AI boom fuels data centre growth, creating opportunities for energy storage companies in the country

Accelerating pace of AI (artificial intelligence) in India has increased demand for setting up data centres. This is likely to create huge opportunities for players operating in the energy storage space like battery manufacturers. Similarly, growing popularity of electrical batteries (EVs) is increasing the demand for lithium batteries.

Against this backdrop, established players like Indo National Ltd, the promoter of Nippo batteries, have several ambitious plans to cash in the emerging demand. In an interaction with the Bizz Buzz, Pavan Kumar, CEO of Indo National Ltd, said that the company is diversifying into several segments in its bid to doubling its revenue to Rs 1,000 crore in the next five years.

He said that the company is planning to launch a ceiling fan in the consumer appliances space with introduction of new technology. Similarly, in its core battery business, the company is actively evaluating plans to focus on alkaline batteries in the companies.

The established battery player is in talks with several companies in the data centre and EV space to explore opportunities for partnership in the storage segment.

What are your plans to strengthen the core battery business in which Nippo holds a significant market share in India?

Currently, we are one of the leading players in the battery segment. We are operating in the zinc-carbon battery segment. That battery is evolving with a change of time to alkaline battery. Currently, we are importing alkaline batteries and selling in India. In India, no body is manufacturing the alkaline batteries at this point of time.

We see the demand of alkaline batteries gaining ground and over the period of 5 to 7 years, a good 50 per cent of the drycell batteries will be alkaline batteries. Whenever we see the pace of demand picking up, we will be investing in alkaline batteries as well.

We may do the manufacturing or semi-manufacturing or bringing the raw material and assembling here. For that to happen, we are currently building the demand side for alkaline batteries. That is one of the areas, in which we will diversify as far as our core offering is concerned.

Reports suggested that Indo National has several other diversifying plans? Can you throw some light into this aspect?

The other area of interest for us is to enter the ceiling fan business with introduction of new technology. That is in the consumer appliances space.

Currently, Nippo as a brand reaches 15 million households. With the help of our R&D and technology, we are planning to come up with a ceiling fan that operates through a new technology and is placed as a premium product.

When we are already present in tube lights, surface panel lights and LED lights among others in the electrical space, we have existing relationship with retailers.

Are you looking at sustainability as a theme at Indo National Ltd? Can you provide some perspective in this matter?

Sustainability is a big theme in the current world. One of the things we are trying out at this point of time is the waste management rule that the Central Pollution Control Board has put on the forefront. This will be enforced this year.

Apart from compliance, we also want to discharge our duties as a responsible manufacturer. In this respect, we are doing two things. Firstly, in the dry cell battery, which are being manufactured by us, we generate close to 500 million batteries per annum.

These batteries are all single-use ones. We are trying to plug the gap by building collection and recycling capabilities both in the formal and informal sectors.

This way, we want to bring those batteries (at the end of their life cycle) to be part of the circular economy. Our plan is that in 18 to 24 months, we should be able to use some part of these batteries.

The second part is that we are evaluating how Nippo can be at the forefront of recycling technology. There are many players, who are considering recycling as a business opportunity. We see it as a moral responsibility to be part this ecosystem.

In this regard, we are looking at startups and companies, which are engaged in recycling technology space for a potential M&A opportunity.

With AI revolution, India is betting on data centre segment with several incentives announced in this year’s budget. Are you exploring any business opportunity as a battery player given the demand for energy from all sources will be high in demand?

Data centres require unlimited and uninterrupted power supply. For that, many companies are evaluating what are the possible options in the lithium-based inverters in the market.

Nippo is at the initial stage of discussions with some companies, which are building large data centres. So, we are definitely looking at this space as an opportunity. But it will take at least 18-24 months for something concrete to emerge.

Can you throw some light about your plans to engage in EV (electric vehicle) space?

We are clearly looking at EV industry where we are exploring options of partnering with recyclers. These are purely for lithium batteries. But we are at a very early stage of discussions with players in both EV and data centre segments.

Have you earmarked any fund to pursue these new initiatives? Can you throw some light into this aspect?

The promoters of the company are running the business for 53 years. Their vision is to earmark around Rs 50 crore to Rs 100 crore of investment to become a leading player in the sustainable space.

This can happen both through M&A route or we can go solo also. As pointed earlier, we are looking at partnering with some player in the lithium battery segment and we want to enter the recycling segment as the growth of EV industry is likely to be around 30-40 per cent for the next 5 to 10 years.

What are your expectations in terms of revenue growth in next 3-5 years? Can you give some perspective in this matter?

We have a mandate of becoming a Rs 1,000 crore company in the next 5 years of time. Currently, our revenue is around Rs 500 crore per annum.

To double our revenue in the next 5 years, we will clearly focus on product diversification like entering into electrical appliances, and increasing our reach as far as number of households are concerned in our homecare segment.

We are actively evaluating options of entering into accessories, which is into charging space. Our plan is to enter into any segment related to energy storage. In this segment, we want to be a leading player.