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Interview

with Murali Narasimhan, Country Leader – India, Hydratight

15.09.2011 / Energyboardroom

Focus Reports has conducted an exclusive interview with Mr Murali Narasimhan, country leader India, and Mr Alain Wald, EMEA business leader of Hydratight, in the occasion of the Offshore India and Unconventional Oil & Gas India conference and exhibition in Mumbai.

As the US and European economies tremble, emerging economies are the ones still responsible for the world economic growth. To what extent does the group look at emerging economies and especially at India, with a forecasted Gross Domestic Product (GDP) growth around 8% for the next five years?

Alain Wald – Fifteen months ago we started a process called “growth and innovation”, where we decided to focus more on process, time and investment. We have identified several countries as growing and emerging markets, of which India is a major one.

In India, we used to handle accounts in an unstructured way; therefore we have decided to place someone in the country responsible for developing our Indian business, with the objective of making operations simple, but international. We will bring people into the country to handle projects and give India a global dimension.

Indeed, we are now able to handle, from India, global standards like Health, Safety and Environment (HSE) as well as all the processes we have worldwide — but we can apply them with a local approach that is in tune with the growth of Indian industry.

After twenty years of operations in India through a distributor, Hydratight has eventually set up a subsidiary here three months ago. Why have you waited so long to do so?

Alain Wald – To be frank, in the past India had not been our top priority. We were growing dramatically in other parts of the world and while India has immense potential, the market were not as well organised as in other parts of the world, so expansion here was more difficult.

But now India must be given the attention it deserves; the time has come for us to have a better understanding of the Indian market. Though we have had agents in some segments of Indian industry and in some geographical areas, we need to cover the market in a more structured, tactical way.

We weren’t ready to do that before; now we are. We are manufacturing and renting products, as well as handling services related to these products. Before setting up the office here, we were just supplying products to a few major accounts and bringing rental equipment into the country as it was needed.

Renting equipment is not something customers in India are used to, which is why Hydratight has to work on changing customer behaviour. It has proven to be a success in other places already. When a client requests a certain product, we should be able to bring it into the country within a short time, and it can be rented for as long as it is needed, with full support services. It is a more cost-effective way of getting access to major items of equipment.

To what extent is Hydratight India able to bring in the market the group’s full range of products and services, to introduce the latest technology and also to access resources to grow extensively and make a strong and fast footprint in the Indian market?

Murali Narasimhan – We plan to introduce products in India progressively. At the moment, we are still in the launch phase, but the entire Hydratight portfolio should be available within 18-24 months. That might sound a long time, but Hydratight’s portfolio is extremely wide.

We are manufacturers as well as service providers and we approach joint integrity as a holistic concept, in which we forge very strong connections with our operators whenever possible. We intend to implement a strong cultural change in the Indian market and that doesn’t happen quickly.

What we know is that safety is becoming the number one issue in all markets; certain operators already place tremendous emphasis on it, and joint integrity as a concept is something with which they associate very strongly. The understanding of this is picking up momentum in India, and Hydratight is very well placed to harness and drive this further. In other territories we are strongly known for our belief in the paramount importance of safety culture

For us, it is not simply about being a rental company or supplying products. It is about asserting integrity — as we said a moment ago, we try to forge strong relationships with our customers not only because it helps us to get the job done properly, but also because clients can then see we are as concerned about safe working and high standards as they are, and about asserting those standards within the local market.

Alain Wald – The Indian market is indeed requesting the highest standards from us.

Hydratight’s full portfolio is still in the process of being introduced to India so at the moment we still bring some expertise in from outside. Our connector business, for example: if we require top technicians, we bring them in from other territories. But we want to hire Indian technicians and train them in accordance with international standards. That is a major ambition for our operations here.

What are the main priorities in terms of building up on strong foundations to ensure that Hydratight will grow for the long run?

Murali Narasimhan – The first priority, as we said, is to focus on more structured market development. We need a better understanding of the nuances of the Indian market and a better assessment of its potential, which in turn will help us to better define our service and business lines.

Alain Wald – The learning phase we are going through at the moment is also a priority with respect to investments. The question is not whether we will invest or not since we intend to invest anyway; the question is where we will invest first.

We have attended Offshore India and Unconventional Oil & Gas India to acquire a better understanding of the competition and of the way the Indian market functions and reacts.

It is likely that some of our customers are in a learning curve as well, when it comes to product rental. As we said, short-term hire of the latest technologies is new to many of them.

