- The promoter`s contribution should be at least 11 percent of the total outlay,
with a ceiling of 40 percent from Indian public financial institutions. To ensure
that the private entrepreneurs bring in additional sector resources, they must
obtain 60 percent of their contribution from sources other than public financial
institutions.
- For both licensee and generating companies, up to 100 percent foreign equity
participation will be permitted for projects set up by foreign private investors.
- The import of equipment for power projects by foreign investors will be
permitted in cases where foreign suppliers extend concessional credit.
- To safeguard return on investment against a possible power demand shortage,
private generating companies will be allowed to sell power under a two-part tariff
structure. This will be based on operational norms and optimal plant load factor
(PLF)--an important indicator of the plants` operational efficiency. The PLF will be
prescribed by the Central Electricity Authority (CEA), the central government`s
advisor to the Department of Power on technical and economic matters.
- The rate of depreciation will be periodically announced by the central
government.
The specific incentives for the licensees are:
- a license duration of 30 years in the first instance and subsequent renewal for
20 years, instead of 20 and 10 years, respectively, prior to the amendment;
- a 5 percent return rate in place of the previous 2 percent above the RBI
(Reserve Bank of India) rate;
- capitalization of interest at actual cost during construction instead of the
previous 1 percent above RBI rate; and
- special grants to meet debt redemption obligations.
Scope for participation
Private participation is welcome for projects based on coal, gas, hydro, solar and
wind energy. A private investor has two options: It can either operate as a
generating company or as a licensee. As a generating company, the investor
Page69
would sell to the grid without responsibility of distribution. As a licensee, it would

generate its own power and/or buy power from the SEBs and other generating
companies, selling to the consumers through the supply and distribution lines.
Project clearance procedures
The new policy has simplified the clearance procedure and provided a single
reference facility with the creation of the Investment Promotion Cell. Companies
must now clear a power project in terms of 17 major parameters with 13
statutory and four nonstatutory categories (Table 2). A new board will monitor
the clearance of the projects under the chairmanship of the cabinet secretary,
the central government`s most senior employee reporting directly to the prime
minister. This ensures that the statutory clearances are obtained and any
outstanding issues are resolved within a specific time frame.
Two-part tariff and investment return
In order to ensure the security of the investor`s cash flow and maintenance of
liquidity, the new policy introduces a two-part tariff system. The system provides
for the signing of a contractual agreement, which lays down rates (for a specified
period) for the sale of bulk power by the generating companies to an SEB. The
first part of the rate ensures fixed cost recovery, including returns based on
performance at normative parameters described earlier.
The second part ensures meeting variable expenses, based on electricity units
actually supplied. This part also provides incentives for achieving efficiency
levels higher than the normative parameter. The sale rate is calculated based on
the operational and load factor norms, as well as depreciation rates periodically
announced by the central government. Once the investor and government agree
on the sale rate, no limit is imposed on actual profits earned by a generating
company. Under the two-part tariff structure, the fixed costs cover interests on
loan capital, depreciation, O&M expenses, taxes on income, return on equity,
interest on working capital and variable costs comprising primary and secondary
fuel costs.
The two-part tariff provides benefits to the investor with regard to both fixed and
variable charges. The fixed charge covers sunken costs and does not vary with
levels of generation, whereas variable charges vary directly with achieved
generation levels. For a licensee, the new policy brings a guaranteed return of 16
percent on investment, 5 percent above the RBI rate. Since tax is treated as an
expenditure while fixing the tariff for a licensee, the return is actually higher,
being in effect, a post-tax.
The response to the new policy has been overwhelming. Through November
1995, the government received 245 expressions of interest to set up power
projects with a capacity of 93,661 MW. This corresponds to an investment of
more than (US)$102 billion. Of these proposals, 52 are from foreign investors
and joint ventures. The government has already cleared 16 proposals with
regard to foreign investment considerations.
Investment opportunity in existing plants
Page70
The low-capacity utilization of the thermal power plants has been of major
concern to the state and central governments for various reasons discussed
earlier. Better utilization of the existing capacity can greatly mitigate the present
gap in demand and supply position. It is estimated that a 1 percent improvement
in the power load factor by the SEBs would make available an additional 390
MW. The trend in the thermal PLF is shown in Table 3.
If the SEBs were able to increase the PLF levels from their current 55 percent to
the 69 percent level achieved by the central generating segment, an additional
5,400 MW of power would be available. The central government has formulated
an action plan to improve the performance of the power sector on short-,
medium- and long-term basis, covering both physical and financial aspects of
generation, transmission and distribution. The short-term measures include
improvement of boiler O&M, optimal regional grid operation, improvement of
station availability and an increase in the PLFs. The power sector can achieve a
significant improvement in the PLF through medium-term measures like proper
maintenance planning. In the long term, it can improve the availability of older
thermal power plants by appropriate renovation and modernization (R&M)
programs. The Confederation of Indian Industries formed a committee to
examine the R&M potential of the existing power plants in three age categories--
less than 15 years, 15 to 25 years and more than 25 years.
Current status
To make the private participation more attractive, the government has twice
amended the tariff notification, offering an additional assortment of incentives to
investors, including investment in hydroelectric projects. It has issued the policy
and guidelines to attract private investment in the R&M and upgrading of old
power plants and offered incentives to industries to encourage
captive/cogeneration plants. In view of the short completion periods for these
plants, the government has decided to allow power projects based on naphtha,
heavy petroleum stock, low sulfur heavy stock, heavy oil, furnace oil and natural
gas as primary fuels. To facilitate construction of large thermal plants, the
government has suggested identifying projects of 1,000 MW or more which
supply power to more than one state as megaprojects. The CEA will identify sites
for these projects. The feasibility reports will be prepared by National Thermal
Power Corp. (the largest utility owned by the central government) and Power
Grid (the central government-owned transmission agency). This will facilitate
measures for selecting promoters and finalizing power purchase agreements
between the promoters and the SEBs. Beginning March 31, 1996, the state
governments have been advised to introduce a competitive bidding element in
the process of awarding projects.
Indian power generation resources
There are adequate energy resources available in India to provide the fuel
required for increased generation. India, the third largest coal-producing country
in the world after the US and China, raised more than 274 million tons in 1974
and has abundant reserves to meet the country`s demand for several hundred
Page71
years. The primary resources are summarized in Table 4. Sweeping reforms have
thus countered earlier perceptions and apprehensions of domestic and foreign
investors who saw a high risk posed by structural inefficiencies and a sapping
regulatory structure. With strong incentives now available for both domestic and
foreign investors, several major projects are already under way. Investment in
the Indian power industry looks very attractive, indeed.
TAX HOLIDAYS ND INCNTVES
The holiday allows a developer to claim tax exemption of up to 10 years within

