CHAPTER - III

GROWTH, STRUCTURE AND PROBLEMS OF ELECTRICAL MACHINERY INDUSTRY

Having noted in the previous chapter, the lop-sided structure of the Industrial sector in Kerala, we may now proceed to an analysis of the growth, structure and development of electrical machinery industry and also to situate it against the background of industrial stagnation in the state. It is one of the great growth industries generating linkages - both forward and backward - and thus giving impetus to the development of industries. But this sector is yet to make its impact on Kerala's manufacturing sector which is dominated by process and traditional industries. This industry is expected to provide ample opportunities for the development of ancillary units. The value added by this industry to total industrial scene is around 8.9 percent (Report by the High Level Committee, 1984). This industry showed an annual growth rate of 1.58 percent during this period. There is no single study which deals with any aspects of electrical machinery industry in Kerala. However, a few studies of electrical mahinery industry related to other: countries are available..

'Economics of Electrical Machinery Industry' by Jules Backman, (1960) is a noted study available in this field. It deals with the classification of electrical machinery, pricing of the product, marketing and profit margin in the context of the American Economy.
Another important study is about Brazil's Electrical Industry, namely 'Transnational Conglomerates and the Economics of Dependent Development - A case study of International Electrical Oligopoly and Brazil's Electrical industry' by Richard New Farmer (1974). It discusses the origin and growth of the electrical industry in Brazil and also the technological advances

41 -:

in this field .

' Manufacture of Heavy Electrical Equipment ( 1960 )

in Developing

countries ' by Ayhan Cili Ngiroeelu

is another study. It deals mainly

with the techniques used for the manufacture of heavy electrical equipments. 'The Power Sector in India by Dileep. M. Wage (1979 ). The Electrical Lamp

Industry by Arthur Bright ( 1949 ) are the other studies worth mentioning.

ELECTRICAL MACHINERY INDUSTRY IN KERALA: The importance of electrical machinery industry lies in the fact that it is a major input to the power generating sector. Electricity can be broadly classified into four stages namely generation transmission, distribution and utilisation. The transmission of electricity ' assumes great importance due to the widely scattered generation stations and load centres. For transmission of electric power transformers are the most important electrical equipment. The electrical industry shouldered the responsibility of achieving selfsufficiency in electrical equipments and machinery essential for maintaining the tempo of power development programmes. Since, power is the prime requirement for industrial and agricultural growth, top priority was given to generation, transmission and distribution of electricity in the state. In Kerala, among the engineering industries the electrical industry has developed most significantly according to the High level Committee Report, 1984 (Report of the High Level Committee (1984).) PRODUCT STRUCTURE: The product of this industry group consists of both industrial equipments and consumer products. Industrial equipments are widely used for further production in all sectors, primary, secondary and tertiary. The product of this industry is a basic necessity for the economic development of the region. These industries are widely related to other industries as users of raw-materials and components.

42 -:

Power generating plants have enormously increased in size with their accompanying economies of scale. The Rural Electrification Programmes initiated by the state has also contributed to the growth of the industry. Rural electrification as a Planned Programme was initiated in the sixties with the formation of the Rural Electrification Corporation in 1969. The industry group includes establishments engaged in* manufacturing machinery appartus and supplies for generation, storage, transmission, transformation and utilisation of electrical energy generators, transformers, switch gears, distribution line equipments and related products are required for the production of electricity. The products using electricity include household appliances, elevators, escalators-,. factory machinery, light bulbs, radio and television receivers (Jules Backman, 1960). The development of electrical industry has to be studied in the context of the development of electricity supply industry. The reasons for this approach is that the power plant industry was established during the third plan, the accent being on extending power supply to the rural areas. A significant development during this phase was the emergence of inter-state power grid system. Indian manufactures produce the entire range of electrical equipment required for power generation, transmission, distribution and utilisation of electrical energy. Large scale as well as small scale units are active in this sector. STRUCTURE OF ELECTRICAL MACHINERY INDUSTRY IN KERALA Power transmission and distribution equipment: 1. Transformers 6 Electricials Kerala Ltd. (TELK), Angamaly 2. Kerala Electricals Ltd. (KEL) Cochin
3. Alum ilium Industries Ltd., (ALIND) Kundara 6 Mannar

Power transformers, instrument,. transformers, switch gears Power transformers, Transmission towers. Cables and conductors, Switch gears.

43 :

4. Premier cables (PCC) Cochin 5. Traco Cables (TCC) Cochin 6. United Electrical Industries Ltd. (UEIL) Quilon 7. Power Systems and Projects, Palghat

Cables G conductors Cables a Conductors Energy meters , 11 KV Switch gears Carrier communication equipment and other T and 1) Instrumentation.

Industrial Machinery:KEL, Kundara

Electrical generators (for Railway) Motors, HRC, fuses, electrical wiring and other accessories. Motor starters and control gears

UEIL, Quilon

Consumer goods:Toshiba Lamps Cochin Electronics , Products , Components:KSEDC and its associate companies All variety of electronic. products and components Switches , relays potent.io meters for electronic industry. Computer peripherals. UEIL, Quilon Carbon film resistors , Plastic film capacitors. Fluorescent lamps

0/E/N Mulanthuruthy

Four industries which produce electrical equipments for generation, distribution and transmission of electricity is taken for indepth analysis. Here an attempt is made to give a brief :analysis of factories taken for detailed study. 1. Transformers and Electricals , Kerala Ltd. (TELK) TELK, a Kerala Government undertaking , makes transformers for the which are

production and distribution of electricity. It started production in the year 1963, it is functioning with the technical and financial collaboration,

44 -:

from Hitachi Company, Japan. TELK tops the list in the production of transformers and related equipments in the state. The Major products of this company are: 1) 400 K.V. Transformers 2) 600 K.V. Transformers Bank . ( It is produced for the first 500 M . V. Thermal Power Station in India at Trombay) 3) 45 K.V. Sf-6 Gas circuit Breakers 4) 420 K. V current transformers 5) 400 K.V. Sf-6 Gas Circuit breakers 6) 420 K.V. Oil integrated paper condensor 7) 144 M. V. transformers 8) 315 MVA, 400 Corporation. KV transformers for the National Thermal Power

TELK's manufacturing facility for power transformers is the best in the country and its products enjoy a good reputation in the market. 400 KV transformers produced by TELK are mainly purchased by the Electricity Boards in Himachal Pradesh , Maharashtra . Boards , Uttar Pradesh, Madhya Pradesh , Andhra and

Customers of the company are mainly State Electricity National Hydro Electric Power

National Thermal Power Corporation ,

Corporation .

