subject: Key Growth Drivers Of The Transformer Sector [print this page] Transformers Transformers
A transformer is a device that helps in changing the voltage level while transmitting electrical energy over long distances, so as to avoid energy losses during transmission and make the required current available to consumers. Step-up transformers are used to increase the voltage while decreasing the current during transmission and step-down transformers are used to decrease the voltage while increasing the current, whereas distribution transformers are used to transmit power to the end consumer.( http://www.bharatbook.com/detail.asp?id=149823&rt=Transformers.html )
The growth of the transformers sector is dependent upon the capacity addition and expansion plans in the power sector. A slowdown in the capital expenditure plans of the power sector due to a delay in financial closures can lead to a slowdown in demand for transformers.
Future growth
Research estimates the incremental capacity to grow at 10-12 per cent, from 1,019,283 MVA in 2006-07 to 1,494,164 MVA in 2011-12, translating into an increase of around 94,976 MVA per annum.
This growing demand will be led by an increase in generation capacities and increased investment in T&D by the government.
The development of the National Grid for enhancing inter-regional transmission capacity to 37,000 MW by 2012 will fuel the demand for transformers.
Schemes like Rajiv Gandhi Gramin Vidyutikaran Yojana (RGGVY) and Accelerated Power Development and Reforms Programme (APDRP) will also create demand for transformers.
A delay in the financial closures of power projects could lead to a slowdown in the demand for transformers.
Investment outlook
Research believes that there will be no further significant capacity additions over next few years as most of the expansion has already taken place and the present annual installed capacity is way above the annual expected demand.
Since the transformers business is a highly working capital intensive one, companies are required to maintain huge liquid funds in order to sustain their working capital requirements. Thus, companies would be required to invest more in working capital to meet their requirements while expanding operations.
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Related Reports
The 2009-2014 World Outlook for Electricity Transformers
