Why Indias Electrostate Push Is Bigger Than You Think Pratik Agarwal Sterlite Electric

TITLE: Why India’s Electrostate Push Is Bigger Than You Think | Govindraj Ethiraj | The Core Report CHANNEL: The Core DATE: 2026-05-30 ---TRANSCRIPT--- We are seeing the highest ever electricity consumption and exactly coinciding with the largest energy crisis we ever had and this gives us confidence that India can move towards being a electro state.

How much of sterite looking ahead is digital and how much of it is let’s say pure traditional hardware. The forecast is in the next 20 to 50 years 10% of incremental capex will go into digital and software. a lot of renewable capacity has come up and they’re waiting for transmission and that is quite scary because in the first year of a renewable project if you don’t generate revenues you you can wipe out the returns forever. India has done a fantastic job in the way it both plans transmission and it procures transmission. So today if somebody came to me as data center company and said that can you do me a gigawatt of roundthe-clock renewable power I can say yes in 12 to 24 months in a location you know 2 hours from Mumbai I can give you that capacity and I can give you the land. So India is in an extremely sweet spot. Hi and welcome to the core reports weekend edition. I’m joined by Pratik Agarwal, managing director of Sterite Electric. Pratik, thank you so much for joining me. So we are meeting at a very interesting time right. So uh somewhere last week India’s total power consumption hit or rather crossed 270 GW. Now this is a record. It’s also the higher side of the projection that I think the people in government planned for about 4 months ago. So when they planned they said okay let’s get the power. Let’s get the gas. Let’s get the coal, let’s get everything so we ready for 270 and we’ve already crossed it and we’re still in May. Now couple of questions. I mean one is how do you see it? I mean whether as a sector player or or as sterite. Second is it’s also interesting that this comes at a time when we obviously have an energy crisis and one of the backups for achieving this high demand or meeting this peak demand was obviously gas which we are facing shortfalls but we can come to that later. So how are you looking at this situation? right now. Perfect. Firstly, thank you so much Go for having me on your show. It’s uh it’s really a pleasure to be here. As your audience and as you know, I run three businesses in the field of electricity. One is in uh grid owning and operating grid networks. Second is in renewable energy and third is in high voltage cables. So coming to your question of this 270 gawatt. Yes, absolutely. There is no denying that this is a watershed moment because uh India in general has been growing as in terms of power sector the consumption but has had as um periods of low growth starting from COVID for various reasons right so this firmly puts India back on the growth track now taking a step back and linking this back to also what you said about the current energy crisis right so I firmly believe that every crisis is a wake-up call you know COVID was a wake-up call and the whole UPI PTM M all of that was born in that in that time right I believe this is our wakeup call to say that is it time to electrify our economy end to end and really make India an electro state right uh various people have different definitions electrostate is a state where more than 50% of its energy comes from electricity that number today is about 25% for India right of which a quarter is renewables right so a quarter of a quarter right so the challenge with this is both on the supply side and the demand side. Supply side wise, if you ask me, generally India is actually doing really well. Like I’m very proud of what we’ve achieved. You know, we’ve really slowed down thermal expansion and yet we’ve managed to scale up renewables. So we added 50 plus gawatts last year in renewables, which is something that they forecasted. But I mean, we all know how some of these central forecasts are, right? Nobody really believes they’ll happen and they actually happened. So it’s it’s phenomenal, right? We’ve already met our 2030 targets. Exactly. Yeah. Yeah. that. So now the big challenge of course in this is that how do you drive people to consume more electricity and replace other forms of energy consumption. The big forms of consumption of course are fossil fuels that go into transport and then you’ve got various forms of heating and cooling. Then you’ve got cooking gas and then you’ve got huge amount of industrial consumption in steel, cement and places like that. All of which are currently fossil fuel and not coming via the electricity route. So this is a time for us to say that hey can we go step by step and convert our use cases from fossil consumption to electricity consumption in places such as cooking and transport through induction cookers through EVs etc. And the country of course the killer app in electricity is ACs and of course that’s why we are here today. It’s the peak summer, highest temperature and people have more ACs than they’ve ever had before and they’re using them and hence the 270 GW, right? That’s really the explanation. But I think this is a very positive sign that the market can react quickly to these situations and therefore we are seeing the highest ever electricity consumption at exactly coinciding with the largest energy crisis we ever had and this gives us confidence that India can move towards being a electric state. Last fact I’ll leave you with China between 2001 and 21 grew its electricity consumption by seven times seven times. Okay, which is a 9% keer. India is currently at between 5 and 6% keer and some people say it’ll be 6 and a half%. But if India can be at 9% keer, then we will grow electricity 20 times by 2047 which is bat. Okay. And then we’ll have about from the current 270 gawatt you mentioned we’ll have a 1,800 gawatt peak load consumption. So to do that you need to fuel the demand side people need to aggressively move from consuming petrol diesel kerosene goar everything to consuming electricity and the supply side I’ll talk about it later but in general we’re doing quite well and many more things we can do right and and tell us about uh the the parts of your company which are actively affected by this rapid growth. I mean when I say affected I mean in both in a positive way and otherwise. Absolutely. We see a rising tide lifts all boats. So when the fundamental demand of electricity is growing everybody and everything in the sector from developers to OEMs to services to the lenders to consultants will do well. So that’s exactly what’s happening right. uh the most directly affected is our renewable energy company where we Serentica renewables provides roundthe-clock uh renewable energy to large factories CNI customers and some utility customers. We are the youngest only 4 years old but the fastest in the country to reach 1 gawatt 2 gawatt and now 3 gawatt in this month right and our plan is to end this season in June by about 3 1/2 gaw reach about 7 gawatt next year and 17 gaw by so when you say 3 gawatt for those who may not understand that’s almost let’s say a midsize city in a country like India oh yeah it’s Mumbai is about 56 gaw consumption so it’s half of Mumbai absolutely correct exactly and and this you’re supplying only to as you said CNI which is commercial and industrial consumers. Correct. Correct. Because most people think of grids and some grid and transmission lines and all that but what you’re saying is that you’re supplying or creating the infrastructure for direct Exactly. generation and supply. See 40% of