Hitachi Energy plans to invest around Rs 2,000 crore on expanding its capacity, portfolio, and talent base. In some of its product lines, the firm is also looking to double its capacity. N Venu, managing director & CEO, India and South Asia, Hitachi Energy, talks about the company’s operations and issues in the energy sector during an interaction with Raghavendra Kamath. Excerpts:
What kind of revenue growth are you looking at in the coming years?
We don’t make forward-looking statements…however, to give a qualitative overview, in the last three years we have been growing faster than the market. We will do the same in the coming years. If you look at our six months’ performance in the current financial year, our orders have grown by 50% and our revenues have grown by almost 20%. Our margins expanded by 220 basis points. If the market grows, we will grow in line or faster than the market.
A lot of new technologies have come up in the renewables space such as hybrid projects, round-the-clock projects, green hydrogen, and so on. How is the company gearing up to tap these opportunities? Are you bringing new products?
The government has set a target of 500 GW for renewable energy by 2030, over 600 GW by 2032, and 500 GW of interstate transmission networks to be built by 2030. These are all huge tailwinds for our company…Renewables is our focus area and then transmission as well. For transmission, we have been localising a lot of products over the last 2-3 years. We have brought in an HVDC factory in Chennai…We are continuously bringing in new products. For instance, we have launched SF6 Free 420KV GIS for the first time in the world, because in a decarbonised world, you cannot have an equipment filled with SF6. SF6 (Sulfur hexafluoride) creates 23,000 times more warming than CO2. So, you need to also have sustainable products.
You announced an investment of Rs 2,000 crore. How will you fund this?
We have a strong balance sheet. We are a Crisil AAA-rated company. We are keeping all our options open — whether it is internal accruals or short-term and long-term borrowing — as the need arises. We have not concluded anything now.
What is the ratio between your domestic and overseas orders? Will you increase export orders going forward?
When we started the company, when we carved this company from the previous owner, our export orders were in the range of 12-15%. Last quarter, it was 22% and last year on an annualised basis, it was more than 25%. We are looking at a share of 25-30% going forward.
Despite the rise of renewable energy, many power companies and even the Union government are looking at thermal power again to mitigate demand. How do you look at it?
The challenge of the transition is huge. How do you manage the transition and at the same time ensure that we support the growth of a particular nation? We call it trilemma of energy. One is, availability of energy security, and then you have sustainability and affordability. We are still in the growing phase and need to balance these things. We need to go to renewables–that is where you have seen a lot of action, but there are issues about storage and other things and the battery prices are quite high. So, we need to manage this transition in a seamless way. We need some of the core coal-fired power plants. But again, all coal-fired is not CO2, but a lot of efficiency can come in. You can also have a carbon-capture mechanism. From Hitachi Energy standpoint, we do understand these transition challenges. We do understand the transition requirements and provide our technology, whether in the product systems or software, to all our customers equitably. So, we will support this transition seamlessly going from fossil fuel-based to non-fossil fuel over a period of time.
What kind of challenges are you currently seeing in India’s renewables sector?
In India’s renewables sector, the challenge, I think, is the target. We have a 500 GW of target. To reach the final gigawatt of target, the country as a whole needs to do 2-3 times more than what it has been doing now. This means we have to add at least 50-60 GW per year. We are adding less than 20 GW per year, 18 GW is what we did last year.
From: financialexpress
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