Limited (EIL) today is Asia’s leading design and engineering company. The
company, which has clients spanning the hydrocarbon sector, is now looking to
branch out into the infrastructure segment. In an interview with Infraline Plus’
Neeraj Dhankher, EIL’s C&MD, A.K. Purwaha, talks about the company’s
priorities and unique role in the face of stiff competition from private
players, investment areas as well as plans to increase international presence.
The following are the excerpts:
How much of a priority is the oil and gas sector for EIL today considering that the company has branched out to sectors like airports and infrastructure?
EIL has a core focus
on hydrocarbons across the whole value chain. In the upstream segment, EIL
started in the 1970s partnering with ONGC, building the required infrastructure
for Bombay High. Before that, we had already taken our position in the
downstream by building the country’s refineries, starting with the Madras
Refinery in 1967, now run by Chennai Petroleum.
EIL as it stands
today began its journey in 1965 with Bechtel. The Government of India decided
that this was the right time for India to begin building its capability in the
hydrocarbon sector, and identified the downstream sector as the place to start,
particularly the refining sector. Within two years, EIL was able to build its
competencies to an appropriate level, and transformed into a Government of India
undertaking. The company took on its first refining project in 1967, and in 1969
we started working on petrochemical projects.
Today, to EIL’s
credit, there are 20 of 24 refineries in the country, 9 of which were grassroots
refineries built by us and another grass root refinery at Bhatinda is close to
completion. In this sense, Engineers India is unique, being probably the only
company in the design engineering and project management consultancy segment who
have more than 50 large refinery projects to its name. In the petrochemical
segment, there are 8 completed plants, 7 of which were built by EIL, with two
more grass root plants with dual fuel capabilities are in the construction
EIL repeated its
success with refineries in the gas-processing sector. All the C2+ recovery
facilities in the country today passed through the offices of our company, and
today we are putting those facilities in place. We have also had admirable
success working on LPG recovery facilities.
basin, off India’s east coast, is a gas find comparable to those found in the
North Sea. EIL is now working with GSPC, one of the major operators in the basin
after Reliance Industries, in order to build up their facilities there. EIL is
involved in the project as project management consultants, providing jackets,
well platforms, a process-cum-residential platform, offshore pipelines, and
onshore processing facilities. Apart from the drilling aspect of the project,
EIL is handling everything.
What opportunities in the gas business are you currently looking at?
I have been
associated with many different aspects of the hydrocarbon sector during my
35-year career. In the initial stages of my career I worked at ONGC for 9 years,
before serving for over 24 years with GAIL. With GAIL, I saw the evolution of
the entire gas sector. EIL has its core strength in the hydrocarbon sector, from
upstream to midstream and downstream. We will continue to look towards that
The development of
gas infrastructure in India will play a key role for EIL in the future, because
today natural gas is only available in small pockets of the country, and in the
future we fully expect it to reach across the whole of India. In order to
achieve this, there is a vast need for more cross-country pipelines, connecting
different communities across the country and bringing gas to the end-users. City
gas distribution is another aspect of gas infrastructure that is currently only
happening in a few places around the country, but in the years to come will play
a much more important role in the Indian energy basket.
EIL has stated the importance of moving more into Lumpsum Turnkey (LSTK) projects. It has been seen that in general, the PSUs are more open to this type of project than private sector players in India. How have you found the market so far in this regard?
Every client today wants their projects to be completed as quickly as
possible, as every day wasted between commissioning and completion costs the
company an incredible amount of money. Engineers India has evolved based on this
principle, and has developed a number of different solutions for every possible
situation. It is not a matter of one solution being better than another; just a
matter of tailoring a solution to each individual client, their organizational
structure and their expectations. With its long association with Indian
hydrocarbon industry, EIL has always been aspiring to provide value added
services to clients for enhancing their experience into customer delight.
In the future, we expect rather than one solution becoming dominant in the
industry, that it will remain as a mix of different project management styles.
Those clients without initial infrastructure or an existing resource pool will
inevitably prefer a project with one point of responsibility, leading them to
LSTK projects. However, others with reasonable resource pools and their own
project management capabilities will look to control costs and source their
engineering and construction work from a variety of different offerings.
EIL is known as Asia's leading design and engineering company and you have successfully internationalized the business. What has been the company’s experience so far?
With 46 years of
experience, EIL has built more than 50 major refinery projects, seven grassroots
petrochemical projects, all the gas processing projects in the country and built
up over 60% of the country’s oil and gas pipelines. This is an impressive
achievement for a single company. As a result, our company has a huge pool of
knowledge and experience available in-house, and we have evolved and
continuously improved our systems, processes and databanks, and most importantly
our delivery of quality engineering services. Out of all the projects on which
EIL has ever worked, we have always met every single deliverable that was
required of us.
