~By MADHUMITA MOOKERJI
Triveni Turbines is the world’s largest manufacturer of industrial turbines in the range of 5-30 MW with a 60% market share in India and considerable exposure to the steel and cement industries. For steel plants, it is critical to have a constant and reliable source of power, while it is one of the key cost factors. Triveni’s turbines convert flue gas waste heat to energy, resulting in power as the final output. So far, more than a fleet of 1,500 MW of steam turbines has been installed by Triveni in the steel industry. Arun Mote, Executive Director & CEO at Triveni Turbines, tells Steel360 that the company is now poised to enter the oil and gas segment, through a deeper exploration of the Middle East market along with a strong focus on aftermarket services. Excerpts from a free-wheeling interview:
Q. Please give an overview of the company
A. Triveni Turbines is part of the INR 5,000-crore Triveni Group that originally started with sugar manufacturing in Allahabad, Uttar Pradesh. However, in the 1960s, the company explored opportunities in installing turbines, which are integral to processing sugar, and so the next best option was to diversify into making its own turbines. At that juncture, the turbines business was part of Triveni Engineering & Industries Ltd, which continued to evolve and, in the late 1990s, it made an entry into power turbines, which catapulted the group’s turnover.
Parent Triveni Engineering & Industries Ltd and Triveni Turbines Ltd are both listed entities. In 2010, the turbine business was demerged from the parent and renamed Triveni Turbines Ltd and listed on the National and Bombay stock exchanges. Triveni Turbines’ turnover is around INR 1,000 crore, including the joint venture with GE Triveni Limited (GETL), while Triveni’s turnover alone touched INR 800+ crore in financial year 2019-20 (FY20).
Q. What roles do turbines play in power generation?
A. A turbine is a mechanism which drives an equipment or machine etc and has two applications. One, when it drives a generator, it is a power turbine and two, it is called a drive turbine in the case of fans or compressors or any other electrical equipment. A power turbine is a constant speed generator where the output is power, while the drive turbine does not have a constant speed, for instance, a fan or a compressor.
We, at Triveni Turbines, make both types, with power turbines’ share at around 90% and revenue contribution is almost in the same ratio.
Q. It seems steam turbines are a speciality in Triveni’s portfolio?
A. The company’s product portfolio comprises a large range of backpressure, condensing and API-compliant steam turbines that are easily customised to suit sector-specific and customer-specific requirements. The machines are equipped with a choice of impulse and reaction technologies, and can work across a wide range of pressure and flow applications.
We are the only steam turbine manufacturing company in the world to have machining, dynamic balancing (low speed and full speed with vacuum tunnel) and also steam testing facilities in-house.
We are an exemplary case on how innovation can help an Indian company to turn itself around from a leading domestic manufacturer to becoming a global supplier of steam turbines with more than 1 billion operating hours of turbine fleet in over 70 countries and installations of over 4,000 steam turbines with a total power generation capacity of 13GW across 20 industries.
Q. The company caters to several industries, including steel and metals. What is its exposure to this segment?
A. In steel plants, when iron ore, scrap or any other raw material is heated, it melts on absorbing this energy. Flue gases are generated in the process, which need to be released. There are two ways to do so. One is to release these gases into the atmosphere. Second is to capture these through a heat exchanger. When flue gases pass through pipes and other areas, they transfer their heat to water which generates steam through energy recuperators. The waste heat from the flue gases gets converted into a high pressure steam, which drives the turbine rotor and in turn gets connected to the generator, to produce power. Here, the energy is nothing but power and we get practically free power from the waste heat.
Steel is one of the industries that uses waste heat.
Recently, we introduced the same concept in cement plants too. So, this waste heat is mainly for power generation – to give the plants the scope of an additional income by producing power through waste heat recovery which otherwise would have been emitted into the atmosphere. This can be used as captive power or connected to the grid, depending on the customer’s choice.
Thus, steel producers ranging from electric arc to induction to blast furnaces, or even rolling mills require steam turbines. Sponge iron plants, scrap generators or an entity linked with metal manufacturing, generate waste heat too, which can be converted into electrical energy using a steam turbine.
Triveni Turbines has been offering captive and waste heat recovery (WHR) power generation solutions to the steel industry for over three decades. More than 150 steam turbines have been installed by Triveni Turbines majorly in India, followed by Turkey, South Korea and Pakistan, that have enabled our customers in the sponge iron and steel industry (both ferrous and non-ferrous) to operate efficiently both in terms of capex and opex.
With flexibility in operation, proven designs and high availability, the company’s turbines can generate maximum power with minimal wastage in the range of 3MW-30 MW.
Q. What is the share of your sales to the steel industry?
A. The share of the steam turbine market for the steel industry is around 15% of the overall steam turbine market in India, of which our market share is around 30%-40%. Apart from this, we cater to several other industries that produce steam ranging from textiles, paper, pharma, cement and chemicals to food etc.
Q. Where are your plants located and what is their manufacturing capacity?
A. We have two plants. One of these, set up in 1974, is located within Bengaluru city. The second one, located 40 km away, had been set up five years back. The combined manufacturing capacity at these plants is about 250 steam turbines per annum. The facilities are primarily used in manufacturing high precision components and the same are assembled and tested before shipping. We follow lean manufacturing and the facilities are IoT-enabled with high levels of automation. Because of all these aspects, the fixed overheads of these facilities are significantly low and they are currently operating at 50-60% capacity.