greenhouse gases are created by industrial consumption of fossil fuels for zero and 50% of all electricity in India is consumed by commercial and industrial establishments. These are the people who were largely not using solar or renewable in a meaningful way. Why? Because daytime solar doesn’t do anything for them. You give them solar for 8 hours for the other 16 hours he has to pay more to his original supplier. So he’s net net more expensive. Doesn’t make sense. Only when you can take a true roundthe-clock solution by combining multiple technologies, wind, solar, battery, pumped, hydro, IEX, put it all together, then you can give them a real solution. Right? I link this to what happened in early 2000s in the telecom revolution. you if you needed a lease line for your office, you had only two options, MTNL or BSNL and then the big wave of private sector came they provided eventually 100x more capacity at probably oneten the price and much better service right so that enterprise migration of data that happened in those 20 years I see that enterprise migration and power happening in these 20 years starting this year so give us an example of let’s say a company or a kind of company who has gone for your product or services and how has it been sort of built up and evolved? Sure. So, let’s start with Hindustan Zinc. Of course, it’s a group company where it’s the world’s largest zinc company and um zinc as you know is critical for galvanizing the steel industries and by definition a big consumer of power. Massive massive consumer of power 800 megawatt across the board uh you know very large. This company was 100% coal fired till about 2122 right uh there was a lot of volatility in coal price they wanted to be CBAM compliant they wanted to be have green power so Centica was being born around then they signed PPAs with Centa in 3 years uh which will end in 26 and and spill over a bit in 27 80% of Hindustan’s inc will be renewable power fed while reducing prices for Hindustan transincing. So it’s a dual benefit. I’ve cut down the power cost which is a very big significant cost for them and you’ve gone green. Right? So it’s a it’s a incredible transformation for the largest zinc company in the world. Now just imagine every other zinc company in the world will follow them and the kind of impact you can have both for the environment for the planet and for creating this economy. So this is a classic example where companies that were dependent either on government suppliers of electricity or if you had a captive power plant you were dependent on government supply of coal either way is your government supply dependent and they said this is enough we need to move to a private option and if it can be green and cheaper then why not it mean it’s absolutely makes makes tremendous this particular case you’re saying about 6 700 megawatt of power that you’re generating so what is the I mean what is it coming or where is it coming from and It’s very interesting, great question. So what we did uniquely as Centica, so typically till about 4 years ago, if you were a renewable company and you wanted to supply to a large factory, you would typically either set up a solar plant on their premises or you would set up a solar plant very close to them and using the local distribution grid, you would supply to them, right? We realized that this was not scalable. A because around that factory is not necessary they’ll have perfect sun, perfect wind, perfect conditions. Central India. This is Rajasthan. Yeah. Now on top of that when you’re using the local grid, remember now you’re competing with the same guys, right? These were the industrial houses are the most profitable customers for the local discom because they overcharge them and cross subsidize everybody else. So now you’re using their grid to supply power to their customers, stealing their customer. That’s never going to be a smooth ride. So that that whole sector never took off as as a CNI business. What we I would say innovated in this. We said that hey there’s a national grid. It offers open access. We also have a very large transmission company. So we know how to build last mile connections to the national grid. Why don’t we change this business? Why don’t we start generating power in all parts of the country. So for example solar where solar makes sense, wind where wind makes sense, pumped hydro where that makes sense and then over the national grid supply to the customer. Now what we brought unique to this is that the customer wasn’t connected to the national grid. So we said we will connect you to the national grid at our risk and cost. So now coming to your question on Hindustan zinc they have a large smelters in place called Chhatur in uh in Rajasthan. We are producing renewable power in Rajasthan, Maharashtra, Karnataka storing it for the day part of it in Andra so that and releasing it at night and all of this is then getting sent over the national grid on a transmission line to this plant in Chhatur in Rajasthan. All happening in real time. We have an AI based uh software called Seran Nova which manages this real time. So says that okay for the next half an hour there’s likely to be cloud cover uh over your solar plants. So better to store more the previous 2 hours. All of this is done using AI for example complete optimization of the grid. So it’s like a symphony you’ve got five six instruments performing every 15 minutes something else is firing and you have to manage this entire symphony on a live continuous basis. So and and Hindustan zinc is one example. What’s the other example? Let’s say from another part of the country. So another part of the country. So our two our largest contracts which are commissioning in 26 are from the group companies and then from next year we have large contracts from third parties. Uh roughly 60% of our contracts are from Vanta group companies at the moment. So the second biggest example is in the aluminum business. Aluminium is the largest consumer of electricity after um uh cement in the country. Okay. So uh and as you know we have the largest aluminum smelters in the country amongst the largest in the world 3 million tons of aluminum production largely between Orisa and a little bit in Chhattisgarh. So again same thing right they needed to aggressively decarbonize their operations. currently all their electricity is cold fired and for CBAM reasons for Indian renewable purchase obligation reasons and for just being a good citizen and their own sustainability goals they needed to decarbonize while keeping the price low because electricity is one/ird the cost of an aluminium producer you can’t be competitive if you’re not the cheapest buyer of electricity so again we did the same thing signed roundthe-clock renewable contracts with vanta aluminium and then set up solar wind batteries and pumped hydro pumped hydro We contracted to a large part in different parts of the country where it makes most sense where the resource is the richest where the sun shines the brightest wind blows the the best at the right times. One more thing very interesting we realize is that when you are using the national grid you can actually optimize really well. I’ll give you an example when you’re when you’re putting together a roundthe-clock renewable solution your most expensive commodity is the battery because you have to store to serve at night. But if you’re combining let’s say wind with Karnataka, wind with Maharashtra, then the wind patterns are different in both states which means that you have 2 hours of extra wind in your total solution and you require 2 hours of less battery and this makes you cheaper than everybody else. And that means