The Eon Electric Limited, Chairman and Managing Director (CMD), V P Mahendru said in an exclusive interview to SME Times that the government should implement the right policy measures, which can boost growth of the small and medium enterprises (SMEs) in the electrical equipment industry.
Excerpts of the interview...
What kind of products are you dealing into?
V P Mahendru: Eon's core manufacturing capabilities are in lighting, wires & cables, mobile accessories, modular switches and fans. Apart from energy conserving high-quality wires, EON is introducing new varieties of wiring accessories, switches, sensors and home automation systems. These systems ensure energy conservation of upto 30% in most industrial establishments, commercial organisations and homes through sensing technology, i.e. sensing presence or absence of human beings in the lighted area and the level of natural lights already available in the room. This is in line with EON's belief that being a scarce resource in today's time, electricity should be used optimally as required . The same is possible through power-saving products for all kinds of establishments, including infrastructure buildings, office, homes and even street lights.
How much growth have you witnessed in the last fiscal and what is your expectation for this fiscal?
V P Mahendru: After the sale of switch gear business and subsequent change in the name of company from Indo Asian Fusegear Ltd to EON Electric, we are moving towards establishing EON's name as a market leader in innovative products that we are in. And the future looks good! We have achieved revenues of Rs 50 crore in 2011-12 and projected revenue for 2012-13 is Rs 250 crore! We are expecting huge growth this fiscal as we foresee an encouraging response to Eon's new innovative products that we will be launching throughout the year for our customers across all verticals. We will also be creating manufacturing capacity for new products. One such product is Lithium Ion Batteries for mobiles and Electric Vehicles for which we are setting up a plant.
According to the latest figure available the growth in Indian electrical equipment industry has declined in the last fiscal to 6.6 percent. What is your take on this?
V P Mahendru: The global economic slowdown in last few years and weakening of sentiments affected almost all industries, and the electrical equipment sector was not immune to that. However, on a positive note, India has remained majorly unaffected from outside influences because of non-dependence on exports. Domestic demand is gradually picking up with the economy stabilizing, we expect that with government support to infrastructure products, our industry will clock better performance going forward.
As we know the industry is facing potential power crisis, how much it is affecting your business and industry as a whole?
V P Mahendru: The recent grid failure is a sure shot sign to the entire nation of our acute power shortage. It's a problem we cannot afford to ignore. However, as opposed to common belief, this only works to our advantage as we are introducing products using innovative technologies that consume least power possible. Immense resources are being put to the cause of research and development so that these technologies of energy conservation can be further developed. The environment is tough right now however, we believe we will overcome the same.
Are the high-tech electrical products that you are manufacturing today energy efficient? How much focus do you give to this aspect?
V P Mahendru: We want to ensure that the consumers get the best of products with most energy-efficient technology available in the world. Our vision is to enrich the quality of life by ensuring safe, efficient and convenient use of electricity; this has been our guiding force for development of new and better products. The culture of innovation and constant change has played a key role in our success and growth. Our product range results in saving of 30% electricity, a big saving for a power-starved economy.
The increasing crisis of skilled manpower is impacting various key functions of the electrical equipment industry such as R&D, consultancy, design and detailed engineering work, according to the Ministry of Heavy Industry and Public Enterprises. Could you highlight on the possible reason for manpower shortage in the industry?
V P Mahendru: Skilled manpower shortage is across industries, be it electrical, automobile, power or any other sectors. The key reason for this is the prevailing education system in the country, which generates millions of unskilled candidates for the job market every year. As a result we tend to have resources with low skilled technical capabilities in comparison to other leading developing nations.
We are taking steps to overcome this shortcoming in coordination with Government and Private ITIs. We impart training to fresh young and school educated young boys and girls to enhance their technical and thinking skills. Eon's principle is to enrich the lives of all stakeholders, and employees are like its blood vessels. We also identify Eon's own people with leadership potential and specially train them and provide global exposure. For example, last year we sent some of our employees for a two-week training programme to institutes like IIM Ahmedabad, ISB, Hyderabad etc. including the AOTS (The Association for Overseas Technical Scholarship) programme in Japan for leadership in manufacturing.
How much of the sector is driven by SMEs and what kind of growth opportunities do you see they have?
V P Mahendru: The domestic electrical equipment sector is heterogeneous and manufactures a varied range of products. In terms of total production, it is estimated that between 40 per cent to 50 per cent is the contribution of SMEs in this sector. To sustain the envisaged annual GDP growth rate of around 8-9 per cent over 20 years, it has been estimated that India will increase its electricity generation capacity from around 205.34 GW presently to over 800 GW by 2032. This would require a matching upgrade and enhancement of the electrical equipment segment. With this huge latent demand for electrical products in the country, the sector can only grow in the future.
What kind of role government should play to boost growth of SMEs in the electrical equipment industry?
V P Mahendru: We expect a few more positive steps from the government's end in terms of policy, especially in promoting energy saving products, reduction in excise and VAT, subsidies for R&D, promotion and incentivizing usage of LEDs etc. The government should also make an effort towards improving the infrastructure at Industrial Training Institutes and develop a few more so as to provide better and more skilled workforce to the industry. These are steps necessary to ensure growth in the electrical equipment market. We also suggest that some leading SMEs may be involved with management of it is, so that their training schedules are well coordinated with the industrial skilled power needs. Indian SMEs have indeed made a great contribution in the Electrical Industrial development. Eon is playing a constructive and fast growing role in this segment.
(Namrata Kath Hazarika can be contacted at firstname.lastname@example.org)