EIL, GAIL are working on Hydrogen Project: Vartika Shukla, CMD

Vartika Shukla, Chairman & Managing Director (CMD), Engineers India Limited, talks about the surge in crude prices, investments, order book situation, benefits of Hydrogen Policy and government policy for strategic sectors among others during an exclusive interview with Swati Khandelwal, Zee Business.

Edited Excerpts:

Q: How do you celebrate Women's Day and what is your view on it? How challenging the leadership position and role has been for you as a woman and what is your message for women who aspire to be women leaders? 

A: Congratulations to you all, especially the women for the year's women's day celebration. The tagline for the year's women's day celebration is #BreakTheBias. First, let me take you to a point that being a woman in the engineering field in which I got my education and joined Engineers India directly after college. The atmosphere that I got in this company and that environment is maintained to date. It gives proof that the women's power in this company has always been on the forefront and everyone has worked shoulder-to-shoulder and have made an equal contribution on all fronts. 

Our ladies and many times even I visit the sites and stay there for several days, implement the projects as Engineers India has a consultancy business of project management. Going forward, I feel that women who come into the engineering field - which would have been counted on the fingers at the time when I pursued my Engineering course - has gone up to around 15-20% today. 

In the same manner, over the years, when their intake will happen in different our companies. Especially in our company, we have 12% women, which is the highest in all the public sectors and this is an example that the environment and opportunity are provided to our women and on equal footing, they are given opportunities to excel and I am a live example of the same. In such a situation, moving ahead by exploiting this opportunity and taking the challenge is a big potential, which is required to bring diversity and bring different opinions to the table as well as to work together to take the country and the company ahead.

Q: As the company is closely associated with the oil & gas industry. How do you see the current surge in prices and what impact do you see of the same? What is your estimate as to how the global commodity dynamics will shape up in the coming days amid what is happening geopolitically and how are you gearing up to take on that challenge?

A: It is a big question for our country wherein almost 85% of the crude is imported and we are largely dependent on oil imports. So, self-reliance is the primary objective towards energy security. But as a company, we see that many energy transition factors are coming like EVs, hydrogen and renewable has a space. So, we look at it in two ways in our company. In terms of geopolitics, it is expected that it will not create pressure on the crude prices for a long time and we might have stability, which is very difficult to forecast. However, it is important to prepare, so, on two fronts, the company is preparing and they are:

(i) The petrochemical business from the crude and the growth of petrochemical is around 6.50% and it is around one-and-a-half times the GDP. So, the business of petrochemical is a very important business for our Atmanirbharta (self-reliance) as which is imported for more than 1 lakh crores. So, our petrochemical business has been quite strong and we will increase it further.

(ii) We are also focused attention towards our diversification in which green technology, carbon-neutral technologies, net-zero technologies - a target set by our Prime Minister and should be achieved by 2070 - and towards it we are encouraging our engineering capabilities, technology capabilities and strengthening ourselves. So, that we as a company can bring business in both sectors.

Q: Do you expect that investments will increase in the oil & gas sectors as prices remain at elevated levels? What are your clients telling you?

A: It is a cash 22 question for the country because we have to make a lot of efforts towards Atmanirbharta (self-reliance) and today, we are the exporters of the finished products. So in this, our and the country's position is on both the sides in which we import to fulfil our needs and also export some petroleum products. It is an aspiration for the country that we should grow and we need the energy to grow.

So in the medium phase, in the next 10-20 years, we will find that we will have to bridge the petroleum demand growth and if we do not do so then this import and export of the petroleum products will reduce a bit. This is why there is a need for an investment in it and many of our clients are looking forward to revamping themselves. In this, it is not necessary that a new Greenfield is established as many of the complexes can be revamped and capacity can be increased at less cost. So, there are many projects that we are seeing along with our clients and investments are on the table, which we are very closely working on.