what like 6:00 to 8:00 p.m. or or even at night. Correct? So in certain times, certain months, you’ve got the wind, especially in the monsoons, you’ve got wind right through to 11:00 p.m. at night. And then the patterns are different in different states. So when you combine multiple states together and you do a a sigma of everything, you realize that actually you’ve got renewable firing in many more parts of the day than you had earlier thought and therefore you need less battery. So this sort of innovation was never happening in India before. People hadn’t thought of using the national grid and then they still don’t like doing that because they find it risky to build transmission lines into the grid. So in these two cases and maybe elsewhere. So you’re saying that their existing coal based power plants are being backed down and dismantled or something similar or just kept as backups. They’re being backed down a and sometimes uh if if the third party market needs that power like the ex market they probably generating and selling into that market, right? It all depends on where it is. If it’s very cheap power plants like on the pit head, then they probably would would consume it, hive it off into a different company and maybe use it there. Like as you know Vanta is going through a de merger. So some of those assets are getting hived off into the power company. We have a thermal power company in the in some cases like Rajasthan where there is no coal in in the vicinity. They’ll probably just back down and use uh at at minimum load. Right. Okay. So I’m going to come back to the distribution because that is fascinating. But uh tell us a little bit about the conducting side of the business because and and where it is growing growing and what are the sort of driving factors. Sure. So our transmission business is called Resonia. Here we’ve been in this business for about 15 years. We have done close to $7 billion to about uh 65,000 crores of development including projects under construction including projects that were uh recycled into the integr into the invit um and including a few projects we did in Brazil. So this business is the is is is the absolute fundamental of the electricity economy. uh as we know if you talk to any renewable player anywhere in the world today and you ask them their number one constraint for growth they will tell you the lack of grid capacity right anywhere in the world so I want to first start by saying that India has done a fantastic job in the way it both plans transmission and it procures transmission every other part of the world has national monopolies which a single company doing all the transmission right and they are getting paid on a cost plus model so the incentives to do faster cheaper quicker are simply not there. So this is even in let’s say uh economies like the United States and so on. Okay. Most states in in the US most that out of 50 at least 45 are in this model or most of the UK most part China most parts of Europe uh most parts of Australia only latam is the only other place that has adopted this kind of the Indian model which is more competitive in nature and sort of driving innovation. So and you are in Brazil as well but we’ll come back to that. Yeah. Yes. Yes. So, so fantastic job done by the Indian government on on on um speculatively planning transmission assets, not waiting for PPAs to get signed. This changed about 5 years ago. Earlier we used to follow that model and now we’re planning speculatively and in procuring it using competitive methods. So once the transmission uh uh grids are planned, they are packaged into small projects and then awarded on bot basis just like roads to the uh lowest bidder and then people like us will come in and we will do anything and everything in our power to build it quicker and cheaper because if we build it quicker and cheaper we get a higher return, right? And this is exactly what you want as a grid operator to pro for projects to come as quickly as possible. So so that whole system is working really well. We are currently uh executing close to 40,000 crores of of projects. Uh the country is awarding every year close to uh 1 lakh crores of projects roughly $10 billion. Last year it awarded $15 billion worth of projects, highest ever in Indian history. This makes India the largest green field transmission DOT market in the world. Right? Because nobody else nobody else is doing it. So I think that business is is is the absolute bedrock. I mean I expect for the next 10 years uh every year there to be this quantum of business and unlike other infrastructure sectors where when the volumes rise the competition also rises usually and then the returns go down and then there’s not much money to be made right this sector has proven to be a bit different of course competition has gone up lately within all the money available in the capital markets as well but generally because of the deep development capability needed to execute a transmission line. See in the case of a road the government buys the land and you’re just building the road. Here you have to procure the corridor end to end from Sicily building a project from Mumbai to Bopal. you have you’re responsible for procuring that 50 m corridor end to end from Mumbai to Bopar in a democracy like India where you’re probably going through I don’t know 5,000 land owners in that process it’s a very complex job and what we do really well in Ronia is we take stakeholder management very seriously we have a full department full science behind it SOPs protocols and we believe that unless you with empathy and respect deal with the local stakeholders these projects can’t be built So that is the skill set we’ve built in the last 10 15 years. Apart from that a lot of technology helicopters, drones, AI based route planning like we are now adopting the home the NBFC style instant payment right so if if you want a home loan you can somebody shows up with an iPad and gives you an instant loan like that if you show up at a farmer’s house to say that we want to put a transmission line can we instantly pay them on the spot using an iPad. So you’re paying them for lease right? You’re not Yes. You’re paying Exactly. Good point. You’re paying a right to use. So, the good news is that they get to keep the title of the land. You’re paying a right to use charge indefinitely for putting up towers in their land. And they continue to if they’re an agriculture, they continue to um farm and and what’s a in your dashboard that you look at, what’s a interesting or challenging transmission project that you’re working on right now? So the most interesting project we’re working on is a project called Kawa which is a um so as you know the largest renewable uh plant in the country and one of the largest in the world is coming up in Kutch uh where eventually you’ll have 30 gawatt of solar plus wind and battery. So the the one of the big transmission systems which will go come from Gujarat all the way into Mumbai and eventually into Pune. We’re building about a fourth of that. All right. That’s one out of the actually it’s more like a third of that. Yeah. Okay. So this project starts um somewhere near Surat and ends somewhere near Mumbai and uh you can imagine right that’s the economically one of the most richest parts of the country that whole whole bed and each piece of land is super valuable. Nobody wants to part with their land and we’re currently in the in the in the very advanced stages about 65% built. We think we will build it on time comp compared to anybody else. More recently, we have uh built a project in the heart of Mumbai. So, Mumbai was running out of power. Mumbai consumes about five about 