Casting in power transmission

Industry to witness a decline in fiscal 2021; gradual pick-up expected from fiscal 2022

Housing of transformer core, circuit breakers of switchgears and casings of GIS substation are casted using ferrous
and non-ferrous material. Aluminium casted housing/ bus bars in switchgears are preferred in GIS, due to
aluminium’s non-corrosive and light-weight properties.

Demand for industrial castings from the power transmission sector is driven by investments of the Central and
state government transmission companies and, to a smaller extent, from the private sector for the medium-voltage
segment. In the power-transmission segment, switchgears are expected to account for the major share of casting
demand.

Demand for industrial castings used in power transmission grew at 2-4% CAGR over fiscals 2016 to 2020 to Rs
15 billion. There was some drop in investments in fiscal 2020 amid the economic slowdown. During fiscal 2021,
pandemic decelerated overall economic growth and pulled investment levels further down. The drop in investment
is expected to impact demand in the casting industry for the year. CRISIL Research expects a ~20% drop in
industrial castings market in fiscal 2021 to Rs 11-13 billion.

However, investments are expected to rebound from fiscal 2022, supporting demand in the casting industry. The
Industry is expected to reach Rs 18-20 billion, clocking a 4-6% CAGR during fiscals 2020 to 2024.

Industrial castings used in power transmission — demand outlook

2-4% CAGR
——_ >
iy 4-6% CAGR 18-20
16 ee “"l
16 15
14
- 11-13
S
=
a
a
FY16 FY17 FY18 FY19 FY20 FY21 FY24

Source: CRISIL Research
Increasing preference for GIS switchgears

Currently around 20-25% of the transmission substation switchgears are gas-insulated. The share of GIS
switchgears is expected to rise further to ~30% by fiscal 2024. Although GIS equipment are costlier than AIS.
equipment, considering the overall life-cycle costs, including running and maintenance costs, GIS equipment are
less expensive than the alternatives. Moreover, these GIS switchgears offer much superior performance.

With the rapidly increasing urbanisation, rising per-capita power consumption and growing space constraints, GIS
switchgears would be the preferred option due to their compact size. Additionally, a rise in the contribution of
renewable energy in power consumption will provide an additional kicker to growing GIS demand.

GIS-based casting demand grew at a 6-8% CAGR over fiscals 2016 to 2020 to Rs 2.4 billion in value terms.
Demand for GIS based castings is expected to accelerate at a 10-12% CAGR to Rs 3-4 billion by fiscal 2024.
Demand for GIS in volume terms will be higher in the MV segment, driven by the private sector, while high-value
GIS substations in the HV and EHV segments will be driven by the Central and state government transmission
companies.

139