the first 15 years of a project's commissioning. The original deadline was March
31, 2010, which was subsequently extended to March 2011 by the Finance Act,
2009. Industry players are seeking another extension.
Capacity additions
Industry chamber FICCI has, in its pre-Budget memorandum, petitioned the
Government that in the light of the slow pace of capacity additions during the
preceding Five-Year Plans and the need to meet the growing demand for power,
tax holiday benefits for the generation and distribution sectors should be
extended by at least five years.
The CII has made a strong pitch against the provision for free electricity to
certain economic groups, as is being done in several States. It has also called for
strengthening the APDRP programme structure and formulating milestones with
State Electricity Boards.
Industry players have also demanded that the Government link Central
assistance to States to reduction in T&D losses achieved by them. Power
shortage issue should be addressed by framing and implementing regulations
and through the creation of wholesale power market.
Excise duty waiver
Transmission firms such as Power Grid Corporation of India Ltd have also sought
that the excise duty exemptions that are available now to power developers for
mega projects, should be made available for transmission companies too.
Also, excise duty exemptions in power equipment should be reconsidered to
attract investments.
India has a power generation capacity of around 1,57,000 MW and plans to add
78,577MW by 2012.
According to the Power Ministry, the Government expects to face a Rs 4.51 lakh
crore funding shortfall.
Of the Eleventh Plan capacity targets, the Centre now expects only around
62,000 MW to be commissioned, with the balance expected in the Twelfth Plan.
Page72
Global & Regional market for the products in the industry
The market for condensate polishing plants (CPP) in India, which are used to
purify and recycle condensate from turbines and condensers in thermal power
Page73
plants, is growing rapidly. Last year, the market was valued at INR1.4 billion
(USD28.6 million), with approximately ten units sold. Industry experts are
predicting demand to rise to between 12 and 15 units in 2009.
This growth is driven by a strong performance in the Indian power sector, which
is set to add 78,520MW of capacity between 2007 and 2012. The market for
condensate polishing equipment is currently dominated by Driplex Water
Engineering, which has a market share of over 70%, but the power expansion
plans have attracted several new players over the past year.
Driplex’s strength is primarily due to a lower priced product, a lack of

