Godrej Electricals & Electronics’ Power Infrastructure & Renewable Energy (PIRE) business offers solutions for power transmission and distribution (T&D) and renewable energy projects. In this interview with Rakesh Rao, Raghavendra Mirji, Senior Vice President & Head – PIRE, Godrej Electricals & Electronics, Godrej & Boyce, highlights on the challenges & opportunities in the T&D sector and how the division is geared up to tap the market potential.

Could you please brief us about Godrej Electricals and Electronics business and its products & services?
Godrej Electricals & Electronics is recognised as one of the leading technology solution providers in India. This division caters to the needs of Indian and global customers in the area of power infrastructure, Mechanical Electrical Plumbing (MEP) & energy management. Our services and solutions include electrical, electronics, MEP, compressed air technology, busbar systems, instrumentation, and telecommunication and automation technology. Our vigilant focus on safety for buildings, engineering, and innovation has differentiated us as a thought leader in the industry.

Our MEP EPC, design and consulting services help integrate energy and water-saving measures. Whereas our specialised Power Infrastructure & Renewable Energy (PIRE) business offers integrated solutions for power transmission and distribution projects and has set benchmarks in capacity, complexity, and speed of execution. We also specialise in the erection of industrial rooftop solar power systems to enable companies to leverage clean and renewable energy for their operations.

How is the current status of the power transmission & distribution (T&D) industry in India? What is the size of this industry?
Transmission & distribution (T&D) sector is well poised to take a good growth in next 5 to 10 years. The industry is banking on the key growth drivers like low per capita electricity consumption; urbanization which is driving huge growth in real estate, metro, smart city development, urban infrastructures like road, bridges, airports etc; huge plans in electrification of Railway lines; push for green energy which is driving growth in electric vehicles & renewable energy; and huge investment plans announced by the government in power infrastructure sector.

The distribution sector is also growing with various initiatives announced by the GoI that includes support to improve the financial situation through various reforms. The last mile connectivity through DDUGJY & SAUBHAGYA schemes has resulted in electrifying almost every village in the country & schemes like IPDS has also strengthened the upgradation of distribution network. The transmission infrastructure is also growing, keeping pace with the increased demand for power in many sectors. Upgradation of new transmission network, dedicated transmission corridors for evacuating RE power, interstate & intrastate transmission network, HVDC projects etc is driving the growth in the transmission sector.

In India, electricity is a concurrent issue, which means that both the central and state governments are responsible for its development. NTPC, NHPC, THDC, NEEPCO, SJVNL, NLC, and other central generation utilities exist, whereas POWERGRID is the central transmission utility. Each state has its own GENCO and Transco at the state level. A 400 kV AC network and a 765 kV AC network that spans a huge region make up India's backbone transmission system. India is currently installing a transmission system to meet both firm transmission demands and Open Access rules.

Since they have been able to bring the necessary degrees of technology breakthroughs alongside the functioning public sectors, the Indian private sector has been the principal and new brand-marking player in the Indian electrical power transmission business. Working with public players, private players have been involved in the development of several transmission lines around the country on a large-scale occupancy basis.

How is Godrej supporting the growth of the power T&D industry?
At Godrej & Boyce, we successfully diversified into the power transmission and distribution (T&D) sector more than a decade ago and well placed to cater to the growth in the sector. We offer diversified services in power infrastructure space that includes executing large scale projects in transmission, distribution & power substations on turnkey basis. We have also entered renewable energy space & offer end to end solutions in both roof top & ground mounted solar projects. We work with almost all the major power utility companies, both central & state govt and operate pan India including tough territories like Northeast states. We are more focused in EHV transmission & MW scale solar projects & have developed the capabilities to deliver complex and large transmission and substation projects

We have developed in-house design & engineering capabilities up to 765 kV, including the structural designs of civil. We have offered engineering solutions to many complex projects that has helped in not only saving cost, but also in reduction in executable time. As an EPC company, we have developed robust project management process to deliver projects on time and leveraged IT tools to exercise better control & get clear visibility.