There are five major companies in this field in the country It faces high competition from its

in addition to more than 20 small units . competitors..

All the ma jor raw materials and components are imported from the rest of India and abroad . So, production depends on the price, delivery etc. of imported items and other Governmental policies. TELK has been incurring heavy losses since 1981 . is said to be that TELK One of the reasons

is not getting enough orders for its products to are sold on credit basis and the in paying the bills in time.

run at full capacity . The products customers are not showing

any responsibility

The difficulty in securing rawmaterial in time adds to this situation. TELK has to depend mainly on imported raw materials.

:- 45 -:

H. United Electrical Industries

Ltd., (UEI) :

UEI was registered as a Public Limited Company in 1950 at Quilon. It was established to produce electrical meter's mainly for household use. It receives technical assistance from the Arol Meters Ltd. England. UEI started production of single phase meters with the help of imported rawmaterials. The company was taken ' over by the Kerala

Government in 1960. Then it started production of meter components also. It started production of motor control gear with the help of Mysore

Electrical Industries Ltd., in 1965. In 1971, the company made an agreement with General Electric Company of India at Calcutta for technical

assistance for the production of circuit breakers. UEI has received wide technical assistance from foreign countries. In 1977, it started the production of Carbon Film Resistors with the technical

assistance from Rubicon company Japan. The total employment in the factory is 600. It has been running at loss since 1982. Lack of orders for running this factory at full capacity is considered to be the major reason for this. III The Premier Cable Company Ltd., (PCC) : The Premier Cable Company (PCC) commenced production in 1966 in technical collaboration with KOMBINT WEBKABEL WERK OBERSPREE (KWO), a combination of eleven large scale manufactures of the erst while German Democratic Republic. With equity holding mainly from outside the state, PCC, is an example; of well managed units in the state. The general crisis and uncertainities in the cable manufacturing sector in the country have no doubt adversely affected the operations of the company. The company has a good sales net work with branch offices at Bombay, Calcutta, New Delhi, Cochin etc.

46

PCC's range of production includes XLPE power cables of 11 KV and 132 KV for all sizes in copper and aluminium, PVC power control and signalling cables, AAC/ACSR and aluminium overhead conductors and cotton and paper covered wires and strips. PCC is equipped with the most modern machinery , testing equipment and special research and development

facilities. The XLPE Plant has been set up in technical collaboration with NOIKA of Finland. PCC manufactures cables with the latest technology. In 1983, it began production of cross linked polythene (XLPE) cables. This particular type of cables is very advanced and hence is gradually replacing the earlier polyvaryl chloride (PVC) and paper insulated lead coated cables (PILC). Regarding the working results of the, company for the period of ten years from 1977-78 to 1985-86 is not fully satisfactory. In 1978-79 sales turnover reached a record level of 9.92 crores despite scarcity of rawmaterials and shortage of working capital Labour relations were not satisfactory. In 1979-80 sales turnover further rose to Rs.14.06 crores and profits also showed an improvement. In 1980-81, sales declined by about 8 percent to Rs.14.35 crores. Lack of orders and abnormal delays in release of payments and lifting of ordered materials were some of the above factors. The unsatisfactory results continued till 1985-86 the period of analysis. Aluminium is the most important rawmaterial for cable manufactures and its price have shot up in the post decontrol period. Other important rawmaterials like copper or XLPC are also imported. The main customers of the cable industry are State Electricity Boards. But, due to the perenial financial crisis, most of them have defaulted considerably on their payments. Infact, cable manufactures are forced to give long periods of credits to State Electricity Boards and this resulted in severe liquidity problems for the industry.

47 -:

Major customers of cables in the international market is Russia. The inability to penetrate international markets can be attributed to the high costs of production. This has made it impossible to compete in the international market. Soaring rawmaterial prices have become the bane of the cable industry in India. Among the rawmaterials used by the industry EC grade aluminium, copper, PVC and XLPE are the major rawmaterials ones . In the case of imported a distinct

like XLPE, Indian manufacturers

are at

disadvantage price-wise. They lack the financial and bargaining power to compete on equal terms with large manufactures abroad. Following an increase in the price of copper, an effort is made to switchover to aluminium which is next to copper in conductivity. Though manufactured indegeniously, the availability of aluminium EC Grade does pose a problem for cable manufacturers. Its erratic supply coupled with spiralling prices have become a matter of concern for the industry. Prior to the decontrol, the production and distribution was controlled by the Government. Short falls in production were met by imports channelised through MMTC. The major types of cables manufactured by premier Cable Company are, 1) Power cables 2) Control Cables 3) Screened Instrumentation cables 4) Special type of cables like fire resistant low smoke (FRLS) Navy/underwater cables, Moisture retardant - Moisture Barrier cables, Mining cables, Railway Signalling cables, Airport cables, Ariel Bunched cables as well as special

cables made to customer specifications. It also manufacturers aluminium and copper conductors. !.IV) Aluminium Industries Ltd. (ALIND): This company was established on January IInd 1946 at Kundara under the initiative of Sr. C.P. Ramaswamy Iyer, the Divan, who played an active role in the industrial development of Travancore. C.P. had invited Sheshasai, a great industrialist from North India to start industrial

48

enterprises in the state. An enterprise namely Sheshasai Brothers (Travancore ) state . Private Ltd ., was established for the industrialisation of the

This was responsible for the establishment of Aluminium Industries.

The company started production in 1950. The main product during the period was conductors. It has a production capacity of 1500 tonnes aluminium conductors annually..

The main products of the company are, Cable, Switch gear , products ,

Steel wire

the machines necessary for producing conductors and static relay.

