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Interview

with B Balaji, President, Sulzer India Limited

28.07.2011 / Energyboardroom

Mr Balaji, you started alongwith Sulzer’s Indian operations back in 1988. Can you come back on the main developments of Sulzer in India that have led the company from inception to success?

At the beginning, we were a multi divisional company for the Sulzer group, engaged in a variety of products. For a major chunk of the product portfolio, we were only operating as a sales office in India.

Sulzer was a conglomerate in former times, involved in diesel engines, textile machinery, which later started manufacturing mass transfer components in Kondhapuri, near Pune. There has been in fact a major restructuring of the operations within Sulzer group over the last two decades with the exiting of several business lines.

Until early 2000, Sulzer India’s business had two major verticals. One was the compressor division, which we eventually also span off as a separate company – today in neighbourhood – the other was the mass transfer division which ultimately became Sulzer India, dealing today with mass transfer products, as a subsidiary of Sulzer Chemtech. Another company, Sulzer Pumps, with manufacturing facilities in Thane, outside Mumbai, also operates in the O&G and power sectors.

What is the strategic importance of Sulzer India for the group’s global operations?

Sulzer India is Sulzer Chemtech’s major manufacturing hub for the region – encompassing Europe, Middle East, Asia, Russia and Africa. Sulzer Chemtech does have specialized product manufacturing operations in Switzerland, but the part of manufacturing for larger projects is done out of India.

Considering future growth prospects in Russia the group also recently started a manufacturing unit in Russia. However, India likely to remain the main factory for the region. This is to address both the local market and the export markets.

What is the break of turnover between international and domestic operations?

It is approx.50%. The strategic role of Indian facilities for the group’s global operations is bound to grow, considering Sulzer Chemtech’s thrust to increase more capacity in India.

What is the contribution of O&G to the revenues?

For us mass transfer division, O&G is a very critical market, especially downstream, in refining, chemicals and petrochemicals. Whereas most of the refiners used to be pure refiners, there were petrochemicals companies in Private sector who became refiners over the years, and today we also have companies in Public sector who have moved into petrochemicals. As the fields are getting spread out, Sulzer India works both on petrochemicals and refining markets.

How challenging is it to establishing strong business relationships in a very state dominated market? What are the major challenges of working with the PSUs?

It is quite a challenge. Sulzer India started operations in 1988 and its first facilities in 1989. We pioneered some of the new technologies, such as structured packing, for the Indian market. We were the first to introduce this innovation two decades back into the Indian market. Given the importance Public sector within the Indian market, the idea first needs to be sold to them. At the same time, as markets are developing, customers also are willing to try new technologies. This has opened up doors for us, as we are able to bring a lot of world class technology in India through the Sulzer Chemtech channel. Innovation is one of the key focus areas for Sulzer.

It is a good bet that there will be continued construction of energy assets and facilities worldwide with the current level of oil prices, and especially in India, given the number of projects and developments taking place across the entire value chain.
Downstream, India is already exporting 40% of its refined production and is developing as a refining hub for the region, with Reliance leading the way and HPCL, BPCL, IOCL, Spice Energy, all coming up with refinery projects. What kind of opportunities does this offer to Sulzer India and what is your action plan to further capitalize on this growth?

In terms of capacity, Sulzer India has been continuously expanding. In fact, Sulzer India has carried out significant portion of the mega Projects in Refineries in 2006 and Petrochemical in 2007 & 2008. Considering we expanded our plant’s capacity in 2005 and 2006, so before the booming really started, the timing was excellent. Successful execution of large projects has given a lot of confidence to our customer for future collaborations also.

When the market really went down, based on Chemtech’s vision, Sulzer India was one of the few companies to have clear expansion projects in December 2008, and the company expanded again in 2009 and 2010. The capacity we added are meant to serve not only India, but also Middle East, where we have executed prestigious projects. Our shops were approved in the last few years by major customers worldwide.

What would you say builds up your reputation most: Sulzer’s worldwide brand or Indian expertise?

Sulzer Chemtech operates as a worldwide plant having the same connections with customers worldwide. For instance, enquiries or discussions can take place in our US offices, be finalized somewhere in Europe and finally the orders are placed in India to manufacture and send the production to projects in Middle East. The world is interconnected.

What is the level of competition in this area and what are Sulzer Chemtech’s main comparative advantages?

Everyone in the world is looking at decreasing its projects costs significantly. Having said that, Sulzer Chemtech offers value – world class technology at a competitive price. The group makes a difference thanks to its global footprint and the continuous investments that are made not only in infrastructure but also in training. Indeed, a lot of our engineers are trained in Switzerland and this know-how transfer program is also a part of our strengths.

To what extent of your capacity are you operating?

Currently our utilisation is quite high. Nonetheless, we are in the process of increasing the capacity further and bringing new products as a core part of the company’s development. Lately, Sulzer acquired a company in the UK for separators, so we will be bringing these products into India. The capacity enhancement is a continuous process.

Many of our interviews tell us that the key to success in the market is not to work on it quarter to quarter, bur rather look at it as a long term market, where patience is key. It seems that Sulzer gives credit to this assessment by having long developed the operations here. Is that the case?

Yes, even in other markets, where there was a huge potential, we started there early more than two decades ago much before major investments came in. Later we could cater to our global customers as they entered the market with large projects.

It is a similar scenario in India. In the last ten years we have seen major rise in local capacity in Refining and Petrochemical within our established setup. We were able to cater to the market as the demand grew.

There is challenge in the Indian market, as competition comes both from local and international players. But for the critical projects, the customers are knowledgeable and make the right choice. The main reason is that Sulzer is not only a manufacturer, considering the company brings a lot of engineering know how to its customers. Indeed, we have set up in Mumbai and Jamnagar a division for field service. With our Unit in Jamnagar, we have done significant installation work for the major customer there. All the critical towers were installed by us.

If you go for a short window turnaround especially in refinery, every shift counts. We can do the turnaround for them, and make it optimal with our global expertise; it is an enormous added value that we are able to bring in to the customers. This initiative has been very successful in the private sector.

What are your personal objectives for Sulzer to grow in the next five years?

Today, Sulzer India is roughly close to 40 millions Swiss Francs. We would like these figures to grow significantly by around 50% in the next 3 years.

As I am quite optimistic about the market overall and confident about Sulzer India’s capability to meet the demand, future prospects are excellent.

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