Electricals industry upbeat on growth prospects

Business Standard,

A LARGE MAJORITY – 76.7 per cent – of the companies participating in a survey of SMEs in the Indian electronics and electricals industry, carried out by IndiaMART Knowledge Services, expects their growth prospects to improve in the next quarter. Only 11.9 per cent said they have low expectations from the next quarter, and 11.4 per cent see no change.

As many as 59 per cent of the respondents reported an increase in orders since December 2010, while 30.9 per cent did not find any change in their order book position and only 10.1 per cent reported a decrease.

About 75.2 per cent of the respondents said they are planning to increase their production capacity. Around 52.9 per cent of the respondents indicated that they were looking to spread their presence by increasing the number of offices.

About 73.8 per cent of the respondents said hiring skilled manpower was a major challenge, while only 26.2 per cent do not experience such a problem. Another major concern is obtaining adequate finance. This was validated by about 66.7 per cent of the respondents, while 33.3 per cent disagreed.

About 53.8 per cent of the respondents also found that using technology was another challenge. On the infrastructure front, about 43.8 per cent of survey participants reported it as a key challenge for them.

Asked what could help them counter such challenges and gain a competitive edge, 91.9 per cent felt that working closely with customers and offering innovative products would be key, while only 8.1 per cent did not agree. Training labour was also found to be an effective option by about 76.7 per cent of the respondents.

On the other hand, 69.1 per cent felt that additional government support can become their growth multiplier. Investing in information technology was favoured by 64.8 per cent of the participants.

As for new initiatives that these emerging businesses are engaged in, about 40.5 per cent of the respondents said they are investing in green energy technologies. Initiatives in R&D won about 43.3 per cent votes while remaining 16.2 per cent reported to be undertaking CSR initiatives.

The electronics and electricals industry is highly fragmented, with a large number of SMEs, though in recent years it has seen large-scale expansion owing to globalisation and entry of foreign competition. Some 22.7 per cent of the respondents said they receive orders worth less than Rs. 5 lakhs per month, while 20.1 per cent receive orders worth this value every week.