Decoupling growth and emissions
Ravichandran Purushothaman (RP) heads the India operations of Danfoss Industries which is a 100 per cent subsidiary of Denmark based Danfoss A/S. Handling various roles in the company since 2002, RPs interest range in the areas of climate change, energy efficiency, decarbonisation and food loss. Through his thought leadership, he has made significant contributions in these fields.
IE: The global HVAC industry is the biggest contributor of emissions. What are the available technologies to curtail this?
RP: According to the World Green Building Council, around 28 per cent of global CO2 emissions come from building operations due to the energy used for heating, cooling and power, making it one of the biggest emitters. Good news is that, innovation already exists to increase energy efficiency and to decarbonise this sector, while creating comfortable, healthy indoor spaces.
At Danfoss, our expertise also lies in district heating and cooling systems. The District Energy, a UNEP initiative, points out that, this technology can help cut CO2 emissions by 58 per cent in the energy sector by 2050. At our global headquarters, ProjectZero was established in 2007 with a vision of turning city of Sønderborg in southern Denmark to become carbon neutral. It was recently recognised by the World Economic Forum for public-private collaboration award. Danfoss supplied the cooling and heating solutions, collaborating on electrification projects and promoting sector integration where industry, energy production, transport and others worked together to reuse energy which was already produced. Last month, ProjectZero announced that energy-related carbon emissions have been reduced by 57 per cent, equivalent to saving about 400,000 tonnes of CO2.
IE: Digitalisation is an important aspect that is transforming manufacturing. How are your operations aligned to this?
RP: Danfoss is seeing a huge digital transformation since the last 3 years. We have added 1400 engineers and made investments of over USD 300 million in India to capitalise on green opportunities. We prioritise excellence and continuous improvement in our manufacturing technology. To achieve this, we have made investments in state-of-the-art solutions like Manufacturing Execution Systems (MES) and Manufacturing Operations Management (MOM) platforms. By implementing automation, modularisation, simulation and upgrading our machine park, we have optimised our manufacturing processes, minimised waste and improved resource utilisation.
IE: How has AI played a role in your business?
RP: AI, machine learning, and other emerging technologies are playing a crucial role in driving the transformation of the industry, specifically in the HVAC sector. In today’s digital era, these technologies have been successfully scaled up to enable end-to-end supply chain transformation. Analysing data in real-time allows to optimise operations, predict maintenance and improve energy efficiency. These technologies facilitate the development of advanced HVAC systems and components that are capable of self-adjusting based on real-time conditions, optimising energy usage and enhancing comfort levels.
IE: A brief on your finances. Are you on target to Rs 5000 crore revenue from India by CY2025?
RP: Indian operations are on relatively high momentum and is amongst the fastest growing regions of Danfoss globally. We will be doubling our business to reach Rs 5000 crore by 2025. We have recorded double-digit growth for the past few years and the projections are strong for all our three business segments. For 2023, we expect at least 20 per cent topline growth. We are working on three pillars to achieve the goal. First, we will expand our presence from 55 cities to more than 80 cities. Next, we will enhance the localisation our products which is currently over 50 per cent (varies within product range). Third, tap new hotspots that are emerging out of the decarbonisation mission. Now our major opportunities come from decarbonisation of commercial buildings, data centers, food supply value chain and tractors. In the tractor segment, systems are shifting from mechanical to hydrostatic and this development was started here in India by our engineers. As India starts to focus more on PLI schemes, infrastructure, healthcare, metro projects, high-speed trains, food supply chain, data centres, etc. there will be lot of new hotspots for strong growth.
IE: How much have you invested in R&D as a percentage of revenue?
RP: Globally Danfoss has beefed up R&D and building capabilities and capacities along with taking over companies that help strengthen our core businesses. In 2022, we invested EUR 457 million i.e., 4.5 per cent of sales in R&D. This provides Danfoss to drive sustainable innovation while offering best-in-class technology and solutions.
IE: How much percent of your product is localised?
RP: Currently about 50-60 per cent across our product categories is localised. Our target is to build a 85 to 90 percent localied supply chain. It will reduce transportation distances, carbon emissions and reliance on long-distance logistics. This regional supply chain approach enables to support local economies, foster closer relationships with suppliers and minimise the environmental footprint associated with transportation.
IE: How did your journey to achieve LEED Zero water certification begin?
RP: The LEED Zero is the new standard for global cities, communities and buildings as they strive to achieve a sustainable future. Over a 12-month period, a balance is maintained between total potable water consumption and total alternative or recycled water use. We took steps to ensure that most of the water requirements for our buildings and processes are met by capturing rainwater and treating it. This cuts our dependence on water from local government sources. Even though, during the summers, some minimum quantity of water is procured from the municipality, excess rainwater is treated and shared with them on rainy days, which helps us to maintain the annual water balance status of zero.
For a large campus like ours in Chennai, water and energy have a huge nexus. Over the last 4 years, we are using an IOT-based solution with over 300 sensors spread across the 50-acre campus. Through this, we have been able to reduce our water intensity by about two-thirds. Our digitalisation efforts helped monitor sources and consumption, changing behaviors of users, etc. Today, we are seeing the benefits of the initiative in the form of a net zero water rating and a reduction of water costs on our balance sheets.
IE: Can you elaborate on the future sustainability goals of Danfoss?
RP: We rolled out 2030 ESG ambitions in April 2022. It relates to decarbonisation, circularity and, Diversity, Equity, and Inclusion (DE& I). Taking ahead our global ESG ambitions, we have committed to go carbon neutral by 2030 in scope 1 and 2 level emissions and achieve 15 per cent reduction in scope 3 for the same period, for all Danfoss locations across the globe. Danfoss Nordborg Headquarters is already carbon neutral as of
December 2022.
We actively engage with our suppliers, customers and the Danfoss community to promote the adoption of green energy and reduce our collective carbon footprint. Our dedication to ESG principles ensures we play our part in mitigating climate change and building a greener world for future generations.