It has established a consultancy Division and an Export Division. Its conductors and cables are widely used in the Idukki project, Sabarigiri project, Damodar Valley project, Bhakranangal project, and the super thermal power projects of National Thermal power corporation. Its products are also exported to Bangladesh , Itan, Iraq , Nepal, Srilanka , Thailand,

Sambia, Allan Switzerland, Aluminium Development Laboratories England etc.

The switchgear division of ALIND was established at Mannar in 1970. The technical assistance for this is received from Alsthom Atlantic

Company, France. The products of Switchgear Division are conductors, Switch gears, Steel Wire products, the machines necessary for producing conductors and static relay. ALIND has to face severe labour problems, which resulted in a loss of around Rs.36 crores . The company has been declared as sick on loth

October 1987 by the Board of Industrial and Financial Reconstruction. A comprehencial rehabilitation package has been worked out for the revival of the company . As a pre - condition to any assistance the IDBI has insisted on

some sacrifices on the part of the employees. Accordingly an agreement was signed on 27th June 1988. Among other things the trade union agreed

49 -: for freezing the wages including the Dearness Allowance for three years. Electrical Machinery Industry in the ASI framework Here an attempt is made to analyse the growth, structure and value added by the electrical machinery industry on the basis of the summery results of the Annual Survey of Industries from 1965-66 to 1984-85, the latest year for which data are available. FIXED CAPITAL The electrical machinery industry comprises of the groups which manufacture electrical machinery and apparatus and parts, insulated wires and cables, dry and wet batteries, electrical apparatus, appliances and their parts such as lamps, bulbs etc. (Sockers, Switches). This industry group shows an increase in fixed capital investment in general, but not free from declining trend in several years. A, detailed analysis of the fixed capital investment in electrical machinery industry is given below. For the entire electrical machinery industry, the value of fixed capital at current prices aggregated Rs.280.33 lakhs in 1965-66 showing an increase of 49.25 percent over the past three years. This tendency continued till 1970-71, but beyond that say 1970-71 to 1973-74, shows a decline in investment from Rs.692.93 lakhs to Rs.690.73 lakhs. Though this declining tendency continued till 1975-76, the period 1976-77 to 1982-83

1. Fixed capital represents the depreciated value of fixed assets owned by the factory as on the closing day of the accounting year. Fixed assets are those which have normal productive life of more than one year. Fixed capital covers all types of assets new or used or own costructed or deployed for production, transportation living or recreational facility, hospital, schools etc. for factory personnel. It includes the fixed assets of the head office allocable to the factory and also the full value of assets taken on hire purchase basis (whether fully paid or not) including interest element.

50

witnessed significant increase of investment of about 21.98 percent. Eventhough fixed capital showed an increase of 10.28 percent in 1982-83 over 1981-82 in the factory sector the increase in fixed capital investment in the electrical machinery industry is only 1.43 percent. The investment in fixed assets in this industry group during 1983-84 is Rs. 2346.2 lakhs comprising 1.94 percent of the total investment in the entire factory sector. INVESTED CAPITAL: 2 The structural ratios as presented in the ASI for a period of time brings out in clear terms the persistent growth of capital intensity in the factory sector in Kerala. The total invested capital in the electrical machinery industry during the year 1973-74 to 1983-84 shows an increasing tendency in general. This increasing rate is estimated to be an overall increase during the period of analysis. Manufacture of transformers and electricals is the group in the electrical industry showing higher rate of increase in Invested capital, say, 11.36 per cent over the period of analysis. Investment in real terms increased from Rs.689.20 lakhs to Rs.2166.87 lakhs from 1973 - 74 to 1981 - 82. Invested capital in the manufacture of wires and cables also shows an increasing tendency in general but there are instances of decline too. The period 1974 - 75 and 1976 - 77 shows a declining trend from Rs.713.63 lakhs in 1973 - 74 to Rs.485.96 lakhs in 1974 - 75 and Rs.450.73 lakhs in 1976 - 77. But, this is only a short term tendency. Beyond that, the

2. Invested capital is defined as the total of fixed capital and physical working capital. Fixed capital is the depreciated value of the fixed assets owned by the factory as on the closing day of the accounting years. Physical working capital is defined to include all physical inventories owned, held and controlled by the factory as on the closing day of the accounting year, such as the materials, lubricants, fuels, stores etc. that enter into products manufactured by the company itself, is supplied by the factory to others for processing. Physical working capital also includes the stock of materials, fuels, stores etc purchased for resale, semi-finished goods, and work-inprocess on account of others and goods made by the factory which are ready for sale at the end of the accounting year.

51

the industry is generally to increase at a rate of growth of 11.09 percent over the year 1977 - 78 to 1981 - 82 and this continues up to 1984 - 85, the period of analysis . Invested capital in the manufacture of dry and wet

batteries and manufacture of electrical industrial apparatus and parts such as lamps, bulbs etc. show an increasing tendency, but the rate of growth is very slow. TOTAL INPUT!

The total inputs purchased by the electrical machinery industry generally shows an increase over the period of analysis and this is estimated to be 11 . 38 percent from 1965 66 to 1984 85. Among the

electrical industry group, manufacture of transformers and electricals shows a noticeable increase in the purchase of inputs from Rs . 804.80 lakhs in 1973 - 74 to Rs.1458.99 lakhs in 1984 - 85. The purchase of inputs of this group contributes 3.92 percent of the total purchase of inputs in the manufacturing sector as a whole.

3. Input in any industrial activity mainly consists of the values of fuels , materials etc, consumed most of non-industrial services received from others; 'cost of materials consumed for repair and maintenance of factory's fixed assets, including cost of work done by others on materials supplied by the factory, cost of office supplies and products reported for sale during last year and used for further production during the accounting year, purchase value of goods sold in the same condition as purchased , depreciation ) consumption of fixed capital (ie. ( ie. payments made to

and the value of labour inputs

various categories of employees).