4,000 megawatts at the moment and it as you know it has only two power plants, one in Tromb, one in Dhanu and then it has one line that comes from Punea. All of this was fully at full capacity and Mumbai wants to be a data center hub. So, how’s it going to do that? Right? So therefore the central government of India came up with a project to connect a place called Parad which has a lot of power and bring it all the way to Na’vi Mumbai. So again 70 km right through the heart of Mumbai. Every place that we went through was a real estate opportunity right for the owners of that land convincing them talking to them re and all of this is overhead. All of this is overhead. Okay. But Maharashtra is also doing underground right. Yes. So most whenever you moment you get into a urban hard urban environment so let’s say within the south Bombay city limits or even the general city limits island Mumbai is impossible to build overhead so then they will specify underground cabling so that’s the future of transmission that in in more and more urban and suburban areas you will have to do underground cabling the cost is extremely high it’s a five to seven times higher but you save the land so therefore there is some break even that comes from that from saving the land because land is equally valuable And more importantly the project gets done significantly quicker. So the the uh since we are in Mumbai I mean we’re all sitting in Mumbai. So uh where’s the landing point for this transmission line? The transmission line uh landing point is uh in Bandi. Okay. The first one. The second one is in Kar. Okay. Yeah. And they’re connected. Uh they connect to each other at the top. Okay. And and on the on the sort of supply side it’s going back into Gujarat. So the it’s it’s like a mesh network, right? I mean yes it is it is created for the Gujarat renewable but any power from yeah any power so that was that was my other question which is more like a primer question so there is a grid already there right and we and that’s how we the whole city gets electricity including commercial industrial and all of that now you you’re adding these transmission lines because there is the grid doesn’t the existing grid doesn’t have enough capacity or is it a new source that we want to connect to this grid both okay both the grid does not have enough capacity near the consumption end, near the generation end there is no grid. Okay. Yeah. So both. Okay. Exactly. So uh I mean you talked about this the Gujarat thing and you said that basically you’re working on 1/4 of the this thing. So I’m assuming this is the last fourth. This is the third. Okay. There’s A B C D. We doing C. Okay. Yes. Okay. So now broadly uh and this is something I think you’ve talked about as well. uh we are adding a lot of capacity in terms of renewable generation and quite fast but our transmission is not keeping up. So what we doing something in one year here and our transmission takes 3 to four years and that’s a big gap that even let’s say crystal ratings has pointed out that you know we have a bit of a log jam. So how are we addressing it or how can we better address it as a country and what can companies like yours do in that? Yeah. So it is true there that is that that is correct. If I just want to put this in context however right if I look at the world picture for a second most people from concept to commissioning most parts of the world except China are building transmission in 8 to 10 years we are still building transmission concept to commissioning in three and a half four years end to end including the planning phase and the execution phase yet you’re saying China takes three times as much time no I say excluding China sorry China is into three years yeah yeah China is China so so in the democratic world we are definitely among the best. Yeah, definitely among the best. Now, let’s come to your problem. Your problem is real. A lot of renewable capacity has come up and they’re waiting for transmission and that is quite scary because in the first year of a renewable project, if you don’t generate revenues, you you can wipe out the returns forever. That first year revenue is critical success, right? And a lot of foreign money is in in those projects. A large amount of pension capital, sovereign capital, global funds. So you really it’s very important that they make money because India’s credibility depends on that and these are people who’ve got an option to invest in the US, UK, Latam, Australia, everywhere. So if they have to invest in India, they have to make money and India needs this capital right. So now coming to the what can be done better. I think first things first um we planned you know when when we planned transmission in the country we awarded them on a very tight schedule on a 24-month schedule and then we went and promised the renewable guys that in 24 months the line will come whereas that was not possible at all from day one. It takes 30 to 36 months to build that. So if we had done that right, told them 36 months and then they had accordingly planned their capacity to come matching with the 36 months, there’s a far better chance that we wouldn’t have this mismatch today. This has now been fixed. So now future projects are all being planned according to 36 months. Now the actual execution of it, the core challenge, it comes down to um right of way and land and the the what really needs to happen, right? There are no there are no billion there are no big fixes here there are bunch of 20 small things you have to do better so rightway in land is a state subject whereas the most of the big transmission projects are awarded by the center so the center state coordination where where it is good for example in Maharashtra it’s excellent or Rajasthan where you are or Rajasthan is pretty good as well those states are doing quite well the center and the state sit together every month they review every project they call the bureaucrats into that meeting virtually they make sure that the right focuses on those projects projects in other states where the coordination isn’t as good as it is not about necessarily the the party being the same even where the party is the same is not necessarily as good right so it’s about the center and the state coming together so I think the state capacity to you know respond and move faster yeah exactly right that’s the big one I think the second one really if you ask me is very interesting uh till in in the my 15 years of of of career in this sector for 14 years the biggest challenge was right of way last year right of way stopped being as much of a challenge challenge because the government did a very good job in increasing the guidelines the amount you pay to to the farmers. So it’s become now quite lucrative for the land owners to to to give their land for the transmission lines. Just a side question what would a farmer let’s say on in Rajasthan or Maharashtra on a median get for leasing out his or so they will get anywhere roughly if I put average 50% of the market value of that land per it’s a oneshot payment. Okay. Right. M while they get to keep the land. So it’s it’s free money. You’re getting to keep the land and you’re getting India is a land of I mean country of small holdings. So if it’s quite likely that most farmers will just have one tower. Yeah. One yeah one or two acres let’s say they’ll have correct. Yeah. So one tower in there this thing. Correct. So they would earn what so depending on the where you are right. So let’s say if you are around Bandi or let’s say in the Surat Bandi belt probably the land value is between 30 to 80 lakhs an acre. So half of that okay is is what they’ll end up between half