Schneider Electric India head Anil Chaudhry says cash crunch, inventory pile-up hit industry

MUMBAI: Schneider Electric India says electric equipment makers are facing a cash crunch and sitting on huge inventories as customers have not taken deliveries after placing orders, although the company is hopeful of a recovery in six months, driven by government initiatives.
“The government has made it clear that they want infrastructure to grow to drive GDP. The industry is waiting for these initiatives to result in action. The Union Budget and the three-four months after that would be very critical,” Anil Chaudhry, managing director and country president of Schneider Electric India, told ET in an interview.

“We have huge inventories that need to be liquidated and the cash has to come in so that the business cycle continues,” he said.

The electric equipment and automation industry in India has borne the brunt of a slowdown in industrial capital expenditure and muted growth of the power sector. The government’s initiatives have given Schneider the confidence that it will finally be able to benefit from the acquisition of Areva’s distribution business in 2010.

“The acquisition of Areva’s distribution business completed our portfolio by providing us medium voltage and automation products and services. In the last three years, we have integrated that business into Schneider. While we could have taken a lot of advantage of this in the last two years, we could not get the full synergies due to the macro-economic paralysis in India,” Chaudhry said.

Schneider Electric India, a 100% subsidiary of French major Schneider, offers products and services catering primarily to industrial and power sector clients. Almost 30% of the French parent’s revenue comes from Asia-Pacific, of which India is a key contributor.

From a company with two manufacturing units and 1,500 employees in 2007, Schneider India has grown to own 29 units that employ 20,000 employees today. The company is keen to increase its presence in India as a manufacturing base as well as a research and development hub.

Chaudhry said that currently the IT sector’s investment in data centres and the recovery in the metals and mining industry are the key growth drivers for its business. The performance of energy and power and industry businesses, which together account for almost 50% of its revenue, continues to be muted. But the company is upbeat about initiatives to improve the condition of the beleaguered power sector and plans to build smart cities.

“Future of electricity distribution in India is smart and digitised electricity distribution. We can keep on feeding electricity into the system but unless we reduce the losses and improve efficiency, there would be no benefits. All discoms realise this and some have even started implementing plans,” he said.

India loses almost 23% of the electricity generated during transmission and distribution.