Submitted by - Mentor –

Priyanka Jaiswal P.R.Dilip

Antra Kumari (Director Impetus Arthasutra)
Equity Research Report
Industry- CAPITAL GOODS ELECTRICAL EQUIPMENT

Indian capital goods Electrical

Equipment Industry Analysis

The Indian capital goods electrical equipment industry plays a crucial role in supporting various
sectors of the economy, including infrastructure development, manufacturing, power
generation, and transmission. This industry encompasses the production of electrical
machinery, equipment, and components used in different applications such as power
generation, distribution, industrial automation, and consumer electronics.

India's Electronics Equipment industry market is anticipated to increase at a CAGR of 16.1% between
2019 and 2025, owing to strong demand, supportive government policies and increased digitalisation.
The ESDM sector plays a key role in the government’s goal of generating US$ 1 trillion of economic value
from the digital economy by 2025. India’s digital base is the second largest in the world and is growing at
the second-fastest rate among the 17 leading economies. Exports of electronic goods stood at US$
2,009.07 million in September 2022. The demand for electronic products will rise to US$ 400 billion by

The electrical market in India research report extensively covers market segmentation by
product (cables, switchgear, boilers, transformers, and other products) and application
(transmission, distribution, and generation). The electrical equipment market report in India
also offers information on several market vendors, including ABB Ltd., Bharat Heavy Electricals
Ltd., CG Power and Industrial Solutions Ltd., EMCO Ltd., Fuji Electric Co. Ltd., Larsen and Toubro
Ltd., Schneider Electric SE, Siemens AG, TD Power Systems Pvt. Ltd., and Toshiba Corp., among
others. Key Electrical Equipment Market Trends in India

The growth in cross-border electricity trading is another factor supporting the electrical
equipment industry in India. Due to the lack of power generation capacity in countries such as
Bangladesh, Nepal, and Myanmar, many people in these nations do not have access to electricity.
The lack of access to electricity is a major challenge to poverty reduction and economic
development. Thus, cross-border electricity trade plays a major role in economic growth and
development, as it helps to reduce energy prices, overcome power shortages, mitigate power
shocks, and facilitate decarbonization for market extension and integration. This will lead to
increased demand for power generation and distribution equipment in India. Thus, the growth
in cross-border trading of electricity will lead to the growth of the market in focus.
New schemes for electronics equipments manufacturing

1 Production Linked Incentive Scheme (PLI):-

PLI offers a production-linked incentive to boost domestic manufacturing and attract large
investments in mobile phone manufacturing and specified electronic components, including unit
Assembly, Testing, Marking and Packaging (ATMP). Incentive: 4-6% on incremental sales (over
base year) of goods manufactured in India; incentives up to US$ 5 billion will be awarded over a
period of five years. Eligibility: Subject to thresholds of incremental investments and incremental
sales of manufactured goods

2 Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors

(SPECS)

Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS)

notified vide Gazette Notification dated April 01, 2020 provides financial incentive of 25% on
capital expenditure for the identified list of electronic goods that comprise downstream value
chain of electronic products, i.e., electronic components, semiconductor / display fabrication
units, ATMP units, specialized sub-assemblies and capital goods for manufacture of aforesaid
goods. Through this scheme, Government of India aims to make India a significant design and
manufacturing hub in Global Value chain for Electronics as part of its Atmanirbhar Bharat
Economic policies. Source: Ministry of Electronics and Information Technology (MeitY) Notes:
RBF - Ready Built Factory

3 National Policy on Electronics 2019 (NPE 2019)

The National Policy on Electronics 2019 (NPE 2019) has been notified by Ministry of Electronics
and Information Technology (MeitY). The vision of NPE 2019 is to position India as a global hub
for Electronics System Design and Manufacturing (ESDM) by encouraging and driving capabilities
in the country for developing core components, including chipsets, and creating an enabling
environment for the industry to compete globally. 32 New schemes for electronics
manufacturing.

4 Electronics Development Fund (EDF)

Electronics Development Fund (EDF) has been set up as a “Fund of Funds” to participate in
professionally managed “Daughter Funds” which in turn will provide risk capital to startups and
companies developing new technologies in the area of electronics and Information Technology
(IT). This fund is expected to foster R&D and innovation in these technology sectors.
5 Design Linked Incentive (DLI) Scheme

The scheme offers financial incentives, design infrastructure support across various stages of
development and deployment of semiconductor design for Integrated Circuits (ICs), Chipsets,
System on Chips (SoCs), Systems & IP Cores and semiconductor linked design. The scheme
provides “Product Design Linked Incentive” of up to 50% of the eligible expenditure subject to a
ceiling of Rs. 15 crore (US$ 1.8 million) per application and “Deployment Linked Incentive” of 6%
to 4% of net sales turnover over five years subject to a ceiling of Rs. 30 crore (US$ 3.6 million) per
application.