VALUE ADDED:

The total value added by the electrical machinery industry (at current prices ) 1984 rose from Rs . 109 lakhs in 1965 - 66 to 1220.14 lakhs in

85. The compound growth rate was around 11.84 percent. Value

added and the emoluments paid to the employees have a correlation. But, the total emoluments paid to the employees rose at a slower rate than the value added and a declining trend was visible in between . 1976 - 77 to 1982 The period from

- 83 shows an encouraging trend in value added by the The increase was from Rs.722.98 lakhs in

electrical machinery industry .

1976 - 77 to 1104. 81 lakhs in 1982 - 83. A brief explanation of the relationship of total emoluments to value added is note worthy. The period 1976 - 77, shows an increasing trend in value added of about 11.7 percent over 1973 - 74, the total emoluments to the employees showing an encouraging trend. The emoluments witnessed an increase of 12.35 ie. more than one per cent rise in the value added. During 1977 - 78, the growth rate in value added was nearly 10.52 percent per annum. During the same period, the total emolument paid to the employees increased at 11.99 percent per annum and this increasing tendency is only a short term phenomenon and it starts declining after this period say, 1978 - 79, and declined up to the level of 8.98 percent in 1984 - 85 with some exceptions in between. The interesting factor is that the decline in the total emoluments paid to the workers is much lower than the decline in value added. The data on ASI for the 1970's and early 1980's confirm the phenomenon noticed since the beginning of 1960's that the share of total emoluments paid to the employees in value added , has generally declines,

ie. 'the share of wages' in value - added has declined almost persistently.

VALUE - ADDED TO GROSS OUTPUT RATIO:

In real terms with the growth in high value added industries, the ratio of value added to gross output should have been rising or the costs of input to output ratio should have been falling. As a contradition to this, it is found that in the ASI sector, the ratio of value added to gross

output has been consistently on the decline. Electrical machinery industry is not an exception to this. The ratio had been generally at 0.17 percent for a number of years from 1965 - 66 to 1969 - 70. Since then, it showed very little increase to 0.21 in 1970 - 71 and then fluctuating on 0.17 to

0.21 till 1979 - 80. Two periods, 1980 - 81 and 1981 - 82 showed an encouraging trend 0.24 and 0.30 respectively and again it started declining to 0.18 and 0.19 in 1982 - 83 and 1983 - 84 respectively. Another point which has to be mentioned in the analysis of data relating to electrical machinery industry is the relationship of outstanding loans to productive capital. Productive capital is the sum total of fixed capital and working capital. Figures of outstanding loans steadily increased from Rs.386.06 lakhs in 1970 - 71 to Rs.2587.27 lakhs in 1979-80, over a period of ten years . As the proportion of production loans had formed

26.24 percent in 1970 - 71, 1981 - 82, outstanding loans formed 81.56 percent of the productive capital. In the intervening years, the proportion has been fluctuating from 61.95 percent in 1973 - 74, it declined to 57.24 percent in 1974 - 75, 56.33 in 1976 - 77; again declined to 39.10 percent in 1977 - 78; and the phenomenon continued till 1981 - 82; in 1982 - 83, productive capital was Rs.3768.65 lakhs. In 1983 - 84 loans declined to Rs.5526.62 lakhs from the previous years. The decline is because of stiff

interest rate on commercial loans prevailing then. The overall increase affected the financing of the industry group also. An important point is that nearly one third of the productive capital in the electrical machinery industry is formed from borrowed funds.

54 -

CAPITAL OUTPUT CO-EFFICIENT:

Data on technical co-efficients at the aggregate level make certain interesting reading. For instance, the capital - output co-efficients measured by the ratio of fixed capital to value added has not shown any significant rise during the seventies or early eighties. The ratio was 2.31 at 1970 - 71 steadily declining to 1.79 in lowest since 1965 - 66. It rose to 2.12 in 1978 - 79, and again slipped to 1.04 in 1979 - 80. The ratio was 1.05 over the six years and out of fifteen years of analysis from 1970 - 71 to 1984 - 85. Despite the many limitations of the data, it could bu argued that these results tend to contradict the generally accepted hypothesis that the Indian economy is experiencing a rising capital - output ratio. Among the many limitations, the first and foremost relates to value - added; while fixed capital must be at book - value, value - added is at current prices. Another major limitation is that fixed capital represents the depreciated value of all fixed assets and many fixed assets have probably longer life than that taken for depreciation purposes. (S. L. Shetty, 1978).

EMPLOYMENT:

The employment shows an increase from 1965 - 66 to 1973 - 74, and beyond that period the rate of increase is moderate. During 1965 - 66 to 1970 - 71, the rate was 14.13 percent per annum from 386 in 1965 - 66 to 3,073 in 1970 -71. During 1970 - 71 to 1976 - 77 the total employment in the electrical industry declined from 3,073 to 1954 is showing a fall of about 10.67 percent per annum. From 1976 - 77, it has a tendency to increase, though from 1954 to 9201 in 1980 - 81. Beyond that period, it steadily declined to 5909 in 1981 - 82, 4465 in 1982 - 83 and then has a slight increase to -5357 and again declined to 4754 during the period of analysis.

55

Major characteristics of this industry group for a period from 1976 - 77 to 1984 - 85 is summarised in Table 3 - 1. A similar tendency of increase and decrease is also visible in the sample units selected for detailed study and is given in Tables 3 - 2; 3 - 3; 3 - 4; and 3 - 5. The structural ratios and technical co-efficients of all industries as well as the electrical machinery industry in Kerala is presented in Table 3 - 6. As may be seen from table 3 - 6 the fixed capital per worker was very much higher in all industries in Kerala than in the electrical machinery industry in 1976 - 77. By 1984 -85 this ratio fell considerably to all industries. But for electrical machinery industry it has not only increased but rose above that of all industries. But in terms of value added per employee the electrical machinery industry has a much better record. This is the case with wages per worker also. The fixed capital net value added ratio has always been higher in all industries. Similarly, fixed capital output ratio has been lower in electrical machinery industry. But net value added output ratio has been higher in electrical machinery industry. Thus we see that the capital intensity in the electrical machinery industry has increased overtime and also value added per worker. This indicates the increasing importance that is being acquired by the electrical machinery industry sector of Kerala.

