India's Emco Moves Into Power Generation and Manufacture of High-Voltage Switchgears

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Researched by Industrial Info Resources (Sugar Land, Texas)--Riding on its established transformer manufacturing and power transmission and distribution business, Emco Limited (BSE:504008) (Mumbai, Maharashtra) is now set to enter the power generation segment with its first power station in Warora in Chandrapur, Maharashtra. The firm plans to set up power projects in India with an aggregate generation capacity of 4,000 megawatts (MW) in the coming years and is believed to be scouting for suitable locations in the eastern state of Jharkhand for future power generation ventures.

Emco also plans to begin manufacturing high-voltage switchgears. The firm is building capability to set up "smart grids" that use state-of-the-art electronics and telecommunications to develop accountable networks. The solution involves the use of chips based on Global System for Mobile (GSM) communications that are attached to electricity meters. The GSM-based chips provide real-time information about electricity consumption to a remote control room where the distribution company can monitor and control the power supply for end use based on realization of bills. The firm has been supplying similar solutions to a power distribution company in the National Capital Region, which comprises Delhi, Noida, Gurgaon and surrounding regions.

Emco recently signed an agreement with J Power (Tokyo, Japan), a joint-venture firm in the high-voltage electric power segment set up by Hitachi Cable Limited (TYO:5812) (Chiyoda, Tokyo) and Sumitomo Electric Industries Limited (TYO:5802) (Osaka, Osaka). Emco plans to use J Power's solutions to augment the carrying capacity of transmission lines through specially designed conductors to eliminate the need for erecting larger transmission towers. Emco has identified this as an ideal solution for rapidly growing economies like India where the transmission network largely consists of overhead cables. This necessitates the replacement of existing towers with larger ones but scarcity of land in urban areas remains the main hurdle to this approach. The firm plans to use specially designed conductors to increase the carrying capacity of overhead power transmission lines from 200 amperes (AMP) to 700 AMP. Emco recently concluded a pilot project in Ahmedabad for Torrent Power Limited (BSE:532799) (Ahmedabad, Gujarat) at a cost of $2.8 million and estimates the cost of upgrading the entire grid in the city at more than $105 million.

As part of its plans to enter the power generation segment, Emco will initially set up a 270-MW thermal power station in Maharashtra. The project is scheduled to be commissioned within a period of two years. The proposed project will require an investment of $260 million, of which the firm plans to acquire 80% from financial institutions and fund the remaining 20% through internal accruals. Emco is reported to have acquired land, coal supplies and water linkages requisite for the project. The project will be set up as a merchant power plant, and the company is expected to enter into a power purchase agreement with Indian's government soon. Emco is currently in the process of selecting engineering, procurement and construction contractors through international competitive bidding.

Emco was started as a family business in the 1960s by C.D. Gandhi. Then known as Emco Transformers, the firm specialized in the manufacture of small power transformers and registered a turnover of $520,000. In 1987, the firm was bought by the Jain family from Jalgaon, Maharashtra, and expanded its operations to manufacture electricity meters and larger transformers. The firm then ventured into the development of substations and built capabilities in the power transmission and distribution segment through the acquisition of Urja Engineers (Vadodara, Gujarat), a firm specializing in the laying of power transmission lines. In 2007-08, Emco posted a turnover of $230 million with exports accounting for 10% of the turnover. Emco's transformers are sold in more than 30 countries to clients including Bechtel Corporation (San Francisco, California) and mining firm BDO (Oman). Identifying Africa as an emerging market for its products and solutions, Emco recently created a joint venture with Edison Power Electrical Private Limited (Durban, South Africa) to manufacture and market products in the region.

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