— Rishi Khanna, Director,
C&S Electric Ltd
C&S Electric Ltd is amongst India's biggest exporters of low and
medium voltage switchgear. Its wide range of electrical and
electronic products finds application in power generation,
distribution, control, protection and final consumption.
Rishi Khanna speaks about the company's phenomenal growth and
gives insights on the company's recipes for success. Looking
confidently at the future, Khanna sees C&S growing by 20 per cent
annually in the medium term. An interview by
Mrinalini Prasad.
From essentially being a switchgear company, C&S has emerged
as a multi-faceted electric company with presence in power
busbars and lighting & wiring accessories. Please share with us the
growth plan adopted by the company.
Even before the switchgear components, the mother
business of C&S was LV switchgear panels. In the mid-1980s,
C&S added in a short time a vast range of LV components like
switches, fuses, air circuit breakers, contactors, motor
starters etc, and built its network of distribution around the
country. Success came quick since the foundation was sound.
From thereon always C&S has looked at expanding the
frontiers of its business in terms of geographies, new
verticals or joint ventures. Our exports of the flagship
company C&S Electric are close to
150 crore now and this
does not include the exports of our JV companies. This has
been an important strategy for growth as not only has it given
revenue but the learning and experience has given
confidence and ideas for growth of business at home.
We are constantly getting into new verticals. To give some
examples, we entered the medium voltage switchgear line a
few years ago through a JV with a Portugese company, C&S
Efacec MV Ltd, which is making waves in the Indian MV
switchgear industry. We have started our own company and
plant in China and expect to tap the vast Chinese market for
all our products. We have also become a pioneer in the solar
energy field and have been one of the first to commission a 1-
mw grid connected solar power plant at Biwani, Rajasthan.
What is the current contribution of your switchgear business in the
total business by the company? Where is the foreseen in coming 3
to 4 years?
Switchgear contributes around 50-60 per cent of the
business. We expect excellent growth in this segment but
naturally some of our newer ventures like solar or electrical
turnkey business are likely to grow faster. This percentage
may thus reduce slightly in coming years. Overall the outlook
for switchgear business in our domestic market as well as
international market looks strong.
What have been major innovations in the Indian switchgear
industry over the recent past? Please tell us about new products by
C&S in this segment.
The switchgear industry is a mature industry the world over and
India is no exception. So the new products that come into the
market are usually only incrementally better in terms of
fundamental technology, but have always some new features
which may be sometimes described as "new bells and whistles".
This is the case in many industries, including for example, the
automotive industry.
The main shift in switchgear technology has been the increasing
use of electronics. This has been the case for the industry as a
whole and also for C&S as we have added some electronic
functionality or the other in all its products. Protective relaying has
advanced in a big way and the use of multifunctional relays and
advanced communication protocols like IEC 61850 have made big
inroads into the industry. However the full benefits of these
technologies have not yet been fully harnessed by the users who
still prefer in many cases "redundancy", which is to retain also the
older systems in parallel - to put it perhaps a bit over simplistically.
Innovation is not limited to the products alone. The manufacturing
technologies and logistics systems are often an area where
innovative edge makes as much difference as in the product itself.
Also innovation can sometimes be at an emotional level, for
example "ease of use" or simply the power of product aesthetics.
C&S is active on all these fronts.
Apart from the existing markets, you were planning to expand your
footprints in other geographies as well. Which are the new markets
you have explored or are in the process of exploring?
We have made some inroads into practically every market in the
world now, so it is not so much about new geographies now. It is
about deeper penetration into the geographies where we have
been already present now. The approach is simple—we have
increased quantity and quality of our manpower in this field and are
setting higher targets. The market is huge and our share is tiny so
there is enough room for us to quadruple our exports in 3-4 years.
