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Spotlight | October 2014

Renewed Focus

With the renewable energy sector receiving the much-needed push from the government, Jakson Power aims to become a Rs 2,500 crore company by 2016-17.

Started as a trading house of electric motors, pumpsets and switchgear in 1947, the Jakson Group went on to become one of the largest players in the genset market in India. However, realising the limited growth in the genset market, the group entered into solar business including solar power plants, solar products and engineering, procurement and construction activities. The company is now also focused on solar business and expects to earn half of its overall revenue from this segment. The company has so far commissioned Solar Power IPP plant of 20 MW in Rajasthan with an investment of Rs 200 crore at about 25 per cent below cost and ahead of schedule. The company plans to set up solar power plants totaling 80 MW in 3 years with an investment of Rs 800 crore.

Blueprint 2017
The company, by 2017, has plans to garner Rs 600 crore from the solar power business. Sameer Gupta, Managing Director of the company, explains how Jakson plans to achieve the same. According to him, by the end of December 2015, the company will have around 60 MW of solar power generation capacity through its IPP (independent power producer) vertical which will in turn generate Rs 80-90 crore. This includes its current capacity of 20 MW, with another 10 MW in the offing. ¨We are also bidding for another 13 MW by end of this month (August),¨ says Gupta.

Now, as the company has a separate division with a focus on EPC, this brings an added advantage to the company´s overall operation in the solar business. ¨Having an EPC division in-house, the dependency on outside contractors will be minimised, and hence investors can expect quicker project execution of the projects they have bagged or likely to bid for,¨ says an analyst from a domestic broking firm.

In the EPC space, the company expects to close deals to the tune of 25-35 MW solar power projects that include land-based as well as rooftop projects in the next 30-40 days. In the EPC space, the company has set a target to execute 60 MW worth of projects, which will take its profile to around 180 MW by end of 2017. Hence, it will certainly help the company to gain a topline of Rs 350 crore.

So far with a clear-cut plan, the company is expected to achieve Rs 440 crore through EPC and IPP. But for analysts, the company´s plan to achieve Rs 250 crore through sale of solar products in the next three years has come as a surprise. Since the company provides total solar solutions that include manufacturing of solar products - gensets, mobile generators, water purifiers and do-it-yourself kits, it aims to focus on the Middle East market rather than India. According to the management, the company, at present has enough orders in hand from India as well as the Middle East market. ¨Selling these products will fill the gap of Rs 200-250 crore,¨ feels Gupta. Jakson expects its solar and electrical contracting sales to account for 50 per cent of total revenue by then, up from just a third at present.

Performance
Speaking to Power Today, S Sundaresan, Director, Finance, says, ¨During FY 2013-14, the gross top-line of the company grew by 2 per cent to Rs 1,490 crore as compared to the previous fiscal.¨ He adds: ¨The first five months have been good as compared to last year but next three months would be flattish. However, we do expect some growth at the end of 2014-15. Overall, we do foresee a modest growth in the overall performance during the current FY.¨ Meanwhile, the company has outlined huge plans in terms of new projects. To fund them, Sundaresan says that the group would access its internal accruals for the equity part and the balance amount would be raised through debt as the company enjoys a healthy debt-equity ratio. Many of the financial institutions have shown keenness to be a financial partner to Jakson's projects, he says.

Increased international focus
The company feels that in India, its product will garner demand only from the government rather than private players. Another reason for the shift in focus from domestic to international is the recent announcements by various governments in the Middle East. Last year, the company launched India's first mobile solar-powered generators (range - of 0.5 kW- 25 kW) and solar-based water purifiers which are based on the plug & play concept. With this launch, the company is targeting to capture the Africa, Middle East and South East Asian markets in a big way.

The entire region is expected to add 30 GW in the next 10 years, hence the company intends to grab a bigger pie in that market. It is expected that the Middle East market will contribute 70 per cent to its treasury and only 30 per cent will be from India. This has led the company to establish its set-up in Dubai and it is moving towards expanding its dealer network.

Order book and backlog
The company is certainly optimistic on its prospects after the new government has taken over and expects more projects to be on the ground. It is looking forward to bag at least 50-60 MW of EPC projects, every year. At present, the company has a order book of 30 MW and a backlog of 16-17 MW. The 15 MW of order backlog consists of around 7 MW in rooftop and about 10 MW in land-based solar power projects.

