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InterviewsDecember 04, 2023
Powering Progress: An In-Depth Conversation with Pankaj Bhati, Chairman and MD at AlphaTND
Pankaj Bhati, Chairman and Managing Director at AlphaTND Limited
- Written by Sandra Francisco
- Published: December 04, 2023
Interview with Pankaj Bhati, Chairman and Managing Director at AlphaTND Limited
To begin, could you clarify the specific industry you are involved in and offer an overview of the challenges it faces?
AlphaTND Limited operates in the power sector, with a primary focus on electricity and its associated network expansion. In the context of Ghana, the sector has been grappling with a significant financial crisis, primarily due to concerns about its sustainability. Independent Power Producers (IPPs) have struggled to receive payments from utilities, while utilities have faced difficulties in collecting funds from their customers. This disruption has caused a breakdown in the entire value chain, ultimately threatening the sector's sustainability.
Over the last six to eight months, the government has implemented several measures to address these challenges. As a result, we anticipate that the sector will be back on track within the next six months. The Electricity Company of Ghana, a major electricity provider in the country, has played a crucial role in this revival. Its leadership has taken steps to boost revenue collection and ensure payments from end clients. This, in turn, will help reduce financial losses and enable them to compensate suppliers and power producers. Previously, this entire payment chain had broken down, leading to a financial crisis in the sector. It is important to acknowledge that in today's global landscape, no government can sustainably support a sector by providing 100% subsidies. Subsidies can only cover a portion of the expenses, not the entirety.
Can you elaborate on your specific products in the power sector and outline your competitive advantages? What sets you apart from others in the market?
AlphaTND is primarily a techno-commercial organization, and we operate with a dual focus. Firstly, we have a substantial 15-year presence in Africa. This extensive experience has allowed us to tailor our products to meet the unique local conditions. Unlike some competitors who import products designed for other regions, we custom-design our products to align with the local environmental, electrical, and social conditions. This adaptability sets us apart from our competition.
To illustrate, when we design electrical products, we take into account the specific technical and environmental factors of the region. For instance, the voltage fluctuations in this market are considerably higher than in Europe or the US. Consequently, our product designs are optimized for the local context. This approach ensures that our products have a longer lifespan and offer superior quality, granting us a competitive edge.
Secondly, we prioritize Value for Money (VfM). Our materials are not only cost-effective but also contribute significantly to the utility's return on investment. This focus on cost-effectiveness ensures that the products we deliver are not only affordable but also highly efficient in achieving the utility's goals. These two aspects, our ability to design solutions tailored to the client's specific problems and our commitment to pilot projects with utilities to guarantee product survival in challenging market conditions, such as during the rainy season, in dusty environments, or in toxic conditions, collectively give us a competitive advantage over our competitors.
AlphaTND operates in three primary segments. First, we engage in the trading of electrical goods such as transformers, cables, conductors, line hardware, and poles, which are essential for the operation of electricity utilities. We import these products and supply them to utilities based on their specific requirements.
Secondly, we have our own manufacturing capabilities, producing smart electrical prepayment and credit meters locally, along with associated accessories like metering and closure metering, as well as panels. We also provide industrial metering solutions. Notably, we have supplied over 1.5 million meters manufactured in Ghana and distributed within the country.
The third segment of our operations involves EPC (Engineering, Procurement, Construction) services, where we undertake turnkey projects. This includes infrastructure projects such as substations, transmission lines, rural electrification initiatives, and network expansion into remote villages. These endeavors represent our commitment to adding value to society.
Are you conducting the same activities in other countries where you have a presence? Could you provide an overview of your international operations and the types of activities you engage in?
We initially commenced our operations in the power sector in Ghana. After establishing ourselves in Ghana, we expanded into several other countries, including Togo, Benin, Burkina Faso, Sierra Leone, Liberia, Niger, Gambia, Tanzania, and Rwanda. In these countries, our activities mirror what we do in Ghana, which involves trading electrical goods, supplying energy meters, and undertaking EPC projects. The EPC projects primarily focus on expanding the electricity network.
It is essential to note that in many African countries, the current electricity access rate is less than 25%. Ghana is comparatively fortunate, with an 85% electricity access rate, but neighboring countries often have access rates as low as 20-25%. Consequently, these countries receive substantial donor aid from various international sources to improve their electricity access.
Through international competitive bidding processes, we participate in these tenders and have been awarded contracts. Over the past decade, we have had the privilege of electrifying at least one million lives in these regions. It is not just about business; it is also about the immense satisfaction we derive from bringing happiness to people's lives when they experience electricity in their homes for the first time. The joy on their faces when they see the first light is more valuable than any other aspect of our business.
Regarding the projects you undertake, do you specifically prioritize larger projects? Can you outline your overall strategy in this regard?
Our approach to projects depends on the capacity and funding available in each country, often driven by agreements between the country's Ministry of Finance and donor agencies. These projects can range in size from $100 million to $1 billion, with individual project sizes ranging from $5 million to $50 million. Typically, larger projects offer greater clarity and allow for more effective planning compared to dealing with multiple smaller projects. As a result, we have progressively moved towards larger projects. We initially began with $5 million projects, and now our single project size has grown to $35 million.
Let's discuss your expansion into India. Could you outline your project and development plan for this new market?
We initially established our company in Ghana and expanded our operations to cover all West African countries. However, in the past year, we made a strategic decision to venture into East Africa as well. We are now in the process of implementing a substantial plan for India. Given the support we receive from the Indian market, we aim to relocate our entire head office from Africa to India to facilitate our growth. This transition is primarily driven by the constraints we face in Africa, particularly limitations within the financial institutions that hinder our ability to comply with the requirements of donor agencies. We believe that a larger economy like India, with more robust financial institutions, will enable us to meet all compliance needs when working with donor agencies.