PROBLEMS OF ELECTRICAL MACHINERY INDUSTRY IN KERALA 1. RAWMATERIAL PROBLEM: The major problems faced by the electrical machinery industry is with regard to rawmaterial. The state has not so far become self sufficient in respect of basic rawmaterials required for the manufacture of electrical equipment. Materials such as copper, colled rolled grain oriented silicon steel (CR GO) insulating paper etc are still imported or coming from the rest of India. Components for products such as high voltage transformers are also being imported. Inordinate delay is experienced in obtaining import

licence for these items.

O 'U Q)

( O N N N O

N O

LO
CD 1 -1 N N rl

LO

m m O) ^-- I

dt

N m CO
N

CO
N O O CO ^--1

LCD

C^
C7)
N

c0
Q

(ON CO
O N

m
CT LO ri

e -- I N

++ r O co

i I I

00 Q)

CA
CO

+- +-^
F Q

d
Co

co
N

r-+ r-I
r-4 Lt)

N -1 T IN CO CD
Lt)

cc

O Cr) r-I Cl 00

Cl 10 Co Cl 0)

rl CD Co CT
d1

O O Cl

O L^
r-

U)

r4

a)
L

er
LO

I-V

a)

a)
ca

a)

IV

CD

.0
O Cl 0 m Cl
co

Cl
N -ZV qz:r

LO Lf) Cr)
(JD

C)
Co
Lt) C\ Lo

41

CD

LO
N

m CT Cl
kil

U-)

Cd

LC)

0 a

LO
C-3

m Cl
r-

a) 3

Cr)
m

CL cU z
(C7 U)

L0 CT r1

O N Cl

dt O
Lt)

co

C)

Lo

O Cl 0)

O CT
L0

dt

co I

LC) Cr)
Lt)

r-

LA N -IV

q*

a) L

i 1
1

00

N
4
N

-l cm N
m

Cr)

r-I

CD
ri CT

r-l

Lo N

qq

00 m co

Cl

co
00 rl

Co LO

O N

b C
co 4^ Cl) +-'

U)

co 0 1-4

1 ^ 1 1 1

LD
co CT C)
CD

00 U) r -; 0)
co

N
Cl Co
LO

L[ ) co LP) O
O

to Cr) Cl LH

C0 Cl Co
00 00

N Co

Cl

00

Co
Cl
C*q

N N
LI) H

0
I;

Cr)

Cr)

LO

ri Cl

N m CD CD Cr) m

O L
++

C
C) I
1

CD O O
1

CD O
N

C) O
C1) N

CD O
Cl N

o O
Co Cl

C O
O Cl

co
U) Cl
Lt)

co
V

CT 1

(1)
ro

.p

b (n
ca 4+

Co
r-1 N

H c r! 0) r-I N

LO CD O m

m L^ CD N m

m O CO N

c^ co L^

CD r1 N C^ N

r-1 O m N
L1)

ca U) La

> a
O O H U :

a)

r1

dt

dt

a)
r i r-I
++ I

r1
v:

CO
r,

N
ri

Cl
L^

Lf)
L^

m Co
L^ V'

o a
La c0 C4 U

co
r41

N Cr) co
N
Cl CO N

m
m

00 rn m

o
co N r-I

Cr)

dL CT dt LA

0 ca
L+ O

a
L I

C7) r-1

LO

r-l CO
c^ Ln

Cl to
14

Co
CD * (0

CO
N * LO

N Cr)
r1 L^ * 03 r-I

a
O La 00

m (M

LO

O LO
c-1

r-I

LO

O CY)

CD 0 Cl

m CN
N

0 C)

co

N Cl

a)

r^ ,^

(T CD CO
r-

dt
dt Cl
r-4

L^
m LO r-

O
CD N LO

dt
Co m
cq

) dL Cl
r-

(D LO LO l,

c0
N ,-I
clq OD

-4 ca

O
co m

.--1
CD m

Lt. U

.I

r-1

r-1

N Cl

r1
I LN I (D N CT)
r-1

L+
CO O
''+

1 I
I I I 1

O
CI N N C7 )
r-l

O
00 I
CT

r--l 00 I

N 0)
r-I

O
Co C)) r-1

Cl 00 I -1 CO Cn r-I

co
CO I N
co LT

dt

Lt)

r-I

co co I I m d^ Co Co CJ ) C) rl r-I

a) U L.

o 0 C N D N , N -+ 0 0 0 m r- C) M c - - NO CO 4 ri Q) CO 0 00 rl d0 CT 11, mot' CT r-4 r-I N N N N c --I c-i N r-I

CAD N N C)

CD CO m N CT c-I (D VI M N O O O M M LO 10 c-i N ri N e-1 N 4 ci N e-I 4 4 r-I N M M M ci N CO (D c-i CD r-I ri r-4 r -I ci ri O O .-I O

r4 +O I O 1- c-I Ca O I CT c1 Q )

CO CT (D CO I-m N r-4 dl m O CD

CU CD N

E- -4 ; O I _o U

M O r

rn rn

co w

ri O N m

rn rn rn

rn

o I

we
(n O Cn O
O

co

L^

I I

Q)

-i

)
0

N N

o m

) 0 CD

N CC)

oo

N (D O r-4

D r-I O r1

Coo
O c-i

co U)

10

(D

co

(D

I b r. cc 4- -4
U) }

I 1
I I I m
Q) Ilzr CD

N
CI )

1c-I

O O rOi

OO

0 CD (D

Q) M N

Q)

CO 07

m N

1(D N

N If) O c-I

(0

CD

I C a) O
Lr r Q (C Q U O

IO d^

O d^

O
Cf)

O d^

O
10

M CO

I)

d' 10

dv
!n

(D
to

N
(0

'0
++

C/)

Ca

CO ri

M
ri

1-

r -I r-I CD r-I N

0 N

CO ri CO N

1r-I

N (D

CD

CD LO
N

N co

> a.
11 U

00
O r-4

O
0 N

O N

4
O r-1

'
m ri

O
m r-I

N
N c-

N r-I

r-+ b

Q) cu

N
10

di
ri
10

CO

CD

N 1N

Q)