Solar portfolio
The company executed a 100 KW build, own and operate (BOO) solar rooftop project at Raipur airport in November 2012. This is the first major photovoltaic installation project in India for any airport. Recently, the company has executed a 10 MW solar power plant project for leading State-owned power generation company, NTPC at Talcher, Orissa. Jakson has recently bagged a Delhi Metro Rail Corporation (DMRC) order to install rooftop solar power plants. Under the deal, the company will set up solar rooftop plants at DMRC´s three premises with an aggregate capacity of 250 kWh. The company is targeting to commission the three projects within the next six months.

What´s trending?
According to Gupta, the diesel generator market will still continue to grow as the overall power sector grows. But its application will change. Instead of relying on diesel for continuous power, generators will increasingly be used as an emergency energy source, similar to markets such as the US and Europe.

The cost of producing electricity from a diesel generator has surged 10 times in two decades to as much as Rs 20 a kilowatt-hour. In contrast, declining panel prices and competition have driven the cost of solar down 25 per cent since 2011 to an average of Rs 6.5 a kilowatt-hour in India´s latest national auction of solar plants. Jakson has introduced solar-based generators -ùcollapsible panels deployed on rooftops in combination with batteries or a traditional diesel engine-ùpriced from Rs 5 lakh onwards depending on capacity. With lower maintenance and fuel costs, the payoff period is less than seven years, says Gupta.

HR Speak
According to Dr Aparajitha Ramadyani, EVP, HR and Admin, there is a dearth of talented and skilled workforce in the renewable space. The specific knowledgeable skilled manpower is limited and the smarter of of them are often attracted by multinational industries. Skilled professionals are attracted by the high pay packages that they can command in the renewable energy industry. At present, the company is facing challenges in procuring talented designers for its operations. In 2013-14, the Jakson group has inducted around 400 employees. When asked about hiring plans for 2014-15, Dr Ramadyani says that for the current year, the company will focus on hiring only for its solar and EPC business vertical instead of genset or product sale.

Since the company is new to the sector, in terms of external training for employees, it has tie-ups with a few reputed technical organisations. The company also conducts internal -æknowledge hour´ sessions every month. ¨Association with reputed technical organisations has helped our vertical heads in the solar business to gain the necessary knowledge in the sector,¨ says Dr Ramadyani.
Rahul Kamat

General overview

  • Leading power solutions provider.
  • Over 65 years in existence.
  • Over 1 million sq. ft. of combined manufacturing space.
  • Over 1,800 employees across India.
  • 6 manufacturing plants.
  • Global Training Centre and Service Facility.
  • 79 points of presence in India including 57 dealers.
  • Offices in Nepal, Bangladesh, Singapore and Dubai.
  • Key highlights

  • The company is planning to enter the Indian defence sector with a vision to become an integral part of the indigenisation drive started by the Ministry of Defence.
  • Last year, the company launched India's first mobile solar-powered generators (range - of 0.5 kW- 25 Kw.) and solar-based water purifiers which are based on the plug & play concept. With this launch, the company is targeting to capture the Africa, Middle East and South East Asian markets in a big way.
  • Last year, the company installed India´s largest genset integrated manufacturing facility at Kalsar, Gujarat, with a targeted manufacturing capacity of 12,500 units by 2016 (current capacity 8,000 units).
  • The company is planning to install 100 MW IPP solar power projects by 2016. Currently, the company has commissioned a 20 MW IPP solar power plant at Rajasthan with an investment of Rs 200 crore in February 2013 and won a 10 MW IPP solar power project at Uttar Pradesh from the government of UP.

    A few success stories
    Client Vedanta
    Project 36MVA diesel power plant
    Value $ 5.5 million
    Scope Main equipment consisting of 12 nos. 3000 kVA DG
    SetsLT-HT Control Panel/ Transformer/Crane
    Civil Work, Electricals & Mechanical
    Client Abhijeet Group
    Project 32 MVA 11 KV power plant
    Value Rs 70 crore
    Scope Design, development and distribution of power house
    Client Airports Authority of India
    Project 100 kw rooftop solar installation of Raipur
    airport on BOO basis
    Value NA
    Scope Installation, operation and maintenance for 25 years.
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