Pace Digitek Powers Into the Battery Storage Race With Containerised BESS Push

Newly NSE-listed Pace Digitek, a telecom business that has expanded from telecom to the battery storage segment, is looking to build containerised battery storage and plans to expand its industry footprint with its new battery energy storage facility. The firm's energy storage division is set to power growth, even as fixed contracts in the telecom space provide it a steady revenue source in the EPC business that can be lumpy in terms of revenue recognition. One reason why despite a slightly underwhelming Q2, the firm stuck to its guidance for the full year, expecting better revenues in Q3 and Q4. The firm recorded a turnover of INR2,439 crores in FY25, and has given guidance for over Rs 2600-2700 crore in Fy 26 with a PAT margin of 11-12%. For Fy 27, the firm has guided for a topline of Rs 3100 to Rs 3200 crore, with a similar margin profile.  

The Karnataka-based company’s Director, Rajiv Maddisetty, during an investors’ call, shared future projections to increase its energy projects order book by Rs. 8,000 crore to Rs. 10,000 crore before the end of this financial year. The firm has won 4 major projects in the recent past, including one through its subsidiary. The three direct wins include We one project from SECI for battery energy storage system  for INR1,159 crores for 600/1,200 megawatt-hour battery energy storage system supply and installation an  EPC project that should be completed by Fy 27.  
It also won an O&M contract with the telecom company TTL, Tata Teleservices, for  INR185 crores for a period of three years. Then there is an  EPC project for solar plus storage with MAHAGENCO for a value of INR920 crores. These help take its order book of energy projects to INR5,869 crores, and telecom projects of INR3,266 crores, Currently, the company is engaged in three types of projects:

1. Manufacturing and supply of the product itself for multiple customers,

2. EPC projects, which it hands over to the customer,

3. Asset-owned business, which builds, owns, and operates the battery energy storage system project over a period of time.

BESS Projects & Container Fabrication Backward Integration

Pace Digitek has seen rapid growth in the BESS segment. Rajiv Maddisetty highlighted two key developments in Q2, specifically in the BESS segment. He said the company has started construction of its battery energy storage system facility and has, to date, developed a 5 GWh facility, with another 5 GWh facility commencing on the same premises.

Maddisetty also shared the company’s plans to move into backward integration by adding a container fabrication unit to support its backward integration efforts and ultimately support cost savings for battery energy storage systems production.

He mentioned the company’s expansion into executing EPC and developer projects, usually for state discoms or public sector companies like SECI or NTPC. The company said it is also working on projects with private customers as a manufacturer and supplier of equipment. Currently, it is doing direct supply and is working on developing projects with major suppliers extended to discoms and central government PSUs, along with supplies to the private sector.

Managing Containerized BESS Pricing Margin in India

Digitek has also stepped into the containerised BESS market. Rajavendhan P spoke during the call about having a 15% to 18% product margin in this segment.

The company said that to meet its lithium cell requirements, it relies on imports. Describing the process to insulate themselves from fluctuating market prices, CFO Rajavendhan P said, “When we get some orders signed off, what we do is that back-to-back, we go and sign off with the supplier and freeze the prices and we ensure that the price doesn't fluctuate. We are not affected by the price fluctuation when the price moves from, say, $35 to $33 or $32 or $38, $40. We are not impacted by the price fluctuation within the permissible range. So, we ensure that we book back-to-back pricing with the supplier.” Containerised battery imports attract a 20% import duty versus Lithium cells at 5%, giving the firm an advantage for building its own containers. 

Pace Digitek subsidiary Lineage Power Private Limited has also received a ₹1,994.20 million (Rs. 199.42 crore) order (including taxes) from Larsen & Toubro to construct and supply Battery Energy Storage Systems (BESS). The company explained the latest order includes the supply of LiFePO₄ liquid-cooled BESS integrated containers for the Bihar State Power Generation Company Limited, Kajra.

Differing Import Duty

Rajavendhan P also how building its own containers helps the firm control prices and margins. 
Explaining the cost difference between the two, he said a container needs to pay a duty of about 20%, and lithium-ion cells attract a customs duty of about 5%. So, there is a clear arbitrage between the import of two different components — raw material versus finished goods. Additionally, there is the advantage of pricing in this by building its owwn containers for Pace.

Chinese Market Continues To Dominate the Container Market for Lithium-Ion Cells

The firm says it has a tie-up with four different companies in China for supply. And all four are among the top 10 cell manufacturers in China to ensure lower risk of suppy disruptions. 

Management View On Recent Tender Bids

Interestingly, Madisetty, when asked for a view on the recent BESS tender bids that have pushed the floor down significantly, had this to say. "We see that that numbers are closer to impossible and because of which this will go through a correction over the next few months.  And since again, like I said, since we are manufacturing the product here, we know the lowest what we can go to and we see that the numbers being stabilized in the coming months and we are confident in that. "