and a quarter of that is what one farmer gets. Then there is it’s not about just it’s not just who has a tower on the land is also under the corridor they get payment. So if a wire is going over your land and no towers you also get paid. So everybody in the line corridor gets paid. It’s slightly smaller for if it’s a wire and it’s more if it’s a and you have towers every uh 400 m think of it as roughly between 1 and two one and 2 and a half crores per kilometer depending exactly where you are. So if it’s Rajasthan where land value is low think of it as about a cr a kilometer and if it’s like southern Gujarat anywhere in Maharashtra Karnataka Bangalore think of it as 2 and a half 3 crores a kilometer so yeah and let’s say it’s a 500 km uh link so therefore you’re paying 500 cr up front for all your right away and all that just as an approximate correct yes so that’s part of your capex in any case yes so uh I interrupted you on the so what has changed suddenly is that the because the the whole country the amount it’s spending on infrastructure is at epic proportions is not just all-time highs it’s probably 30 40 50% above alltime highs between roads and airports and transmission right there’s an acute labor shortage in the country both on the of course more on the skilled side but also on the unskilled side so today our single biggest challenge in buildout is able to get the right labor and to keep them at sight and this has been exaggerated by the fact that the sector sector didn’t innovate fast enough right because the sector till about 2010 all those privatizes started in 2010 but till about 2020 bulk of the business was still in the hands of government agencies and again for whatever reasons they didn’t sort of innovate fast enough so you’ve got the labor intensity the amount of labor we need to do 1 kilometer of line in India is two times of Thailand and and Latam and it is four to five times of Europe is the amount of labor mandates that we use because of they’re not scaled because the productivity is less and just because we’re used to using this and we’re not using enough mechanization and equipment right and then the safety issues are on top of that because of the work at high but where would why would the skilled folks go away I mean are they migrating to other industries or several things a they’ve got just many more options then you’ve got Mandrea and then you’ve got the fact that why should I climb a tower right it’s just painful work as opposed to just working on a horizontal project or working on a building okay so it’s it’s that but it’s uh to be the the real solution here is mechanization the speed at which we have to build uh you have to reduce the labor intensity because even if you have all the labor they are going to go home for Diwali for chad for for holi so it’s it causes a lot of disturbance at site right and then summer right impossible so we’ve aggressively gone on the mechanization route we’ve been working on importing any and every technology currently all our installation of the wires are done using drones or automated drones where the drone talks to the tensioning machine and sort of autonomously does this work, right? It’s dramatically improved. And you’re also going faster. I’m assuming we’re going faster and that’s why we did it. But it’s very interesting the side effect is happening. Like if we had imagineh you asked this question, right? So imagine there’s a 4 km stretch with let’s say 12 towers on it. In the traditional way, we would go talk to each after putting up the towers, we talk to each farmer that hey listen, I now need to pull a conductor. So, I’m going to destroy this patch of your crop and I’ll pay you for it, but I’m going to have to destroy it. Now, crops are a very sensitive topic for farmers. And if now in the new way, we don’t even talk to them. We pay them, but we just fly on the top. And the the delight, you have to go there to believe it, right? If you’re not destroying their crop, they will be your best friend. They will help you with that project. They’ll make sure the project happens on time because you’re the one not destroying the crop. Everybody else is destroying the crop in between. It’s a very deep emotional connection. So these small small things matter a lot right at the field how what you are doing to keep the local stakeholders happy it makes a huge difference in this business right and I’m going to come to the the the part about electrostate in a bit uh but you know earlier you talked about the symphony of using you know so working with multiple providers uh bringing it all together using technology so uh obviously you’re a uh hardware traditional hardware company in in in the electricity business but you’re also a digital company because you have to do all of this but today as you look ahead uh if I if I were to ask you to put a percentage how much of Sterite looking ahead is digital and how much of it is let’s say pure traditional hardware how how would you define it it’s a great question uh let me give you a stat right if you think of the last 50 years of investments in energy or power um only 1% of that capex went into digital and software ware the forecast is in the next 20 to 50 years 10% of incremental capex will go into digital and software because what are we doing we just building building building hardware and we’re not investing in optimizing the usage for example there’s a lot of people who say that our own transmission capacity so today you hear a lot about curtailment right because of the transmission not coming up on time but has anyone asked this question that the same transmission line which you are curtailing actually has 20% more unus use capacity which can be used in certain hours of the day depending on the temperature and the humidity around that. Now if you had sensors and a proper digital system then you would be unlocking 20% capacity for free and imagine the impact on the economy and imagine on this 270 gawatt what you could be doing. So this is what digital type one example of what digital brings. No. So I’m particularly very very excited about the world of digital in uh electricity and energy. It is the most underpenetrated. Agri energy are the most underpenetrated uh sectors in terms of digital technologies. We are doing a few things. I mentioned to you Sarah which is our AI platform that does optimization of generation matching it with customer demand storage and weather and ex because you also have this trading opportunity. So five different data sources coming together and hardware and then optimizing on the go. So we we built that it’s something that’s going really well. Uh recently in our cables business we announced something called Ster Lumic which is a cable sensing technology. We partnered with a company in Spain called RDT which has spent 10 years in building these incredible high-end sensing technologies where using fiber optics you’re able to measure uh current and the qual and the uh asset health of cabling systems. I’ll give you a quick example, right? I live in Worley in South Mumbai and uh we’ve hardly ever experienced power outages in the last 30 years I’ve been. In the last year, I’ve had three power outages, which is the highest it’s ever been. Why? Because all of us are consuming more electricity. The cable is old. The cable is not able to keep up. Right now, when that power outage happens, there is no way to know where it has happened. Where where the cable fault has happened. Let’s say it’s a kilometer long cable. We don’t know where the cable fault has happened. And they use the really traditional methods with a man going with a sensor and it takes 8 hours to fix it. Right? With