Power utilities must ensure that they purchase quality products

Based in Jammu & Kashmir, Alba Power is a medium-sized manufacturer of transformers that has won several accolades and awards for its impressive performance.It is the first company in J&K that has exported equipment outside the state. It is also only the second Indian transformer to have got BIS certification for its products. Nisar Ahmed Baba discusses the challenges of running a manufacturing enterprise in J&K, and also sheds light on some pressing issues in the distribution transformer industry. An interaction by Venugopal Pillai.

To start with, what is the current situation with respect to availability of prime grade CRGO? Also, has there been any reduction in “dumping” of scrap CRGO in India?

At present CRGO steel is sufficiently available in the market. There is also substantial reduction in dumping of scrap CRGO in India.

What is your overall view on the government making “BIS” certification mandatory for international suppliers?

While the decision to make BIS certification manadatory has merit, but at the same time, it has a huge demerit by which manufacturers equipped with BIS certification are regulating the price to their advantage, as far as the Indian market is concerned.

Several studies point out that the failure rate of Indian distribution transformers is amongst the highest in the world. This is because of the scores of marginal manufacturers that produce inferior products. What entry barriers should be introduced to curb the subsistence and proliferation of unscrupulous manufacturers?

It is a fact that the failure rate of transformer in India is highest in the world. There is no doubt that the manufacturers who lack expertise, infrastructure, testing facilities and commitment to ensure quality repair of transformers, are responsible for poor quality repair, but at the same time (government) departments are equally responsible for creating the mess as far as repairing of the transformer is concerned. The utilities and department are under pressure to reinstall damaged transformers forgoing inspection as well as routine testing of the repaired transformer. The department is solely responsible in entrusting repairing of transformers to players in the unorganised sector.

We appreciate that when it comes to the manufacturing sector, J&K has challenging conditions. Please discuss some of the major ones.

I feel Jammu and Kashmir is most challenging for manufacturing sector given the blockade of highway during the winter, disruption of communication, disruption of Internet facilities, long duration bandh and curfew. It is very difficult to plan, execute and deliver as far as manufacturing sector is concerned.

Government utilities are known to inadvertently purchase substandard distribution transformers in their attempt to honour the L1 procurement guideline. What is your view?

My opinion with regard to L1 procurement has always been that it is nonsensical to decide purchase on the basis of L1 tender! Utilities need not only to ensure that they purchase on reasonable rates but they need also to ensure that they procure quality product. The prime condition in procuring quality product is to ensure that rates are workable.

Talking about your company, Alba Transformers is expected to soon start production of 132kV transformers. What is the current status?

Due to disruption of law and order in the valley, we could not stick to our schedule to manufacture 132kV transformer. The deadline has been extended till 2018.

We understand that Alba has received approval from BEE and BIS for its transformers. How do you this positively affecting your company’s growth?

Alba is only the second company in all of India to get BIS licence. We are approved by BEE also. The certification has resulted in substantial orders for distribution transformers in our favour. This has had a favourable impact on us given the fact that there are only few manufacturers in our competition who have BIS certification.

Tell us about your market outside your home state J&K.

As far as outside market for us is concerned, it is challenging given the geographical position, but we have been successful in competing with the market outside J&K.

What are the key corporate objectives that you would like to see Alba Power achieving in the next (say) 4-5 years?

The key objectives for Alba to be achieved during the next five years is to manufacture 132kV transformers, repair up to 220kV transformers, manufacture HT switchgear and reach the Rs.100-crore sales turnover mark.