Heat, steam & perception: Inside Triveni Turbine's audacious global gambit
Heat, steam & perception: Inside Triveni Turbine's audacious global gambit
Triveni Turbine has posted its best fiscal performance in over a decade. With contribution from foreign markets growing at a faster clip, can India's biggest steam turbine maker engineer a playbook for a dominant global play?
Rajiv is based out of Delhi-NCR and writes stories on startups, corporates, entrepreneurs of all kinds, and yes, marketing and advertising world. His ‘historic feats’ include graduation in history from Hansraj College, master's in medieval Indian history from Delhi University, and PG diploma in journalism from Bharatiya Vidya Bhavan. Another forgettable achievement was spending over a decade at The Economic Times as his maiden job. For the first seven years, he learnt the craft on the desk, and the remaining years were spent unlearning and writing for Brand Equity and ET Magazine. What keeps him going, and alive, apart from stories is the heavenly music of immortal legend RD Burman.
Nikhil Sawhney, MD and vice chairman of Triveni Turbines
Image: Madhu Kapparath
Noida, Uttar Pradesh May 2023. “The only thing constant for us is the heat,” says Nikhil Sawhney. It’s May. The scorching summer in Delhi-NCR had forced commuters to stay off the road, and the brave ones stepping out in the blazing sun find themselves running out of steam. Sawhney, somehow, is ice-cool, even as he is in the business of heat. The MD and vice chairman of Triveni Turbines, India’s biggest industrial steam turbine maker, says he cannot take his feet off the fire pedal because they have to be ahead of competition. “The heart and soul of the steam turbine is the fluid dynamics,” maintains Sawhney, as he starts explaining the nuances of the steam turbine.
Five minutes into the conversation, the strong central air conditioning of our meeting room on the eighth floor of the Express Trade Towers starts to freeze the cabin. “Do you want me to turn off the AC,” asks Sawhney, a suave Cambridge graduate who joined the family business of sugar in 1999, went on to study MBA from Wharton in 2002, and came back to India to be inducted into the turbine division of Triveni Engineering in 2004.
The AC is put to sleep, and the second-generation entrepreneur gets back to what he does best: Talk about heat, steam and turbines. “We set unrealistic benchmarks of where we think our competition is or could be,” Sawhney says, explaining how the DNA of ‘taking the heat’ got ingrained in the company, which got demerged from the parent entity in 2010, formed a joint venture in the same year with GE Oil & Gas to design, manufacture, supply, sell and service steam turbines in 30-100 MW in domestic and global markets. “We do this (benchmarking) so that we can constantly be ahead of others,” he adds.
Back in the 2000s, Sawhney got to see another side of steam: Burn. For steam turbine makers, India has been a low-cost and not a lucrative market. Global markets are where manufacturers make more money, and it’s in the foreign markets where quality, credibility and, most importantly, perception matters. India players, unfortunately, were singed by poor brand perception, and it had nothing to do with quality. It’s not that Triveni never had technical collaborations. Back in 1968, the first steam turbine was delivered in partnership with the UK's Peter Brotherhood. The arrangement continued till late 90s, and then Triveni decided to carve out an independent path. “We decided to invest in ourselves, in R&D and engineering,” recalls Sawhney. “We needed to back ourselves,” he adds.
What also acted as an impediment was a sense of insecurity, Sawhney explains. “We didn't know enough about our global competition,” he says. Back in the early 2000s, though India had taken rapid strides in gas turbines, when it came to steam turbine, the country still lacked enough steam. Sawhney also spent a few years in trying to find out a right set of foreign partners. Extensive recce was done in China for two years, then months were spent talking with European and Brazilian manufacturers but nothing materialised. Meanwhile, on the front of winning contracts on the global front, the problem of perception and apprehensions around working with an Indian player persisted. Finally, the joint venture (JV) with General Electric (GE) happened in 2010.
What helped Triveni in its ‘self-reliant’ fight was an abundant engineering skill available in India. “We have very cost-effective talent,” says Sawhney, though he is quick to add that for Indian companies it was never a question of arbitraging the labour cost on a shop floor. “We did value addition with the engineering talent, which made us highly cost competitive,” he reckons. What also happened simultaneously was that Triveni started exploring tech alliances across the globe and in 2002-03, identified a bunch of design houses in the US, which worked with the Department of Defense and the aerospace industry. The mandate was to design a new family of blades.
