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Mr. Fati Elgendy, President, Perma-Pipe Inc.

14 May 2015

‘Insulation is going to be a big business in India’

Perma-Pipe Inc., a leading North American manufacturer of pre-insulated district heating and cooling piping systems entered India in 2008. Since then there has been no looking back as the company has managed to make a firm ground for itself here. President Fati Elgendy, seen as a ‘turnaround artist’, who has been with the company for over three decades, spoke to InfralinePlus via email about his vision for the company’s India arm and its prospects in the country.

Let me first congratulate you for Perma-Pipe Inc. has received various orders totaling approximately $45.5 million to supply engineered and insulated piping products for new construction projects in few geographies. How do you react?

Although 2014 was challenging and the beginning of 2015 will be as well, we believe that we are successfully positioned for a much improved 2015. We are delighted to have been selected to supply insulated chilled water piping systems for the early phases of several marquee, world-class projects in Saudi Arabia and Qatar. Our analyses indicate that Perma-Pipe is now the undisputed market leader in the Middle East and, specifically, in the Gulf Cooperation Council market, and our quotation activities in the region are at our highest historical level ever. All of the projects for which we have been selected offer significant future business opportunities, as their development is planned to continue for many years to come.

Let us now focus on India now. Given the dependence on oil and gas for a country’s economic growth, where do you see India standing at this point in time?

India is diversifying its sourcing of oil and gas, exploring for its own resources, both onshore and offshore, as well as modernizing, updating and upgrading its offshore flow lines and transportation lines.

What are the challenges before Indian companies that wish to go for pipeline insulation? Is cost a concern, keeping in view the state-owned oil marketing companies’ dependence on the government for subsidies?

In the wake of global crude prices, are margins also a matter of concern? Insulation and, sometimes, heat tracing a pipeline is utilised for flow assurance. Heavy crude is very viscous and cannot be pumped from one location to another unless heated and insulated. There are other methods and technologies for heavy crude transportation such as heated tanker trucks which are very expensive, keeping in mind the current state of road infrastructure in the country. Also, some chemical additives can be used to decrease the oil viscosity and, hence, improve its flow ability. Our solution for providing long-term, dependable and quality insulated (and sometimes heated) pipelines is the best solution for heavy crude transportation. It is efficient, long lasting and environment friendly. Of course, economic concerns are part of every decision making process in India or in any other country, but we have been very successful when given the opportunity to demonstrate our solutions.

Are more companies willing to go for insulation? What kind of safety cover would your technology provide in oil and gas transportation and how financially viable will it be?

We are experiencing some success in the Indian market and getting a lot of enquiries about insulation. We have served major Indian oil & gas companies from within and outside of India. Our technology provides long-lasting and long-term solutions for heavy crude transportation. We also supply solutions to most international and multinational oil companies in the Gulf of Mexico, Latin America, West Africa, Middle East and now, in India. Our technology make the pipes corrosion protected, insulated and installed, which is why they are the safest and the most economical bet for heavy crude transportation.

What kind of growth opportunities do you foresee in the sector? Are you also mulling over tie-ups in the Indian market?

We have started our fully-owned facility in India as we see a significant opportunity in providing insulated pipeline solutions for heavy crude and sulphur transportation, in the nuclear industry as well as in the district heating and cooling markets here. With the Indian economy growing at a steady pace, a larger segment of the middle class would be able to afford heaters and air conditioners. Till now, these needs were met with split units and central air conditioning. However, district cooling and heating save approximately 50% of the power requirement, they are easier to maintain and economical. We believe that this nascent market will grow and prosper. Our goal is to serve diverse market segments, and train and keep the best Indian talent gainfully employed. We strongly believe that business is people. Hire the best, train them, respect them and give them room to grow and prosper because if you take care of your people, they will take care of you.

Your company has tie-ups with few private Indian companies. How do you propose to move forward? Do you have plans to get associated with state-run firms? Are government policies conducive to the segment’s growth, or there is a need for policy reforms?

We would like to stay independent but work with every reputed Indian firms and work towards providing a “one stop shop” for all customer needs. Currently, we are not looking for tie-ups, however, we never say never, so we will carefully evaluate every opportunity for collaboration presented to us in due time.

Any plans for a tie-up with any marketing firm? Also, besides insulation, are there any other products that you might offer to Indian companies?

Insulating pipes for transporting fluids underground and above ground is our core business. We have over 50 years of experience in this field and we want to continue to offer the same in years to come.