Corporate India loses $8 Billion in power cut

May 29, 2009 at 4:27 am (News)

Bangalore: The India Inc has suffered a loss of $8.64 billion (Rs.43, 205 crore) in the power downturn in the year 2008-2009, says a study by the Manufacturers’ Association for Information Technology (MAIT) and Emerson Network Power (India). The study was an in-depth analysis of the impact of downtime in corporate India due to high occurrence of power outages, loss incurred are scheduled and non scheduled expenses, which is just double the loss incurred in the year 2003, when it was only Rs.22, 000 crore. 

2The loss incurred is about one percent of India’s total GDP. The key reason described in the report for the loss is because of the infrastructure stress on the power utilities. There are a large number of companies which rely on the IT infrastructure for automation, productivity and business management. The employee productivity and customer management were severely impacted by such downtime. Manufacturing sector has been described as the worst affected in this downtime.

The study, which in the third round was conducted by the consulting firm M/S Feedback Business Consulting Services, covered around eight hundred cities located in seven important industrial cities in India. Sixty-two percent of the companies surveyed were found to have a complete dependability on the IT and Automation sector. Fourteen major industry verticals including manufacturing, electronics, telecom, IT services, IT enabled services, banking & finance, pharmaceutical, biotechnology, SMEs, retail, hotels, real estate, infrastructure and hospitals were surveyed and the information was obtained from the senior executives.

“Contingency planning is part of the India Inc’s mindset, based on traditional experiences with infrastructure limitations. This trend will continue in the light of global power failures encountered in Western countries. Firms will need to pay more attention to maximizing uptime if they are to remain competitive in a globally networked economy,” said Vinnie Mehta, Executive Director, MAIT 

The power disruption frequency was highest in Delhi, followed by Pune and Bangalore. Among the surveyed, 78 percent feel that the condition will improve in one year, but Delhi was at the top with the least confidence in showing up. The highest confidence level was polled for Chennai. Telecom sector was found to have the fastest restoration ability, while it was found slowest in pharma/biotech, hotels/hospitals and manufacturing. 

The downtime loss incurred across all the verticals was observed at an average of Rs. 54,434 per hour, which is highest in telecom and real estate/infrastructure companies, and lowest in the SMEs. The major impact of the downtime is on the employee productivity and customer management. The average speed of restoration was found about 71 minutes. Bangalore was adjudged with high frequency and longer outages. Mumbai continues to be most depended on grid for power. 

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