O
N

CT

O
N

co

CD O

M CD

a
0L)

CD

ri

r-I

ri

r- I

ri

r -1

cc ci

1f

ri

l
CO

(a
CD
ri
Cp

CD

r-I

(D

(n

co

C) Co

m CD 14 14 t- N CD N

CO r-I CD Q) m O O d1 M m

co
O

a)
Lr O U)

(0

CO

CD r-I 10 Co

(a

O CD O c-i

N N m CD N N ri O

O
CT

CU Q) c-i CT

r-i a CO Co Q) CA CT CT

CT

ri

vl

O O O CT CO

Cxi

[N M (T O
O I N 1N 1 fT I ri

r i N (O Li) CO d^ 1-CO CD m CD CO Cp CD O Q) Q) f7) O Q ) CT CT CT ri ri ri c-i r i r-I ri r-I

+' co C 41 n'

CO N

O CO

r4

CO CO

If)

-4 f

CO

CO O

Ui
N

N d^

e-I O

E- 0

0 NP
r4

rn m .-i
O ri CD N

0 ;t
r'1

.-I d^
r-i

In

O
(D

d^
CD

cD
m

r I

r-I

d"

m
LO

0
m N N CO

m O

N O .N r-I

m L^ t-

CO N

CO CO .-I

Co O) CO r-4

N N N t-

U') N O

r-C 'O

Co 't1

r-I

co

I ^

O m

d4

d'

Co d4

10 CO

Cf)

10 CD

Co

cf)

O
.-I r-I

LO

r -4

r-I
ri 4?

co 0

O m r-I

CO cD
d4 r-I

0 CO 0
m

N
CO O) r-I

m
m r-I

C%
m rl N tN O N

am)
ri N

CO
m r4 N o N N

r-I

wE cc 0

'44

rj)
..7

I
'(4 I

0
m m r-I t4

O
rI CT
N rC

N
r-I

m
N

a0 ri
m N r4

d^ ri
O N r-1

O
. -I CO CD 14

O
m
N r1

m
. I CO
N 4

a0
r-I CT
CO r4

00 1.4 Co co

O
CO r-1

ri
CO r4

Ca CO
I Cf) 00 CT r-I

) Q.i
ca Co O 00 r I CO

0
U
w

m
LO O

N r-I CO O

CO rI CO 0

CO N N N

N m U') -4

CJ)

m
U') r-I

r-I

d4 0

m N

Lr

O .a

I !

Co O
0) r-I

CO s-I

r-I
m
I )

co

co

(1)

r-I

a)
I o o I
, ,

m
O

e^

m r-1

cD
N

cn ri
N

O Co
CO N

d+
co

0 1-:44
CT LO

m
CT

Q U

co N .i

41

Q)
0
O

N
s-I

CT

C^
N
LO

0 C

t~

r-I

LO

-4 ( ++
G.

CO

CO

Lo 4^ -4

Co

o
r-I m N r-I

tN

m
CO

CD
r-

co Cr
CY)

CO

d^

Co e^

a) > 0.
Co
C -C U ,

O m
N r-I

r-I r-I

a) r-I 0
ri

r-4 N r-I

CO
N r-I

0 co
t-I

ED m rn
ri

m c l! CO
d4
r-I

CO
0

a)
A co r4
Co co

CO
Cf) T-4

Ey

a)
rC

En .,4 Cd
41

co

C7) r1 N

m cm N N

CO

CO

r-I

O
N

CO eI N O r-I Co CO O) m CO

t,

o)

O
14
' rI

m CD

Cc)

o
co
04 L)

N
t^ .-I tCO N

CJ) CO LO M m r-I

m
m L r) e-I
t-

CD
N

co

OO m C CO

Do_,

r-1
LO

a)
E
-4

Co

r, co 0 co

r-1

CD O) m ri

O
CO N r-4

O 0

CO CO

m CT CT 0 Cf)

r4 m CO CO

C%

3 U

CO O Cf) CO Co ION CO

O
CO CO

0 0.

a)
to

Co
ri CO

ri

r-1

10

r-I

O
CY) CT

O
C) O

A)
CD CT

CT
cn C7)

CO
(M N

CO
r-I CD

v -4
r-i r-I

C)
cm CO

CO

Co

fi. U
m m

CF) CO

.-I

r- I

0)

CT

co

LO t-

a)
A co
f-+ CCS N

(1) U
I I 1 1 N N C7)
r4

F-

CO N CJ )
ri

CJ ) N C7) r4

O CO CT r-1

r-1 CO Cn
r4

N CO CT r-I

m CO C7 ) r-I

--*
CO O) r1

Cf) CO CT r-1

CO CO CJ) '-i

0 U)

N
c0 O
a)

m N m ri

m a
U)
1-0 v

O m O r-I
r{

a0 co 0 0 N

n rI r1 O c-1

OD
N

N I

m r-I N m m

(D m

IC)

00
m r-I
114

cD O

a)
(D N LS Cl

co dq
m

O P-4 C

a) .

co 'o I a) > co ! Ir)

1 1 I

rr-I r1
IC )

cD

a)
a)

N r-i cD

a)

Ci r -1

aD

v) If) m (D

a) m

m IC)

m r

CO a)

dq

IC)

m
IC)

m
r-4

0 r

1-4 401

00

O E^ H I O Q.

co O 4a CL

a) j
9 (D m

rl

0 V

co
rl DO (D

a)
S

co
a) 00 (D

v
0

co

( ^--I 00

m r-ll N Co

N co

m
(D

(D

m S

i I
a) I

W E^ ! I
ca

I I

1 1

I 1

I 1

1 1

1 1

I I

O 1 a)

un

CD

.'

