The year 2016-2017 has been an eventful year for the world at large. The Asian Development Bank recently predicted that India’s growth rate will improve to 7.4% for the year 2017-18, and even further the following fiscal to 7.6% keeping ahead of China. It is reassuring to hear this, yet the ground reality is that growth in the capital goods, power sector, and infrastructure has been sluggish. We have had to innovate and explore different ways to protect our bottom line from slipping. Many of these have yielded results.
The Transformer business achieved its highest order booking ever this last year. Order booking has gone up 36.5% (by value). This has been the result of our Business Development initiative over the last 2-3 years which is now yielding rich dividends. Our geographical reach has grown substantially and orders in the non-tendered segment of our business have more than doubled in the last two years. Transformer export has also seen some success by achieving a breakthrough order from a utility outside India. The learning curve in exports has been steep and the progress slow as it is a difficult market to break through. This remains a focus area for growth. The Motor business has received two awards from the Confederation of Indian Industry. One was for operational excellence as a division and the other for product excellence in the energy efficient category. Last year we achieved a huge milestone with the launch of our super premium energy efficient motor. Increased penetration of these motors will be one of our big initiatives. The division has bid for, qualified, and bagged a prestigious order for the new generation of locomotives with the railways. We have managed to retain market share in the face of extremely stiff competition and price erosion. Cost reduction and design optimization have yielded results. Margins however remain under pressure for both motors and transformers.
The Projects business has seen a landmark order from a reputed solar power company. We have been able to execute all orders on time and within budget. However, heavy downward pressure on prices and business risk has forced us to cherry pick only very selective orders in this market. We are in the process of examining other areas of interest in this space. The Drives and Automation division has received a breakthrough order from a customer for a green regenerative motor test bed. We will soon have a new mobile application for trouble shooting, product updates, and customer service excellence. The Magnet Technology Machines division has signed a purchase agreement with a tier one customer for the sale of gearless machines of a substantial number. This is a great achievement as we have developed this product completely in-house. While we continue to dominate supply of gearless machines to elevator manufacturers in the domestic market, exports have also been rising steadily.
The world today seems to be in a phase of de-globalization. Compared to ten years ago, world trade is falling, global capital flows are plunging, and the flow of migrants is slowing. The rise of nationalism also is affecting the macroeconomic landscape. This is the same sentiment that has had a major influence on the Brexit and Trump getting elected. Some sectors like IT have seen the direct impact of this. India however, is driven largely by domestic demand and this should mitigate any effect of these global events. The Indian government seems to be making an effort to improve the ease of doing business but we may have to be patient and suffer short term pain for gains in the long run.