Opportunities and solutions in the power sector

The Indian industry is coming of age. The government’s program of electrifying all the villages by 2012 has proved to be a major factor in boosting growth. In addition to this, since the economy is growing at the rate of 6-7 percent, the electrical industry is expected to grow at the rate of 12-15 percent. This is a must rather than an expectation. The current power shortage is a case in point of the ill effects of the electrical and power industry not matching the country’s overall growth rate This is already been felt in the scenario today. For the next 10-12 years, we have to grow at those rates per annum if we have to stay competitive.

China has already added 400,000 megawatts to its power capacity. India, on the other hand, is still at 125,000 megawatts. The country needs to catch up to those levels to sustain even the current growth rate. The next 10-15 years is going to be the era of the power industry. And if the current development scenario is anything to go by there can be no possible doubt about this fact. The industry is gearing up for that eventuality and hence simultaneously the quality of the products is also going up. In addition to this, India is also slowly emerging as a destination for outsourcing the manufacturing of electrical equipment for the rest of the world. Thanks to this trend, Indian manufacturers are slowly focusing on improving quality. In most cases, the manufacturing process and the product quality already match up to international standards. Proof of this change can be seen from the fact that many European nations are increasingly importing from India.

ELECTRIC MACHINERY AND ENERGY

The electric machinery and energy industry has a critical role in modern society. Electric machinery and energy research covers equipment for new energy sources and renewable energy and heavy-duty energy equipment, electric wires and cables, household appliances, the lighting industry, industrial and commercial electric equipment, power systems, refrigeration and air conditioning equipment and related key components.

This offers immense opportunities for Indian electrical and electronic equipment manufacturers both in India as well as abroad. And the industry here has realized that there is vast untapped potential waiting to be tapped. Hence, many Indian manufacturers are developing innovative products to capture mind share and market share. Almost all manufacturers looking at the business with long-term goals in mind have already set up R&D centres thus breaking a myth that has persisted for long about the lack of interest by Indian manufacturers to invest time and resources into research.

Says Piyush Patel, Director of Amtech Power, which is into the business of industrial electronics and has launched several innovative solutions, “We are focusing on motion control equipments, which is supported in the background by our in-house R&D. Our facilities have been approved by the government of India’s standards body. We do a lot of technology oriented projects, which could be more challenging in the field of industrial power electronics. We have a strong R&D background, which enables us to keep ourselves in the market in spite of stiff competition from multinational big wigs. We have already executed some of challenging projects in the field of power electronics especially in power supplies.”

Indian companies have also forayed into technology areas where only a select few have dared to enter till date. Amtech, for instance, has made its mark in the area of traction drives. There are only 4-5 manufacturers around the world, which has anything significant to offer in this space. This is a challenge that the company has taken up and succeeded. Amtech now manufactures traction drives for export to the US market. And the company has been growing at the rate of 10-12 percent every year in its line of business. Amtech is now aiming to be a leader in the motion control and industrial electronics space. The company plans to stick to its strategy of providing solutions rather than be known as a product company. This might be in keeping with the success of India’s IT industry, which adopted the strategy of providing solutions than developing products.

Unlike Amtech, which is focusing on providing solutions, well know switch and electrical products manufacturer Anchor has opted to dedicate itself to the consumption segment of power and electricity. This is another field where Indian manufacturers have managed to carve a niche for itself.

Says Dinesh Aggrawal, Country Head, Anchor, “There are three aspects of power and electricity – power generation, transmission and consumption. We fit into the consumption segment of power. We would like to be the leader in every product which goes into the energy consumption area. Our vision is very clear. Right now we are focusing on low voltage, medium switchgear and medium. But now that we are renowned in this space, we have also added institutions into our customer portfolio. Through this move we have now effectively moved into the production of high end switch gears. We aim to repeat our success in this space as well.”

But R&D continues to be at the core of all these innovations. Says Manabendra Chakrabarti, Chief Marketing Officer, Bhartia Industries, “We have invested a lot in R&D. We have our own tool room facility, which is one of the best in the industry. We also upgraded our manufacturing plants in line with future requirements.”

