CEO Ashish Rai discusses Aurionpro's data center market strategies on ET Now

Mr. Ashish Rai of Oriental Solutions joins us on the show to talk to us about what exactly is a data center opportunity for the company as well. Hi Ashish, good to be speaking with you. I do understand that the company provides data center building services both in terms of turnkey data center physical infrastructure as well as consulting and planning services for the same. Talk to me about the overall opportunity that can come to the company's path in terms of the overall growth which is expected from data centers.

Hi, good morning and, and thanks for having me. Yeah, so we've spoken about this earlier as well. So data center is one of the four large bets that OrientPro has on. Right. Along with the bets around banking, around smartification of mobility, etc. Right. And data center as, as we see, you know, we specialize, we, we've got one of the most specialized teams at least in India in terms of designing of the really complex data centers around programming the build of those data centers together. Right. So we see a significant demand. It's not India specific demand as you see the demand overall has been going up but both the demand coming in from the sovereign data needs, demand coming in from the need for high performance compute increasingly. I mean we've done some of these projects with, with some of the I teams in terms of building those out. Right. So it's a significant opportunity. It's about, I would say it's, it's 15, 17% of the, of the overall pie for us overall growing at probably 40 to 50% plus. There is way more demand than supply in that space at the moment. Right. So we are very selective on the projects that we take on but we feel the segment will continue to grow for us at a, at a very, very rapidly for the next few years.

Point taken. The other thing that I want to discuss with you Ashish, you Talked about the 16, 17% kind of, you know, orders can come your way but there are analysts on the street which are expecting almost 40% seizure for the entire data center industry. Is that a realistic number and is there a number that you can put for the entire industry size as to what the demand could be over the next few years?

Yeah. So that 1617 was the share of data center business within Orient Pro. Right. I think the business has been growing at certainly not of 50% for us as well. I, I believe for, for a lot of other players in the industry being, you know, very, very specialized player for us we see that segment growing, you know, very strongly 40 to 50% at least, you know, over the, over the Next several years. The overall size though, you know, I think so there are lots of industry experts. We're not, you know, we're not an analyst. So so, but if you look at some of the other industry reports coming out over the next eight to ten years globally, that's a trillion dollar of spend going in. You know, just in terms of repurposing for example, the traditional data centers for, for the, for the high performance from the AI compute itself is supposed to be a trillion dollar opportunity till 2030. Right. I think some of that trickles into India. A lot of original demand from the digitization of India also comes into India. India if anything I think would continue to grow, the capacity will continue to grow at a, I think 40% CAGRADE is a pretty good number in terms of let's say over the next seven to eight years. Right. I think there's a significant demand. Some of this is obviously not, not, not known in terms of how fast the industry has been changing. Right. But we feel the demand will be very, very strong, you know, for the medium term at least that we can have a look at it. Right. So I think 40% is a pretty good number to look at.

Right. Mr. Right. This is Vinny joining in the conversation as well. While obviously you're Talking about the 31st 40% growth in the next Kaggle growth in the next few years is what we could watch out for as well. I just want to understand you know, what are the prime primer facilities challenges that you know you're facing over there while opportunities there right now biggest concern that comes in in terms of the data center opportunity for the company.

Yeah, I think the scaling up for, for us so we, we are a product and platforms player so we believe in building our own ip. I think we got a highly specialized design team that's been you know, helping design the very complex data centers. We've got a, you know we've got a very strong team in terms of program managing everything that goes around. But I think the longer term price for audience specifically is in terms of productizing the various parts of the data center value chain. Right. So we have been working, we are a very R and D focused organization. So we've had our R and D teams working on building out products. For example, we, you know we're already piloting a product around Edge Compute which we believe again would be, would see a significant demand not just in India but in terms of sort of export potential around the world. Right. So which is where a very, a highly productized compact form Format for an edge data center that can really get rolled out. Whether it's, whether it's, you know, defense needs, whether it's remote locations, whether it's you know, very large geographies. Right. Both in India abroad as well as other parts of the value chain. Right. So for us, you know, we will once see obviously the organic growth of the data center capacity and what we are doing around designing those, what we are doing around building those, especially with our strategic partners. But I think the longer term, let's say three, five years out, a bulk of it would be around productized offerings and things like edge compute, high performance compute that we can actually not just sort of provide in India, but also provide it around the world.

