1. Executive Summary
NavAlt is an Indo-French joint venture startup based in Kochi and built India’s first solar ferry – ADITYA. It was inaugurated by Sri. Piyush Goyal and Kerala Chief Minister in 2017. We won a lot of global awards and recognition, including Gussies Award for “World’s Best Electric Ferry” and Social Impact Award from our Prime Minister, Sri. Narendra Modi. It won customer appreciation with three- year operation carrying 10 lakh commuters and saving 1 lakh liters of diesel. Inspired by ADITYA, Kochi Metro (KMRL) decided to change its water metro project to electric boats instead of diesel-powered.
KMRL’s Water Metro project of 23 ferries of 100 passenger capacity and 55 ferries of 50 passenger capacity would have been a landmark project for our startup which has invested in developing the technology that would deliver on their requirements. It would have been a showcase project and a big boost to the startup community.
However, instead of keeping the experience of making electric boats as a criteria, KMRL kept only shipbuilding and balance sheet as criteria to select large shipyards for making small boats. However, for the propulsion system vendor, they selected NavAlt as the only firm in India along with eight other foreign firms for supplying the propulsion system. The key assumption was that the winner of the shipbuilding contract, having no experience in electric propulsion, will depend on propulsion suppliers to design the propulsion system. Cochin Shipyard (CSL) was the only bidder since the conditions in the tender prevented others from participating. After awarding the bid to CSL, terms like timeline were relaxed for them.
After signing the contract with KMRL, CSL came up with the propulsion tender for the supply of the key item in the boat, valued more than 50% of the project cost. In this tender, they limited the options by choosing one kind of system, the Common DC, that favoured suppliers who offer solutions on large ships. CSL with no experience of the electric propulsion system as such is not competent enough to choose the appropriate system (they specified Common DC) and eliminate another solution that is cheaper, better, more reliable and suitable for this size of boats – Common AC. Although this issue was raised during the pre-tender meeting, no explanation was given for the reason for their choice. Strangely, this tender was withdrawn, and a new tender released. This time a new condition was added – financial turn over criteria. The bidder is required to have 80 Cr turn over in the last two years. This ensures that a startup like ours with the technology and experience to deliver the optimal solution cannot participate. Given this new financial criteria, CSL which is driving this project does not need technology experience but just strong financials – a bank with a project management team could have easily qualified and would have been another replacement!
CSL also introduced other conditions to favour foreign bidders compared to an Indian technology builder by its differential import duty handling, payment terms, payment timing, payment currency.
Our request for a fair playing field was rejected. This project killed four main policy initiative of govt. of India – Startup India, Make in India, and MSME Support or Aatmanirbharata campaign.
2. Navalt and Aditya Ferry
NavAlt Solar & Electric Boats was found in 2013 with the vision to transform marine transport more efficiently by drastically reducing the energy for its operation. A solar-powered ferry that comes with low operational costs and zero pollution is among the most feasible solutions to combat this problem. Like any other startup company, our journey in the initial years was hard. The Kerala Government took the courageous decision to pilot a solar ferry in India and floated the tender. We grabbed this business opportunity. There were many naysayers in the Industry who claimed the solar boat will be a catastrophe. Most of the banks were reluctant in supporting us when we faced difficulty in managing the working capital. We had to overcome all challenges in working towards our aim. Considering the eco-friendly mode of transport MNRE had supported us with a customs duty waiver for importing lithium batteries which were a great favor in our tough times.
The result is ADITYA, India’s first solar ferry: a 75-seater passenger ferry commissioned by the Kerala State Water Transport Department (KSWTD) which can compete with any other ferries in the world on quality and technology. ADITYA is also the world’s first commercial ferry which runs on more than 65% from solar energy. This is the reason why it was chosen by the Solar Impulse foundation as an efficient solution that protects the environment in a profitable way and the recent Gussies Award.
ADITYA indeed brought fresh thoughts about adopting new technology in the water transport sector. Now while planning new projects in the public transport sector, a major thrust is given to environment-friendly modes. Even Kochi Metro Rail Limited (KMRL) adopted the idea of the electric boat for the water metro project scrapping their initial plan of boats with diesel engines. After seeing and evidencing the success of ADITYA, the State Water Transport Department ordered another five solar ferry boats and one hybrid cruise boat. The Department is planning to phase out all the existing diesel boats with solar boats in the next five years.