The C&S Group recently set up a new R&D centre in Noida, in the National Capital Area—a state of the art facility boasting world class standards in terms of research equipment and personnel. Says Rishi Khanna, Director - Low Voltage Products, C&S Group, “So we are investing heavily on R&D right now. The R&D center, which we set up in Noida earlier this year has all the facilities over there for design, development and testing of low-voltage circuit breakers, switches and other related items. We even have an excellent team of R&D professionals. Our head of R&D was formerly with of Alstom worldwide. So we are actually developing a lot of new products including a new circuit breaker and various new additions in all our products.”

There is a wide scope for global expansion for Indian manufacturers. Many companies have already achieved world class standard when it comes to quality and so there is ample scope for exports. Says Vivek Ranade, deputy manager, Lawkim, “Indian products match international standards when it comes to quality. We are planning to export our products once we gauge the response from the market. At the moment, we are going ahead with our products all over India and in different markets even in rural markets. We already have a presence in cities like Chennai, Coimbatore, Kochi, Jammu and even Far-East states. We are now going into the interiors also.”

Power Distribution

The industry was in the dumps a few years back because in the area of sub-transmission and distribution sector the problems were never identified. Enough investments were never made in this sector. The common though that to some extent persists even today is that generating more electricity will solve the energy and power problem in the country. We need to generate more electricity undoubtedly. In fact, if the recent CII reports are anything to go by our requirements far exceed the capacities that we are currently planning. The planning has not taken into consideration peak hour demands.

But unless we make sub-transmission distribution the focal point, the investing in the industry will not be viable proposition. Industry as well as institutional investors will only invest in industries where they can see a return on investment. And even if investments do come, it will go down the drain because 40 percent of the power generated in India is stolen or lost. So sub-transmission distribution is a sector which needs to be taken seriously now. And this is already happening at the moment, which shows the industry has turned the corner. The industry doing well at the moment and other factors remaining equal it can only do better in the years to come.

India needs more electricity. The Indian economy is growing at almost 8 percent per annum and if it has to sustain this growth, and also increase and accelerate this growth rate, it will require more power. It is not just the manufacturing sector that needs power but even the services sector, which today accounts for a significant portion of the country’s economic growth needs huge investments into power sector.

So the prospects for the power industry are looking good. But much more needs to be done. The government needs to support private sector initiatives to generate power through policy support. Infusion of public investment into the sector is also the need of the hour otherwise it will not sustain the momentum. only private investment will not sustain it. And unless it is commercially viable investments from this sector could also dry up.

The industry must make more investments into research and development initiatives. In addition to developing new products manufacturers should also take initiatives that will reduce overall costs of deployment. As the volumes increase, the cost also necessarily needs to decrease else it will not be able to sustain the momentum for long. These are lessons that can be learned from any fast growing industry. So the challenge now is to come out with new solutions. Some of the meters in the market can already address the problem of theft because the moment you try to tamper with it the meter can be totally disconnected. More such solutions are however required, and at a macro level. And using information technology in such products is critical because that’s where the integration is required now. Software and hardware must work together.

ENERGY CONSUMPTION

Conzerve Energy’s Abraham Verghese, who is the Head of the Energy Management Group in the company, says that energy has now become the most important factor in production or manufacturing cost. Says he, “We help the industry in energy management. Earlier it used to be a neglected factor. Now with price of fuel going up it has become a very important factor in the total manufacturing costs. In fact, in industries like steel, energy costs make up 40 percent of the total production cost. So it has become a very important factor. What we do is, we help the industry in managing their energy or basically to reduce their energy costs and help manufacturers use energy more efficiently.”

Manufacturers can follow the three-step approach suggested by Verghese for energy efficiency-- measure, detect and control. So the first step is measurement. Without proper measurement it is practically difficult to identify whether a manufacturer consumes more power or less power. Hence, manufacturers need to take measures to measure the exact usage of power or energy be it electrical, thermal or mechanical energy. Once the rate of consumption is identified, manufacturers can then compare it with the expected consumption to get an idea about whether it consumes more power than the stated standard. Whether consumption is high or low, it is creating problems for consumption as well as for the process. There are various equipments available for electrical energy measurement or manufacturers can avail of the services of service providers in this space.

