Technical Associates is a reputed transformer manufacturer with a standing of close to five decades. Vishnu Agarwal who heads the company is also a prominent figure in the electrical equipment industry having recently held the President’s office of industry body IEEMA. In this exclusive exchange, Agarwal takes us through his company’s operations and future plans but more importantly, gives keen insights on serious issues affecting the transformer industry. He explains in depth the impracticability of the transformer industry having to deal with guidelines issued by two bodies—BIS and BEE.
An interview by Venugopal Pillai.
To start with, take us through the range of transformers currently manufactured by TAL. Do you have plans to move to high voltage ranges in the near future?
Technical Associates Ltd. is a 50 years old company which started as a manufacturer of distribution transformers. We have two manufacturing plants – one at Lucknow (Uttar Pradesh) and the other at Sitarganj (Uttarakhand). While we still continue to make distribution transformers at both our plants, facilities for large power transformers, whichform the majority of the business in financial terms, exists only at the Sitarganj plant. TAL is probably the only integrated unit which manufactures the entire range of transformers from 5 KVA to 200 MVA.
Do you have plans to expand manufacturing capacity at your Lucknow or Sitarganj plants?
Our Sitarganj plant is a state-of-the-art facility spread out over a huge green area and is presently, fully equipped to manufacture and test EHV power transformers up to 400kV class. This facility is also extendable for manufacturing of power transformers of 765kV class. Therefore, we already have the requisite infrastructure for manufacturing large power transformers.
Mandatory BIS certification of imported CRGO has been an issue directly affecting the transformer industry. How do matters stand today?
CRGO is an important and critical input in transformers. Unfortunately it is also an input which that not manufactured in India and hence we are completely reliant on foreign steel mills for the same. A view has been taken in some sections in government that low grade CRGO being imported into the country has been responsible for inferior quality and frequent failures of distribution transformers. This is not completely correct. While CRGO (and its grade) may play a role in the energy efficiency of transformers, no transformer analyst or engineer would be able to significantly link lower grade of CRGO with failures in distribution transformers.
It is important that any raw material coming into the country should be of good quality – and to that extent the Steel Quality Control Order is welcome since it seeks to regulate the quality of CRGO being imported.
To the best of my knowledge, this order has definitely curtailed the imports of inferior grade CRGO in the Country. However, there is a problem in its being made applicable only for transformers manufactured and used in the country. There is neither any mandatory BIS certification requirement of CRGO for the transformers imported from overseas or being exported from the country. This is an anomalous situation which puts the local industry at a disadvantage.
As we understand, Technical Associates started a projects division in around 2006. How is business at this division, and what are the major jobs that this division undertakes?
Yes, TAL had started a Project Division in 2006 and had also done some prestigious jobs in UP, MP, Haryana, Chhattisgarh, Himachal and Karnataka. Unfortunately, we decided to close it as we found that we lacked the necessary management bandwidth to manage the projects on a pan-India level.
Do you see any improvement in the procurement policies and practices of state government utilities, especially over the past two years?
There had been a considerable debate, both for and against L-1 based procurement policies of government utilities. It is every purchaser’s right to procure goods at the lowest possible price. However, every purchaser also takes a decision between the kind of performance that he expects from the goods being procured, and the value which he will place on better or longer performance of the same.
In government utilities particularly, this situation is complicated because despite being independent commercial entities, they provide a social service to the country and are often supported through public finances by the government. It therefore becomes essential that the products/goods being procured by them are not just low cost, but also cost-efficient. Being cost-efficient and low-cost are not the same. While low cost only focuses on reducing the immediate procurement cost, cost efficiency also focuses on delivering the highest return on investment, over the life of the equipment.
It is essential for Government utilities to also focus on other issues other than price when placing their orders – on the performance of similar equipment earlier, on the quoted performance parameters, on verification of the performance parameters, on the reputation and standing of the supplier, and on the long term benefits that the equipment is expected to deliver.
In my opinion, a more robust system of vendor rating, based on the past performance of the equipment supplied by the vendor should be factored in by the government utilities while making purchase decisions. While there is no perceptible change in the past two years, I am afraid that do not even see any urgency to resolve this issue.
It is said that even as India is capable of indigenously producing 1,200kV transformers, the failure rate of low-rating distribution transformers is the highest in the world. How do you view this dichotomy?
You are correct that India has the technology and capability to successfully manufacture 1200kV transformers and also the rate of failure of low-rating distribution transformers is the highest in the world. Factually speaking, the failure of low-rating distribution transformers is not due to the lack of capability in the country. It must be understood that the failure of the distribution transformers is really a big problem only in the state owned utilities. Currently, there are many distribution utilities which are owned and managed by private companies and their rates of failures are minimal. A little study of this phenomenon would define both the problem and the answer for solving it.