this new technology, you will have fiber optics in the cable and you’ll know at the millimeter level not only where it has happened, but you’ll know a few hours before it’s about to happen because it’s heated up or Exactly. because it’s sending signals from there. So you can go in there, you can fix it before it happens. And this is a problem in every city and every industrial establishment in the world. They have cables that have no sensing. They don’t know what’s going to happen next and it’s going to disrupt the so the retrofit opportunity is I’m assuming large exactly but how much of it can we do and will we do let’s say even if you were to take big cities like Mumbai and Delhi in so we’ve just launched this about 2 3 months ago and all I can tell you is that we had modest plans for the first year but in the first week we have already booked enough orders to fill our first year so that’s the kind of uptake we’re seeing the reason is simple you’re solving a problem which is a deep chronic problem for the customer. It’s a very deep desperate situation that hey I don’t know when my cable will fail right we spoke to a large industrial steel conglomerate one of the largest in the countries one of their factories is an old factory uh they lose between 30 and 100 crores a year just because a random cable fails in their in their plant so again classic and this is within the plant yes it’s within the plant so that’s another use case you’ve got within the within premises you’ve got the the distribution end you’ve got the transmission end and then you’ve got within the generating plant for example solar fields uh the the one we spoke in in Gujarat in K is about 1 lakh acres is imagine the amount of uh trans cabling in there and the amount of sensing you you could you could use over there right and many of the since you mentioned cables so a lot of cables are obviously old and maybe decades old so is that fine or is that do they need to be replaced I mean one is to retrofit correct or overfitit what you’re saying which is sensors and fiber and so on but apart from that uh are they okay for now or as a I you know um if you think of the whole TND infrastructure yes of course the cables and conductors have a finite life but they have a very long life they have a very long life some say 50 years some say 80 years and depends on the maintenance the parts of the grid where we see more wear and tear and therefore needing repairs is the transformer end. So today while the technical losses in transmission are very small maybe 3 4%. technical losses in distribution continue to be double digit because of this poor infrastructure more on the transformer end and then will be insulators and cables and and uh and and conductors right and you mentioned transformers which brings me to the sort of almost mandatory data center stroke AI question big investments are going on there and some of course in let’s say Andra but Maharashtra is the data center capital Mumbai is the data center capital so what does that mean for you in terms of demand and because I keep reading that transformer companies suddenly are shooting stocks are shooting through the roof on Wall Street. Yes. So, first let’s take the big opportunities. So, data center is the AI data center specifically is the killer app so to speak for electricity at the moment. and um you’ve got probably a very large amount of capacity that is in the US and wants to stay in the US but US has a unique challenge that because they don’t have a national grid they actually can’t deliver a huge amounts of capacity in a short period of time. So what I’ve understood is that India has a very unique window which ends somewhere in 28 or early 29 where it is probably one of the only countries in the world that can provide gigawatt of power at a low cost at a high speed and that to green and it can do that in a very short time. So today if somebody came to me as a data center company and said that can you do me a gigawatt of roundthe-clock renewable power I can say yes in 12 to 24 months in a location you know 2 hours from Mumbai I can give you that capacity and I can give you the land. So India is in an extremely sweet spot. Of course um a lot of the end hyperscalers and the customers who use data centers need to be comfortable with the geography. We have the large announcement for Google and Wisag and I really hope that you know three or four of these follow very soon. What this means for us first again Centica is the customerf facing end of our business. They are currently talking to every major data center company and hyperscaler to say that we will give you an end-to-end solution in India with land a renewable PPA a transmission connection into the national grid because remember we’re the large second largest transmission company in the country and the fiber connection into the landing station. So we’ll do the entire infrastructure for you and then you come plug and play build your data center and of course we’ll help you manage that. Right? So the speed to power is the big ad advantage India has today and this is because of the amazing policies over the last 10 years both on the grid infrastructure and on the renewable side right and both and and of course there is a shortage of chips which will go inside the data centers but are you saying that everything else outside of it particularly to do with what you supply or other allied industry supply we’re okay in terms of availability yes everything is relative so I’m now I have to compete with the US or I have to compete with the Malaysia or a Middle East, right? Middle East, we can imagine why it’s not a place right now for anybody to go to. So, relative to these geographies, speed of power, cost of power, we’re doing extremely well. Yes, ships we have, we don’t have. So, most of the data centers have their partnerships with the GPU companies and they come together, right? So, that’s that that’s for them to handle. Okay. So as as you look ahead uh you know you did touch upon Brazil where you have $2 billion of assets and I understand that you may be uh leaving that asset and that country but tell us about how you’re looking ahead. I mean where are the biggest opportunities? Uh where does the electrostate fit into that and what is the company looking like and what’s the financing side of things also? Sure. Perfect. So coming back to the electrostate idea I think yes this is a wakeup call for India to really electrify its economy. If India takes this journey of 250 gawatt to 1,800 gawatt in the next um uh 20 20 25 years then you’re talking about an incredible expenditure in generation assets. I do believe that with so something unique happened in October of 25 in October 25 Chinese battery prices reached an inflection point which is supposed to reach in 30 or 32. It reached in October 25 and at that China battery price when you combine it as wind and solar you can now deliver a roundthe-clock renewable power solution in India at a price which is cheaper than a new thermal power plant right despite the despite falling coal and on top of that you add the idea that coal will be an inflationary asset and renewables is a flat or a deflationary asset so just 6 months ago renewables became the cheapest source of power in India period anywhere in India not in pockets of India but anywhere in India because of the grid but but you’re also saying I mean because a lot of people ask this question so you’re saying that current battery technology at the affordable cost or at an affordable cost can power let’s say a small city all through the night without any fresh generation no current battery technology combined with renewable power so