Indeed. Ashish also wanted your take regarding the World 2030 vision that you have articulated for yourself. It will of course be a part of organic, inorganic and co engineering kind of growth coming in. Talk to me about, you know, how much would be organic, how much could be inorganic. Do you have any inorganic opportunities in the pipeline right now that you're looking at what's happening? Size, which capabilities are you looking at adding?

Yeah, so great question. Look, our Vision 2030, we stated that three years back we've been, you know, continuing to make progress on it. For us we've got you know, four or five major bets going on. Transformation in the corporate banking space is one. Transformation in the transit payment space, in the payment space in general is the second one. Digitization of India is a third one where the data center theme plays in as well. And the fourth is around co engineering the products as well as enterprise AI offerings around the globe. So for us the goal is to be a top three global player in each of these segments. I think we've been progressing pretty well on each of those. As you would have seen, the firm has been seeing we've grown at 34, 35% for the last four years. Since we pivoted into making this global products and platforms player. There's been a very, very strong investment that's happened in R and D that's been propelling the new products coming out to the market. Right. So I think we feel each of these segments is, you know, a 10 to 50 billion dollar opportunity. Our goal is to be the most, one of the most competitive global players, if not the most competitive global player in each of those segments. In most of those segments we, we progressed well. We've had global clients come in, we had, you know, we were rated very well by global analysts and you know, I think the business has Been doing very strongly. So going into 2030, we feel we will be a top three global player in each of these segments. Now what is the size of that player? Each of these segments is a, you know, 10 to 50, $70 billion segments. Enterprise AI is probably a trillion dollar segment. We will continue to make investments, I think both organically as well as inorganically. Organically, we'll continue to gagger. We've been saying we'll continue to CAGR in the range of 30% which we've been doing for the last inorganically I think as an opportunity presents itself. So the way we operate is we have a strategic blueprint for each of these bets. Now that blueprint of course we have products that we are building out. But every gap on that is a choice of buy versus build. We've done three acquisitions in the last nine, 10 months. We've deployed probably close to 400 crores towards those acquisitions. We did Aria AI, which we, which we discussed on your channel, deployed a 200 odd crores, 150 odd crores too. So you know, we will continue to do that. Are there any opportunities? We're always open to the buy versus build choice where when an opportunity presents itself, we are not aggressively looking for acquisitions, but I think we become fairly prominent in each of those spaces and we become a natural sort of buyer. So people do approach us. And as and when a deal makes sense, we'll, we'll come and talk about it.

Right. You know, just one more question that I have, Mr. Rai, is just in terms of, you know, while obviously favorable policies, everything is in place but tier 2, tier 3, and do you think that's where most of the data center expansion and growth is going to be happening in these cities? And what is it that in terms of a policy, any change or more easing that is required from that front?

Yeah, so look, I think that's a great question. Digitization of India is not a tier one city phenomenon. The way applications are built, built these days, you know, there is a lot of demand around compute. Close, you know, around Edge Compute, especially you know, closer to where, where the, the consumption is. And, and so you know, there'll be demand all across. That is the reason why we invested so heavily around productizing offerings when it comes to, you know, Edge Compute, which can be deployed pretty much across the country, anywhere there'll be a lot of demand from, from government organizations, lots of demand from defense, but lots of consumption of web applications across the country. Right. So I think you're, you're totally right. I mean, demand will be tier 2, 3, tier 3. And I think there is a, there has to be a much more efficient way of sort of building against that demand, which is what we are doing from the, from the products that we are building out. Right. I think any, and I think government is very progressive in India. India is one of the, when it comes to digitization, I think it's pretty much top tier in the world. Right. So I think policy will keep making progress in terms of supporting the efficiency of that company.

Yeah. And the digitization has been fairly broad based, so tier 2, tier 3 is not far away. A quick word and if you can give me a quick answer for this one, Ashish. Overall you had the target of revenue growth of 25, 30% over the long term with the margin profile of 20% plus Rosie's 20% plus. Are you on track for that?

Yeah. So we look, I think we've been doing that for the last three years, so I think that's been the broader planning number for us all the while. Of course, I can't talk specific numbers, specific quarters, but you know, broadly we've been on track. I think we see a very good sort of Runway over the medium to long term in terms of continuing to stick to those numbers.

Runway for growth. Thanks, Ashish, for making time and speaking with us today, if you like.