The results started showing. By FY12, revenue climbed to Rs632 crore, JV with GE started gathering pace and exports was set to pick up from around a low 5 percent in 2010, and more importantly, Triveni had become the biggest player in India in the market below 30 MW. In spite of shrinking of the domestic market by over 40 percent in twelve months leading to FY12, the company kept growing, expanded its geographic reach and moved from Southeast Asia to UK and Turkey.
Over the next decade, Triveni gained heft. By FY20, revenue touched Rs817.9 crore, and international share stood at Rs392.2 crore. There were other encouraging growth metrics: The company manufactured 87 turbines, order book ballooned to Rs793.5 crore, and PAT (profit after tax) swelled to Rs121.8 crore. The growth blades of Triveni Turbine were rotating at a brisk pace. But little did the company know that it was about to be hit by two pandemics. First was natural: Covid. The second was man-made: The joint venture with GE ended after a bitter legal tussle. Sawhney faced tremendous heat, once again.
The deteriorating global landscape made things messier. Between 2012 and 2022, the global steam turbine market tumbled from 115 MW to 74 MW. What this meant was a steady 4 percent decline per annum. During the same time, the domestic market below 100 MW—this is where Triveni Turbine operates—stayed flat. The onset of the pandemic, end of over a decade-old JV, shrinking of global market and a muted growth in the domestic market were set to make business tough for the homegrown company.
What happened next was what Sawhney keeps harping about: Change in fluid dynamics. Triveni Turbine’s aftermarket—sales of parts and services, and refurbishment for third-party turbine users—emerged as an unlikely yet strong tailwind. While the share of revenue from after-market sales stood at 26.2 percent in Q4 of FY22, it jumped to a staggering 40 percent in Q4 of FY23. Overall, the share of exports to the revenue pie too mirrored the same trend. It increased from 25.8 percent to 51.8 percent during the same period.
Interestingly, production of turbines too gathered steam: from 116 in FY22 to 190 in FY23. The number looks dramatic if one goes back to FY18 when Triveni just had 96 turbines to show (see box). In terms of global footprint, the company has a total installed base in over 75-plus countries, has sold turbines in over 80-plus nations, and now has taken its unique Intellectual Property Rights (IPRs) to 338.
Industry watchers reckon that Triveni Turbine is well-placed to expand its domestic and global play over the next few years. The company, points out Prabhudas Lilladher in its recent report, is set to benefit from strong inquiry pipeline in domestic and exports market, robust market share of around 50 percent in India, and a sharp focus on aftermarket segment with strategy to penetrate into newer geographies for third-party turbine refurbishment.
“While its overall global market share stands at 12-13 percent, the markets where it operates it has cornered 22-24 percent,” the report underlines. While exports growth was driven by small and large power ranges of turbines from regions such as Europe, Africa, Central, South and North America, they will remain core focus and form a significant part of long-term growth. “Export is expected to contribute over 50 percent of total revenue in medium to long term,” the report adds.
A strong domestic footing, reckon a bunch of analysts, is helping the company expand its global presence. “When the home country becomes your buffer, then one can take bold global bets,” says Achin Goel, head of research at Bonanza Portfolio. The global and Indian renewable energy opportunity is also set to benefit the biggest player in the country. The turbine industry, Goel points out, is moving at a fast pace towards use of renewable sources. Globally, a strong uptick is visible in gross fixed capital formation in industries such as steel, cement, and chemical waste heat recovery.
The challenge, though, for Triveni Turbine would be to ramp its brand profile. “We need to improve the branding profile of Triveni being a technological leader. We find that missing,” Sawhney confessed in the Q4 and FY23 earnings call in May. The company, he underlined, needs to support sales and marketing efforts on the product side along with branding investments. The entrepreneur also makes a candid assessment of the fronts where the company has been found wanting. Take, for instance, the pace of growth in international markets. “We've been talking about internationalisation of our businesses, but the fact that we haven't been able to internationalise as quickly as we need to is something that I see as one of our mistakes,” he says.
Sawhney, though, prefers to look at the bigger picture. “The reason we are here today is that we backed ourselves. And we need to back ourselves more,” he says. “There is enough steam left in us. It’s still Day 1 for us,” he signs off.