The Hindu Business Line : `Being small has its advantages'

SUCCESSFUL first-generation entrepreneurs engaged in manufacturing activity in Bengal, in the current milieu, are somewhat akin to the famed Bengal tigers - both are dwindling in numbers and are not so easily found.

And for such an entrepreneur to survive in a field like vacuum circuit breakers, competing with big players, such as BHEL, Siemens, Crompton and Alstom, and carve out a market niche on an all-India basis, is remarkable, to say the least.

Electroteknica Switchgears Private Ltd (ESPL), started by two Andrew Yule engineers, Mr Deb Kumar Majumdar and late Mr Sandeep Chakraborty, in 1989, when the multi-division PSU was still making profits, is now clocking a turnover of Rs 13 crore, and has graduated from being a single product manufacturer (11 kV vacuum circuit breaker) to a multi-product outfit (two factories) with a large customer base straddling different industry sectors, including power and coal mining, across the country.

Armed with technology tie-ups with Cetem Spa of Italy for manufacture of 11 kV, 630 A and 25 KA load break switches (1998) and Freitz Driescher, Mooseburj of Germany for 11 kV and 36 kV pole mounted load break switches, ESPL with substantial orders in hand this fiscal, is confident of moving ahead despite being disadvantaged as a small player in a field dominated by giants.

Mr Deb K. Majumdar, Managing Director of ESPL, spoke to Business Line on the twists and turns of his chequered career, and what still keeps his entrepreneurial spirit going. Excerpts:

Why did you leave a lucrative career in Andrew Yule to venture into a new business?

I felt I was stagnating as general manager - operations of AYL's electrical division after an 11-year stint, and was actually goaded by my colleague late Sandeep Chakraborty, to start something of our own. We casually approached West Bengal Finance Corporation for a term loan to launch the circuit breaker project, and when it actually came through, we quit AYL and have not looked back since.

My colleague took care of the design and development, and certification of the vacuum circuit breakers, and I looked after sales, finance and overall policy matters. I am also a qualified cost accountant besides being an engineer.

How did you graduate from single product to multi-products?

Being small in a field dominated by big players, we felt it was not enough to concentrate in just one area of coal-mining. We needed to expand our horizons to stay competitive, and in just three years, we developed through in-house R&D, related products such as vacuum contactors, 11kV CTs, PTs, packaged sub-stations, automatic voltage regulators, flameproof vacuum circuit breakers and transwitch units, which were type-tested at CPERI, Bhopal. Our customer profile has also gradually increased from only mining to power utilities, pumping stations and other industry sectors.

What are your strengths, as a small player in a critical field?

Well, we move much faster compared to the giants, and quick after sales service at the customer's doorstep is our forte. Being small is good at times, as our structures are fairly flat and we move men and materials to the customer end much faster.

And the disadvantages?

Oh, plenty, mainly on the raw materials price front, with regard to basic inputs such as steel, copper and CRGO steel for transformers (cold-rolled grain oriented), which is entirely imported. Copper bar prices have shot up by 150 per cent in the last one-and-half years. We need copper of 99.9 per cent purity in our business. While availability is not a problem, what is crucial is the price and the purity content in the more than Rs 5,000-crore vacuum circuit breakers market.

What is so difficult about transformer core availability?

None of the Indian steel units make this product, as it requires very high precision, and being not so lucrative, is not preferred by many. There is a worldwide scarcity of this critical transformer component, which is manufactured by steel units in Europe, the US, Japan and China.

Though availability is better now, price is still a worrying factor. And in the present market situation, many manufacturers have stopped offering quotations for future requirements. It is imported in rolls forms, cut and annealed at the user end.

What is the key challenge at this stage?

To keep developing new products and continuously update the existing range to remain in the market. The market for power sector electricals, which had remained stagnant during 1999-2003, has now picked up owing to investments in the power sector, especially with the Government deciding to add 70,000 MW of generating capacities within the next 6-7 years.

Our main product is the 12 kV vacuum circuit breaker, and the total all-India market for this product will be approximately 16,000 units a year, valued at around Rs 4,000 crore. In 2004-05, our turnover was around Rs 13 crore, and we are aiming at Rs 15 crore this fiscal.

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