(1)

( ri 00 ca 14 CO (0 1 C

00 N r-i

S m O

a)
00 m

r-I (fl O) m

0 a) O

Lo

1.44

Lo eI

00 O

O (D

m cI

(A ! m

d^

'

d^

d^

d^

d^

(D

00 (f) O a)
r-1

In

1 Ln T3 r. r- ca co 0 41 o0

U)

m
ri

r-

.::r

00 N m qtv

IC)

m
rl (.f)

(D
a)

00 IKV 00 dI

r-i

O
r (D

Lo

S r-I

as

0 ^ D
A z
1.0 I O

O (1)

dl

a) l.()

r-i Co

(1) a)

(1)0 S
L+ r4

aco
U) .^

r-i

m N

00
N

S r-I
It)

O
co

Q U IC)

ai

Ir-1

5 (D r1

11*

co

tit

r-I N

(.0

(0

(D 1a
C

Co
III

dI

O
co

o
co

m (f)
ao
N rI (D r-1

4-r

z
0 i CO r
m

0 m
CO

ao
Cl

CD d'

dl
Q)

r
IC)

0
d1

cm
N

(1)
.0 co

CL .-i

co a)
U, ri

m
Oo r1

t`
a) m

.-i
r
5

m
00 r-I

r1
O N

r
Cl N

(D r-I

t`

(f) H

(o co
L0 .,-I co

a)
U co 0 o a (D rl
(f) m <\ S 00 00 m a) (D 00
m (D d+ N IC)

co
'I CO

Cl a) m

d+ in

r-4 a)

(C

s-4 ca Q7 o a

0., U (D

d^ O

oo

00

co

a) E~
0

ca
a)

4_P

rr-i

a
3 U
0 CO r-I
N

S O r-I m

O
Lo

m
r-4

d4
(O a) Cl

(D N O m

d'
n N

m N (3) N

o0
O a) N

Cl

a
5

(D m

CO N

a) 'a ,i co
[L, U m

++ O

I m rl I 00

CO r-I O
It)

m N
10

O m
S

m S
(D I.C)

a) S N
(1))

00

to

d^

'1
(D
l.()

r-1

m
m to

Co

! 'd*

(.C)

IC) (fl

d, LC)

a)
A co E-+

a)
co 0)
>4

- 1 S
1 1 I

S a)
r-4

CO

S a)

a)

S a)
r-4

0 ( a)

r.4

Cl

t-I

r-i

00 a)
r-i

00 a)
r-1

m 00 a)
r-I

dr
00 a)
r-I

w a)
r-4

it)

(D 00 a)
r-4

0
0

La 00
(/)

<A
CL

1-4 O 41

Lc) ao
, N

0 4

co m

N 0
rl

0)

O m

N
r-I

N m

cm N Lz

It)

m O
r-I

R1 04 0 E-i O

N
rl

Cr)
r

r-

co

cc)
0

a)
0

-:r

(o
O
N

co
rl

t,:

.-4

a)
a)
rl

CO
rl

r-t (o

m N
rl

c a)

I I

It) to

O m
m
N

N rl

m
0)

O cV

O rI

N CO a0
N

O m
co
r-I

m
(D

O CO

.q b 1 > co I

m
N

ra
N

0
N

0)
to

N
N

O
r1

'

m
CO

n I 1-4 1 co

Cr)
a)

CO 0

CO rl N

O
C`

1-

*' CL 1 , O

m c*i
4

CO

m co
r-I

m m N -I

CO rl

0
rl

N 00 CO Q r ^ -I

0
a) rm-4

CO

ac o
w 8 z ;

co cn a)
00

r-

LO

r-

r-

r-

r-I

a)

co 1-4
co

0)
O
0

ri O r-I

N c0
rl

O N
N

O m
N

a) m
N

N O

N d4

a) cD

ni a) m

(D CO I L1)

V)

co o I

C" I O .-4 !

++ 0o

oo m

m
0
O rl

O 0

co co

rl

N rl

(0 d^ r-I

rl ri

.^

(D r-I

O 0

m N

o 0
I[)

N m
N r-I

CO a) r-I

L4

O 0

N a) 0

cc
(1)

O O

a)
I~
((O a) 'i , (^

CCO O L O

rn rl LO

CC?) ) Q) It)

s-4 m r-I , -I

I)

IL M

L Lt) Cn d4 rl

.-.

-a co

A U 1

O cN O

O V O

d' LO O

LC) N r

It) dl
-I

0
++ CO

rn

d1 O

CO rl

4+

m
c0

m
(D

d^
1^

rl

CO
rl

CO

d^ O
o

> a
co
H U

N cD co

m
CO N

cm
o

N
(0 Cl H

a) s-I

N
CO r-I

rf

d1

r{

m
,-I

m m C
rI

rl r-I

Ln

(1)
ca r,
y

ri

a0
a) VI rl

LO

CO

rI

a)
> '^I
a I I V 10 1 O CL

(n

CO

I)

a) r-4 (0 T--4
r

1'IV
Lt)

(-

a)

Lt)

0 10
r-I CC)

(D

0 CO

CO
O
0

Lt)

a) C)

CO
I

4-,

co ca

N O
rr -i

04

(0 LO
c0

0) '
10

CO
m
LO

m
a) r

ao ,
c}o
O CO

I 1

0) ' ,-I

Cr)
m -I

0)

r+ co

co

,-I

ao
I

N ri
0

In

LO

CO

dl

N ra m-I
Lc)

m C)

LC)

0) w

a) E

ca

0
1-4

(V r1

CO

r-I
r1

Iq

co
r-I

rI

10

0 r1 ri

0))
CO
0

1-1 N O O

Cr)

a)
U)

O +0. It)

N x

I
I
I

CD d^ N
m

m
t\

O m rl
LO

N Co d+
r-

ri

O
(D
rI LO

ri rl
m

m O
N
L A C)

CO

ra

d^ O
Co CO

a)

co
N
N

N
( CO D

LO

Cr)

a)
A co E-+
^+ O

(1)

1
I

N L^ a) rl

O N O rI

a) N

a)
rl

O O O s-I

-I O C)
r

N O

a)
ri

m O

d1
CO a) rl

a)
r-I

It) O

U (D O O rl

(1)

a)

rl

cn

I.

w a
. .1
r. ly ^

Ci y

U r N

In

N 0 1

In e-^ O

1 N 0

m N 0

N N

m N

(n

N 0 0

We
i
i 1 N I I 1

E to
- U 'O C

I I

O)
'I

O N

'i
N

C) 'i

Oo
,-1

0)