Q. What kind of an impact did Covid have on your business?
A. Globally, the industry de-grew by about 30% and in India by around 20% but for Triveni Turbines, the degrowth has been 10-15%. We expect to achieve pre-Covid-level growth in the next financial year.
Q. Tell us about Triveni Turbines’ future plans
A. Our total business is divided 50:50 between global and India.
At present, we address markets in over 70 countries – we have installations in as many countries. But, we are now expanding by tapping new market opportunities in at least 5-6 geographies, which would be added to our overall global installations in the coming years.
We are present in Central and South America, Europe, Africa, Middle East, SAARC, Turkey, South East Asia, Australia, South Korea except China, where we sold negligible numbers.
The new markets we plan to explore will depend on where the enquiries and opportunities are emerging from. In FY22, we are looking to further explore Middle East, and there is a reason for it. We are looking to enter the oil and gas segment, a new field for us, where the turbines are typically ‘drive’ and below 3 MW. Our share will increase 10% through this development.
Importantly, this segment offers a better after-market too. Also, the margins in turbines in the oil and gas segment are higher by almost 30% compared to power turbines.
Q. Would you be looking to set up any overseas plant, in that case?
A. No, this not required but we would certainly have service centres. Neither would we require increasing our manufacturing capacity.
We are, in fact, not planning to have any significant capex for the next 5-6 years, because we are sufficiently equipped and our current capacity would be adequate for meeting the expanding markets in the future.
Q. What sort of growth do you foresee in the turbines segment for the next three years in India and at Triveni?
A. Considering the pandemic, we expect the overall market for turbines in India to grow 10%-15% for both steam and drive categories over the next three years.
The total size of the market we operate in, in India is INR 1,500 crore-INR 1,800 crore.
We at Triveni aim to grow our business better than the estimated growth of the industry. This is due to our plans to expand our global reach and also due to our foray into oil & gas, a segment we expect to grow fast in future. Further, we feel our aftermarket segment will also grow in future and will be driven by an increasing installation base as well as our break-through entry into the refurbishment segment which includes third-party turbines.
Q. How much and what kind of steel do you need for manufacturing these turbines? Is it sourced locally?
A. Around 95% of the steel is sourced locally. These include castings and high nickel forgings. The shaft is the most critical component.
We make mainly 40-tonne turbines and consume 1,200-1,500 tonnes of steel per annum. In our expansion, each drive turbine will add another 10-15 tonnes.
However, it is to be noted that at our customer end, the usage of steel is higher. For instance, if the turbine produced at our plant is of say 30 tonnes, another more-than-30 tonnes would be added at the customer end through bought outs. So, ultimately, Triveni generates a steel consumption of 5,000 tonnes annually through additional auxiliary equipment procured and supplied to the customer during installation.
Q. India, under the Paris Climate accord, will have to reduce emissions intensity by 33-35% by 2030 from 2005 levels, and reach 40% of power generation capacity from non-fossil fuels. What impact is this likely to have on your business?
A. As far as our business is concerned, around 70% of our turbines go into the renewables space. Sugar, paper mills, municipal agencies all use waste to produce power. So, all the waste that would have gone into the atmosphere is utilised in generating power in an eco-friendly manner. In South Korea and Europe, most of our turbines go into treating municipal solid waste. Thus, we are contributing in reducing the carbon footprint in a big way.
We are a very ‘green’ company, having planted 5,000-7,000 trees in our city plant. And the second plant has the option of almost 20,000 trees. It is to be highlighted that our manufacturing facility at Peenya (the city plant) was awarded the prestigious Platinum rating by the Indian Green Building Council (IGBC), certified for Green Factory buildings, which is considered the highest Green rating awarded to any factory by IGBC.
Q. Do you supply to the power sector?
A. We produce turbines up to 100 MW. We sell to independent power producers when they need smaller, say 30-MW, turbines.
Q. How was the company impacted when steel prices shot up recently?
A. Normally, our orders are taken at a fixed price. Higher prices impact if we are not covered well. We have long-term contracts with our suppliers, so thankfully we are covered. But we have had to go for a price increase for future orders. Our margins will not be affected but our prices will go up by under 10%, depending on the scope of supply.
Q. Where do you see the challenges for the industry?
A. The challenge lies in making the turbines increasingly efficient to ensure proper returns on investment to the owner. We offer a concept called ‘value engineering process’, whereby we keep reinventing the turbine designs and reducing the cost of operation. Incidentally, our costs are lowest in the world, because we follow the lean design practice. Every year, we reduce the cost by 1-2%.
The challenge also lies in usage of the turbines in different processes. The needs of customers change, depending on what processes they follow. Each turbine we supply is suited for a particular application in an industry. We manufacture industrial turbines which, by power rating, have capacity up to 100 MW. These are “engineered to order” products. Turbines up to 30 MW are supplied through Triveni Turbines and above 30 MW till 100 MW, through our joint venture with GE.