The winds of change are blowing all over Torrent Power, which is headquartered in Ahmedabad and is considered one of India’s foremost power utility companies. Spearheading this transformation is 40-year-old Jinal Mehta, the company’s soft-spoken Managing Director and the recipient of this year’s BT-PwC India’s Best CEOs award in the Energy category. And it would be a truism to say that within the rigorous landscape of the power industry, Torrent’s ambitious vision mirrors Mehta’s own unwavering determination to succeed.
“The foundation of our strategy is that we are one of the few integrated energy companies. We think a play across the value chain would help in meeting the needs of the energy transition,” outlines Mehta. The eventual plan is clear—to have clean energy round the clock. Mehta envisions that it will lead, eventually, to a move to green hydrogen. “That’s really where the future is.”
Mehta characterises the current phase at Torrent Power as Torrent Power 2.0, contrasting it with the earlier phase marked by the energy transition and gas-based projects. He emphasises, “The transition to renewables will drive the majority of our growth. This, coupled with distribution and B2C, is pivotal for creating future value.” The company’s financial performance reflects this optimism. Torrent’s total income has grown at a CAGR of 24% over the past three years, with profit after tax (PAT) growing at 22%. As a result, its stock price has also surged, jumping by over 136% in the two years to February 21, outperforming the BSE Sensex, which rose 26%.
The company operates across five key areas: generation, transmission, distribution, renewable energy, and power cables, forming an integrated energy portfolio. In power distribution, it serves 12 centres, including Ahmedabad, Surat, Dahej, Kalwa, and Agra, with a capacity of 4,700 MW, catering to up to 4 million customers.
Regarding renewables, the government has set a 500-GW target for the country by 2030. Torrent Power’s participation in the recently concluded Vibrant Gujarat summit signifies its commitment. It inked four MoUs worth Rs 47,350 crore in renewable energy, green hydrogen, and electricity distribution, aligning with this vision. As for green hydrogen, industry watchers are already bullish about its potential. According to Deven Choksey, CMD of wealth management and investment advisory firm DRChoksey FinServ, green hydrogen has the potential to be disruptive. He feels it must be understood from both the production and consumption perspectives. “It can cost substantially lesser than the prevailing price and that will have a ripple effect across usage opportunities. A business model of today can look dramatically different once that takes place,” he says.
At Torrent Power, there are many projects at various stages of discussion and implementation, with the possibility of injecting green hydrogen with gas being a very interesting one. Torrent’s existing gas distribution network will come in handy and Mehta says this is something that is already taking place in the West and can disrupt the status quo here. To elaborate, Torrent’s gas distribution business, which is through a different company, Torrent Gas, operates in 35 cities and does not overlap with the power operation. The 47 cities put together, he says, can grow to 100 cities over the next decade. “There is no other group with a big presence in both gas and power. Though that is at a group level, synergies will be shared,” he says.
Torrent is clear about its future strategy and has already identified avenues for growth. During the Q4FY23 earnings call, the company stated that it wants to focus more on distribution along with the renewables segment. And to this effect, the company is actively scouting for inorganic acquisitions along with greenfield projects. But power distribution is a tricky business and achieving growth, especially through the inorganic route, has been an uphill battle.
“The real test in distribution lies in transforming operations to generate tangible value,” explains Mehta. However, each market presents its own unique set of hurdles. Consider Daman, the first instance of privatisation in a Union Territory, where the high load density due to industrialisation signalled immense growth potential for both demand and infrastructure. “Despite paying a premium compared to other bidders, the investments made in network quality have yielded significant returns over the past two years,” explains Mehta.
For Mehta, the focus ultimately is on customer experience through reliability and reducing AT&C (aggregate technical & commercial) losses (in Gujarat it is less than 4% and comparable to global standards. Similarly, in Bhiwandi, AT&C losses plummeted from 65% to 9%). As for reliance on coal or gas, Mehta is clear that from a direction point of view, it will reduce significantly.
Mehta’s green vision promises interesting times for both his company and the country.
@krishnagopalan