competition and a strong association with governmentcontrolled power plant
manufacturers such as National Thermal Power Corporation and Bharat Heavy
Electrical (BHEL). Together, the two companies generate 70-80% of the total
demand for condensate polishing plants in India.
The remainder of the market is shared between companies such as Ion Exchange
and Thermax, except where CPP equipment comes bundled with other imported
power equipment. Newer players include VA Tech Wabag and Doshion, which
both entered the Indian market in 2008 by way of technology collaborations, but
the latest and most aggressive entry was made in December by Indian-listed
BGR Energy Systems, in technical collaboration with Termomeccania Ecologia
(TME) of Italy.
Swadhin Samantaray, deputy marketing manager at BGR Energy, told GWI that
the BGR/TME partnership has already confirmed two orders in 2009 for power
plant equipment in which it is also providing CPP units. BGR’s medium-term aim
is to garner a market share of 35-40%, and the company expects to increase its
revenues by INR450-550 million (USD9-11 million) in 2009 alone. Sales stood at
INR1.5 billion (USD30 million) in the year to 31 March 2008.
Customers are also anticipating a change. “The entry of Doshion, VA Tech and
BGR Energy/TME into the market is likely to break the dominance of Driplex,” a
senior official at BHEL told GWI. In his view, “competition is likely to bring down
the price of CPP equipment by 15-20%”. A 500MW power plant requires a CPP
costing INR140-200 million (USD2.8-4.0 million).
CPP is predominantly used with oncethrough boilers in power plants using

highpressure thermal cycles. It is used to minimise the use of boiler make-up
water and to ensure the returned condensate is free from impurities which could
Page74
cause scaling. BGR Energy estimates that a 2 x 250 MW plant would require CPP
capacity of 670m3/d, although this varies depending on the impurities present.
Driplex remains optimistic, and a source at the company insists that it is “too
early to say if Driplex will lose market share to BGR Energy. It has yet to be seen
what BGR Energy and TME have to offer in terms of technology.”
********************************************************************************
INDIA'S POWER EQUIPMENT IMPORTS

SURGE ON DOMESTIC MKT'S FAILURE
India's Heavy Industries Minister Vilasrao Deshmukh on Thursday said a recent
surge in imports of power equipment was due to the failure of
domestic manufacturers to meet rising demand from the energy sector.
Deshmukh's comments come in the backdrop of complaints by domestic power
equipment majors like Bharat Heavy Electricals (BHEL, BSE:500103) and Larsen
& Toubro (L&T, BSE:500510) against duty-free imports from China.
"The capital goods industry has failed to ride the manufacturing boom and has
not been able to meet the entire requirement of the user industries. This has
resulted in the gaps being filled through imports of various sub sectors of capital
goods," he said at a Ficci function here.
But at the same time, the minister agreed that there is a case for imposition of
import duty on power equipment to give a level playing field to the domestic
players.
"Local manufacturers should get protection against foreign players... The
ministry would again approach the Finance Ministry for imposition of 14 per cent
duty on imports of power equipment," Deshmukh said on the sidelines of the
function.
He said to enhance competitiveness of the capital goods industry at the global
level, a scheme has been envisaged for consideration of the Expenditure Finance
Committee in the Ministry of Finance.
It includes setting up of four common facility centres covering sub sectors --
machine tools, textile machinery, heavy electrical equipment, and two capital
goods specific industrial clusters.
"...Finance Department has agreed to provide Rs 300 crore (US$66 million) and
may be next year we will reach up to Rs 1,000 crore to create this cluster and
Page75
other facilities required for capital goods," Deshmukh said.

At present, the capital goods industry contributes 12 per cent to the total
manufacturing activity and the manufacturing contribution to the country's GDP
is 16 per cent.
To achieve 9 per cent growth in the country's gross domestic product during the
11th Five Year Plan, the manufacturing industry should grow at 12-15 per cent
per annum. This would mean that the capital goods industry, which is considered
to be the core of manufacturing, should grow at the rate of about 18-20 per
cent," Deshmukh said.
At present, India imports almost 50 per cent of its capital goods requirements.
Stressing on the need to compete with global players, he said, "We need to
upgrade our technology, develop skills and increase cost competitiveness vis-a-
vis developed countries who have already registered a strong presence in the
field."
Currently, capital goods sector suffers from a number of difficulties like non-
availability of advanced technologies, benchmarking,
inadequate infrastructure and absence of level playing field.
Global Power Equipment Group Inc. (“Global Power”) is a leading comprehensive

provider of power generation equipment and maintenance services for
customers in the domestic and international energy, power infrastructure and
service industries. The company designs, engineers and manufactures a
comprehensive range of auxiliary power and heat recovery equipment primarily
used to enhance the efficiency and facilitate the operation of gas turbine power
plants as well as for other industrial, energy and power-related applications.
Global Power has over 40 years of power generation industry experience and the
company’s equipment is installed in power plants and in industrial operations in
more than 40 countries on six continents. The company believes, in its product
lines, it has one of the largest installed bases of equipment for power generation
in the world.
Global Power also provides routine and specialty maintenance services to

nuclear, coal-fired, fossil, and hydroelectric power plants and other industrial
operations. With these services, the company provides a comprehensive range
of industrial maintenance, modification and construction services to power
generation, pulp and paper, chemical, refining, manufacturing and other
industrial markets. The company also combines its services and equipment
divisions to offer turn-key solutions for after-market repair applications located in
the North American gas turbine power generation market.
With corporate headquarters in Tulsa, Oklahoma, Global Power operates
Page76
primarily through two operating divisions, Global Power Products and Global
Power Services. Global Products supplies auxiiliary power components to the
worldwide gas turbine power generation industry under the Braden
Manufacturing and Consolidated Fabricators name brands, and supplies heat
recovery boilers to the international energy, power, and process industries under
the Deltak brand. The Global Power Services division provides industrial services
under the Williams Industrial Services Group brand focusing on specialty
services, outage management and overhaul of power facilities and other heavy
industrial plants.
Annexure
List of charts & tables