On the second hand, as I have said about the conversion of crude products to petrochemicals, which means, crude has been imported but its conversion happens into a value-added product, technology-driven product, it is a second thing. With these two factors, we are quite positive that investments are on the table and the refinery capacity is projected to be around 440 million tonnes (MT) by 2030 for which investments are required. The transition that is visible at present has policy interventions and many more factors that will give momentum for the growth. So, both are moving together. We have to invest to grow due to which we are hopeful and are getting such projects and we are into the discussion but we should also have preparedness for the future.

Q: What is the current orderbook of the company and what kind of orders do you expect to win in Q4 and overall 2022? How do you see your order book growing? What is the overseas orderbook looking like currently and any new geographies you are looking at? Do you have any exposure to Russia or any other European nations and can the current conflict impact this business?

A: We see this in two ways. Our current order book stands above Rs 8,500 crore and my team and I are very confident that this orderbook will increase substantially next year. Many things are in discussion now, which will convert into a project next year. Because there is a cycle, feasibility is created, there is inclusion, discussions after which they convert into projects and investments. Today, we are working in many areas like petrochemical, Petronet LNG, BPCL, BINA. 

We are working on all of these and they will convert into projects. So, our orderbook is going to substantially grow next year and very significantly. In terms of the international world, we have an office in Abu Dhabi, which has done quite well this year despite COVID and a lot of challenges of international travelling. We expect that we will focus on the neighbouring areas of Abu Dhabi. In terms of diversifying the geographies, we are present in Nigeria and we are looking forward to more clients in Nigeria itself. We have won an LNG project over there and we are working on it. 

And, in and around there are some discussions where we are hopeful that we will expand. The FDIs and the investment decisions are due to many reasons abroad like the net-zero, the international companies are looking very closely and are monitoring that how to invest in fossil fuels, the conventional carbon-based fuels. As far as the geopolitical situation is concerned, as we are a consultancy, we do not have a direct exposure but have business exposure in it, so, there can be a slight decline in reaching out, travelling, meeting clients but we will overcome it through virtual meetings and more. So, we will be able to go out and do the same dialogue and interventions even in the international arena.

Q: The Hydrogen Policy Phase-I has been announced by the government. Do you see any future opportunities for your company from this and what role can EIL play here?

A: Hydrogen is a very complex and a new technology subject and we all are in a learning stage in it both the technology providers, consultancy companies like ours as well as refinery enterprises. So, we are working with GAIL as a natural gas pipeline that is spread across the country, which is more than 15,000 gas pipelines, and in it what percentage of hydrogen should be mixed in it so that it can provide an impetus in the gas market. We are seeing that huge opportunities are available for EIL in these kinds of consultancy segments. 

The second area is green hydrogen and it by bringing a price parity, which is a breakeven point, where the green hydrogen can replace the current hydrogen which is a fossil fuel-based hydrogen. In it, few parts of the policy have been addressed like there have been policy interventions in power purchase and power facilitation. Similarly, the land opportunities are there to facilitate plants that are going to come up in the SEZs kind of thing or give impetus to exports in terms of providing spaces in the port areas. These things provide an opportunity to the investor that an investment can be made on these things. If there is an investment then it means projects will prop up and if projects are there then it is sure that EIL will look for a lot of opportunities for consultancy in it. So, in this way we see a lot of opportunities in core strength areas of engineering, consultancy, technology, project implementation and procurement as per government guidelines.

Q: Government under its PSU policy said that it will have a focus on the strategic sector and it will exit from the non-strategic sectors and a lot of consolidation will happen in the strategic sector. When we talk about consultancy then there are many PSUs in the area and EIL is the big one in it. So, do you see opportunities to merge any other consultancy firms with yourself?

A: Rightly said, the government has clarity on this subject but I would like to say that we are the only consultancy organisation in our strategic sector of oil and gas. As far as the merging of other consultancies is concerned then there are several reasons and discussions on it but as of now, there is no decision on the subject by EIL. It has some benefits as it projects an Indian organisation at the global stage but as of now, there is no such discussion on the table. Anyway, we are a global organisation, we are competing globally and have all services in our umbrella and we are making certain changes in those as business units to get more revenue, presence, not only in oil and gas sector but also in other diversified sectors.

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