How was the performance of Godrej Electricals and Electronics in 2021? Which products & projects are driving the demand?
Recently, PIRE has secured orders worth Rs 600 crores comprising of 400kV new AIS substations, 220kV new GIS substations, 220kV transmission lines and 220kV underground cables in the domestic T&D market. In 2021, the business had secured a project worth over Rs 100 crores for the construction of a greenfield 400kV Gas Insulated Switchgear (GIS) substation in Vikhroli along with a 400kV bay extension in Kharghar. With this order, we were able to expand our portfolio to include large private utility players in the EHV substation projects, thus enhancing our role as an EPC player for both government and private players.

The PIRE business by Godrej & Boyce has also recently commissioned several substation projects up to 400kV across India including tough terrain of the northeast. Going forward, we plan to expand our capacity by building 765kV substations within two years. We are also aiming for portfolio expansion of up to 1000 crores by next year.

Given the importance of developing green energy, the PIRE business by Godrej & Boyce has forayed into EPC of solar projects by offering end-to-end solutions. We are also commissioning the large size 85 GW of Ground mounted Solar plants in Maharashtra.

What kind of export opportunities are you looking at?
We are aiming to expand our portfolio by focusing on overseas business in countries like Nepal, Bangladesh and SAARC countries in the T&D segment. We will be focusing mainly on EHV Sub-station projects, both GIS & AIS. There are good opportunities in Africa as well & we will expand our business to Africa as well. We have developed capability over the years in the EHV segment & we are confident of executing any largescale projects overseas.

What are the key challenges in executing large scale T&D projects? What is the impact of rising raw material prices on the industry?
The project execution in power infrastructure space is quite challenging. Besides high standards of safety protocols that needs to be complied, we also need to work in a tough terrain, extreme climate conditions & challenging territories. The key challenges in executing large scale T&D projects are:

Apart from the above few key challenges, the recent unprecedented rally in commodity prices have put serious dent on the financials. Most of the projects do not have the contractual arrangement of price variation & the projects are taken on a firm price. Since the project tenure is normally between 15 to 25 months, the sharp rise in the raw material prices like steel, Aluminum & copper has impacted the project financials adversely. It is a difficult time for all the EPC players to deal with such crisis & unless the customer considers the price variation method, it is very difficult for the EPC players to survive.

How serious is the threat of imports in the T&D industry?
The import dependence in the T&D sector is not very significant. There are many manufacturing facilities in India covering wide range of electrical equipment & accessories. However, many such manufacturers are importing some or other component/parts from other countries. The import dependency for such manufacturers is approximately 20% to 25%. GoI has restricted the imports of critical electrical equipment & amended the public procurement policy by increasing the percentage of local content in manufacturing.

The government has announced a PLI scheme for the solar industry. How will it encourage domestic manufacturing?
The PLI scheme will definitely boost the domestic manufacturing. At present, India has around 16 GW of solar PV module manufacturing capacity & large portion of demand is met through imports. With PLI scheme amounting to around Rs 4500 crore will attract investments & will enhance the domestic manufacturing capacity. This is very much needed & will benefit the solar projects.

In recent months, the Government has made many announcements to push for green energy (including the Green Corridor Phase-2 project). How are these critical for the growth of your business?
The announcement of the Union Cabinet's approval of Rs 12,000-crore Green Corridor Phase-2 project, which will facilitate the integration and evacuation of renewable energy from seven states is of great significance in achieving the ambitious target of 500 GW of Renewable energy by 2030.

The recent announcement by the Union Cabinet would facilitate the Public-Private Partnership (PPP) model wherein 33% of Rs 12,000 crore can be financed by the centre and the rest can be taken by private or state players thereby changing the landscape of the power infrastructure support in the country.

This will give impetus to our Power Infrastructure and Renewable Energy (PIRE) business unit that has already commissioned several successful EHV substation and transmission line projects up to 400kV across all territories in India and further aims to consolidate its position in the T&D segment. Godrej & Boyce has always been committed to providing critical infrastructure to power the nation in its progress. With this new cabinet’s approval, we hope to align our goal of greener India and create more opportunities to resolve the problem of reliable power in the country.

What are your short- & long-term growth plans?
We are aiming for portfolio expansion of up to Rs 1,000 crores by next year of which, Rs 500 crore would be allocated to railways, Rs 300 crore in ground-mounted solar and about Rs 200 crores in overseas business opportunities. As an established player in power T&D and solar segment in India, the business unit is targeting to reach Rs 2,000 crore orders in the T&D, renewable and railway segment in the next two years.