Experts Column

UDAY & UJALA to boost demand for modern electric equipment

Gautam Seth,
Joint Managing Director, HPL Electric
and Power Ltd.

The Indian government has implemented several initiatives such as private participation in the transmission segment and development of the National Power Grid to boost growth in the transmission, and distribution (T&D) industry. Additionally, the government has announced various plans, including recasting 100 cities in India with an estimated expenditure of over Rs 3,000 billion under its smart cities programme, the ‘Housing for All’ initiative and by facilitating the domestic production in the Indian electric equipment industry to reach an output of $100 billion by balancing exports and imports, pursuant to the Indian Electrical Equipment Industry Mission Plan 2012-2022 of the Department of Heavy Industries and Public Enterprises, Government of India.

Commenting on whether these initiatives have started delivering or not, Gautam Seth, Joint Managing Director, HPL Electric and Power Ltd says, “We believe that government’s initiatives will drive the demand for domestic and industrial electric equipment, including for electric equipment that we manufacture. Further, increasing urbanisation in India coupled with rising household income levels have resulted in progressively increasing demand for residential real estate, which has been a significant consumer for variety of low transmission electrical products and lighting solutions. The capacity addition in the real estate sector is expected drive the entire value chain of the electrical industry and will provide a base for significant product and service innovations in the future. Also, the ‘Housing for all’ initiative seeks to build two crore homes by 2022, which is expected to give a 137 thrust to the electrical equipment industry in India, and affordable housing is expected to promote innovation into low cost and affordable electrical solutions.”

UDAY & UJALA: Game changers
India has garnered huge acknowledgment for its energy efficiency initiatives. HPL believes that pursuant to the UDAY scheme there would be added emphasis on improvements in operational efficiency including through mandatory use of smart metering solutions, upgradation of transformers and meters, implementing energy efficiency measures like efficient LED bulbs, agricultural pumps, fans and air conditioners, amongst others. These measures help us save nearly Rs 12,000 crore for discoms due to issuance of UDAY bonds worth Rs 2.32 lakh crore and are expected to reduce the average AT&C Loss from around 22 per cent to 15 per cent and eliminate the gap between ARR and the ACS by fiscal 2019. More than 23 crore LED bulbs have been disseminated under UJALA scheme, and this has served dual purpose and helped save around
` 12,400 crore in electricity bills, and also reduced CO2 emissions by over 2.5 crore tonne annually. According to Seth, these savings will help in providing direct benefit of power to consumers.

“We believe that such measures (UDAY and UJALA) will result in increased demand for modern electric equipment that adequately responds to the technological needs of power utilities and other customers,” asserts Seth.
India’s ranking in ‘Ease of Getting Electricity’ by the World Bank rose from 99 in 2015 to 26 in 2017. “We seek to address this increased demand through introduction of a range of products across product verticals, particularly metering solutions and LED lamps, with modern technology that monitor energy efficiency,” Seth says.

Observations on industry health
As per PWC report, Winning Leap solutions could save approximately $200 billion in capital outlays across power generation, T&D, while also ensuring universal and reliable access to power. To meet the desired outcome of tripling per capita power consumption to 1,800 kWh, India would require an additional 455 GW of installed capacity along with significant investments and operational improvements in T&D networks. Using traditional means to achieve these targets would require investments of almost $900 billion over the next two decades. To put things into perspective, India spent only $120 billion of the available $170 billion in the 11th Five-Year Plan on power infrastructure.

Hence, Seth observes, “Achieving the Winning Leap target through traditional means would require current investments to be doubled on an annual basis. India’s dependence on fossil fuels for energy generation has also resulted in high greenhouse emissions, with India being ranked fourth, behind China, the US and the EU in global emissions.”

Increasing footprint
Briefing on the company’s performance during the past one year Seth says, “Our metering business has entered into positive growth trajectory marked by improved traction in orders from utilities. Our lighting business displayed remarkable growth in previous driven by increased sale of LED bulbs and luminaries. Switchgear and wires and cables business also maintained healthy growth along with significant improved in margins. “

HPL is now focussing on increasing its brand visibility through consistent brand promotion activities, incentivising its dealers and aggressively reaching out to more dealers and retailers. The company is confident that these measures should help capitalise on various positive sectoral tailwinds and aim for long term sustainable growth.

HPL’s innovative strategies to remain competitive
HPL has consistently focused on expanding its product range and introduce modern electric equipment, offering a wide range of features. “We seek to utilise our research and development capabilities to develop new products, particularly lighting equipment, has the highest profitability margin amongst the products that we manufacture and supply,” says Seth.

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