renewable power is let’s say is is uh obviously feeding the batteries through the day and and then it’s and and that is enough Yes. Okay. Answer is yes. Okay. But the current battery technology along with the inverter technology, transformer technology along with renewable power can do everything that thermal and gas and nuclear are doing for the last how many ever years. Okay, it’s happening at scale. We will deliver our first 24/7 contract somewhere in this or next calendar year where we will do exactly that. We will serve 24/7 power to a very large uh industrial house uh using batteries and and and solar mostly which means they’re also working two shifts or three shifts. Correct. Okay. 24/7 operations. Okay. Yeah. So as you look ahead. Yes. So as we look ahead this is going to be a huge opportunity right set up gigas scale wind solar battery complexes and then on over the grid deliver uh all of the growth. So if people are adding um uh factory capacity, people are adding data center capacity, call center capacity, uh or just resident homes are adding ACs, any of the above, that growth will come in consumption, you cater that through renewables. So that’s a mega opportunity and it’s huge. I mean, if I if I give you some uh numbers, right? So today India is a India’s electricity market is a hundred billion dollar annual market 9 lakh crores. that will double in just six years if Indra grows at 67%. So an extra hundred billion dollars of annual revenue which by the way is in the form of 25 year PPS. So if you think about the EV of that enterprise value right that’s it’s it’s a very very large number right it’s about a trillion dollars in value and if say if you say conservatively that half of that will be renewable which I think will be more than that but let’s say half will be renewable the rest will be nuclear etc that is $500 billion of enterprise value that renewable players will get to enjoy and one/ird of that will be equity right so our focus is to do complex aroundthe-clock projects where we believe competition will be lower, customer delight will be higher, innovation will be more critical to success, not just about putting assets on the ground but managing them smartly. And we want to make at scale the highest IRS that anybody makes in India on on in the renewable sector. We believe we already doing that in our current portfolio. The highest IRS in India and we want to continue that at scale. So that’s in Centica. The grid requirement is going to be mega today. In the next 10 years, India has already announced a 9 lakh cr plan which is a hundred billion plan. I believe this will get revised upwards as which is amazing because it’s already the largest plan in the world. They’ll get revised upwards and therefore people like us who are able to deliver complex long-d distanceance transmission on time will be able to name a price command a premium and people don’t mind that because remember transmission is out of a 5 rupee bill per unit transmission is 40 pesa it doesn’t matter 40 becomes 43 or 44 what matters is the grid coming on time because then you can buy cheap power you can move it around right so that’s is going to grow we are last year we won about 10,000 cr of projects. Next year we hope to win between 15 and 30,000 crores. You mentioned the future in transmission. One will be a lot more HVDC. So that’s the DC technology of longd distance transmission. Each project is about $4 billion in that. So that’s definitely something that we look to get into a lot more underground. You asked about that as well. a lot more projects and the the high voltage DC or direct current will run alongside AC and yes or will it power different things or no it’ll run it it’ll be so imagine that if you go back to the Rajasthan example right in the western most parts of Rajasthan on the border you’ve got the most amount of uninhabited uninhabited land for solar now Rajasthan can’t consume that power it has to go to it is the largest producer in any case in this country today yeah so lot of longdistance lines that are needed to take it to MP, Maharashtra, Punjab etc or even out. So those lines will be DC. Then from there the downstream lines could still be AC but these mega lines of 6 GW each because DC you can travel longer and lose less in transmission. Exactly. Okay. Exact. And there’s a third importance of DC. Right. So a lot of the curtailment that you’re currently seeing is not because the transmission is not there. Yes. transmission is is is is uh missing in some cases but the transmission is there but they’re not able to absorb what we call inverter based power. So solar is inverter-based power and the AC system is designed for absorbing rotating mass power like thermal and gas. So we have a very serious upgradation needed of what they call act FACTS which is flexible AC system management system things like stratcoms and synchronons which needs to be installed in the grid so the grid can actually absorb renewable power this is one area where we are slightly behind and then finally the grid management right the grid management the way the grid operators work uh they also need to be equipped to be to allow more injection of renewable power currently you know They work in a fairly conservative manner and and fair enough that’s their job to protect the security of the grid but they have to be able to have more software and more tools to allow more injection uh without taking any risk right so this involves more AI and the way grid is managed and lastly a lot more battery storage at the grid level today we’re seeing a lot of battery storage at the generation level so people are combining right but if I use an example of food when you have food grains Food grains are stored at the producers end then they are picked up by the large food distribution national companies of India and they are stored in large warehouses along the national highway so that they can be distributed where where required. So equally the national highway in power is the national grid and therefore the battery is like the food storage you want to store it in the national grid so that can quickly go to any part of the country rather than getting curtailed in that part of the country. So a lot more storage needs to come along with the grid buildout and that’s what’s currently being discussed in in Delhi and we hope that will come as well. So these are the big changes and the future of transmission and and you’re sort of going to be more India focused and therefore I think you went abroad but you don’t see yes um again because uh the for you for a private company to be a transmission player the country needs to first adopt the competitive bidding model and the B model. So like I said, India is very ahead in this. UK is now experimenting with it. Australia is now experimenting with it. So till the regulatory system stabilizes in those countries, right? We will rather remain focused. So we see for the next 10 years huge opportunity in India or just on transmission and having and let’s face it it is a it is a slightly localized business because I told you in the beginning of the of the of our chat that the hyper local stakeholder management understanding what that community in Nagaland cares for and what that community in Kutch cares for and therefore respecting them and respecting their their needs is what makes us successful. So do can we do this in northern England and can we do this in Western Australia eventually? Yes. Yeah. We have to build from there. Right. Okay. Last question which maybe gives a sense of uh how things are unveiled. I mean things are going to sort of move forward. Let’s say you are going to hire 100 engineers. Yes. Uh