We do pick some markets from time to time where we focus. In recent times, these markets have been Russia, Africa and North
America. We have an office in Moscow and in Dubai. We also now
have a focus on the Chinese market. It will be a slow start, which we
have already had. But the market is 5-6 times the size of India's
market. And we already have a reputation in China for our superior
quality as compared to the Chinese companies thanks to the
supplies we make to our global accounts who have their plants in
China. So we have great expectations from this in the long term.
Please tell us about the competition in the sector. What are the
strategies adopted by the company to maintain its position as a
leader in industrial switchgear export market?
The competition comes from the same people we compete with in
India—nobody is new! On the one hand we have the European and
Japanese giants, and on the other hand the Chinese. Of course the
Chinese companies also come in all types and one cannot
generalize. Over the years we have developed our own unique
positioning—an elusive alchemy of product quality, customer
service and intelligent marketing.
What is your view on competition from Chinese suppliers in the
domestic market, especially in the LV and MV category?
It is a reality in India and in the world. Chinese competition has
reduced pricing for all, even those like us or the Europeans who do
not directly always compete with them. Unfortunately, not all, but
many Chinese companies produce and sell products of very low
quality, which do not comply with any standards of safety or
standard of performance. And there is a large market in the
developing world for such products and many traders are only too
happy to make a buck and promote such products.
In China there are, for example, hundreds of companies that make
cheap, poor quality switchgear products literally on the road side.
These companies could never sell these products in the Chinese
market, as they have no certifications or comply with no proper
standards. Yet these companies thrive on exports to markets in
Asia, Middle East and Africa where such products get sold. But this
attitude is the same as saying "Why have a plug at all, why not just
put the wire directly in the socket?" The sad truth is that this
happens everyday in our electrical world. You would never see
something like that in Europe or USA. But having said this, not all
Chinese companies are like this. The Chinese companies which
make good quality products however, typically have costs equal to
or higher than ours. So they have been restricted largely to their
huge domestic market.
We perceive that Indian power utilities now prefer EPC and turnkey
contracts, as opposed to direct procurement, for switchgear. What
do you think? Do you have plans to take up T&D contracting?
Switchgear requirement of large projects in power sector are
usually a separate requisition as it is a substantial purchase. I
would estimate 70 per cent of the procurement takes place
directly as a switchgear package whereas the 30 per cent goes
through what we call EBOP (Electrical Balance of Plant)
contractors. I personally feel that it is up to the customer to
decide what suits him better. More experienced customers
prefer to buy switchgear direct because the value addition of
the EBOP contractor is not much. As far as our switchgear
division is concerned, we are focused on product supply and not
on turnkey project execution. However we have an electrical
turnkey projects division which is active in the kind of space
mentioned by you. This is a fast growing business for C&S and is
an internal customer to the switchgear division.
The company, we believe, has been exploring opportunities to set
up manufacturing units in Middle East and in China. What has been
the progress on that front?
We are exploring manufacturing facilities in China only. In the
Middle East, it is only our Dubai office. In fact, our China company
and facility are already in production since over six months now and
things look promising. However our strategy in China has been
deliberately one of taking one step—waiting, watching and then
planning the next step. The first step has gone well. We will now
execute and unfold our strategy gradually.
We understand that India lacks testing facilities for MV and HV
switchgear. What is your view?
Actually, we have the facilities; it is only that they are often over
booked. I am not so aware of the HT side but in LT/MV side, all
facilities are available. Lead times can sometimes be long as there
is always a lot of testing in the pipeline. But we have seen in China
also the lead times are long. Still some public-private partnership
here may help speed up the things.
What are your medium-term growth objectives for C&S?
In terms of numbers, our intention is to grow at a CAGR of 20 per
cent organically over the next five years and also add about $50-
100 million of turnover through acquisitions. Many are under
consideration but it is too early for me to speak about any of
these to you. Other than numbers, our endeavor continues to be
to build our organization, its capabilities, its culture and its
people. C&S is a wonderful place to work at and this has been
one of our core strengths always. In the future too we shall
endeavor to grow and contribute to society and to the process of
our nation building.