— Jaideep Jain, Director, Tesla Transformers Ltd

Bhopal-based Tesla Transformers is a leading name in the transformer industry. Producing almost every type of transformer, Telsa is also active in the EPC contracting space. Team Electrical Monitor met Jaideep Jain during the recent Elecrama 2012 in Mumbai. In an informal exchange, Jain speaks about his company and his future plans for Tesla. Bidding for 765kV transmission projects is well on Tesla's radar and the search for an international partner is on, notes Jain.

Could we start by knowing the product range of Tesla Transformers?
At Tesla, we make power transformers in the 100 MVA range, up to 220kV class. Besides that, we produce a host of transformers like distribution transformers, furnace transformers, special application transformers, rectifier transformers, ring main units, etc. We also have dry-type transformers, cast-resin transformers and even unitized substations. We cover practically the entire range of transformers. Tesla also undertakes EPC contracting of substations and transmission lines up to 220kV.

Do you have plans of scaling up your EPC contracting business?
Yes, we are now quoting extensively in Power Grid Corporation of India for projects up to 400kV. We are also looking out for international partners to bid for 765kV transmission projects. We would like to be local partners in the proposed joint ventures. The process is on.

Coming to the transformer industry, what is your view on concerns about prime grade CRGO suppliers?
I don't think that the issue is relevant now. A lot of domestic companies have started processing prime grade CRGO. There is currently no problem…

What do you think on the mandatory BEE rating for distribution transformers?
It is a good move! It will ensure that scrap CRGO used in transformers will reduce. I also think that this will bring down under-hand practices in the transformer trade.

We hear of Chinese companies planning manufacturing plants in India…
One of them has already put up a plant! Once they put up a plant, they become like Indian players. They face the same headwind that we (local players) face.

What about competition from them?
India is a big market! It is often said that India will have to come to China's level. India's power generation capacity is 1,50,000 mw and in China it is 900,000 mw. If India has to grow to China's level, it will have to grow by at least six times. The market is huge!

How big is the transformer market?
For every mw of power generation capacity, power transformers worth 3 MVA will be needed. If we take the distribution side, it will be much more.

Tell us about Tesla's exports market.
Currently, we are exporting around 20 per cent of our production. We want to be aggressive in our exports. We are quoting extensively in all countries around the world except perhaps Latin America and Europe. Exporting is basically a tendering business. We are interested in any part of the globe from we get orders.

Do state transmission utilities form your major clientele?
We don't supply directly to utilities as payments could become an issue! We prefer working through project contractors.

India offers many opportunities to own and develop transmission lines. Do you have plans in this direction?
Yes, we have quoted in some BOT-based transmission line projects handled by nodal agencies like Power Finance Corporation and Rural Electrification Corporation. We had quoted in joint venture but came out L2 or L3. We have yet to win our first project.

What about projects at the state-level?
Currently, we have not bid for any such projects, but yes, that should an area of interest going forward. We see direct synergy between transformer manufacturing and transmission line operation.

Are you planning any capacity expansion for transformers?
Not really. We have just expanded up to 100 MVA only recently. Further capacity expansion will be undertaken once we saturate our existing capacity.

In your EPC contracting business, do you face manpower challenges?
Yes, manpower is area of concern! We don't get quality manpower in the industry. Even if you get, they jump very fast! Retaining manpower remains our key concern.

Any other challenges that you would like to highlight?
As a transformer manufacturing unit or as a contracting company, the biggest challenge is to ensure that cash flow is always positive; and that we don't end up taking orders where payment is not forthcoming. The real challenge is to get projects in those areas where working capital is not likely to get adversely affected. To be able to get such projects and to generate that kind of business volume is the challenge.

In general, power utilities are suffering huge losses. To get orders whilst ensuring that working capital problems do not crop up is the key. The market is extremely competitive. Currently, there is more supply than demand.

Talking of policy issues, do you think privatization of some urban distribution circles has improved the state of affairs?
I don't see any improvement! This is because people who have taken this distribution circles under the franchisee model have been over-ambitious and have extended themselves. They currently don't have the funds to undertake the franchisee model. Currently, I am not seeing any improvement in the sense of installing new capital equipment like transformers.

Transformers are being repaired and the same practices (followed by utilities) continue. Private distributors, I think, are only looking at the "corners" without addressing the main issue. All said, there may be in one or two projects where the change might be positive in the sense that core issues are being addressed.

How do you see the market for dry transformers?
The fact is that India is a very price-sensitive market. In spite of all the accidents that happened like the recent Kolkata hospital tragedy or the Upahar cinema accident in Delhi ten years ago, the penetration of dry transformers is still low.

What could explain the high failure rate of distribution transformers in India?
This is partly because the quality of equipment purchased by utilities is not up to the mark. Till the early part of the 1980s, the failure rate was very low. The failure rate started increasing because no proper vendor registration was followed and there were no checks on raw material used.

However, if you see the Central transmission utility Power Grid or power utilities in Maharashtra, the failure rate is low because of good procurement policies and consciousness. Basically, when buyers are conscious, the failure rate of equipment is bound to fall.

Do you think the L1 procurement policy is responsible for substandard equipment?
Actually, the problem is not only about L1. They should have a proper vendor registration system. Once they pre-qualify a supplier, then they can go in for an L1 system. If they (utilities) go in for an L1 system without proper prequalification, they may not be able to find the right supplier. Power Grid, as I said earlier, has a pretty good vendor registration system.

What is the future course of action for Tesla?
In the contracting and also on the transformer side, we are very keen to scale up. Obviously if we have a sustain ourselves, we have to move higher up in the value chain.

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