I. Half yearly growth rate of last 7 Years…. Page 6
II. ABB Financial summary & Ratios… Page 8 & 9
III. Crompton Greaves Financial Summary & Ratios… Page 10 & 11
IV. Alstom projects Financial Summary & Ratios… Page 12
& 13
V. PBIDTM & PATM table… Page 26
Page77
VI. Sales, PBIDT, PAT, Net Profit%, Net Sales%... Page 27

VII.ABB Ltd. Financial analysis Chart… Page 34
VIII.Crompton Greaves Financial analysis Chart… Page 34
IX. Alstom Projects Financial analysis Chart… Page 35
X. Expected Investment Chart… Page 36
Bibliography
http://www.infinancials.com
http://www.ghallabhansali.com
http://machinist.in/
http://www.alstom.com
http://www.abb.co.in
http://www.bhel.com
http://www.cglonline.com/
www.cgglobal.com
http://www.capitaline.com
http://www.dare.co.in
http://www.in.kpmg.com
http://www.researchandmarkets.com Page78
------------------------------------------ END------------------------------------------------
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Analyst (VAdv) Template - EPR KC - ST

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2010

Power Equipment Market in

Global & Regional market for the products in the industry..................................59

The report talks about key players in this segment

In the next part report covers the market entry

Recent mergers & Acquisitions which can make or

analysis it represents the study of the stimulus

• Half yearly growth

➢ Generation machinery - Key products in this

Indian Electrical Equipment Industry, though growing still, is showing signs of

1. ABB Ltd. India

BHEL is one of the largest engineering and

2) Crompton Greaves =>

With management having highlighted a likelihood of slower sales booking

Isabelle Liu, Vice President of Corporate Communications, ABB North Asia

Currently, ABB operates 27 local companies, including over 20 joint

largest global producer of low-voltage switchgears and air circuit breakers

In addition to economic development, the company is committed to

ABB (www.abb.com) is a leader in power and automation technologies that

Key Oppurtunities & Challenges

The growth of the Indian economy is unprecedented and calls for a

(2004 – 2005) which is much below per-capita consumption of

This increasing power demand by the country's vibrant economy

To enhance the per capita consumption of electricity to 1000 kWh by

These projects involve huge investments in the region of Rs 20,000

Evacuation of the power generated is the other high priority for

During the XIth Plan period new inter-regional capacities of 20,700

It is envisaged that the total fund requirement for transmission

It is with this in view, that the CII National Committee on Capital

With the huge investment planned by the Central, State Utilities as

This Seminar aims to organize an interaction between the suppliers

Risks and challenges

As the Indian power sector is embarking on increasing the generation and

by a significant margin and with tremendous opportunities ahead, the power

The various proposals in generation and transmission are currently under

towards foreign companies. Similarly, coal evacuation from mines in South

3. Land Acquisition and Environment Clearance

Land Acquisition poses an increasingly significant challenge in the Indian

project development agencies to the extent of 70 percent of the land required

Rapid build up of the generation capacity is being aided by setting up of Ultra

There is a general consensus that shortage of talent in the construction

Advantages or key drivers towards the sector

• Increasing importance of the industrial sector – The industrial sector in

of 8 per cent, indicating the increasing significance of this sector in the

economy. As industry is one of the largest consumers of power, growth in

industry is driving demand for power,which in turn drives demand for

• Infrastructure development – The Government of India has taken up

infrastructure development as a priority area and large investments continue

major consumers of electricity also indicate a sustained demand in growth

for power in the future.

• Increased electrification – The Government is focusing on increasing the

on improving the quality of power supplied. The Indian Railways is looking

at increasing the share of electric locomotives and trains in an effort to

reduce costs and pollution.

• Investments planned in expanding capacities in the power sector - The

investments in the Indian electrical machinery industry by 2012 are expected

Distribution System & structure

Electricity distribution is the final stage in the delivery (before retail)

The actual attachment to a building varies in different parts of the world.

Japan has a large number of small industrial manufacturers, and therefore

Two frequencies are in wide use. Using 60 Hz permits slightly smaller

up "lost" cycles so that electric clocks maintain correct time.