As a startup that planted the idea that could transform the waterways of India, we received accolades and awards including UNIDO’s global award for the best renewable energy product, including recognition from our prime minister during Pravasi Bharati Award 2017. International Solar Alliance (ISA) facilitated the visit of Ambassadors from 40 different countries to ADITYA last year to experience the ferry and 6 discuss the possibilities of replicating it in their respective countries.
3. How CSL won KMRL tender for Electric Boats without any experience
3.1. The Opportunity
In the seeding stage of a Kochi water metro project, a prestigious project of KMRL, we proposed the idea of a solar-powered ferry. KMRL got convinced and adopted the idea after looking at ADITYA and other electric ferries in France built by our technology partner. As the only experienced solar ferry manufacturer in India, we thought it is our responsibility to provide technical advice for nurturing the project. Being locally available and having proven high technical capability with the launch of ADITYA, we thought we had a great chance of winning such an ambitious project which could take us to the next growth phase.
3.2. The Issue and the Unfair Advantage
When KMRL came up with the tender for 23 electric boats of 100 passenger capacity with an advanced electric propulsion system, we were shocked to see the financial turnover criteria they had introduced. KMRL had planned to restrict the boat building to large shipyards like CSL (Cochin Shipyard Limited) using the turnover criteria.
As a startup firm, we could not meet this criterion. Most importantly the technological experience of the bidder in building the electric propelled boats were not considered in this tender even though more than 50% of the cost incurred is for the propulsion technology. This ensured that large shipyards without any technical experience, like CSL, could only participate. In all fairness, it must have been assumed that the propulsion system technology provider will make choices in the system based on their experience of meeting KMRL functional requirements.
Thus, CSL was the only bidder in this tender because of these conditions. Despite that, the project was awarded to them without a re-tender on nomination basis. For a 3000-crore turnover firm like CSL, this small-boats project is not critical and without any investment or experience in electric propulsion technology, they could easily take the project only because they are a large government shipyard. In this process, hopes of a startup like us, who invested a lot on this proven technology and innovation, was destroyed.
3.3. The Multiple benefits and Importance of Giving Equal Opportunity to Startups
Government Contracts are very lucrative business opportunity in India to grow big quickly especially for the startups or MSMEs. However, sometimes Government projects are awarded to large companies despite young technology startups offering competitively priced products. If we had got this project for construction of 23 boats, there would have been a massive boost to the startup ecosystem while also delivering on the project in a cost efficient and environmentally friendly manner. Our success story as a startup will boost the community as an encouragement for young entrepreneurs to develop innovative product and services. In addition, this would have enabled indigenisation of high technology in this space. In our plan, by the end of this project, we could have achieved 50% within India whereas CSL would continue to remain an assembler of the finished product of electric propulsion. More than funding, startups need business to survive.
When small boat building projects are awarded to large government shipyards like CSL, many small MSME yards are losing business and are at the verge of closing. If the number of small boat building units closed in India due to lack of business in last 2 decades are taken, it will show the gravity of situation.
4. CSL Tender for Electric Propulsion System
Although we lost a big opportunity to supply the boats as a complete solution, we still had hopes to provide the propulsion technology to CSL as they did not have this technology and they were bound to choose one of the approved technology solution providers, of which we were one. This was a significant order for us for more than 50% of the value of this boat is electric-propulsion technology.
4.1. We had support
As a startup working in Kerala, the entire startup ecosystem of Kerala was ready to support us. When we shared our concerns on financing for such a large project, Kerala Startup Mission (KSUM) assured to arrange a financing mechanism if we win the bid.
4.2. CSL’s lack of experience resulting in limited and inefficient system design
After signing the agreement with KMRL, CSL issued a tender for the purchase of the propulsion power train. Our greatest concern here was that CSL, with zero experience in electric boats, is narrowing down the technical specification for the propulsion system. Instead of the propulsion system provider choosing from different possible systems based on their experience and meeting KMRL functional requirements, CSL finalised a system eliminating other alternatives that could be cheaper, better, and reliable, and suitable for this size of boats meeting the KMRL functional requirements. CSL decided on the Common DC architecture, the flavor of Siemens, which is usually found in big ships.
Another sign of lack of experience was the total unrealistic timeline for delivering the first set of propulsion unit (development time) and lack of time between the first and second sets (feedback after testing).
