Established over five decades ago, Technical Associates Ltd (TAL) is today amongst the most respected and longstanding names in the Indian transformer industry. In this exclusive interview, we have Vinamra Agarwal, Director, Technical Associates Ltd, taking us through TAL’s current operations and future plans, whilst providing keen insights into pressing industry-related issues like rising prices of raw materials, the CRGO imbroglio and India’s self-sufficiency in transformer testing. An interview by Venugopal Pillai.
Let us start with the recent ISO/IEC 17025:2017 accreditation given by NABL to TAL’s transformer testing facility. What does this certification entail and what would be the positive implications on your company?
These solutions can be both for new transformers as well as for repair, upgradation and life enhancement solutions for transformers up to 400kV, 500 MVA. This accreditation is also a testimony to our continued focus on quality. I would like to add here that we are amongst the select few companies to possess such capabilities.
We understand that TAL had plans to produce power transformers up to 765kV rating. What is the current status?
Yes, Technical Associates has a definite plan to foray into making 765kV class transformers. Our plant at Sitarganj, Uttarakhand is well equipped for the same. Being an old and established manufacturer, our approach is to enter into higher voltage classes in an organic manner.
Every move from one level to the next higher level represents a paradigm shift in technology and processes. Over the past few years, we have moved from being a manufacturer of small power transformers to being a regular manufacturer of 220kV class transformers. This is part of our plan to ultimately move towards becoming a manufacturer of 765kV class transformers.
In general, do you have plans to expand your overall annual capacity to around 18,000 MVA, as we understand?
Currently, we manufacture approximately 10,000 MVA of transformers annually. We have definitive plans to take the same up to 18,000 MVA in the next 2-3 years. Increasing production capacity by itself can never be a good strategy for any company, unless backed by concurrent efforts in generating a healthy business pipeline for the company.
TAL is already one of the dominant and preferred manufacturers for transformers up to 132kV and 220kV, not just amongst utility customers, but also a very large spectrum of private customers.
In addition, we are also increasing our focus on international markets and are getting very good traction from key international markets where we have been successful in bagging new orders.
Let us come to some industry-related issues. The mandatory BIS certification of CRGO steel and the alleged use of inferior or scrap CRGO steel by Indian manufacturers has been a contentious issue for very long. Where do matters stand today, in your view?
The reality is that the Indian market is not a very major focus area for global CRGO manufacturers, especially when compared against their global markets where such certifications are not required. Hence the BIS certification creates an unnecessary barrier for any company that may be looking at India as an additional market for its products. While insisting on quality CRGO is important, at the same time, there are many ways of ensuring the same. In fact many customers are continuing with extremely onerous processes for verifying CRGO usage in transformers, despite the BIS certification being in place.
Doesn’t this raise a question mark on the effectiveness of this certification per se?
Extending “Aatmanirbhar Bharat” to transformers would mean domestic production of CRGO steel, which has been elusive for decades. What is your take on the matter?
Rightly said! I have alluded to this point above and this is a critical requirement for the country in which some focused effort is required. If we can put in a focused effort towards attracting private industry to set up a semiconductor factory in the country, why is the same not possible for CRGO?
Staying with CRGO, we understand that there has been a spike of late in prices of key raw material like aluminium, copper, CRGO, etc. How is TAL approaching the situation, especially with respect to earlier-finalized contracts?
The prices of these raw materials have risen in the range of 25 per cent to 90 per cent during the last one and half years. For instance: aluminium, 85 per cent; copper, 80 per cent; CRGO, 60 per cent; steel, 50-80 per cent; polymers, 50-90 per cent; transformer oil 25 per cent, etc.
While the entire industry has been impacted by this volatility, TAL has been relatively better off as we believe very strongly that our competitive advantage is in building good quality transformers and not speculating on commodity prices.
We have therefore ensured the discipline from a very early stage in only accepting those contracts in which Price Variation is permitted in line with IEEMA’s transparent PV formula. We have in fact been a strong advocate of this approach across the entire value chain and hope that the recent volatility and ensuing losses will help propagate this concept even further.
What is your overall view on India’s self-sufficiency in testing facilities for transformers, especially short-circuit testing of high-voltage transformers?
India is fairly self-sufficient in carrying out all tests on transformers as required by various standards. As regards to short circuit testing of high voltage transformers we do have a serious constraint – considering that the National High Power Test Laboratory (NHPTL) set up in Bina, Madhya Pradesh is the only lab having capability of conducting short-circuit test on 765kV transformers – and that facility too is not yet a member of STL (Short-circuit Testing Liaison). The lack of this certification will mean that the transformers tested in this lab will have very low global acceptance as almost all international customers demand short-circuit tests from an STL member laboratory.
Much like other forms of electrical equipment, transformers are also going “green” with the use of natural ester oils. What are TAL’s plans in this direction?
Yes, we are well aware of the advantages of ester oil. We are working on that and will be offering a product very soon. Unfortunately, the acceptance of ester oil-based transformers is still very low in India due to their higher prices and this continues to be a challenge towards the growth of these products.
Tell us about TAL’s exports business. Which countries currently dominate your exports business, and which countries or geographies, hitherto untapped, hold potential?
Africa and Asia remain the lucrative markets for Indian manufacturers considering the volume and funding available however we are also looking at increasing our footprint to the markets of Middle East & North Africa (MENA) and Latin America as well, in the coming years.
What are some of the cherished milestones that you would like to see TAL crossing in the medium term, say 5-7 years?
Over the next 5-7 years we are indeed looking at crossing some critical milestones for our company. The top three such would be:
- Starting manufacturing of 765kV transformers
- Achieving 18,000 MVA of annual production
- Diversifying our customer portfolio to include a minimum of 30 per cent coming from private customers and a minimum of 20 per cent coming from exports