In 2009, EIL was
appointed against global competition by the Oman Oil Company, for suggested
solutions for value maximization of their existing Sohar refinery, which was
originally built by a Japanese consortium. From day one of its commissioning,
this project has not achieved stable, un-interrupted operation nor the design
product yields. After trying for couple of years to address specific issues in
the plant, in 2009 they invited different engineering consultancies to the
plant. EIL was also qualified for the work and eventually we were selected. We
completed the strategy for the plant in about 4 months, presented it to their
government and the cabinet, who accepted it. Government of Oman & Oman Oil
Company are proceeding with the implementation of the refinery modification plan
as per EIL recommendation. In 2010, EIL was appointed detail engineering
consultant against global competition by National Petroleum Construction
Corporation, Abu Dhabi for EPC installation of their Qushawira Field Development
Project for Abu Dhabi Company for On-Shore Operation (ADCO). Construction
activities for the project at site are in progress now.
EIL does not yet have a major presence in many countries, because we have been
very busy in our home country, developing the hydrocarbon sector. Going forward,
we are looking to these countries much more closely. Today we are working in Abu
Dhabi, Oman, Qatar, Venezuela, Algeria, and Ghana, and you can expect to see our
presence in many more places in the years to come.
Financially, EIL is a debt free company and sitting on a large amount of internal resources. Which are the key areas in which the company will look to invest internally in the years to come?
We will be looking
to invest in areas where there is a synergy with our existing business. Our
prime role will continue to be design, engineering and project management,
because those are the company’s core strengths. We will also be doing a lot of
activities on LSTK basis, but as I previously stated, we do not expect LSTK to
completely overtake EPCM contracts in India.
investments will be in related projects on the fertilizer and power side, city
gas distribution and pipelines. We will be looking towards these investments as
the opportunities present themselves. In many places we may look to be the
operating partner on projects, but otherwise we may take a smaller stake if the
size of the project is too large for us to handle.
EIL is looking to reach a turnover of $1.1 billion USD by 2014. What are the biggest challenges that you will need to confront in the next few years in order to make this a reality?
strategy is based around reaching this target, and perhaps even higher, by
continuing to focus on the hydrocarbon sector within the country, to look very
closely and more vigorously at the overseas market in the hydrocarbon and
non-ferrous sectors. We are also exploring opportunities to diversify into the
areas of wastewater management, nuclear power, thermal and solar power, city gas
distribution and fertilizers. Internationally, our aim is to find more work in
relatively untouched markets like Venezuela, which we have already started to
do. We are also studying how we can start working in countries like Brazil,
which is another region with a lot of hydrocarbon activity. As our experience is
predominantly in onshore projects, we see a lot of opportunity in countries like
Brazil once the product comes back onshore.
The PSUs have been largely responsible for building the oil and gas industry into what it is today, but in recent years there have been a lot of changes in India, from the liberalization of the industry to the diversifying roles of the PSUs. Given this situation, how would you define the unique role of EIL today?
company is unique in its partnering relationship with all of its esteemed
clients, whether public or private sector. This has developed well since the
company began. Initially, the company’s only interactions were with the Indian
public sector, as these were the only companies involved in the oil and gas
industry in the country. Today, we have seen that the market has been
liberalized and the world has entered India, and EIL has learnt to deal with its
new clients just as well as it did with its old ones, who are still very valued
clients. Our recall value and return business rate are proof that we have
managed these relationships very well, even in this brand new industrial and
economic environment that we are facing today. As the years progress, we hope
that the confidence our clients have in us will continue to be our greatest
What are the major challenges faced by EIL in the past ? How did the company address them and how do you see them change during the next ten years?
EIL on its part has played a significant role in
shaping the hydrocarbon industry of India by developing significant indigenous
technology and expertise for offshore platforms, oil and gas processing, oil
refining, petrochemicals and pipeline projects.
Over the years, EIL has developed database of
around 2000 suppliers. We have also helped developing manufacturing capabilities
of indigenous suppliers resulting in by reducing the imports from 60% to about
10% in hydrocarbon sector.
High attrition rate due to better employment
opportunities in country and abroad was the major challenge that knowledge base
companies like EIL had to encounter during last decade. Improved remunerations,
structured incentive programs and amicable HR policies facilitated EIL to retain
its best talent pool. Attrition rate at our company during last year was less
On operational front, business dynamics in
hydrocarbon sector has changed immensely during last decade. For example, the
cycle time of completion of a grass root refinery has reduced from 5 years to
three and a half years posing immense challenges in all facades of project
These challenges requires us to leverage the
knowledge base in Project implementation through standardization, smoother data
management, creating dedicated cross functional teams, close monitoring and
system improvements, envisaging bottlenecks at the time of project formulation
and improved supplier and contractor management.
(InfralineEnergy thanks A K Purwaha, C&MD, EIL for sharing his valuable insights with our
readers. The column 'In-Conversation', is a platform to engage
experts from various sectors to share their views on the different
transformations happening in the Indian energy sector.)