6 Modified Special Incentive Package Scheme (M-SIPS)

THE M-SIP Scheme, launched in 2012, provided capital subsidy of 20% to electronic industries in
Special Economic Zones (SEZs) and 25% to industries outside SEZs. As of 30th November 2019,
407 applications with a total proposed investment of Rs. 1,09,768 crore (US$ 13.29 billion) are
under consideration. Out of these 407 applications:

235 applications with about Rs. 66,407 crore (US$ 8.07 billion) proposed investment have been
approved.

31 applications with about Rs. 13,072 crore (US$ 1.58 billion) proposed investment have been
recommended by the Appraisal Committee for approval.

141 applications with Rs. 30,289 crore (US$ 3.66 billion) proposed investment are under appraisal
process.
About SIEMENS
Siemens Limited is a technology company. The Company operates through four segments:
Energy, Smart Infrastructure, Mobility, Digital Industries, and Others. The Energy segment
provides fully integrated products, solutions, and services across the energy value chain of oil
and gas production, power generation and transmission for various customers, such as utilities,
and independent power producers. The Smart Infrastructure segment is a supplier of products,
systems, solutions and services for transmission and distribution of electrical energy for power
utilities, industrial companies, and infrastructure segments. The Mobility segment is a supplier
of solutions for passenger and freight transportation, including rail vehicles, rail automation
systems, rail electrification systems, road traffic technology, and information technology
solutions. The Digital Industries segment contains a portfolio of edge automation, drives and
software technologies covering the complete life cycle.

Shareholding Pattern
WHY SIEMENS: -
Company in news

• The economic times - India will undergo the largest urbanisation in the world: Matthias
Rebellious, Siemens. Siemens AG has invested 5 billion Euros in India over the past five
years and plans to invest further. Matthias Rebellius, Member, Managing Board of
Siemens AG and CEO Smart Infrastructure, tells ET that Siemens has a huge role to play
in India's rapid urbanization and energy transformation.
• Times of India - Siemens firming up big India investment plans
Siemens AG is finalising its strategic plan for the next five years for India and its
investments in the country are likely to be "more ambitious" than before, global chief
executive Roland Busch said.
• Mint – siemens net profit rises 39% to Rs 471 cr in the march quarter.

Important parameters
Net profit margin - Siemens Ltd's net profit margin jumped 8.18% from last year’s period to
9.48% in Q4 2022-2023. A higher net profit margin is generally viewed positively as it signifies
improved profitability and better financial performance.
ROA – ROA has been increasing for the past few years, and the current ratio of 2022 is 7.84. An
increasing ROA is generally considered positive, indicating improved profitability and efficiency.
It suggests that the company's management effectively utilizes its assets to generate returns for
shareholders.
ROE – ROE has also been increasing in the last few years, and the current 2022 is 13.20. A rising
ROE is generally considered positive as it indicates improving profitability and efficiency in
generating returns for shareholders. It suggests that the company's management effectively
utilises shareholders' equity to generate profits.
Current ratio – This ratio assesses the industry’s short-term liquidity and ability to meet its
current obligation. The 2022 current ratio is 1.94. the ratio is more than 1, so it can better cover
short-term obligations.
Debt to equity ratio – it is 0. A debt-to-equity ratio of 0 indicates that Siemens has no debt or
financial liabilities on its balance sheet relative to its equity. This means that the company is
entirely financed by equity capital.
About ABB LTD.
ABB India Limited is an India-based global technology company. The Company's segments
include Robotics and Discrete Automation, Motion, Electrification Products and Process
Automation. Its Robotics and Discrete Automation segment provides value-added solutions in
robotics, machine and factory automation. Its Motion segment provides products, solutions and
related services that increase industrial productivity and energy efficiency. Its Electrification
Products segment provides technology across the full electrical value chain from substation to
the point of consumption. Its Process Automation segment provides products, systems and
services designed to optimize the productivity of industrial processes. Its solutions include
engineering, control systems, measurement products, life cycle services, outsourced
maintenance and industry specific products. It serves various industries, such as oil and gas,
chemicals and pharmaceuticals, metals and minerals, marine and turbocharging.
Shareholding Pattern
WHY ABB: -
Company in news
• MINT – ABB India to invest Rs1000 cr in India in next 5 yrs, opens facility in
Nashik. “ Electrification and automation company ABB India on Friday
announced to invest ₹1,000 crore in the country in the next five years
for capacity expansion, said a top company official.”
• Business line- ABB India to invest up to ₹2,000 crore on bolt-on acquisitions. Bolt-on
acquisition is done when a business buys another company to merge it into one of its
business divisions. It’s also called a tuck-in acquisition. ABB India to utilise part of ₹3,600
crore for organic and inorganic growth

