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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