Below are the excerpts of our recent interview with Mr. Simarpreet Singh, Head- Strategy, Hartek Power
Let’s begin with Hartek Groups Growth story and how 2016 has been so far.
Marking 25 years of our business, 2016 has been a landmark year for us as we celebrate this milestone coinciding with the highest ever growth registered by the Hartek Group. Maintaining a growth rate of 30%, we have yet again exceeded the expectations of all our stakeholders. All our five strategic business units—Power Systems, Rooftop Solar, Power Distribution Products, Fuel Services and Value Added Services—have recorded appreciable growth in terms of revenue and EBITDA. Our focus on backward integration helped us reduce costs, manage the supply chain better and enhance operational efficiency.
Cashing in on India’s solar overdrive to match our growth with that of the industry, we have registered the highest growth in the solar EPC domain in 2016. Having bagged 460-MW solar EPC orders in the first half of the current financial year, we have registered a steep increase of 373% in terms of order size as compared to the corresponding period last year. We have connected 258 MW of solar power to the grid so far, and going by how things are shaping up, we may well surpass the 1,000- MW mark by the end of 2017. Our Rooftop Division also did particularly well in 2016, commissioning more than 10-MW solar PV plants, including Chandigarh’s first rooftop project in the commercial category.
Solar technology is evolving with time. Is there anything that you are looking forward to happen in the next few years? How do you think the Industry would shape up in near future?
The revised National Solar Mission target presents a sea of business opportunities to private companies. In pursuit of the 100-GW target, the focus has now shifted to bigger solar projects and Mega Solar Parks, as being developed in states like Andhra Pradesh, which will result in exponential growth of the Indian solar industry in years to come and bigger orders for companies like Hartek Power. Far exceeding market projections, the vast project pipeline will lead to high-trajectory growth in the solar domain with the upward trend picking up momentum with each passing year. The government’s plan to double the capacity under the solar park scheme from 20 GW to 40 GW will also give a much-needed impetus to the industry.
The next few years will also witness an overhaul of our transmission lines in sync with the kind of solar power being fed into the grid. With eight special green energy transmission corridors coming up across the country, evacuation of solar power will no longer be a challenge. Considering the rapid pace at which solar power is growing, operation and maintenance will also be a key area for the Indian solar sector in times to come. It is solar energy that will form the basis of India’s sustainable growth in the long term.
Rooftop has been a growing segment. Do you see more business from the off-grid market in India over the next 5 years?
Pursuing a difficult target of 40 GW by 2022, India’s rooftop solar industry is finally getting the thrust it needs to reach the magic figure. Growing by 113 per cent over the past one year, India’s rooftop solar capacity recently crossed the 1-GW mark, a high point that should set the tone for unprecedented capacity additions in years to come. Rooftop solar in India has every- thing going for it—favourable government policies, streamlined processes, an efficient regulatory mechanism and an investor- friendly business environment.
The next five years will witness unprecedented growth in the rooftop segment with the Solar Energy Corporation of India coming up with its biggest 1,000-MW tender recently. But the real difference will come if the government gives a practical shape to bi-directional net metering, especially in the residential category, and makes installation of rooftop projects on government and new residential buildings mandatory across the country. The housing boom, in particular, offers a great advantage to roof- top solar developers. With the Central government deciding to pump investments to the tune of Rs 5,000 crore, the rooftop solar segment in India will see a lot of action.
The growing demand for rooftop projects will bring down the cost of solar panels, making rooftop financially more viable. With leading global solar panel manufacturers keen to set up base here under the Make in India campaign and domestic manufacturers heavily investing in R&D to come up with new low-cost materials and mechanisms for solar panels, these panels will become increasingly affordable. As the industry introduces more and more cost- effective solar PV technologies, off-grid solar opportunities are also poised to grow proportionately.
Do you expect to see the aggressive bidding again by the developers or have the tariffs bottomed out for the present?
It is difficult to comment on this as every developer has a different strategy in mind, and not all of them are aggressive when it comes to bidding. As far as utility- scale projects are concerned, I think the market has stabilised and investors are not expected to be bullish.Moreover, in view of the possibility of increase in costs after the introduction of GST next year, investors are in a wait and watch mode. Coming to the rooftop solar segment, we witnessed the lowest tariff of Rs 3 per unit, but this was after 70% subsidy. We can see more such low tariffs in projects where the government is forthcoming with subsidies and incentives.
What are the milestones you wish to achieve by the end of next fiscal?
Besides focusing on high-growth southern states like Andhra Pradesh, Telangana and Karnataka to reach the 1-GW mark in the solar EPC domain by the end of next year, we will also expand our operations to new geographies like Jharkhand and strengthen our hold in states like Punjab where we have traditionally been doing well. In 2017, our prime focus will be on creating an integrated engineering, construction, manufacturing and technology-based company catering to all the requirements of the T&D segment.
Besides stamping our excellence in the high-voltage and extra-high voltage class, we will also build on our tie-ups with leading global giants and continue to focus on backward integration to add more value to the T&D value chain. Rooftop solar, biogas plants, central electricity authority projects, rural electrification, consultancy services and operation and maintenance will be among our other focus areas. We will also target utilities to consolidate our position in states where we are active and open our account in new geographies.
Considering that technology will play a vital role in power systems and, eventually, smart grids and smart cities will be the future, we will continue to invest in the future to remain one-up on our competitors and derive our growth from a high- quality product basket, strong client base, timely execution of projects and adoption of latest technology.
Anything else you would like to add for our readers.
Driven by a resolve to contribute significantly to the Indian power sector value chain, we have led from the front to turn the Hartek Group into one of India’s fastest growing conglomerates, especially in the Transmission and Distribution (T&D) and Solar EPC space. My message to Solar EPC companies which want to make a mark in the business like Hartek Power would be to adopt uncompromising quality standards and ensure timely delivery, backed by world-class project management techniques, the two factors that define the success of any solar EPC project or company. They should focus on excellence in engineering and cost-effective design, energy-efficient operations, smart grid power solutions and high safety standards. We would also like to urge all our stakeholders to build sustainable business models and create a win-win situation for everyone.