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Interaction | March 2016

India will soon embrace quality, like Japan did

Dr Katsutoshi Toda, Chairman & Managing Director,
Toshiba Transmission & Distribution Systems (India) Pvt. Ltd.

What have been your experiences in India and how different it is from other countries/markets?
Basically, all markets are the same, with a few exceptions. Many markets are based on the specifications and based on the bidding, then some rules are set, otherwise there is no big difference. But if I have to try to find the difference, may be Indian customer is much more conscious on initial price than the specifications, quality and long term benefit. We have to do much more convincing to do. But the Government has set energy efficiency specifications Under IPDS, DDUGJY schemes. But things will change gradually, along with globalisation and also as Indian people, manufacturers and the Government consider this as one of the industrial hubs. Japan was the same issue in 1950s. Japanese people were looking at the price, not quality. Gradually, we had started looking at quality, specifications and changes in product and processes, quality of people, today they are all recognised. Same is set to happen here. China was also the same, it is on the way now. That I believe of India, it shall be the greatest country in the world within 10 or 15 years. The change will happen, or we are on the way of transition. Toshiba will co-operate and contribute in achieving this.

You have pressed new manufacturing lines into service at your Hyderabad facility set up with an outlay of Rs 200 crore (in February 2016). What are your future plans?
We have just completed investment of about Rs 200 crore (3-billion Yen or around $30 million) for boosting our production capacity of transformers by 50 per cent and setting up new production lines for new technology switchgears like gas insulated and solid insulated categories. This was done in line with our commitment towards ´Make in India.´ We are planning to invest an additional Rs 200 crore in our Hyderabad facility in the next two years as part of a strategy to secure a 20 per cent market share in the Indian T&D market and to develop the facility into a global manufacturing hub.

Already our Hyderabad factory is the largest integrated T&D manufacturing facility in the country employing over 6000 people. Another 1000 more people will be added in the next two years. The production capacity is being increased keeping India´s plans to increase power generation capacity to 1000 GW by 2040. We are also planning to take export component from 33 per cent of the total production to 50 per cent by 2018.

How do you describe Toshiba´s strategy in India and the importance of T&D in corporate structure of Toshiba Corporation here?
First is how Toshiba looks at India and transmission and distribution (T&D) in India. India is witnessing the fastest GDP growth. Our products and services are related to power generation and T&D. All of these areas are very much close to GDP growth. So, we are expecting very fast growth in the T&D sector in the years to come. I think, more than the GDP growth, there is a general expectation on growth of the sector. In that sense, India is thought to be a country of opportunity. That is the basic understanding and strategy, based on which Toshiba has invested in the country and in manufacturing, and also looks at India as a global manufacturing hub. There are two other important points. One, political strategy, the Government of India aims at ´Make in India.´ This encourages foreign investors like Toshiba. Besides, India and Japan have close relationships for decades and they are at the strongest point now, strengthened by industrial policy and Make in India initiatives. The second is, India´s young and capable talent. About 30 per cent of India´s population is in the age group of 10 and 24 years. Here we can expect that until 2040, the population in the productive age group percentage will be very high, that means India would be the most suitable place for manufacturing. Additionally, here in India, information technology (IT) and servicing sectors are very strong. There are many capable IT persons in India. So, it is very convenient for us to combine manufacturing with IT. That is the reason for us to choose India as our manufacturing hub.

What is the place of T&D in your overall organisational strategy? What are the other businesses you have in India?
If I have to talk about power sector, in power generation sector products like turbine and generator are manufactured at Toshiba JSW Power Systems located in Chennai. On metering side, the smart metering company, Landis+Gyr, this is a leading manufacturer of metering products and systems, and besides it also has its research centre in India. Another is aerodata business, besides software development business, titled Toshiba Software India Pvt Ltd. It is also into environmental-related temperature business. There is an important company, Toshiba India Pvt Ltd., headquarters for the Indian operations and advertisement, it provides customer communication and all kinds of services to the Indian subsidiaries of Toshiba Corporation.

India is at the cusp of explosion in the power sector. To what extent you will be in a position to exploit this opportunity?
One reason why Toshiba acquired Vijay Electricals is that this company was the number one manufacturer in India in the distribution transformer sector. Distribution transformer is an important commodity in the T&D sector to maintain our competitiveness and to offer our product at an affordable price. This also helps in reduction of T&D losses and creates big impact on the sector. This government is trying to reduce T&D losses by changing the specification not only for transformers, but under Integrated Power Development Scheme (IPDS) and Deen Dayal Upadhyaya Gram Jyoti Yojana (DDUGJY) schemes. In this context, technology is very important. And this, I believe, is supported by the Government. Fortunately, we have the biggest market in this segment. Also we bring in technologies from Japan and with the mixture of production capability and advanced technology we are able to offer advanced energy efficient products in India, at an affordable price. And I believe that this is very important and helpful for the Government. This is the vertical integration capability that can be applied to all other units as well. So, we are going to manufacture switchgear, bulbs, driving mechanism etc. This makes us much more competitive, ensure quick delivery and uphold quality. Sometimes outsourcing may be difficult, so we can assure these three points by this vertical integration, and offer products at affordable prices.

India is aiming at being a global manufacturing hub.

What it might have to do to achieve the same?
As a country, I believe that India should be much more focused on the industrial sector. In order to get the foreign exchange, to bridge the trade deficit, like Japan did, the product of India should be much more qualified as a quality product, affordable price and high specifications. We only think inside India, the cheaper is better, and sometimes we can neglect the specification part. If we consider that industrial sector of India should be one of the driving force of the country, we should consider that whenever higher specification and of higher quality is available at an affordable price to, for e.g., African and other Asian countries. I believe this should be one of the strategies of the Government.

Somewhere I was reading that you are very good at modern railway electrification projects coming from Japan. What is the progress made in this regard, what are the technologies you have?
Basically the western corridor is a Japanese-funded system and I understand that the specifications are based on the Japanese railway systems. And we are very familiar and good at that kind of products and the characteristics of these specifications are high reliability. And we are ready to manufacture railway related T&D products in the country - transformers and switchgear based on the Japan-based specifications. Of course, we have to learn something from Japan side, but that is on-going.

Have some bids already taken place?
We are not the prime contractor. We work under that kind of contractors. Discussion, negotiations and pre-bid discussions are on-going and we are assisting these kind of activities and we are ready to take up this opportunity.

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