According to reports, in an exclusive chat with ET Nowm Anil Chaudhry, Country President & MD, Schneider Electric, said that the industry is seeing short-term challenges in the back of demonetisation.
ET Now: Do you think schemes like UDAY or IPDS provide a new lease of life to the power sector and what are you expecting from the budget as well?
Anil Chaudhry: So UDAY is a very welcome step to restructure that which most of our discoms have been facing up and definitely their credibility is going to be improved and what is encouraging that many of the states and discoms have opted for this scheme. And this should while improving their balance sheet, have them to get more credit and to invest into the most challenging segment of our whole power cycle which is the distribution. This is about last mile connectivity. And I think keeping in view that vision of government for 24×7 supply, last mile connectivity is very important and it is very important that discoms are able to improve their credit and availability of the funds with the scheme to invest in strengthening and digitising and modernising the whole distribution network to achieve this 24×7 power supply dream of the government.
ET Now: So what has been the on-ground impact of demonetisation on the company and are you seeing a slowdown yourself?
Anil Chaudhry: So demonetisation if we look as a programme point of view, as initiative point of view, it is very important initiative of this government to tackle the few of the economical issues which the country has been facing and what we have seen definitely in short term there are challenges because of most of the points of sales at the last mile, the transactions, 80% to 85% transactions were being done in cash which have seen a slowdown in November, a sharp slowdown, and then little bit recovered now as the situation is becoming normal. But for companies like us which have been in mostly businesses B2B, we have seen impact which to a lesser extent but I understand from various industry reports and the feedback which we get, the FMCG and the companies where there is lot of B2C sales, there has been a larger impact than expected. Now what we have to watch is next two quarters, one-two quarters where we have to still face some of the challenges because some part of the acceleration which is still happening will be coming from the order backlog and the new orders probably are coming at a slower pace and that will show some impact next quarter. However, in mid-term and long-term, this is definitely going to help the overall industry to be much more structural and much more beneficial for the economy as such.
ET Now: Analysts believe that the government initiatives and vision to generate two trillion units energy by 2019 will aid order inflows as well and I think it is a no-brainer per se. But let me ask you what kind of order growth potential do you see?
Anil Chaudhry: So for sure I think India as a country still has to do lot to get to the normal levels of per capital consumption which is required for a country like of our size and population. Today if you compare that we are about 1000 units per capita consumption compared to close to about 4000 where China is and whereas much higher scale where Europe and America is and the investments in this sector are going to go or shall be increasing to improve the quality of the people of the country as well as we also believe in that access to energy is now a fundamental right. And to achieve that, the investments which are coming and especially the focus which the present government have in the infrastructure and especially in the electricity and energy sector, is going to help definitely the companies like us and as you know that for Schneider electric we are in the domains of power, industry, data centre, renewable especially solar and this is a focus areas of the present government so that in coming years should help us to further accelerate the growth of our presence in this country. And coupled with that, the initiatives like digitisation where Schneider is very much focussed with internet of things and industry 4.0, we should be able to further contribute to the overall infrastructure growth in the country with our technologies and solutions.
ET Now: Analysts are also seeing a healthy revenue growth of about almost 12% CAGR by FY19, what kind of revenue growth are you pencilling in after muted revenue growth for almost the last five years?
Anil Chaudhry: You know in terms of our strategy we are very much aligned with where the government is focussed on and that is where lot of acceleration in the growth will come in. Now the segments in which we are focussing today is for sure power starting from generation up to the last mile connectivity in the distribution. The industry segment where we have food and beverages, oil and gas where a lot of investments are happening, then in the data centres where with the digitisation drive of the government this is going to further accelerate and last renewable where Schneider Electric is very much present as a full (24:50) supplier to all investors and EPCs who are investing in this domain. Now if we look at these five, six major segments where the government focus is and where basket of offer of Schneider Electric is strong we expect that to be turning to be a good growth story for us in the coming four to five years as we move on with the overall story of the country growth in this infrastructure investment. So we are quite optimistic on that part.
ET Now: You recorded 20 plus revenue growth in transactional business, will this contribution from this space increase?
Anil Chaudhry: So transactional is an important part of our overall business mix and we are very much focussed on that. We are also increasing presence in more and more cities, especially in tier-3 and tier-4 where the actual growth is happening. So since these are the new geographies which we are adding on to our sales coverage we expect an accelerated growth coming from those geographies which would add to our overall transactional growth and that is our focus are. And that is where we are balancing our business mix with the transactional focus, with system growth and very importantly services which is another business where we are focussing on because with our installed base over 50 years in this country there is a lot of renovation, modernisation required of the equipments and solutions which have provided to our customers and that is another growth initiative which we expect to add on to our both profitability and volume growth in the coming years.
ET Now: You are also looking to make all your products digital so where do you see yourself in this entire digital story of the country?
Anil Chaudhry: Now very important and for us as a business strategy we see the world is going through a 3-D change where digitisation, decentralisation and decarbonisation are going to define the trends of the future technologies and their sustainability of the businesses. And from our point of view because the digitisation where we have estimated that approximately 50 billion devices will be connected by 2030 and this is where each and every device where we are presenting our products and solutions should have the capabilities and possibility to connect so that our customers can use these devices and use these solutions more efficiently by utilising the power of mobility, connectivity and analytics. For that is our lot of infrastructure and research and innovation done that where will keep on adding these, I will say, the specifications into our solutions and devices to make them connected and to make them digitised so that the power of mobility and analytics and connectivity can be passed on to our customers so that they can efficiently use these solutions for overall growth of their business.