Important parameters
EPS - It has earnings per share of ₹ 48.0, indicating that ₹ 48.0 is allocated to every individual
share of the stock. A high EPS indicates good profitability
P/E RATIO - Its shares were trading at a price-to-equity ratio (P/E) of 92.4, significantly higher
than the industry P/E of 32.0. This could mean that the company’s stock is overvalued as
compared to its peers.
RETURN RATIO - The company has an ideal return on equity of 19.00%. This indicates that the
company generates a profit of ₹ 19.00 on ₹ 100 worth of equity that is deployed in it. Further, it
has a return on capital employed of 25.4%%, indicating that it generates ₹ 25.4 for every ₹ 100
that is deployed in its business.
DEBT TO EQUITY RATIO - ABB India has an ideal debt-to-equity ratio of 0.01.
CURRENT RATIO - it has a current ratio of 1.66. This indicates that its current assets are more
than its current liabilities.
SHAREHOLDING - The company’s promoters hold a 75.00% stake in it. Retail investors hold a
7.71% stake, FIIs hold 7.55%, and DIIs hold a 9.73% stake in the company. Further, there is no
pledge against the promoters’ holding. The promoters’ stake has remained constant over the
past few quarters. Moreover, FIIs have gradually increased their stake in the company from
3.76% in December 2021 to 7.55% in December 2022, which is a good sign.

The company has a stable outlook in the near future due to relatively lower inflation rates in
India, stable commodity prices, rising private consumption, and the gradual revival of capex.
Government measures and central bank policies are likely to provide a cushion against global
spillover
About INOX Wind
Inox Wind Limited is an India-based integrated wind energy solutions provider. The Company is
engaged in the business of manufacture and sale of wind turbine generators (WTGs). It also
provides erection, procurement and commissioning (EPC), operations and maintenance (O&M)
and common infrastructure facilities services for WTGS and wind farm development services.
The Company offers various products, which include Inox DF 93.3, Inox DF 100 and Inox DF 113.
The Company offers wind energy solutions and provides servicing to independent power
producers (IPPs), utilities, public sector undertakings (PSUs), corporates and retail investors. It
has three manufacturing plants in Gujarat, Himachal Pradesh and Madhya Pradesh with a
cumulative manufacturing capacity of approximately 1,600 megawatts (MW). The plant near
Ahmedabad, Gujarat manufactures blades and tubular towers, while hubs and nacelles are
manufactured at the Company's facility at Una, Himachal Pradesh.
Shareholding Pattern
WHY INOX WIND: -
Company in the news -
• The economic times - Inox Green Energy IPO: Can this renewable energy player keep your portfolio in green?
• Inox Wind bags bulk order from NTPC Renewable Energy.
Inox Wind bags order of 150MW wind power project from NTPC Renewable Energy Limited.
Kailash Tarachandani, CEO of Inox Wind, said the company aims to cultivate a long-term
partnership with NTPC.

Important parameter
ROA – it is –6.67. Companies with negative ROA may experience a decline in their stock price,
which can create an opportunity for value investors. Investors with a long-term perspective
might find it attractive at a lower valuation if the market has overly discounted the company's
stock due to its negative performance.
DEBT TO EQUITY RATIO – it is 0.63. A debt-to-equity ratio below 1 generally indicates that a
company has a relatively lower level of debt than its equity, suggesting a conservative financial
position.
CURRENT RATIO – it is 1.09. A current ratio above 1 typically indicates a favourable liquidity
position, as the company has enough current assets to meet its near-term liabilities.
THE OTHER REASON ONE SHOULD INVEST
1. Growth potential in the renewable energy industry.
2. Established market position in the Indian wind energy market.
3. Technological expertise and innovation in wind turbine technology.
4. Government support and favourable policies for renewable energy.
5. Long-term potential for profitability and stock price appreciation.

Thank You