Railway electrification is picking up at good pace. How do you see opportunities for TAL and also the transformer industry in general?
TAL already has the approval from RDSO for the range of transformers that it manufactures. No doubt that as more and more electrification takes place, there shall be new opportunities in this sector both for the electrical industry as well as for TAL.
What is your view on India improving its competency with respect to testing of high-voltage power transformers?
Developing capabilities within India for testing large power transformers has been actively engaging the attention of the government. The test station at Bina was conceptualized to meet a part of this need. There have been delays in commissioning this facility but I understand that now it is likely to be commissioned soon. Presently, large power transformers are being sent to KEMA (Netherlands) for testing. The time and costs are prohibitive. Starting of the Bina facility would be very helpful in mitigating this problem.
What your reaction to Chinese players setting up local manufacturing facilities in India? We are referring to Chinese entities like BTW, TBEA, etc.
We all know that the Chinese are quite aggressive in the power sector. As per the data available out of thermal generation capacity of 48,540 mw commissioned in the 11th Plan, main plant equipment for 18,187 mw was imported from Chinese manufacturers.
I, like the rest of my colleagues in the Industry welcome all international players, including the Chinese to set up local manufacturing facilities. Once this happens, these units shall also be operating on level playing field like the rest of the Indian industry. The Indian electrical industry is against import of finished equipment, particularly from China and has been advocating that the country should recognize the threat of relying excessively on imported equipment. I am happy that the government has recognised this threat at the highest level. Recently, a committee has been constituted under the chairmanship of CEA to examine this issue and submit its report to the government. Wherever imports are a necessity for reasons of inadequate technology or capacity, vendors should be asked to commit to establish manufacturing facilities in India, within a definite timeframe, before they are allowed to participate in the tender process.
It is obvious that when international players set up operations in India, the existing Indian industry which has not modernized itself shall need to do it for meeting the competition.
We understand that the dual certification of distribution transformers (BEE star labeling and BIS) is causing practical difficulties to manufacturers. Please explain this issue in some detail. How is the Indian transformer industry addressing the same?
The Bureau of Energy Efficiency (BEE) came out with an ambitious program to improve the efficiency of the distribution transformers, particularly the small ratings which are used in the rural electrification system. They divided the different efficiency levels into five categories and designated each level with a ‘star’. The lowest efficiency was designated as 1-star category and the highest efficiency was designated as 5-star category. It was soon realized that the industry was already evolved and hence the 1 star and 2-star categories were hardly used. The 3-star category was the general choice and continued for a substantial period of time whence the industry switched over to completely manufacture 3-star and higher efficiency of transformers. Soon it was realized that time had come to migrate to a higher level and 4-star category was adopted.
In the meantime BIS revised its standard for distribution transformers viz. “IS 1180”. In the revised standard, detailed specifications and losses were specified for all distribution transformers of 11kV, 22kV and 33kV class and having capacity up to 2.5 MVA. It was also mandated that all transformers manufactured and sold within the country shall adhere to this standard. Simultaneously, the BIS abolished 1-star and 2-star categories and the efficiency relating to 3-star was the lowest efficiency that could be manufactured. In the standard it was designated as “level-1”. Similarly, the 4-star and 5-star were designated as “level-2” and “level-3”. These levels were defined for all the standard ratings and in each of the voltage class.
After the BIS had carried out a detailed exercise and revised the IS 1180 standard, everything, in respect of ‘energy efficiency’ that was earlier being done by BEE, had been taken care of and in my opinion there was no further role for BEE. The standard carries the force of law as it is a Gazette document and is now being followed by the industry in a big way. Unfortunately, BEE continues to issue new instructions on its own. Recently, they have notified that the ‘Level 1’ (as specified in IS 1180) shall be replaced with the losses of ‘Level 2’ (as specified in IS 1180) and concurrently it shall be called the new ‘Level 1’. Similarly the old ‘level 2’ losses shall be replaced with the losses of what was hitherto ‘level 3’. Neither was the industry taken into confidence before taking this decision nor was BIS consulted.
I am personally of the opinion that BEE does not have any constructive role in regulating the efficiency of the distribution transformers after BIS has revised the standard after detailed discussions with all stakeholders. With multiplicity of authorities that work without any mutual coordination, it is only the industry which is at the receiving end and suffers for no fault of its. It is high time that a solution is found out by the government to this issue of multiplicity of authority. The transformer industry has no choice but to approach the people concerned and explain the rationale (or irrationality) of this move.
The premier association of electrical equipment manufacturers of the country – IEEMA has been doing this, though with limited success so far. The implementation of the BEE notification has been deferred by six months. I feel it may be necessary to defer it further.
