New Delhi, Aug 12
Sales of the domestic electric transformer industry are set to cross the Rs 40,000 crore mark, growing at an estimated 10-11 per cent annually to the next fiscal, compared to sales of around Rs 33,000 crore in the last fiscal, a report said on Tuesday.
"The sales growth will lift the capacity utilisation of manufacturers well above 80 per cent, leading to an increase in working capital requirement and capital expenditure, which would be funded through incremental debt," Crisil Ratings said in its report.
According to the report, the development will be on the back of significant investments in transmission and distribution (T&D) infrastructure to meet surging electricity demand.
Despite the higher debt, credit profiles will remain stable because of improving cash flows and healthy balance sheets.
"Significant investments in the power transmission and distribution infrastructure are spawning a cumulative revenue opportunity of Rs 70-75,000 crore for the transformer sector through this and next fiscal," said Rahul Guha, Senior Director, Crisil Ratings.
The consequent strong demand will drive up orders equivalent to more than a year’s sales, compared with nine months now, leading to high sales visibility, Guha added.