Kalpataru Power Transmission Ltd (KPTL) is amongst the leading EPC players in the infrastructure space. Though power transmission remains its forte, KPTL has diversified into several areas like oil & gas, railways, buildings & factories, metro rail, etc. T&D India met up with Rajeev Dalela, President – T&D, India & SAARC, Kalpataru Power Transmission Ltd during Elecrama 2023. In an interaction with Venugopal Pillai, Rajeev Dalela traces KPTL’s journey from a local Gujarat-centric company to an international EPC player of repute in the power transmission space. Dalela also provides rare insights into the power transmission development space where KPTL has participated at both intrastate and interstate levels.
Please take us through KPTL’s journey as a Gujarat-centric company to the globally-present company that it is now.
If I could describe the journey of KPTL over the last four decades in three words, it would be: resilient, stellar and responsible.
Kalpataru’s Power T&D business for India and SAARC – what I look after — has traditionally been the mainstay of Kalpataru. If you look at the history of KPTL right from the 1990s, our international foray came much later. Initially, we started off as a Gujarat-based company, largely catering to the state power utilities of Gujarat. We secured our first major order way back in 2000, with Power Grid Corporation of India Ltd (PGCIL) – the Rihand transmission packages.
Thereafter, we established ourselves as a serious player and built strong credentials. Power T&D (for India and SAARC), was contributing roughly 30 per cent of the total revenue of KPTL, before JMC Projects (India) Ltd formally amalgamated with KPTL.
Now, with the JMC merger, these dynamics have changed. Today, we are amongst the top three listed specialized EPC companies of India — engaged in power transmission & distribution, buildings & factories, water supply & irrigation, railways, oil & gas pipelines, urban mobility (flyovers & metro rail), highways and airports.
How has business in general been with respect to power T&D in India?
On the power T&D front, the last 2-3 years saw slower-than-expected growth as majority of the projects in the Indian subcontinent (India, Nepal, Bangladesh, Sri Lanka, Bhutan, etc.) got pushed ahead by six months to a year.
In India, an important development has been the Great Indian Bustard (GIB) issue related to interstate transmission schemes associated with solar projects in Rajasthan. These solar projects were expected to give a big push, but the GIB issue stretched out for almost a couple of years, breaking the momentum. Now, these are settled and we are seeing bids coming up.
A total of approximately 30 GW of solar and wind power projects are coming up in Gujarat (Khavda) and Rajasthan. Bidding for Gujarat projects are going on and we have been recently successful in a couple of them. Rajasthan bids are likely to begin anytime now.
We expect that a major push, in terms of the country’s investment outlay, will come from power transmission. So, things are looking good!
We note that Kalpataru Power had developed transmission projects in the TBCB route but later exited from the same. What was the rationale?
Our foray into the TBCB business was essentially to feed our EPC business and develop quality assets. Wherever we saw the opportunity to create value with our expertise and resources , we entered the TBCB space. If you observe, we have done one TBCB project every 2-3 years or so.
It is not that we have given up the TBCB space; we will definitely pursue TBCB projects if we find right kind of value-addition both for our EPC business, and in terms of our overall portfolio.
What about state-level TBCB projects?
In fact, we developed the very first power transmission project of both Haryana and Madhya Pradesh, under the public-private partnership (PPP) mode. In Madhya Pradesh, it was the 400kV DCDS line running 246 km from Satpura to Astha. In Haryana, we developed the Jhajjar KT power transmission project involving 100 km of transmission lines and two 400kV substations. Both the projects were developed under the DBFOT mode, with viability gap funding (VGF).
Kalpataru recently made some important acquisitions in Brazil and Sweden. What was the rationale?
We realized early on that profitable growth will come only through international expansion. Of course, Africa is our big market. Middle East, on the other hand, has been a saturated market with intense competition and limited opportunities. Speaking of Saudi Arabia, it has its own challenges in terms of execution and realization. Africa is one market where we are quite active — right from MENA area (North Africa) to the southern part of Africa, also west and east.
However, we realized that Latin America was largely untouched; it is a huge market and is largely dominated by Spanish companies.
If you look at Brazil, it is completely dominated by Spanish companies though Brazil is a Portuguese-speaking country! When we studied the Brazilian market, on ground, we realized that we needed to have a foothold and be local. We were scouting for a suitable company that fitted into our requirements, so as to have a foothold. That resulted in the acquisition of Fasttel.
Now for the European markets; they are very much closed-door. Unless, you have local presence and understand the market through the eyes of the locals, you cannot be there.
The Indian style of working and management doesn’t work. With that in mind, KPTL acquired Linjemontage – a Swedish company. It is relatively a small company but we saw value. We are confident that we can expand it given our significant international exposure.
Today, Linjemontage is bidding very actively with a lot of backup support coming from us. They are now on a growth path.
Incidentally, after taking over Fasstel, we recently secured a prestigious contract in Chile—Rs.2,300-crore transmission package. That also heralds our entry into Latin America. From that point of view, it is a very important milestone.
Are you considering power transmission development, through concessions, in Brazil?
Honestly, not immediately. Fasttel — the company that we have acquired in Brazil — is a relatively small company. Also, the initial experience with Indian companies that have entered this space has not been the best, according to our understanding. The concession market is a very difficult market. It is very important to understand the local issues because developmental projects (concessions) typically entail much pre-project work like securing of clearances, etc. We do not want to immediately enter that space. But yes, we are watching that space very keenly.
We see a lot of technological shifts in power transmission technology, like HVDC, UHVAC, etc. However, we feel that underground EHV cabling has not picked up as expected. What is your view?
First of all, you need to understand that a cable is five times costlier than an overhead conductor. Also, it is not technically possible to lay EHV cables over large distances. Therefore, both technically and commercially, replacing transmission overhead lines with cables is not easily possible.
Cable is always used as the very last option only for small sections of transmission lines. You would do everything in your power to ensure that you don’t have to go in for a cable! As I said, it is five times more expensive. It does not make commercial sense nor it is technically feasible to lay cables for long distances.
Are you keen to pursue opportunities in power distribution, especially with the roll out of RDSS?
If you look at the history of KPTL, we had an early foray in the power distribution segment. That was at a time when all major EPC companies participated in a big way when the first round of APDRP bidding. The implementation challenges were huge due to lack of support from the discoms, along with local law and order issues such as pilferage and theft. It took KPTL ages to complete the project and get paid for the work, while grappling with these issues.
The power distribution business requires a different kind of skill set. Secondly, the rampant equipment theft and pilferage at the project site is a very contentious issue to be dealt with. Power distribution is unlike power transmission, which, though cross-country in nature can be managed very effectively. The overall dynamics makes power distribution a difficult proposition for an organization like KPTL.
Do we then infer that in the power T&D space, your focus will be on power transmission?
Yes, absolutely!
