Sameer Gupta, Chairman and Managing Director, Jakson Group
How do you see the power backup market panning out in the next couple of years and why?
Backup power is required by every segment and diesel is the only choice of fuel for backup or emergency power. With ´Make in India´ initiative, we can expect world class quality infrastructure in the coming years. There is a evident focus on improving our expressways, modernising railways, launching smart cities and indigenising defence procurement, which will open up many opportunities. The expected growth in this industry can be anything between 10 to 15 per cent depending on how fast we as a country, are able to implement various Government initiatives.
Meanwhile, the micro, small and medium enterprises (MSMEs) will also aid this industry due to the government make in India initiatives. At present, although, there is not much traction on this front, but with the basic framework is ready, the results in the coming years will swing the trend. All said and done, though our power deficit has been reduced to 2.5 per cent, and that is primarily due to power capacity additions, for the year 2016-17 will be around 7-8 per cent, and then it can gradually increase to 10 per cent y-o-y.
What are the segments you are present in and which of these dominate the market?
As far as power backup business is concerned, we are not missing out any sector or industries be it industrial, power, infrastructure, pharmaceutical, and banking. Notably, in the past 15 months, the government spent has gone up significantly. This has led us to focus more on the government based tenders. And, its not only spending from the central government, but also from various state government, which has transpired us to focus on these government tenders.
In the recent time, we have witnessed the demand from rural banking too as this will create a major demand for smaller gensets in India. We are also eying for real estate as there as some unfinished projects which are now in the process of completion. We are also eying healthcare and hospitality sector, which will create huge demand for power backup sector.
Meanwhile, as far solar space is concerned, we are eyeing for a revenue of around Rs 300 crore. And, next year, we are hoping that our solar business vertical will give us a revenue of above Rs 1,000 crore.At present, we have an order backlog of Rs 1,100 crore.
Do you feel that the demand for DG sets will decrease due to the increasing grid connectivity for renewable power?
Demand for DG sets will grow with growing economy and improved grid. This has been the trend in the developed world over the years and is fully supported by the fact that diesel is the only choice of fuel for backup power. With improved installed grid capacity, the only change expected is in the usage of gensets. Before, gensets were run on 24x7 basis as a continuous source of power, which over last 15 years has come down to eight hours a day, and now seems to be moving towards around two hours of daily usage. This trend is expected to continue and with improved grid, gensets will one day be applicable only for emergency use. However, demand for the equipment as such will not come down and is expected to grow in the long run. Solar or renewable energy only complements the back-up diesel genset industry.
What are the emerging technologies in this segment? How about gas-based DG sets?
As far as new technology in this segment is concerned, we are the pioneered one. To be precise, even before the implementation, we were manufacturing CPCB II compliant gensets in India. And, we are fortunate to have a partnership with Cummins for all our genset engines. Basically, the greenhouse gase emission is based on what kind of diesel engines installed in any genset. The engines that we use in our gensets are state-of-the-art and adhere to the CPCB II norms which is equivalent to Euro III nroms mandated by the law.
To your question on gas-based DG sets, if you recall, we were the first one to introduce it in the Indian market. As a matter of fact, we have around 90 per cent market share in the North region as compared to our competitors. However, the question remains is do we have the infrastructure for manufacturing gas based gensets? We may have gas reserves, but how the same can be transported as there is no connectivity. That´s a major road block which may not be solved in the near term. Indeed, we want pipelines and a regular gas supply, but it may not be the top priority for government.