As the founder and chairman of Mytrah Energy, Ravi Kailas’s focus is on pursuing innovative ways of doing business in order to grow his company…
Ravi Kailas’s approach to business is distinctive. Mytrah Energy is a pioneer in the Indian renewable IPP space. The company has grown fast since its creation. But Kailas is not interested in the conventional approach to growth, “merely” adding MWs or improving the bottom line. He is more concerned about innovation, impact and governance.
He chose wind energy as the business he wanted to set up because it was the cheapest and most accessible method of supplying power. The decision to set up Mytrah came at the end of a four-year “sabbatical” during which he asked himself all sorts of questions. What changes is the energy industry going through globally? Is there room for more players who can come in with a tangential approach? Is this a business that can both last and sustain my interest? And how can we focus on innovation in an industry that is not known for innovation and build a new model – in other words, the utility company of the future.
The answer was wind. Mytrah Energy, a renewable energy developer and operator based in London, was set up in 2010 and was listed a few months later as the world’s first “start-up utility”on the AIM segment of the London Stock Exchange. Mytrah Energy (India), a wholly owned subsidiary, operates as an IPP and has 15 wind farms in operation, over 210 wind masts, one wind and 22 solar farms under construction. Its operational wind farms are spread across eight states: Rajasthan, Gujarat, Maharashtra, Andhra Pradesh, Telangana, Madhya Pradesh, Karnataka and Tamil Nadu. It aims to own and operate 3,500 MW of renewable capacity in India in the next few years. “We built an organisation from scratch,” says Kailas. “From determining where to build a wind farm, project development and engineering, procurement and construction (EPC), to asset management – we built a company that is unique in our space and is still run entrepreneurially.”
Kailas is speaking to Power Line at the Taj Hotel’s business centre in New Delhi. Getting an interview with a man who is constantly on the move – he lives between San Francisco, London and Hyderabad, and is rushing to catch a flight – has taken persistent efforts. But now that he is sitting on the opposite side of the desk, he seems relaxed and happy to talk about his company.
In creating Mytrah, Kailas has consciously built a market disruptor. For one, he wanted it to be a great place to work. There are “Town Hall meetings” and “Coffee with the MD” sessions that provide platforms for an open exchange of thoughts among employees and the management. As the company website says, “Coffee, cakes and conversation are potent ingredients that help people connect with each other.” During work hours, people can do yoga, play games and participate in varied events so that boredom doesn’t set in. About 8 per cent of the company has been given as share options to the staff. A leadership development programme is in place for recruits, mostly from the IIMs. The idea, says Kailas, is to build a “thought leadership kind of business within a space that is not designed for this purpose”.
In an infrastructure business, the infrastructure is a company’s asset. Kailas has created a business where the people are the assets. Mytrah has just under 1,000 MW of operational wind capacity in just six years since its founding. This year, it is also setting up about 500 MW of solar projects across India. Kailas and his team own about 75 per cent of the company even after raising almost Rs 100 billion.
In this short time, the company has become a leading force for originality. Kailas talks of how the company has been participating in an annual global contest run by the European Wind Agency to explore the capability of algorithms in predicting power production from wind data. “Typically, companies in the consulting business will participate, take raw wind data and make projections. We decided to create our own predictive algorithms. Our wind resource team of 20 people has been working to build a leading edge capability for five years and to do the math for it internally. We are ranked among the top few companies in the world in the contest,” says Kailas. For similar reasons, he was named the Wind Power Person of the Year 2015 at the 3rd World Renewable Energy Conference in Delhi.
Kailas’ fresh approach to business may have something to do with his early experiences with his remarkable businessman father. Remarkable because, when Kailas was 11 years old, his father told him that he would not inherit anything from him, despite the multiple businesses and factories he owned and Kailas being his only son . S.R. – as he was known – said he was happy to let Kailas help in the business while he was at college in Hyderabad but told him to figure out his own life once he had finished his education. “He said I could ask him for some capital if I needed and he would think about it, but I would be on my own, without a safety net. He kept to his word. I loved it. It gave me wings. I knew from a young age that I had to find my own path and I was prepared. He always told me that people earn more respect if they make their own way in life,” he recalls. His bewildered mother used to ask her husband: “What will you do with your businesses if you won’t give them to Kailas?” His father answered: “I’d throw them in the sea rather than yoke my son to what his father has been doing.”
