With a standing of nearly 40 years, Salzer Electronics is not only the market leader in the field of rotary switches, it also has a diverse product portfolio that includes industrial components, motor control products, transformers, modular wiring devices and control panels, among several others. In this exclusive interaction, Rajesh Doraiswamy, Joint Managing Director, Salzer Electronics Ltd gives insights into the company’s recent strategic entry in the smart metering business. Doraiswamy seeks bright prospects for Salzer – both as a smart meter supplier and an advance metering infrastructure service provider (AMISP) – under the Revamped Distribution Sector Scheme (RDSS). An interview by Venugopal Pillai.
When did you start making components for smart meters?
In our switchgear business, we have been manufacturing current transformers and relays for many years now. These are critical parts of a meter, and we have the technology to manufacture them in-house.
We got an opportunity to supply current transformers to one of the large meter manufacturer in the country. That is how it began.
As far as the complete meter under the “Salzer” brand is concerned, what will be the import dependence?
The smart meter consists of various components – plastics, wire harnesses, relays, etc. The other major portion is the electronics and the communication module. As far as the electronics is concerned, even though we are doing the PCB assembly in India, the country is still dependent on imports for electronic components. We will need to import these components from China and Taiwan. It is not just our company, all meter manufacturers need to import electronic components.
However, there are large distributors available in India and Singapore that source and stock these components. Though we would need to import these electronics components, the entire value addition, as far as Salzer meters are concerned, will happen in India.
We understand that Salzer has received BIS approval for its single-phase meter and that for three-phase meter is awaited.
Yes, we have got approval for our single-phase meter. For three-phase meter, the BIS approval is in the final stage. Most probably, by first week of August 2024, we should have BIS approval for three-phase also.
What certifications to energy meters need, apart from the BIS approval?
As far as the energy meters are concerned, BIS approval is mandatory. Apart from that, it is also mandatory that the manufacturing facility should have a proper testing lab, which is approved and certified by NABL (National Accreditation Board for Testing & Calibration Laboratories). Such a testing lab is mandatory and we are already equipped with one.
To start with, our focus will be single-phase and three-phase consumer meters, as well as the LTCT (low-tension current transformer) meters. Having said that, we will also be focusing on the DT (distribution transformer) meters and feeder meters, six months down the line. That will also be needed in our product range as we have also got registration as AMISP (advance metering infrastructure service provider) under the Revamped Distribution Sector Scheme (RDSS). It is always better that we have the entire range of meters required for an RDSS project.
We understand that Salzer meters are currently being tested and evaluated by potential customers. Tell us more.
We have so far approached around seven large AMISPs in the country, and have submitted samples. Discussions are in different stages. The products have already been evaluated by some AMISPs and they have technically cleared the product. We are into commercial discussions now.
When are you expecting your first commercial sale of energy meter?
As a new entrant into this field, I think it is a little difficult to crack a well-set market! There are very large players who have been in this field that have been supplying to AMISPs for a long time. Their products have been proven in the market, and they enjoy the reputation. We being a new entrant, it is naturally taking some time to crack these AMISPs and make them confident about the efficacy of our meters.
We have to actually undergo a lot of additional testing and checks, which an AMISP would perhaps normally not ask of an existing meter manufacturer! However, we have a strong technical team in place that is competent enough to customize meters to the requirements of the AMISPs. We have also put some meters in the field for trials. We are demonstrating all this to our AMISPs to gain their confidence.
My expectation is that we should have a commercial purchase order by the end of this quarter (Q2FY25: July to September) or definitely during the next quarter (Q3FY25: October to December).
The physical form factor of the meter is the same – whether prepaid or postpaid. The software that goes into the meter will change according to the payment mode. As far as I have seen, the enquiries are largely for postpaid meters. There are very minimal prepaid meters, as of now. But it is always better to install a pre-programmed meter – whether prepaid or postpaid. Otherwise, remotely changing the software could be a challenge, though it should be technically possible.
What is Salzer’s current meter manufacturing capacity?
Currently, our annual capacity is 40 lakh meters that we are trying to fill for now. We will see how the demand is. If the order inflow exceeds that, then yes, we will definitely look at capacity expansion. The market of 25 crore meters under RDSS, I feel, is just the beginning. The market will become much bigger – by say 40 per cent or so – in the coming years.
What is the typical useful life of a smart meter?
I think the suppliers are already giving a 10-year warranty under RDSS. In my opinion, the meter does not have moving parts – it is mostly electronics. If the product is designed well and is equipped with robust electronic components, I think the useful life of a meter should be up to 15 years. But the longevity of a meter can get influenced by external factors like environmental conditions at the place of installation.
Are there anti-tampering measures that manufacturers have to mandatorily incorporate in their meters?
BIS certification mandates various anti-tampering measures to be built into the meters, which every meter manufacturer is expected to do, and so have we. Also, because of the communications module associated with the meters, which is of course outside the meter, steps are being taken to at least detect cases of tampering.
Tell us about the different communication protocols that Salzer meters are compatible with.
There are broadly three types of communication protocols on which today’s energy meters are being produced — GPRS (mobile technology), RF mesh and NB-IoT. We are also ready with all these technologies in our meters. We have also integrated our meters with various RF technology providers.
For an AMISP, it is not only about meters. One has to integrate it with data management, communication systems, billing modules, etc. We have already integrated our meters to make them communicate with few large IT infrastructure system integrators.
And as I said, we ready with all the three communication protocols. NB-IoT (Narrow band IoT) technology is still to be proven and there hasn’t been widespread deployment so far.
Given that RDSS is a TOTEX model that would require large financial resources to be deployed by the AMISP. What is your view?
I think financial strength is the primary requirement to be an AMISP. You need to have the financial muscle to be able to undertake AMISP works under RDSS. That is why companies that have become AMISPs have virtually unlimited money flow!
As far as we are concerned, and especially in the initial stage, we are not looking at large-scale tenders, say in the range of 40-50 lakh meters. We might participate in tenders that are sub-10 lakh. There are small states and UTs or one package of a large state. For that also, we would definitely look at financial and technical partnerships.
How do you see the road ahead for Salzer’s metering business?
We have been in business for close to 40 years. We have created a reputation in the electrical field as a producer of quality products, across the various segments that we have been operating in. We also always see how any product or any business can be sustainable over a longer period of time. That is the main idea by the company board and the management. That has been our goal. Instead of short-term growth, we always look at long-term growth that is sustainable.
Getting into smart meters is something along these lines. We have seen significant opportunity in this. We also see significant revenue growth due to large volumes, and we are working towards it.
Another significant advantage here is most of the contracts under RDSS are long-term contracts. You can therefore have long-term contracts with an AMISP for various other businesses, apart from just supply of meters. Given the scale and scope of opportunity under RDSS, and as we ourselves as an AMISP, we see significant potential for growth and expansion.
Today we are new in the metering business, and there are stalwarts with a long presence! Nevertheless, we are confident that with the team that we have, we will definitely come out as leaders of this product also.