N N N

U U

N O

N O

N O

1-4

'' 1 O

-4 '1

v v

WE

O O

k a r". oo

a K.

co co " E V) I

'r U b

IA

O LI) 0

O)

c0 m 0

N m 0

c0 0

'i

(n (n
0 0

1
I

z ro

m I
I

^cY [ a
U CO

I
1
O

In

-4

v
O

CO

-4

I Cp

.^ r0 a a,

.0 a 1 E N y I

(n m 0m N N O N U 'O O cts G) > I < W -n I N N N N N N N N

V'

-1 00 Un (D N In -4 O -1 'i '-1 N

O
oGp

L 1 E I Cl) U "4 1 aa-' a 1 N 0) O V' '1' N QI (0 co " co o 1 O N m 0 0 0 0 0

LO a)

c.

3 3 i Q w - 1 0 0 0 0 0 0 0 0
Um

O) Co U 'd C! N N N m 'd' m m w 0 0 0 0 0 0 0 0

co cc E 1. +' > d 1
N
'Q 1
.~1

z 0

1 to

'a
. C 1

O 0 N v U) W N m
rI

,-

-4 N N

Z co I < w

w 0 0 0 0 0 0 0 0

0) v (n (t) O a) O N Y d Co 'Q co C N 1-1 co m v (O "" 1 w U E c .C+ m I 0 0 O O O N O (0

.0 o I m I to

0) - a) rl to 0) co r-I X n' a 1 O N N N Om '1 O

E
[x

a)

44

0" .. m

0 0 0 0 0 0 0

1 N 00 O ,-I N m d' (n 1+ 1 (D N 0) O N m y 1 N N N 00 00 00 O 00

Another problem is that import licences for the current period are being issued on the basis of the value of materials consumed during the previous period. This will not be sufficient to step up production as more materials will be required for increasing the volume of output. However, the value of all rawmaterials and components is steadily going up, and therefore, for the same value of import licences manufacturers are able to produce only less quantities of these rawmaterials in the succeeding periods. The prices of essential rawmaterials are going up steadily- This inflationary trend has its own impact on the prices of electrical machinery products also. Fresh levies and duties of Government every year add to this. Manufacturers are forced to increase prices substantially due to the impact of input price increase. Substantially due to the impact of input price increase, process time for electrical equipments like transformers is more than eighteen months including the design time. Transformers are manufactured only against firm orders. Even orders received at a good price will ultimately become a losing order due to the increase in the prices of rawmaterials. During the last decade, especially, the last five years, there has been an unprecedented rise in the prices of copper, silicon steel and also in the customs and excise duties. In many cases, the prices were not even sufficient to cover the material cost. The purchasers mainly the Government Uepartments and Electricity Boards were very much reluctant to accept price variation clauses to safeguard the interests of the suppliers in the event of rawmaterials and components. Most important rawmaterials required for the manufacture of electrical equipments are copper, silicon and steel. As the production of copper in India is quite insignificant, the requirement is met by imports. There has been a very steep rise in the price of copper since 1971. The reasons for this increase are:a) increase in international prices b) increase in customs and excise duties c) Canalisation of the export of copper through MMTC.

63

2. DEMAND FORCASTING:

Electricity Boards are the major purchasers of the products of electrical machinery industry , especially , the transformer products. About

90 percent of the entire production is purchased by the 20 Electricity Boards. Hence, the requirements of Electricity Boards influence the industry substantially . However, the manufacturers are not able to furcast the The requirements of

demand of the Electricity Boards due to various factors .

Electricity Boards are directly connected with Power Development Programmes . These programmes are influenced by various external factors

like foreign aggression , shifting of priority etc. and these factors force the Electricity Boards to post pone purchase. This affects the manufacturers adversely as the manufacturers are making advance requirements of meet increased demand not envisaged in development plans. The purchase of Electricity Boards is generally made by inviting tenders from manufacturers . requirements in advance . Electricity Boards fail to plan their

This necessitates earlier deliveries, which the

indigenous manufacturers may be unable to offer due to the procedural delay in obtaining import licences, designing and processing. This compels Electricity Boards to approach the Government for import licences for the import of these equipment alleging inability of the local manufacturers to deliver the products in time. This situation can be avoided, if the purchasers plan their actual requirements well in advance. This will also help the industry to plan their manufacturing schedules suitably staggered to keep their plant engaged throughout the period. Financial problems faced by the Electricity Boards also contribute to the problem of instability in demands. Even firm orders placed are usually

Cancelled subsequently or deliveries postponed unilaterally. The manufacturers lose heavily in such case, as most of them will be unwilling

to remedy in such cases, in the interest of the future business.

Past trends show that there is no uniformity in demand. Under such circumstances, manufacturers are not in a position to plan their activities properly. Only with an assurance of smooth flow of orders, the manufacturers can plan and deliver the equipments in time.
Frequent changes in the Power Development Programmes put the industry into difficulties. Only if a definite and achievable Power Developments Programme extending over a period of atleast 10 to 15 years is finalised the industry can plan its capacities properly.

3. TRANSPORTATION

Transportation of the products manufactured is another major problem facing the industry. Since transformers are of very large size, special type well wagons are required for transportation. The railways have got only very few such wagons and hence allotment are normally delayed by two to three months. Advance registration of demands also is not possible as the delay could not exactly be anticipated. Representation have been made to the Ministry of Railways for improving the conditions. Movement of wagons are also delayed considerably. A consignment booked usually taken two to three months to reach destinations 2,000 to 3,000 kms. away from the despatching point. Railways have to work more efficiently to reduce the transit period.

65 -:

CONCLUSION

Thus we see that the electrical machinery industry occupies a dominant

position in the industrial map of Kerala . This justified our choice of this

industry for indepth study in order to demonstrate the salience of our hypothesis that most of the large scale industries set up in Kerala failed to generate sufficient linkages with the local economy . This line of reasoning

is examined in the next chapter more fully on the basis of fresh data collected from the sample units.