Utilities

<h2 style="text-align: justify;"><span style="font-size: 12pt;">Q1. Could you start by giving us a brief overview of your professional background, particularly focusing on your expertise in the industry?</span></h2><p style="text-align: justify;">I have worked for nearly 4 decades, having diverse experiences in India and Asia. In Thailand, I worked in the FMCG sector, Telecom, white goods sectors, and the power storage and renewable sectors. I also worked across TTK, Johnson and Johnson, Gillette, Nokia, and Whirlpool.</p><p style="text-align: justify;">For the last 9 years, I was the managing director of Luminous. I have experience across various industries, with a primary focus on sales and marketing, as well as some experience in strategy.</p><p style="text-align: justify;">&nbsp;</p><h2 style="text-align: justify;"><span style="font-size: 12pt;">Q2. What is the current market size of India's home electrical and power backup industry, and what are its key growth projections for the next five years?</span></h2><p style="text-align: justify;">I focus on the power backup industry. If you just look at the stationary storage power, primarily in residential plus small SMEs, it would be about 20 to 25,000 crores of the market without Solar. If you include solar, it could be at least about another 1 1/2 to 2 times that market if you include the total solar space as well.</p><p style="text-align: justify;">Now, India is an interesting case where, on the one hand, we have historically faced a power shortage situation, and there are infrastructure issues that have evolved over time. Therefore, the home storage market is still growing due to the replacement of batteries and new penetration in the home.</p><p style="text-align: justify;">I think the other aspect of this is the emergence of solar energy, driven by a couple of factors, one of which is the low cost of solar panels. Exciting incentives from the PM's, Suryoday Yojna, and the need for homes to have multiple sources of power so that their quality of life does not suffer, and they want to save money.</p><p style="text-align: justify;">When you look at the industry side, the need for solar energy is even greater because they believe they can invest in it and benefit financially. So, I think if I were to choose the two sides, one would be stationary storage power, and the other would be solar. The growth opportunity is tremendous; that's the feeling if organizations focus on it on both sides.</p><p style="text-align: justify;">Although the levers of growth differ in both markets, I think the opportunity is tremendous. What is required is a product portfolio, a brand's go-to-market strategy, and continuous innovation in the segment, as it will attract many companies to enter the space. However, what will make the differentiation in the head start is the brand, innovation, and how we can reach the customer, which I think are the drivers of growth in the sector.</p><p style="text-align: justify;">&nbsp;</p><h2 style="text-align: justify;"><span style="font-size: 12pt;">Q3. What impact does the rising cost of raw materials, such as copper and aluminium, have on profit margins and pricing strategies for batteries?</span></h2><p style="text-align: justify;">I believe that good organizations always strike a delicate balance between what's good for the consumer, what's good for the shareholders, and what's good for the employees, as well as raw material costs, which are outside the organization's control. If the price of copper rises, the price of lead also rises. It's beyond what? What is within your control are cost-led initiatives and technology that drive costs downward.</p><p style="text-align: justify;">How can I be far more efficient in the system? And I think, what's the strength of my brand, and what's the brand price trade-off?</p><p style="text-align: justify;">I can ultimately sum up that. There will be some pluses and some decliners, and there will be some trade-offs that ultimately get passed on to the consumer.</p><p style="text-align: justify;">Likewise, if the prices come down, we'll also get past. That's what good companies would do, and it's their ability and agility to react and have a robust supply chain system that makes them successful, even in a turbulent environment, which I think we've been focused on since COVID, as prices have come down. Organizations leverage that in many ways, and raw material prices are increasing. I believe that agility and a robust supply chain are key to a company's success in this space.</p><p style="text-align: justify;">&nbsp;</p><h2 style="text-align: justify;"><span style="font-size: 12pt;">Q4. Which emerging technologies or business models present growth opportunities?</span></h2><p style="text-align: justify;">I think there are a couple of areas.</p><p style="text-align: justify;"><strong>Artificial Intelligence</strong></p><p style="text-align: justify;">Artificial intelligence and related developments are happening in that space, and organizations will have opportunities to explore ways to reduce the costs associated with it. The most prominent example I see in AI is the use of service or industrial robots in factories. Automation is happening in various industry processes.