5. Types of Electric Propulsion Design
A typical electric propulsion system for boats has three possible approaches to the system design – Independent DC/AC, Common AC, and Common DC. Here AC and DC refer to the type of electric current – alternating and direct. ADITYA is an independent DC/AC system for complete system redundancy. However, for some strange unconvincing reason, KMRL needed an option to connect the port and starboard systems to run both the motors with one battery bank intact. In that scenario, only two possibilities arise – Common AC and Common DC.
5.1. Why Common DC is not the optimal solution
In Common DC, the DC bus is interconnected with fuses in-between. Since the DC bus has low impedance, if there is a fault on one side, the fuse will blow and the other side will not be redundant. Another cause of a chance to fail is that since DC is interconnected, there should be a common management system to control the whole unit. However, it seems quite ambiguous that following this architecture and in the event of failure of a common management system, the redundancy of the whole system puts to question. It needs many more additions to obtain the necessary reliability.
In an electric boat, there are two reasons why a generator is placed. Firstly, to provide the energy if the boat has a high-speed mode along with cruise speed. In high speeds, the generator provides the required power, either completely, or in KMRL’s case, partially. The second reason is to provide redundancy to the system if the DC system (PMS, BMS) fails. In that scenario, the generator should be able to run the boat directly. In the system proposed by CSL, the second function is missing. If the DC system fails the boat will not be able to run by generators.
In comparison, a Common AC does not have any of these issues. A common AC system can be created in three ways – a single generator, two generators with or without synchronising. A single generator is sufficient since the generator is not used in normal mode, i.e. cruise mode. However, if redundancy is needed it could be done with two generators with synchronisation or without keeping one as a backup. A single large generator is 40% cheaper than two small generators. KMRL had reservations on synchronisation although, in our experience of designing eight multi-mission boats for the French Navy, it has been working well for the past two years. If synchronisation is to be avoided, our recommendation is to keep the second generator as a backup. In any of these cases, even if the DC system fails, the generator can run the motor without PMS and BMS.
6. How MSME and Startup benefits do not reach them
We tried to point out the limitation of the CSL proposed system in terms of DC redundancy and Generator redundancy both before the tender finalisation as well as during a pre-bid meeting. However, CSL neither showed any interest nor gave any technical reason for their sub-optimal choice. They did not justify the reasons for the choices they have made and the criteria they had introduced as part of the tender process.
In the initial limited tender inquiry floated on 1st January 2020 to the approved list of vendors selected by KMRL, the financial eligibility criterion was not included. But after the prebid meeting on 14th January 2020, CSL re-tendered this inquiry adding a new and unfair financial eligibility criterion. As per the new criteria, the bidder should have a total turnover of Indian Rupees 80 Crores (2 years together) during the preceding two financial years. As a startup firm, we will not meet this criterion and we are losing another business opportunity for reasons that cannot be justified. CSL is claiming that they have added this criterion to reduce their financial risk in case the contractor is bankrupt. But it is very evident that they introduced this condition to restrict us and bring in foreign vendors. They also ensured that neither they answered the prebid queries citing tender cancellation nor conduct a prebid in a new tender to facilitate raising the unanswered queries.
KMRL had selected the potential power train suppliers including us based on the experience criteria. They had not specified any financial criteria which shows that their focus is on getting a vendor with the best experience to deliver the technical solution. Now CSL has added a financial turnover criterion in the re- tender which stops us from participating in the tender. We believe as per the startup India policy, all startups are exempted from the “prior experience/turnover” criteria applicable for normal companies answering to government tenders.
Unlike CSL, a startup MSME, NavAlt offers a complete solution to the client. The entire process from design to construction, including the integration of propulsion power train, was done by us which made ADITYA successful. CSL, a 3000 Cr turnover company with massive infrastructure, cannot offer this solution. They merely act as an assembler, since they have not invested in creating this technology which is the critical element in delivering on the KMRL project. Looking at CSL’s annual report one can easily see that they import 60% of their materials (1029 /1796 Cr) and they have a net forex outflow is 1131 Cr. Such firms are gatekeepers of Aatmanirbharata!
Even though the GOI has announced ample support to startup and MSME firms, Government PSU like CSL sidelines MSMEs and startups. Our technically proven proposal was rejected even after explaining the benefits in detail, because they were looking for big foreign players which works against the “Make in India”, “Start up India”, “MSME Support”, or “Aatmanirbharata” campaign.
GOI must walk the talk on their policies and tame the organisations that work againts their policies.