Engineering firms see great value in building, maintaining data centres

Data
As India’s data centre market grows, engineering companies are spotting a likely new business segment. With 8.5 per cent annual growth expected here, they’re looking at opportunities to build and maintain these centres.

 

“Data centres are extremely high on engineering,” said Prasanna Sarambale, chief executive officer for Data Centre Business and Group Head-Business Development for Sterling and Wilson. By the end of this financial year, he expects Rs 400 crore of turnover from this business.

 

Larsen & Toubro and KEC International are two other companies looking at this segment. The former is already implementing various projects here and the latter is hoping to get its first project. “We are the lowest bidder in a data centre project,” said Vimal Kejriwal, MD and CEO for KEC International, adding that these fit well into their civil engineering and cables business, as well as its interest in the smart cities segment. “It also brings business to our transmission and distribution division, as data centres are power-intensive.” “The opportunity in building these centres might be around Rs 4,000 crore per annum and Rs 1,000 crore for related infrastructure like DG sets. It is a good opportunity for contractual work. The capital goods opportunity, in terms of hardware requirement, is limited for Indian firms as most of the parts are imported,” said an analyst with a domestic brokerage who did not wish to be identified.

 

Industry data suggests the market size for engineering opportunities in the data centre space is $2.7 billion and expected to be $4 billion by 2024. Sarambale said: “We are seeing more competition entering this segment…this is an industry that is flourishing.” Some capital goods firms are hopeful their business segment will be able to make Rs 200 crore turnover annually as operations start.

 

Data centres are being targeted by engineering companies for two types of opportunities — build or construction and  maintenance. “We have built data centres and handed these over. Some are with us on a build, operate and maintain basis,” said a person from a major company who did not wish to be named.

 

C P Vyas, president of the electrification business at ABB India, said: “Many more global co-location firms are investing and expanding their business. It is one of the emerging drivers of growth for ABB and, in the past three years, we have witnessed significant traction in the data centres segment.”

 

ABB offers a range of products here, on power availability, reliability and low carbon emissions.

 

Vyas expects more opportunities from the Internet of Things, artificial intelligence and cloud computing. Complemented by e-governance and the govrenment's push on fifth-generation telecom technology. The government's smart cities initiative is already contributing to the order book for engineering companies.  State-sponsored welfare schemes are expected to also contribute to higher demand.



Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel