HIGH PRIORITY MARKET- POWER
NOTABLE TRENDS IN THE ELECTRICAL MACHINERY SECTOR
Upgrading technology
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Industry players are upgrading their transmission capacities to the next higher voltage system of 765 kilovolts( KV) and are gearing up to supply transformers and related equipment of this class.
Increasing R & D expenditure
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Indian manufacturers are becoming more competitive with respect to their product designs, manufacturing and testing facilities. Investments in Research & Development( R & D) in the electrical machinery industry are among the largest in India’ s corporate sector.
Diversifying product portfolio
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Increasing competition in the industry and changing consumer demands have led to new versions of products being launched in the market. Players are entering into strategic alliances and tie-ups with technology suppliers to upgrade capabilities.
Adoption of supercritical technology
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The Government of India is encouraging the adoption of supercritical technology for thermal power plants due to its efficiency and reduced emissions. During the 12th Five Year Plan, 60 per cent of the total additional power is expected to be generated using supercritical technology.
PORTER FIVE FORCES ANALYSIS
Competitive Rivalry
Ü With a small number of firms in the high-end equipment market, competition is moderate in the sector.
Ü Large players provide complete solutions.
Ü Government plans to increase investment in power, rivalry is expected to increase.
Threat of New Entrants
Ü Threat is low, because of the capital intensive nature of the industry.
Ü Presence of big players, blocks entry of new players.
Ü Threat from substitutes is low.
Substitute Products
Ü Other substitutes such as solar and wind plants are less developed compared to electrical transformers.
Bargaining Power of Suppliers
Ü Bargaining power of suppliers is low.
Ü Suppliers( steel, aluminium) tend to have longer term contracts with the companies.
Bargaining Power of Customers
Ü Bargaining power is medium, following high price sensitivity.
Ü Buyers are limited and majorly government agencies, which lend higher negotiating power.
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