‘We plan to diversify into new areas’

With the highest performance ranking for 1999-2000 amongst all public sector units under the Ministry of Petroleum and Natural Gas, Engineers India Ltd (EIL) has set a target of Rs 720 crore for the value of services to be rendered by the company during 2001-2002. In an interview with Jyoti Mukul of The Financial Express, EIL chairman and managing director Keshav Saran outlines the company’s strategy to deal with the challenges ahead especially those that will come up by the dismantling of administered price mechanism. Excerpts:

EIL is planning to diversify. Is it because the company foresees less business for itself in its niche area of hydrocarbon sector?

EIL has decided to diversify in various areas of infrastructure which includes mass rapid transit system, highways and bridges, airports, ports and terminals, intelligent buildings, specialist materials and maintenance services, refractory services, information technology, power and non-conventional resources of energy. The project execution scenario in general is now changing from EPCM (engineering, procurement, construction and management) to LSTK (lumpsum turnkey) mode. Our core area of operation, thus will still remain the hydrocarbon sector. While we are making all efforts to increase our business in LSTK projects, diversification has been planned in order to exploit fully our strength in engineering and project management areas, particularly in the fields where huge investment is going to be made in the next couple of years in infrastructure like highways and bridges, power, airports, ports and terminals.

Today, when it is thought that the government should move out of new businesses, your company is planning to get into new areas. How will it help the company’s prospects especially since it has been recommended for disinvestment?

As far as disinvestment is concerned, it is a matter for government to decide. Our strategy planning for growth is an ongoing process and diversification into new areas is just one of such strategies. Our economy today is on a new threshold due to increase liberalisation of economic policies, competitive environment, dismantling of administrative price mechanism for petroleum products and a renewed thrust in hydrocarbon sector in particular and energy in general. In the circumstance, EIL is now required to play a very important role in the economic development of the country; not only in hydrocarbon sector but also in various areas of infrastructure.

Do you see more competition for your company post dismantling of administered price mechanism in the oil sector?

Competition is a way of life and we have taken steps to face competition. We have latest technologies and will continue to update as per the requirements wherever necessary. We got a number of jobs through competitive bidding against various bidders in India and also overseas. We are also bidding more and more against international competitive bidding including lumpsum turnkey (LSTK) basis. With more liberalisation and change in business scenario, the market may become more competitive and we have taken steps in this regard. We are confident that we shall be able to get more and more jobs in this competitive era.

What are the areas of strength for your company?

EIL’s main strength is its highly skilled and technically competent manpower who have vast experience of working in various projects including overseas assignments. EIL has accumulated, over the years a very large data-base for hydrocarbon plants. Moreover, we have worked with almost all the major licensors, technology suppliers and contractors.

EIL has provided its specialist services such as process design and basic engineering, heat and mass transfer equipment design, plant operations and safety, environmental engineering, risk analysis, corrosion control, health check equipment and advanced control and optimisation for a large number of plants.

EIL has creditably worked abroad in several countries of the West Asia, North Africa and South East Asia including Algeria, Bahrain, Iran, Iraq, Korea, Kuwait, Malaysia, Norway, Qatar, Saudi Arabia, Sri Lanka, the UAE and Vietnam.

As the Indian government is considering more infrastructure development, it has been felt necessary to utilise EIL’s expertise in this area. Therefore, we decided to set up a strategic business units in various areas of infrastructure. In some areas as needed, strategic alliance would be done based on the requirements. This will be decided as and when required.

Do you think that the company faces the problem of a huge set-up and needs to rebuild its image of a quality service provider?

Our image as a quality service provider is very high. We believe that our achievement in the past and our planning for future which is expected to bring good results, making the company brighter and shining further in days to come, would be the best image provider. We additionally are taking steps to make our work achievements and capability known in various sectors within the country and outside.

Engineers India Ltd (EIL) was formed in 1965 with the objective of providing engineering and technical services to hydrocarbon sector. Where do you see it now and how far do you think it has moved since then?

Traditionally, EIL has been serving the process industry providing a complete range of project services. Initially, it started with engineering work for petroleum refineries. But diversified, over the years, to add other activities as well as other service.

In response to the changing business environment, EIL went through several stages of development and has gradually evolved into an engineering company serving a wide range of industries including petroleum refineries, power, fertilisers and metallurgical industries providing a complete range of project services. EIL has been conveniently doing work on EPCM basis which implies that EIL gets associated with the project right from conceptual stage itself and provides complete services viz. feasibility studies, basic design, detailed engineering, procurement assistance, construction supervision, commissioning assistance and of course the overall project management.

Now, the petroleum companies are switching over more and more to LSTK basis in addition to the conventional EPCM jobs. We have already done a few LSTK jobs and are bidding for more such jobs.