— Rishi Khanna, Director & Co-promoter,
C&S Electric Ltd
C&S Electric Ltd is a leading suppliers of electrical equipment in
India and is one among country's largest exporter of industrial
switchgear. Its wide range of electrical and electronic products
finds application in power generation, distribution, control,
protection and final consumption.
Rishi Khanna talks to
Renu Rajaram about the challenges faced by the Indian switchgear
industry and the strategies adopted by his company to maintain its
leadership position.
What is the current size of the Indian switchgear industry and at
what rate do you think the industry will grow in next five years?
The current size of Indian switchgear industry is around
Rs.10,000 crore and is expected to grow 8 to10 per cent
annually in next five years.
How do you see the prospects for the switchgear and control
gear industry? What will be the principal growth drivers?
The prospects for switchgear industry are very good as Indian
economy is riding on power and infrastructural growth. The
growth drivers for switchgear industry are infrastructure
sector, power generation sector, power transmission, telecom
sector and upcoming new industries.
What is the share of C&S in the Indian switchgear market?
C&S is amongst the top four players in the domestic market.
Our share varies by product, and ranges from 7 per cent to over
50 per cent.
Tell us more on your manufacturing facilities.
C&S has 16 state-of-the-art manufacturing plants spread
across Noida, Haridwar, Belgium and China. All our
manufacturing facilities are equipped with latest precision
tools, machineries and testing equipments ensuring highest
quality of products and services to the customers.
Can you brief us about some of your latest products introduced
in the market?
Our attempt has always been to have highest revenue coming
from newly developed products. We have launched a number of
innovative high performing products in the market. We recently
introduced a new range of contactors, protective and multifunctional relays with advanced communication
protocols, new circuit breakers of various types, and cast-resin
busbar trunking in India for the first time. There are many other
examples too.
Which are the new export markets you have explored or are in
the process of exploring?
With presence in more than 78 countries, C&S is amongst the
largest exporter of industrial switchgear products. Today 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 are
already present.
The approach is simple-we have increased the 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 but we have made it. The market is 5 to
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 suppliers who have their
plants in China, we made it to our Global accounts. So we have
great expectations from this in the long term.
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 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 therefore reduce
slightly in coming years. Overall the outlook for switchgear
business in our domestic market as well as international
market looks strong. We recently acquired a company in
Belgium which is the world leader in cast resin busbar systems
with a turnover of approximately Rs.125 crore. This took C&S
Electric's turnover above the Rs.1,000-crore mark in the
current year.
What are the main challenges that the Indian switchgear
industry currently faces and what type of government support
would you expect towards remedial measures?
The challenges are of two types. First, broader macroeconomic
challenges and the difficulties faced by the power sector are
well known to all. These apply to the switchgear industry as
well. Second - the challenges more specifically to the industry
are the increase in raw material prices in recent years, and an
intensely competitive environment restricting the level of price
realization that is possible in the market. C&S never looked for
industry specific government support as such. General good
governance and policies promoting general economic growth is
what we all want. Few areas in which the government can
certainly step in are with regard to regulations for product
quality and safety to prevent low quality products in the
marketplace, also in solving the complex problems of our
customers, the power companies and utilities. These of course
will have a positive impact on our industry. But these are
broader problems of which many industries are the sufferers.
What is the current investment in upgrading capacities of
switchgear and control gear production and how much of it
goes to R&D?
C&S invest a great amount of time and efforts in R&D activities.
Today we have four certified and government recognized R&D
centers with over 70 engineers continuously involved in
creating world-class products. We have focused team for new
product development, product life cycle management and
Value engineering.
Do you think Indian manufacturers of switchgear and control
gear are investing sufficiently in R&D?
Indian companies, barring a few, do not invest greatly in R&D
facilities. C&S invest 2 per cent of its turnover in R&D activities.
Products developed out of our R&D centres in last two years
contribute more than 25 per cent to our total revenue.
How has the Indian switchgear industry been doing in terms of
exports? Which countries have led India's export growth?
Indian share in switchgear exports is low which needs to be
increased. India exports in a major way to the Middle East
region, Europe and African continent. C&S however exports all
over the world—approximately evenly spread in each continent. Our exports in FY12 will be over Rs.125 crore on a
standalone basis and Rs.250 crore considering the Belgian
acquisition.
What are the strategies adopted by the company to maintain its
position as a leader in industrial switchgear export market?
Continuous innovation, technology enhancement and product
upgradation as per international standards are the key
strategies for maintaining our position as a leader in industrial
switchgear export market. As our mission statement says, we
endeavor to create a "unique alchemy" or a unique "cocktail" of
outstanding products, compelling marketing, and noticeably
superior service.
Over the years, do you perceive any change in the procurement
policies of government utilities?
The trend remains same as still most of the buyer procures
switchgear products directly. But recently trend is shifting
towards EBOP.
Indian power utilities now prefer EPC and turnkey contracts, as
opposed to direct procurement, for switchgear. Tell us about
your 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 directly
because value addition by the EBOP contractor is not much. As far
as our switchgear division is concerned we focus on product
supply and not on turnkey project execution, but 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.
What is your view on the present state of domestic testing
facilities for switchgear and control gear equipment?
We have good testing facilities in India but they are generally
overbooked, leading to longer waiting time. With public-private
partnerships, we can speed up things.