S.R. had a great appetite for risk. He used to switch from one business to another on a leap of faith. Kailas has inherited some of this risk-taking but, he smiles, not as much. There is no doubt about the admiration he feels for his father for rising from hardship in a family with seven brothers and three sisters, who lived in one room, to a prosperous entrepreneur. He learnt about dealing with setbacks from the times the family business was not doing so well, he learnt about treating women and men equally, and he learnt about making one’s own destiny. When most of the family migrated to the US, S.R. chose to remain in Hyderabad. Kailas had a mixed upbringing, divided bet-ween the family in the US and in Hyderabad and then later, London too. After graduating in electronics and communications engineering from Osmania University, Hyderabad, Kailas went on to do a master’s at the Graduate School of Business, Stanford University.
Later, while living in Mumbai, he founded a number of start-ups, including Zip Global Network, a telecom services company; Xius Technologies, a telecom software company that launched the world’s first interoperator prepaid roaming service; and Altius, a real estate financial options company. “I refused to take on any debt with these ventures. I wanted to separate the entrepreneur from the investor while retaining the majority stake. The only common thread among them was that they were all innovative and tangential approaches. All three companies reached a fairly critical size. The first one, in which I invested Rs 500, ended up being valued at $100 million,” he says. Kailas sold all these companies because he felt it was the only way for him to start doing something new on a different scale and a broader vision. This is when he took four years off, in 2005, when he was living in San Francisco, to relax, study, reflect, run marathons, hike, go fishing and meditate. “I was fortunate to be able to do this. I had enough money to live on. I was in my 30s and I don’t lead a fancy lifestyle,” he says. He now boasts of 25 years of entrepreneurial experience in various sectors including telecom, software, franchising, digital media, real estate, financial options and infrastructure. Mytrah has turned out to be a company that has remained stimulating and challenging for him.
Kailas has deliberately pursued a policy of diversification as it allows the company to remain fluid, with all options open. “We did not want to build our wind farms at just one or two locations. We said, let’s build in 10 places across India, in 10 different environments, vendors, counterparties and business models. To be a pan-Indian GW-scale company, we needed to get comfortable, right at the start, with increased degrees of difficulty on every axis. With this policy, we now have a portfolio that gets the broadest part of the monsoon. If there is low wind in one part of the country, there is high wind in another. Also, discoms in various states go through cycles of strength and weakness. So being present across all wind-rich states creates a smoothening “portfolio effect” for us,” he explains. This “counter-intuitive” strategy has worked. By and large, Mytrah’s wind farms have been on target, on budget and on time in every state. Even if a project gets delayed, the fluidity built into the business means he can take wind turbine from one project and put it in some other project to minimise the delay.
Kailas believes that the renewable energy policy environment has improved, with more convergence and coherence. What he would like, though, is a standardised PPA, easier land acquisition (“wind farms use wasteland, so there should be simpler laws for us”), and a better debt capital market because the banking system cannot by itself support the huge levels of debt needed to reach the industry’s potential. He believes India can lead the way in terms of size and scale because, unlike in Europe or the US, it is building the first unsubsidised renewables business and if this model is successful, it will impact the rest of the world.
Three gigantic global shifts excite him. “Multi-trillion dollars of assets (50-year-old nuclear and thermal plants) are being mothballed and replaced. This is a huge shift,” he says. Second, power will in future be generated closer to where it’s consumed. Third, energy will become a part of the digital economy with energy being consumed and measured digitally. “It’s all absolutely fascinating,” he says, before checking his watch, gathering up his papers and heading to the airport.