Besides the power sector, Alpha Group is involved in other areas. Could you describe the different business activities in which Alpha Group is engaged?
Alpha Group operates in three distinct sectors. The first one is the power sector, represented by AlphaTND Limited. The second sector is healthcare, where we have established a comprehensive healthcare system. In this domain, our company covers the entire spectrum, from customer engagement to the acquisition and operation of hospitals. Lastly, we also have a presence in the financial sector, with a small banking license in India. So, in summary, our business activities span across finance, healthcare, and power.
Could you share the strategy behind this move? Are you planning to centralize your activities and consolidate all divisions under one umbrella in India?
Essentially, the group will function as a single entity, but it is important to note that each sector operates independently. Our plan involves three distinct verticals, all reporting to the central head office. Each division will maintain autonomy, with separate teams, unique structures, investment plans, and country-specific strategies. However, all of these individual elements will ultimately fall under a unified umbrella, representing the Alpha Group as a whole.
Can you share a success story that you are particularly proud of, something you have accomplished over the past decade?
It is a moment of great pride for me to recount my personal journey. Back in 2012, I embarked on this journey as a sole individual with minimal capital of one million dollars. In just 10 years, we have grown AlphaTND Limited to employ more than 220 individuals directly, achieve revenue exceeding $50 million, with bookings totaling $150 million, and establish a presence in 10 different countries. This growth is a source of immense pride, especially in the context of Africa, where numerous challenges persist.
From being a one-person operation with one million dollars to a thriving company with 220 employees and $50 million in revenue is a remarkable transformation. Furthermore, beyond the realm of business, I can proudly state that we have made significant contributions to the economy. Africa often faces foreign exchange challenges, and over the past 10 years, we have brought in over $200 million into the country, specifically Ghana, through project execution. This indirect contribution to the economy, including tax payments and compliance adherence, stands as a testament to our commitment to supporting the local economy, rather than taking foreign exchange out of the country.
It seems your impressive track record has been recognized with various awards. Would you like to highlight some of the noteworthy awards you have received?
Absolutely, we have been honored with numerous awards across different platforms. These include accolades such as the Best Consumer Choice, Best Quality, Best Electrical Company, and the distinction of being recognized as the Best Manufacturing Company, which we hold in high esteem. One of our proudest achievements is being named the Fastest Growing Company by the Association of Ghana Industries (AGI). It is worth noting that this award was not limited to our sector; it encompassed all sectors. This recognition is particularly significant, as it is conferred upon only eight companies, and we are privileged to be one of the recipients of this prestigious award.
Could you update us on your current projects?
In Ghana, we have been collaborating with the Electricity Company of Ghana on a revenue enhancement initiative aimed at bolstering their financial stability. This involves an extensive loss reduction program, as there is a significant amount of electricity loss in the utilities – meaning that the electricity delivered is not fully collected. To address this issue, we have developed specialized meters, which we are currently installing for consumers. Our goal is to elevate revenue collection from its current level (A) to a more efficient level (B), potentially achieving a 100% collection efficiency. This project commenced six months ago, and we are proud to report that the revenue has doubled within this period. This is not only beneficial for the utility but also facilitates their network expansion and future planning.
Beyond Ghana, in other countries, we are engaged in expanding the electricity network. The objective is to bring electricity to rural areas and villages, which, in turn, has a positive impact on the social and economic life of the local population. This aspect of our work is particularly rewarding and fulfilling.
Are you engaged in CSR initiatives?
Absolutely, we actively participate in CSR initiatives, not for marketing purposes, but because it is personally fulfilling. In Ghana, we provide comprehensive support to an artistic school, where AlphaTND has played a central role. We have provided the land, constructed the building, and furnished the facilities for the school. This is a 100% commitment from AlphaTND.
Additionally, in Sierra Leone, we have contributed to the construction of a football stadium. We also extend support to individuals who require specialized medical treatment that may not be readily available through local hospitals.
During the COVID-19 pandemic, the Ghanaian government sought to establish a specialized hospital at a cost of 15 million US dollars. We were proud to contribute to this effort during the critical period of the pandemic. Our contributions were recognized and appreciated by the government for this endeavor.
How do you envision the future of your company in the next three years?
AlphaTND has achieved significant milestones, and now it is time to elevate our trajectory. Our vision is to transform into a true multinational corporation, not confined to West Africa but expanding our presence in Africa, Asia, and possibly Latin America. We aim to establish a footprint in multiple countries and operate in all segments of the power sector, encompassing generation, transmission, distribution, and distribution system management.
In terms of revenue, we already have a solid stream, and our goal for the next three years is to reach a minimum revenue of $300 to $400 million. We have ambitious plans in the manufacturing and EPC sectors, and with strategic steps, we are confident in achieving these objectives.
Whats is your life philosophy and what drives you?
I would say that one of my mentors imparted a valuable lesson when I embarked on my career. Business, in essence, is a source of happiness, but it truly thrives when it creates value. What drives me is not only the financial or monetary gains from business, which are undoubtedly important, but the value we contribute to the system. I have always been candid and transparent in my choices across the three sectors: finance, healthcare, and electricity. These sectors represent constructive businesses that bring happiness into people's lives. They do not take lives; they save lives. For me, business is about creating value for my stakeholders, which includes clients, my team, suppliers, and all those associated with me. This drive compels me to set ambitious goals for myself, always aiming ten times higher, and that is what keeps me motivated and passionate about what I do.
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