Mumbai: Diesel generator maker Mahindra Powerol Ltd, which depends significantly on the telecom sector, is expanding into the infrastructure sector in an attempt to de-risk its business.

The company on Monday launched three high-capacity diesel generator sets (400, 500 and 625 kVA) aimed at commercial establishments such as data centres, shopping malls, hospitals and hotels, besides mining and road-building. The diesel engines are being sourced from UK-based Perkins Engines Co. Ltd.

The telecom sector fetched about 56% of the company’s revenues in 2017-18, up from 48% in 2016-17, said Hemant Sikka, president, Powerol and spares business, Mahindra.

The company clocked Rs1,400 crore revenue in 2017-18, up 10% from a year ago, Sikka added.

The company, which claims to have command 75% share of the sub-75 kVA generator market, first entered the infrastructure sector with two medium-capacity generators (250 and 325 kVA) in November 2017. The two gensets were developed at a cost of Rs170 crore. Sikka said the two gensets were “extremely well-accepted" but declined to share their contribution to revenue growth because production is still being ramped up. The company plans to secure a double-digit market share in the mid and high capacity ranges within the next two years, he added.

With this, Mahindra Powerol now covers close to 98% of the broader genset market in terms of volumes, up from 70% before, Sikka claimed.

The market opportunity for gensets above 250kVA is worth 700 crore, Sikka said, while adding this segment is yet to mature and will witness “galloping" growth in the immediate future.

“Higher kVA gensets were the white space for us. With these launches, there are absolutely no gaps in the product portfolio," Sikka said, while adding that he expects Powerol to outpace the broader genset industry, led by higher offtake in medium and high-capacity generators.

The sub-82.5 kVA segment, described as mature by Sikka, grew under 5% in the 2017 fiscal, according to a company presentation, while the market for higher-capacity gensets (above 82.5 kVA) grew over 16% during the same period.

“The 500 kVA node is very critical because we can even satisfy demand by customers who want 1 or 2 mVA of secondary power. This is a node which will help us scale up our business very fast".

Sikka estimates the broader genset industry to grow at an annual average rate of about 10% this fiscal.

Some factors behind the optimism are a weak power distribution grid, which necessitates a secondary source of power especially for small and medium enterprises (SMEs), in addition to increased government investment in infrastructure and the Smart Cities mission and higher GDP growth spurring manufacturing and private investment.

Mahindra Powerol, a unit of Mahindra & Mahindra Ltd, claims to be the overall market leader in terms of volumes with a 20% share, and a 16% share in terms of value.

The expansion into high-capacity gensets puts Powerol in direct competition with established players such as Cummins Group and Kirloskar Oil Engines Ltd, in a segment that Sikka calls “heavily contested".

Going forward, the company will not launch gensets with higher capacities but will work on developing more gas-based gensets within the next three to four months. Mahindra Powerol claims to have launched India’s first gas-based genset in March, with a capacity of 125kVA. The launch will help the company better address the New Delhi and NCR markets where the Supreme Court had banned diesel generators this winter, owing to poor air quality.