Once the measurement stage is completed, the next stage is detection—why is energy consumption higher. Manufacturers can -compare it with accepted standards. Says Verghese , “We study the technology, then we find out why the consumption is higher. After the detection part, we do energy audits and power quality audits, power factor correction studies, we do cogeneration consultancy. We offer many such services in the detection part.”

The third step for companies--once they have the consumption measurements and have identified the reasons for the extra consumption—is to get the consumption under control. C&S offers energy management system software, which claims to help manufacturers in controlling its energy consumption.

NEIGHBOURING MARKETS

Several manufacturers are looking at expanding into the subcontinent before venturing into more far flung territories. DB Power is a case in point. The company is currently present in four countries including Sri Lanka, Bangladesh and Nepal. However, D. B. Power took the partnership route to this end. Vinayak Joshi, the DGM Marketing of the company says that horizons are now expanding. But according to him DB is still concentrating on India at the moment because it’s a big market and a major chunk of its business is still dependent on the domestic market. Simultaneously, it has started developing the market in Sri Lanka where it sees a huge opportunity. Says Joshi, “We have a small presence in industrial type of market, which is expanding. Awareness is increasing because through our partnership we have introduced several international quality products. So we are recognized as a good service provider with quality products in our portfolio. And because of that we are now expanding our horizons in other countries also. With DB Power we are already in Middle East and we have sold a different type of UPS system and power supply in the US also, which are required for plasma. DB is in different fields also, in solar and grid interactive units. So there is no limit as such, we are doing lot many things in the field.”

Indian companies need to set up call centers to handle technical support—both pre and post sales. In addition to this, there is a need for factories that provide supply for machinery, improved office environment, banking and financial institutions, airports, better transport infrastructure, etc

Several manufacturers are looking at developing indigenous solutions to meet raw material requirements. The reasons for this are manifold—it will help keep a check on quality on raw materials required, it will help keep a control on innovation in the components space to keep up the pace with the technologically developments in the final product and finally it will help control costs if planned effectively. Says Vijai Electrical’s Chairman D. Jai Ramesh who is also IEEMA’s Vice President, “We want to develop our own indigenous raw material like magnetic core material and some other accessories and fittings. Our sister concerns Samrakshana Electrics and Techno Electrical manufactures circuit breakers, press boards, powder paints, lightning arresters, insulating materials like bushings, etc. This makes us an end to end manufacturer in our space.”

Vijai Electricals, for instance, is the biggest manufacturers of distribution transformers  in our range in the Asian market. We have the capacity of manufacturing 1,000 single point transformers everyday. We are the leaders in CSP transformers completely self protected transformers and we introduced in India the CSP technology. We introduced the highly energy efficient amorphous metal transformer in India.

In addition to this, the company is developing transformers in collaboration with a Swedish company. Says Ramesh, “We do have the patents for the technology. The product is yet to be released commercially. Maybe we will launch the product in the next few months. We do manufacture transformers to all standards like IEC, Indian standards, American standards, Japanese standards, South African Standards and even Mexican standards. All the transformers are tight tested at independent test labs like CBRI in India, Canada, ERDA in Baroda.”

  

CONCLUSION

The customer in India wants the best. The earlier distinction between local and export customers is no longer applicable. Today, the customer in India wants the very best at a very competitive price. Companies have learned many lessons from there interactions with the export market. This has helped them significantly in their dealings with the home markets. In turn, the home market is helping companies in their exports. There is homogenization of demand. The home customer, today, is equally or much more demanding than the international customer. Says Electrak’s Export Director, Andi Pearson, “The Indian market is booming at the moment. That is one of the reasons we are here to show the products to the Indian community so that they can see what’s on offer. And as of now we have had positive reaction.”

It is crucial for the country’s future as an attractive location for business and industry that its firms remain internationally competitive in a global economy, which is increasingly driven by technological progress. Only then can the advantages of the international division of labor be fully utilized and jobs and incomes safeguarded. To accomplish this, however, business and industry must be capable of innovation and willing to undergo structural change; firms must concentrate on areas of technological and industrial growth. Modern technologies, efficient and economical production methods, and efficient company organizational structures form the foundation for the nation's competitiveness.