Servotech Power Systems Ltd. sees a 64% increase in their fiscal revenues in FY21-22, along with 386% increase in profits, 41% growth in EBITDA, and an improved EPS of Rs. 2.15 per share. These results are a direct outcome of Servotech’s forward-looking, far-reaching strategy. The company is accelerating innovation, with a focus on developing and scaling proven solutions to serve new and existing customers. This gives the enterprise strengthened confidence in their ability to build even greater momentum in the upcoming years.
In this special feature, we gain insights from Servotech’s founder and MD, Mr. Raman Bhatia, on how the company achieved these strong numbers and what encompasses their future outlooks.
Servotech’s latest financial results have been inspiring. Outline the key takeaways from your performance and which approach helped you achieve these strong numbers?
The most encouraging and exemplifying sign of our strong fundamentals and solid strategy execution is the 64% jump in revenue that we witnessed. On top of it, we achieved an annualized 43% increase in gains, which was a result of our diversified portfolio which helped us accelerate growth and generate revenues even in disruptive and challenging times. These numbers have been underpinned by our commitment to our vision of “Produce Green to Live Green”, aligned with our collective efforts of team-building, market-expansion, cost-of-ownership optimization, and most importantly, research and innovation to equip us for any subsequent market shifts.
Picking up on your impressive product-wise revenue stats, which product category are you expecting to draw the maximum revenue share for the next year?
With renewable energy sources making waves in domestic and industrial circuits, plus considering how effectively the government is pushing for the same, it’s sensible to assume that our solar products are going to emerge as our stand-out ones for the next year. What value that might draw can be guessed from the fact that in the last fiscal, 60% of all our product sales were contributed by our solar range. But to add another element to it, our EV-charger segment range too, can come out as a differentiator by the end of the next year. As India shifts towards e-mobility and EVs become the norm, EV chargers are soon going to take over the market, so there are some interesting prospects in here as well.
Apprize our readers on the business blueprint Servotech is looking at following to expand its operational footprint farther in India?
In the previous fiscal year, we achieved significant progress toward our goal of making tech-enabled solutions affordable and accessible to the general public, with strong momentum across all of our strategic pillars. Consistent gross margins and EBITDA were achieved thanks to calibrated pricing and a focus on cost optimization measures and efficiencies. Going ahead, our focus on expanding our partner network program, that’s currently helped us scale our solar solutions in 21 Indian states, will only sharpen. In addition, having launched our EV-charger section supported by our constant R&D and innovation initiatives will enable us to successfully establish a competitive advantage.
On your current numbers, what would be your projections for the next 2-3 years, say till 2025?
Servotech expects this upward trend to continue in FY2023 and beyond. In the years ahead, our R&D team will develop a number of new and specialty customer-focused solutions, resulting in a very strong and diversified business-generating pipeline. Our recently announced high-precision solar and EV charging products will not only steer consumers ahead from conventional energy and mobility solutions to modern ones, but will also generate significant money for all of our stakeholders. Over the next five years, we are aiming for a consistent double-digit growth rate, which will be driven by our concentration on highly consumerizable solutions.
With Servotech recently stepping into the EV charging segment, how does this move look from a business standpoint?
EV is not only a promising field, but it also fits well into our value framework. With a pressing need to minimize our carbon footprint, we’ve shifted our focus to research and development in order to provide smart, climate-friendly, and inexpensive tech-driven solutions to the public. We are now using our established presence to enable fuel stations to become equipped for future automobiles and, as a result, any e-mobility innovations. We have previously been instrumental in modernizing petrol pumps and fuel facilities across India with our solar services. To that aim, we are already assembling the best personnel in the automotive sector to assist us in steering our ship in the proper direction.
What, in your opinion, are some of the government’s important measures or schemes that could change the landscape of India’s EV ecosystem?
The Indian government is already working on clear policies, coordinating with key stakeholders, and motivating states to build electric vehicle infrastructure. To return to my previous point, all of this is being done well before the e-mobility sector reaches its peak, and when it does, this infrastructure will support existing adoption while also encouraging additional growth. On a policy level, my suggestions would be to look into ways to make this technology more cost-effective, such as determining how incentivized Lithium battery manufacture might be started to lessen external dependence and how duties could be cut to encourage additional companies in the segment.
To follow up on your response, one of the most pressing concerns and goals for India is the development of indigenous batteries for electric vehicles. According to you, how can India become self-sufficient in this area?
The most important component of electric vehicles is lithium-ion batteries, which account for more than half of the entire cost. While the government is implementing steps to promote lithium-ion batteries, the government should complement lithium-ion battery supplies by encouraging private sector enterprises to increase and strengthen lithium-ion supply in the country. Costs will eventually fall down as economies of scale are attained. Furthermore, India has a significant advantage in the field of lithium-ion batteries. India leads the world in both assembly and battery management system (BMS) technology, with cheaper assembly costs. BMS is fully software-driven and uses computer technology, an area where India has a lot of potential. India will have a major competitive advantage over other nations once lithium-ion cell manufacturing begins in the country, thanks to its outstanding software capabilities.
Servotech recently erected India’s first portable solar rooftop system at the Swaminarayan Akshardham temple complex in Gandhinagar, Gujarat. What are your thoughts on this achievement?
This was an important project for Servotech since it not only reshapes people’s perceptions of solar solutions, but it also aligns closely with our Prime Minister Narendra Modi’s vision of ‘One Solar City per State,’ and plays a key role in transforming Gandhinagar into India’s first Solar city. It took four years of iterative work with GIZ to get here, while teams investigated ways to make the technology more affordable and scalable. By the end of it, we’d managed to make the gadget four times more cost-effective than it was before, while simultaneously adding new features. In the future, we will take an omnichannel approach to facilitate its wider and easier adoption, and bring it to the masses not as a stand-alone system, but as a gadget with flexible utility. On the public front, we are already completing additional projects, such as Gandhinagar, across the country’s heritage sites and key attractions in order to garner future engagement.
Help us understand what Servotech’s expansion plans are going to be; what can we expect the company to deliver in the next 5 years?
In the next five years, we plan to leverage and complement our current industry leadership position, skills, and experience to achieve a 15x increase in revenue. This will be accomplished through a variety of initiatives that are already underway, including as extending our client base, entering new networks, expanding our distributor footprint, and preparing for any disruptions that may cause a demand shift. We’re already seeing positive results in all of these areas, which is helping to define and direct our next steps. To give you an example, our channel outreach programs have already resulted in a greater awareness of Servotech’s services, which will be empowered and executed by close to 10,000 channel partners by the end of this year, which I am delighted to share.
