Ravi Kumar Dhulipala, Managing Director, Rexnord Euroflex believes that the market will likely revive within the next 18 months. He also sees India rapidly inching towards its target of achieving 24x7 power.
Following Rexnord's acquisition of Euroflex Transmissions India Pvt. Ltd in 2015, how are the synergies developing between the two companies?
The product portfolio of Euroflex fits very nicely into our existing portfolio of couplings, which we had prior to the acquisition. This has presented to us with a significant expansion of the market, which we could not attempt to go after earlier. Additionally, with Euroflex's manufacturing capability, we are also able to break into some other new territories in our existing brand of couplings. And that is an additional synergy. The market is currently slightly down because of investments in oil & gas being slow. The synergies are going to be fully realised once the market revives completely.
How soon do you see that recovery happening?
We are seeing some of the offshoots of that recovery happening in India. The government has announced very significant initiatives in terms of Euro 6 emission norms. This has led to refiners upgrading their facilities to meet the new regulatory norms. I believe the opportunity will present itself sooner than later; probably in the next one to one-and-a-half years, where you will see some serious activity when these projects move from completion of feasibility analysis to the order stage.
What are the enhancements at your new Hyderabad base?
We used to have a small manufacturing facility in Mumbai. We have now consolidated all our manufacturing operations in Hyderabad. We have three facilities located over 10 acres (100,000 sq ft) in operational built up area. This is the first enhancement that we have done. Secondly, we have added a couple of products that we used to make elsewhere in the world to our portfolio of manufacturing operations in Hyderabad. Those products were launched last year. Apart from that, we are also continuously enhancing our manpower, investments and systems.
What areas do you plan to expand in this FY? Are there plans to make significant headcount additions following your relocation to Hyderabad?
I will first answer the second question. We aren't making too much of headcount additions. We will hire as per the requirements of our organisational structure. We have exciting product called Flattop, are used in multiple industries such as beverages automotive and unit handling. Since we believe that our market share is less than what we intend to have, that's one of the focus areas for us. We want to build a lot of applications with regards to flattop and offer the same value here that provide to various OEMs across the world. Our second area of focus is to drive the overall penetration of very powerful brands. We will go after very specific target markets and try to see how we can fine-tune our value proposition, which compels the Indian customers to seek us out.
Any interesting products such as those based on IoT in the pipeline for the Indian market?
I can't say if the IoT will immediately accrue to India or not. But we also have several other products like Cambridge and Falk. There are also several additional products within the existing couplings and bearings group, which we believe have a great potential in India as the current offerings in the market don't provide value proposition which we can provide.
What is your outlook for the Indian power sector for 2017-18?
India is in a very nice and interesting juncture in this journey towards 100 per cent power for everyone. If you will recall, back in 2013-14 we had only 80 per cent of the generation capacity of the total demand. Once the Ujwal DISCOM Assurance Yojna (UDAY) scheme was launched, the power generation capacity suddenly became surplus. If you see the data for the last two years, there were millions of units that went unused. The plant load factors are currently hovering around 65-70 per cent, if not lower. This despite our shutting down most of coal imports. So, where was the problem in the power industry? The answer is, in transmission and distribution, where the money is being pumped to evacuate what we can produce. And I believe because of that we will have additional growth. For example, if you were a farmer in a village with 14-hour long power cuts, you planned your life around that. Now if you have either 24-hour power or very little power cuts, you can plan your day much better to undertake some other economic activity. I believe that this is going to throw open a lot of opportunities to all of us. The government is also pushing renewable energy significantly. I think we got our priorities right in the renewable energy sector in the sense that we are going after one abundant source of energy that is solar. Again, India has reasonable deposits of thorium, which can be converted into uranium. These things make me believe that we are on the cusp of realising our dream of 24x7 electricity.
Do you foresee India becoming a major energy exporter?
Energy export is more a factor of people buying it rather than exporting it. The more natural resources you have, the more you can set-up. That is the easiest part. However, even more important is securing international contracts that allow you fair and equitable compensation for all the electricity you have produced. Through our diplomacy with our neighbours such as Nepal, Bangladesh, Bhutan and Sri Lanka, we may have a chance to export significant power. These countries can come together to form a highly interconnected grid, with each one of us feeding into the other. That's a possibility. But you need to have leaders with the will to make this happen. Additionally, you need to have seamless connectivity that ensures 100 per cent collaboration and trust.
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