Kathmandu. Domestic transformer manufacturing industries are under pressure due to intense competition from cheaper Chinese products. This pressure has had a direct impact on the business of the company that manufactures the Nick brand, one of the oldest transformer manufacturers in Nepal.
According to Infomerics Credit Ratings Nepal’s recent evaluation report, the company has been able to utilize only 7 percent of its production capacity in the fiscal year 2081/82.
In the previous fiscal year, the capacity utilization was 17 percent. According to the report, a large part of the industry, which can produce 18,000 units of transformers annually, is lying idle, which has increased the fixed cost and this has affected the business return.
The operating income of the industry has also decreased significantly. In the fiscal year 2080/81, the operating income has decreased from Rs. 1.83 billion to about Rs. 935 million in 2081/82. The main reason for this is that the number of big projects of the Nepal Electricity Authority (NEA) is very few and the business is mainly limited to small projects of the private sector.
Although the company has been sending transformers to Bhutan for the past year, the export was relatively low in the last fiscal year. The company said it is preparing to expand exports again this year. However, there are some positive signs in the business.
According to the report, the company has secured purchase orders of about Rs 957 million till May 2026, which is expected to improve in revenue in the coming period. However, the report concludes that the profitability of the domestic transformer industry will not be easy as the prices of raw materials fluctuate, changes in the exchange rate of the US dollar and price competition with foreign manufacturers are maintained.
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