V. Krishnavelu, Managing Director, United Cooling Systems P. Ltd.
Comment on the markets for the two different types of air cooling towers in India.
Though the demand for the Indian power segment is on a slow track, demand does exist in the current market conditions. As a supplier to both domestic and international markets, I feel the Indian market would see a higher traction over the next 10 years. My expectations are that by 2025, we would see double that of the current demand. It also means that the power equipment segment will see a rise. One should understand that India is one of the toughest markets, rich with varied products and capabilities.
From the international markets, we are seeing increasing demand from the Middle East region and Europe. Let me tell you, in addition to the power segment, we supply both cooling and heating solutions to the oil and gas segment as well.
What is the percentage of contribution to your revenue from the power segment?
Cooling tower has a negligible market in India. It consumes only 25 per cent of what we produce. Of this, 10 to 15 per cent is constituted by the power sector. So the revenue share is also on the lower side from the Indian market. But we cater to almost all leading power generators in the country. The major share of our revenue comes from the international market, both from cooling towers and other heating and cooling solutions.
What are the major challenges faced by the manufactures in this segment?
Skilled employees are one of the key issues faced by the industry. Though India has a high talent pool, retaining talent is becoming a task. The scenario has changed, unlike the earlier period, the engineers or, for that matter, employees in any category move from one organisation to another quickly, that hit the company in a negative way, as the time and money invested on the employee turn futile.
Nowadays, finding the right talent, training and making them adapt to the company standards consume more efforts.
In China, for example, people stay with a company for 20 to 25 years. This gives the companies the leverage to develop products faster as compared to Indian companies that invest a longer time in finding, retaining or replacing talents.
Where do you procure the raw materials from, and is there a problem in procurement?
We depend on the domestic market, as importing, with all the various taxes added, will make it as costlier as domestic supply. Raw material from China, which is priced at Rs 60/ kg costs Rs 112 in India. But importing means that one would end up paying customs duty, sales tax, minimum import price and so on. That makes it as equally-priced or slightly higher-priced than what you pay in the domestic market.
But the effect of this gets reflected when you peg your product in the international market. With the (Make in India- initiative, there are more opportunities for exports. However, we are unable to give a competitive pricing to the products as the input cost is higher. And, China gets the advantage in pricing.
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