</p><p style="text-align: justify;">Having a good view and a head start, conducting some experimentation in that area, and not having a large team but rather a 2-3 member or 5-member team can help organizations understand how to approach these costs.</p><p style="text-align: justify;"><strong>Adopting a Service-based Model</strong></p><p style="text-align: justify;">I think India is a product market at the moment. Not many people want to adopt a service model, whereas I don't want to put a cap on the operating cost. You come in and install a solution. I think that's still evolving, but it hasn't even reached the stage where it will gain traction. I think organizations need to try that, and with financial credibility coming in its place and people being held accountable for what they sign and what they pay for, here's an opportunity.&nbsp;</p><p style="text-align: justify;"><strong>Storage Technologies</strong></p><p style="text-align: justify;">From a storage perspective, I think lead acid still presents a significant opportunity for profit, but new emerging chemistries have been discussed for quite some time, such as lithium, iron, and sodium. I think some exploration is needed in this area to determine where the traction lies. What are the benefits to the consumer, and how do we generate profits for the shareholders?</p><p style="text-align: justify;"><strong>Automation</strong></p><p style="text-align: justify;">The process is what comes from artificial intelligence, and I think India's a heterogeneous market. There is no one market. There is a market at the bottom of the pyramid and a market at the top of the pyramid, and it's reasonably sizable enough to attract companies, invest in them, and provide consumer satisfaction, potentially making a profit for themselves. I think that's where the future lies: a good sense of technology, a good sense of consumer, and a good sense of change in the ecosystem. There is no straightforward answer to many of these questions, but I think automation will make some attempts and take calculated risks; otherwise, it probably cuts through, and you never know where innovation will come from. So, I would say that from an innovation perspective, it's essential to have some innovation within the organization but also keep an eye on and explore the ecosystem outside the company to identify potential opportunities for adaptation and discover new technologies that can be introduced into the company.</p><p style="text-align: justify;">&nbsp;</p><h2 style="text-align: justify;"><span style="font-size: 12pt;">Q5. What is the growth potential of solar inverters, smart energy storage, and IoT-based electrical systems?</span></h2><p style="text-align: justify;">The Solar and inverters will be a huge opportunity today. We are at the top of the pyramid, and if companies innovate by launching solutions that are easy for consumers to understand and adapt, solar and inverters will go a very long way.</p><p style="text-align: justify;">Smart energy storage also has a huge potential. And it depends on what innovation we bring to the company. I think there will be a fusion between IoT and smart energy storage. IoT just for the sake of it doesn't help, but if it attempts to release data into people's homes. And then say, here is somebody who is coming in and making money out of it. And giving consumers data that they can use to optimize, I think, is where the joy lies. So, I go outside the space and look at what a business does. What other ecosystem do I think offers tremendous opportunities?</p><p style="text-align: justify;">I believe AI and IT tools have to be studied in depth. There is no single-line answer to it, but I think there is room for us to explore what suits our consumers. Where is the traction, what drives adoption, and if it's good, how can we facilitate better and faster adoption?</p><p style="text-align: justify;">&nbsp;</p><h2 style="text-align: justify;"><span style="font-size: 12pt;">Q7. If you were an investor looking at companies within the space, what critical question would you pose to their senior management?</span></h2><p style="text-align: justify;">The investor's framework is a little different.</p><p style="text-align: justify;">We would like to see the management team be good and able to last over the next four to five years. To achieve this, they must have a thorough understanding of both the business and the consumer.</p><p style="text-align: justify;">See how good it is and the ability and agility to adapt to technological change.</p><p style="text-align: justify;">How good the processes are in the organization from a compliance perspective, ecosystem, and doing things that you know help the company to grow faster.</p><p style="text-align: justify;">Are they compliant? What value system is there? Do they have a management team?</p><p style="text-align: justify;">Do they understand the technology and possess the experience and agility to implement this change within the organization?</p><p style="text-align: justify;">Because that will demonstrate how they will behave in the next three to five years from that perspective.</p><p style="text-align: justify;">And do they have a road map?</p><p style="text-align: justify;">&nbsp;</p><p style="text-align: justify;">&nbsp;</p><p style="text-align: justify;">&nbsp;</p><p style="text-align: justify;">&nbsp;</p><p style="text-align: justify;">&nbsp;</p>