for next year or or for the near future what would their qualifications be or who would you be looking for? Can I take a step back? I didn’t answer one of your questions about the investors. So I really want to talk about this because uh I mentioned again in the beginning about how infra companies disappear and uh one of the things that I think we did early and I got a lot of support from my family for this is made sure that the businesses are equity funded all the time and we don’t make the mistake of taking debt in the asset debt of the whole core and then it’s a house of cards right so we’ve been very fortunate over time to build credibility in the sector today in transmission the government of Singapore is a very large owner in our company is probably the largest investor in India period across asset clusters between equities debt and infra and real estate they’re the largest investor in India they really understand India so they have a very serious and I’m sure they’ll look for an exit at some point you know uh our other investors are more funds and therefore they need an exit in 5 to 7 years this being a sovereign don’t have a defined exit and that makes it very nice because they know they have the long-term orientation like we have and they’re really looking at a 5 10 year 15 year window right in this business so that is GIC in Razonia in Serentica. KKR is our partner. This is our fourth deal with KKR. So again, a good track record of doing they’ve given us close to 650 now approaching $750 million single check in that business. uh so I think this building institutional credibility right uh is one of the most critical things being successful in energy and infrastructure because I don’t think any promoter no matter how large you are can fuel their own growth ambitions with their own equity so then you’re going to either do debt or you’re going to try for an IPO or you’re going to you know or you need this which is institutional capital so I think this has worked really well and then in our cables business we have a small investors a company called GF you you know that that is there with us. Of course, at some point we will look at invit again. We’ll look at a listing at some point but by and large I think um it’s been a good run in and you’re saying that you will or you will avoid as far as possible taking any debt holding holding holding company in the holding company. Yes. Okay. And maybe but that is almost counter to what everyone else is doing even today. Yeah. Are you saying others are also now more I would say compared to the 2010 to 20 era where there was a lot more hold debt. I think lenders anyway have become a lot more conservative there but yes you’re right promoters have there are enough at least half of the companies do have old core debt and I think it’s a philosophical call right people will in good times lend you money wherever you want and it’s for you to say no so yes I think remaining uh uh uh remaining well equitized and that comes with the tradeoff of diluting uh and you have to live with that I think that that’s fine as rather own 40% of a company that eventually becomes you know 1020 billion dollars and survives rather than 100% of a company that remains small and and and may die right so so now I’ll come to your next question you said 100 engineers whatever 10 engineers but what’s the this is get a sense on what the company looking like so there are different skill sets that are needed for success here I think um on the field you definitely want people who understand project management agement uh and engineering to an extent but we have had some very interesting insights. Um the people who have been most successful are the ones who are more social and arts in their thinking because like I said building a line or frankly even building a renewable asset is not rocket science. It’s not a nuclear plant. It’s not you know it’s not SpaceX. It’s it’s it’s all right. Uh your contractor will do most of the work for you. the managing the local ecosystem, making sure your construction never stops, making sure the locals are happy with you, right from the village to the district to the state capital to the center. So therefore, now more and more we’re looking for people who’ve got those kinds of capabilities. We’re hiring history graduates. We’re training people. We have a stakeholder management academy in the company and we have a Warton professor who teaches stakeholder managing to large mining companies in the world. He comes for 2 days a year. Was he your teacher as well? He was my teacher. He was my teacher at Wharton. Yes, I stayed in touch with him. He comes for two days in the year. He does case studies, simulations, workshops and we have every year we have a manual called the stakeholder management playbook. It’s a 100page document on how it used to be done. Every year we update that and most and most of the awards and rewards in our in our company go to people who have excelled at this, you know, who really sort of and and remember it’s not a lot of people approach this with a fixing mindset. Fixing doesn’t work. A it’s illegal but more importantly doesn’t work. It only works when you really get in there and you know you empathize with them and in a structured way you manage the local stakeholders. So there’s one answer to your question. Um the business is becoming more tech from a construction standpoint. We’re looking for more people who understand technology, robotics, AI more at the head office than in the field and to really embrace the best technologies. Many of them are not designed for our sector. So how can I bring in tech from other sectors implemented in our sector right and then commercial skills will remain very critical. So my CEOs are typically commercial people and not project people and they are the ones who can understand returns and who can make trade-offs. You know every day you have decisions to make. Hey I need to spend 2 crores more on this project. Should I spend it? Should I not? And he needs to know that yes that you know if I can save 3 weeks I should probably spend it. Right? So those commercial decisions uh become more paramount uh at this scale. Right. Last question. So uh when you go out and I’m sure you do to inspect, what what’s the one or two things that you look for to know that the project is on track, people are happy including your on ground uh let’s say partners for lack of any other term. Uh great question. Fantastic. So first let’s start with the partners. The first thing the sign that the project is doing well is when the client and the partner in a meeting are speaking like one team. If the client and the partner and the blame game, that project will not go. As simple as that. No matter how how much of a trouble that project is in, as long as they’re maintaining team spirit between the contractor and the the developer, there’s a decent chance we’ll be okay. The next I look for exactly that within my team. So I look for the team being very well bonded, having collaboration amongst each other, not operating in silos. Third, I look for the focus of the project manager on stakeholder management. Is he really aware? Does he know the names of every um serpunch by first name? Right? And does he have them on WhatsApp? Is he able to communicate with them? Right? As well as a district collector, right? And then I look for innovation that is this person looking to do things differently? Whatever his arm round challenges are, is he finding innovative ways of of of doing that? Those four. Yeah. Pratik, it’s been wonderful speaking to you. Thank you so much for dropping by. Thank you so much, Gohan. Thank you. A pleasure. Thanks.