The Indian genset industry has matured and will continue to register a healthy growth on the back of a growing economy, predicts Gagan Chanana, Director of Noida-based Jakson Group, a leading manufacturer of gensets in India. In the near future, Chanana sees tremendous business opportunity in logistics and the dairy industry.
Where do you see the Indian genset industry headed?
The Indian diesel generator (DG) industry currently is at a very interesting point. A couple of years ago, the industry had become stagnant and not much growth was happening. But with the economic growth plans that the current government has rolled out with focus on railway, power projects and expressways, the demand for additional power for infrastructure projects has started improving. Besides, industries like automobiles, warehousing, logistics and e-commerce are doing well. Therefore, the next five years are expected to be good for the DG industry and it is likely to grow between 8 and10 per cent per annum.
Amidst the talk of India becoming a power surplus country, what is driving the genset business here in the coming year?
The DG industry has matured. Earlier the DG set was considered the prime source of electricity. Since there has been a decline in power outages, DG sets are presently used as a standby or backup source of power in industrial, commercial and residential applications. Even though its use as a power source has come down per se, the requirement has gone up. At a time when the country is developing and living standards are rising, we are increasingly becoming used to operating in an air-conditioned environment. We need backup because we do not want the air-conditioning to shut down due to lack of power. Interestingly, the US happens to be the biggest market for the DG industry. The country's dependence on power is so high that it cannot afford even a minute of power outage. You must have heard of Hurricane Sandy that resulted in a large-scale outage. DG sets were used to restore power to the affected areas.
Manufacturing and infrastructure sectors are among our leading clients, followed by commercial and residential real estate. And then comes the services industry that includes IT, ITES, retail and rental. A couple of segments that we are keenly looking at to sell our products are cold storage, warehousing and the dairy industry.
What are some of the areas where DG supplies uninterrupted and stable power?
Other than the usual power requirement that one might have from the DG, reliable and quality power is required for several other applications. The electricity grids still malfunction at times, depriving the consumer of good quality power in terms of voltage and frequency. Low voltage can especially cause serious damage to sensitive electronic equipment. In such an eventuality, DG is the only source that can provide you with a stable supply of electricity. This is especially very critical in the case of process-driven industries like hospitals.
In areas where hospitals do not have access to reliable electric supply from the grid, despite having two priority connections from the state electricity board, they may be dependent on DG power for critical medical procedures such as specialised diagnoses and surgeries. Similarly, the stadium at Eden Gardens, Kolkata is powered by our gensets. On one occasion, the floodlights at the ground could not be operated due to some disruption in the power supply. Soon after, the ground management called for DG sets to be installed. We supplied six 380 KVS DG sets to the stadium as a part of the project. Now each floodlight tower runs only on DG, to ensure that sporting or other events happen without any interruption.
What are some of the important emerging technologies in this segment?
New technologies like Artificial Intelligence (AI) and the Internet of Things (IoT) are finding their way into all products. In the DG industry too, we see a lot of innovation happening. For example, remote monitoring systems are helping us avoid fuel pilferage as they allow us to remotely access each one of oursites.
Does the Indian market have a good potential for gas-powered generators?
Gas-based gensets have been available in the market for nearly 20 years. But somehow the concept has not caught on due to lack of a proper government policy. Although gas is available, the government gives priority to supplying it to the fertiliser industry, automobiles and cooking gas for homes as a replacement for LPG.
Moreover, gas-based gensets have their own limitations; they take time to take off and absorb the load to provide power backup. Also, since the cost of gas gensets is higher when compared to diesel gensets, the capex also goes up. When you only have a limited requirement, users tend to be sensitive about capex. Moreover, to be able to fully utilise the gas genset, you are required to be connected to piped gas. So again, the government has to provide the required infrastructure to ensure the fuel's availability, which is not the case with DGs. Usually, some people find the gas-based genset attractive largely out of their concern for the environment. However, the Ministry of Environment, Forest and Climate Change stipulates norms for the DG sets. As a result, the quality of exhaust from the diesel gensets is far cleaner than the quality of air on a normal day in Delhi NCR. Currently, the CPCB stage II norms are in effect. The Central Pollution Control Board (CPCB) will be introducing stage III norms over the next two years, which are going to be even more stringent.
But there is a view that with the thrust on reducing carbon emissions, the demand for diesel gensets is likely to decline over the years? How accurate is that assessment?
We use Cummins' engines ofthe highest standards. Cummins is focused on improving the technology part. Even though Cummins happens to be a US-based firm, India is its biggest manufacturing base globally. Recently, it opened a global technology centre in Pune. In fact, the engines in our gensets are suitable for CPCB stage III norms, and we will not have to tweak them much to make them compliant.
What is your current order book position? Also, how are you supporting the government's Make in India campaign?
Our two genset manufacturing plants churn out nearly 8,500 units per annum. Our order book is very healthy. Incidentally, though the new financial year has just started, we have an order backlog of Rs 3.5 billion, which is the equivalent of three months of our sales. By the standards of our industry, it is considered to be a very healthy average.
As far as supporting government initiatives is concerned, all our gensets are made in India. We regularly engage with the government agencies through industry platforms like the Confederation of the Indian Industry (CII) to make recommendations. I would like to mention that we are also a member of the Indian Green Building Council (IGBC). Our current corporate headquarters in Noida is the first green building for an Indian genset manufacturer.
What about your overseas presence?
Other than India, Jakson is present in Bangladesh, Nepal and Bhutan. We are the sole distributors for Cummins in Bangladesh and Nepal. We not only sell gensets, but also provide after-sales support to our customers there.
How can generators be made more efficient in supplying emergency power to meet all kinds of loads at a fairly low cost?
Being a high-volume player, we are able to keep our production costs under control. We have always believed in having a low-cost model to offer the most competitive price to the customer, even while delivering the best product.
We do compete with other players, but have simultaneously created a niche for ourselves.That is how we are able to maintain our market share and leadership position in India.
The Central Pollution Control Board will be introducing stage III norms over the next two years, which are going to be even more stringent.
- Manish Pant
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