Players like Sterling Generators are taking the lead and have gained foothold in the market. POWER TODAY caught up with CEO of Powergen Business, Sterling and Wilson, Sanjay Jadhav, at the company's facility in Silvassa where he talks about genset market and its importance for data centres.
Clean power is the need for data centres and advanced installations. How fluctuation/ load shedding can cause serious damage to superior equipment?
Data centres and network rooms draw total electrical power, which is the sum of the power consumed by the installed information technology (IT) equipment. Historically, this equipment consumed power at a value that varied only slightly depending on the computational load or the mode of operation. The notebook computer created the requirement that processor power should be managed to lengthen the run time of battery. Power management technology enabled the power consumption of laptop processors to be reduced by up to 90 per cent when lightly loaded, as this technology has matured and has begun to migrate into server design. The result is newly-developed servers can have a power consumption that varies dramatically with workload over time. When power varies with time, a variety of new problems occur for the design and management of data centres and network rooms. A few years ago, this problem was negligible. The problem has now reached a point where it is significant and the magnitude of the problem is growing. Fluctuations in power consumption can lead to unplanned and undesirable consequences in the data centre and network room environment; including tripped circuit breakers, overheating, and loss of redundancy in redundant power systems. This situation creates new challenges for people designing or operating data centres and network rooms
Tell us about your recent order bagged from Sri Lanka?
We bidded for a global tender, a 50-MW diesel power plant where we have outsmarted 19 global companies.
We have signed a contract with Ceylon Electricity Board (CEB) and the total project cost in terms of value is Rs 120 crore. This order is one of the largest projects to be commissioned in Sri Lanka. Meanwhile, Sri Lanka is dominated by the Chinese players, however, the country always relied on Indians players. Despite this, we don't see any presence of impactful players other than Tata's, Ashok Leyland, Bajaj and Indian Oil Corporation. As per our estimates, genset market potential is around Rs 400-500 crore. the country is driven by government spending especially in ports and tourism sector. So, for Indian players, the country provides a better investment environment and opportunities.
According to you what is driving the genset business in India?
The unreliability of electricity grids is one of the major factors driving the market. Electricity grids, already operational in India, are not able to withstand heavy rainfall, earthquake, and fire, causing power outages and the need for installation of gensets across the sectors. The need for uninterrupted and continuous power supply has led to increased adoption of gensets across the industrial, commercial, infrastructure, and residential sectors. With implementation of CPCB2 and stringent emission norms, there will be substantial improvement in the quality of exhaust gases being discharged into the atmosphere. Engine manufacturers are continuously developing fuel-efficient engines which will improve efficiencies by at least 10 per cent.
Therefore, diesel generator being a backup power does feed the power through UPS in the absence of the main source, and thus, for the data centre, this criteria may not applicable. For process-oriented manufacturing units, the quality power is the main criteria where smart DG set is the better choice.
What is your assessment for Indian genset market?
India, with Rs 8,000-crore genset market has a huge opportunity to tap. According to recent reports, almost 300 million citizens in the country do not have access to electricity, including a national gross domestic product loss of about $68 billion due to electricity shortage. In this regard, the government has been encouraging manufacturers to develop environmentally safe generators, with a strong focus on improved power delivery, reduced fuel consumption and pollution levels. Diesel generators, in particular, are rapidly becoming a trusted solution to India's power shortage.
In a Rs 8,000-crore genset market, where does Sterling and Wilson stand?
We are the second largest player in high-horse power (HHP) and medium-horse power (MHP) genset segment with around 20 per cent of market share. Since our inception in 2005, till the present day, we have grown rapidly and gained considerable market share in the Indian HHP market achieving revenue of Rs 850 crore in FY17-18. Through our manufacturing facility in Silvassa, we have managed to achieve a commendable production value of about 1,000 hhp/mhp generators, higher than most diesel genset competitors in India. With power shortages and energy storage solutions being critical issues in the future for India, we will continue to see strong demand from the market. As we enter 2018, we aim to reach 2,000 units and continue a robust, consistent growth of 20 per cent in a primarily mature gensets market. The company's 8-acre facility in Silvassa, one of the largest in Asia, was established in 2006. During the last 10 years, we have invested over
Rs 100 crore in the facility and is looking to further invest Rs 50-60 crore by the year 2020. With state-of-the-art PLC-based testing facility in the factory for diesel gensets up to 3,000 kVA and we have plans to reach an annual production capacity of 5,000 gensets.
Tell us about export viz-a-viz domestic share in your overall revenue?
In our total portfolio, export business gets 30-per cent and 70-per cent support from domestic market. Presently, we are predominantly present in Dubai, Abu Dhabi and Qatar. Going forward we see good potential in Oman, Kuwait and Saudi Arabia. That said, in Africa, we see huge potential for HHP and MHP, especially in Egypt, Nigeria and Tanzania. That apart, we are also tapping South-East Asian market that includes Sri Lanka, Indonesia, Philippines and Australia.
So, from a business perspective, what are the challenges that confront you?
At present, the only challenge hovering around is new Central Pollution Control Board (CPCB) norms which will come in. Luckily, for this business, it is still not highly regulated because it's an emergency power. Meanwhile, the biggest challenge for this industry will be upgradation to a next level. As far as Sterling and Wilson is concern, we are adhering to the CPCB II norms and once CPCB III kicks in we are all ready to adhere to new norms too. We have already started working with our channel partners, suppliers for engines, etc. We have already started working on our products considering new norms. So, we are fairly in tune with the government regulations. Meanwhile, due to implementation of Goods and Service Tax (GST), our production went significantly down and we managed to survive on 40 per cent of capacity utilisation. But, October onwards our capacity utilisation has started picking where it stands at around 80-85 per cent.
What is your current orderbook position?
For fiscal year 2018 (FY18), our current outstanding orderbook position is about Rs 350 crore. Meanwhile, in the next two-three years we are targeting an export revenue of 50 per cent. This is mainly because what we are witnessing in India is just noise and not much of on-ground action. For our genset business, we may witness good orders from industry such as data centres, hospitality and infrastructure including defence.
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