Hydratight addresses the bolted joint needs of several industries. To what extent does Hydratight’s product portfolio fit to the O&G related activities in India?

Alain Wald – Our core activity was originally bolting and joint integrity, whereas today it is about 25%-30% of our business. We are also very strong in special on-site machining and testing. Our range of products today is very large, and not limited to joint integrity. We emphasise a total-integrity approach, and everything is planned within that broad spectrum of involvement in different services.

What is your assessment of Hydratight’s capacity to tailor its approach to the idiosyncrasies of the Indian O&G market, a very state-dominated market undergoing many changes and transforming itself with the recent opening?

Murali Narasimhan – We already have a strong relationship with this side of the market in terms of emergency pipeline work. Hydratight sells highly-engineered connector products to the state-owned enterprises.

We are also looking at forging relationships with other major enterprises, because there are very few other companies in the world of our size capable of offering our kind of complete engagement – everything from manufacturing to specialist components and machining, to joint-integrity services. As a manufacturer rather than merely a supplier, if a client needs something special we can usually design and make it; other companies might spend weeks or months searching for a solution.

We expect this factor to be a major business driver for us in the years to come, perhaps tripling turnover in India in a couple of years.

Alain Wald – Many companies in the Indian oil and gas industry are state-owned, but the process itself, upstream or downstream, is the same all over the world. We have a reputation as a key supplier of certain services, and as a universally-respected brand. We have already completed work for all the major oil and gas players, not necessarily state-owned, and we believe that is a more than adequate calling card as proof of the specialisms and expertise we can offer the Indian market.

In this context, how could the importance of India grow for the group?

Alain Wald <ï>– Hydratight is a global company with 20 centres in the EMEA [Europe, Middle East and Africa] region. We aren’t currently planning to make India a base for wider regional operations, but we certainly do intend that our base here will cater fully for the local market; it will be big enough not to need outside back-up.

But it does offer us wider benefits; we currently work with an Indian company which helps us export to Europe, China and Brazil, for example, and we see this sort of synergy continuing to expand as much as possible.

Murali Narasimhan – We have also worked with other Indian original equipment manufacturers, offering customised products such as bolt tensioning equipment and precision- engineered heat-exchangers. Over time, we expect to be making these products in India, so our customer-response time can be much faster. This is already under discussion.

Alain Wald – Our primary objective though is to have a special, full-service team in India exclusively looking after our Indian customers and market.

Considering India is the world’s fourth largest oil consumer after the United States, China, and Japan, consuming around 3 million bbl/d in 2010 while producing only about 900 thousand bbl/d, the government is strongly promoting exploration and production activities. Downstream, the industry keeps adding new capacity every year. Where do you identify the best growth opportunities for Hydratight?

Murali Narasimhan – We see opportunities in all areas of the business, both upstream and downstream. At the moment we haven’t focused very much on maintenance and asset integrity, even though this is one of our major area of expertise.

For example, one of the major international companies with which we deal has flawless start-up initiatives. The company looks at the number of joints that go into the construction of a refinery or any other asset during the commissioning phase, and we have a role in this process, helping the client to avoid the sort of surprises non-specialists might miss.

This sort of technical investigation is among our many areas of expertise in this area, and we need to look into the market to understand how such services might be received here. Of course working with major oil and gas companies on Indian projects has already introduced our services to many segments of the market here, and we expect this sort of engagement to be very useful to us.

Alain Wald – From a global perspective, we are stronger in upstream applications. We have a considerable downstream segment, but we have yet to develop it extensively within India. Outside India, we pay close attention to both ends of the process; it’s a matter of building our Indian market slowly, with services we know are needed here first.

Your presence at this event sends a strong signal about your willingness to establish a presence in the Indian offshore market, venturing more and more into deepwater areas. What role can Hydratight play in India in a booming offshore sector?

Alain Wald – We have always been a major player in O&G both offshore and onshore sectors, having worked everywhere from the North Sea and Gulf of Mexico to the West Coast of Africa. Our connector business offers a unique way to connect and repair pipelines, even in deep water, without welding, for example, and we have a range of other equipment that we believe offers real benefits to the subsea sector.

How would you like to position yourself in the market in three years from today?

Alain Wald – In fact we know fairly well, since we work on a three-year projection!

Three years from now we expect to have increased our turnover to around 700 per cent of today. And that’s not just speculation: we have the commitment of our parent company to the investment required to become a major service supplier to Indian O&G.

This country is a priority for us; the only question is how to organise for ourselves the strongest possible base here. We need a better understanding of the needs of our local customers; after that market knowledge will follow. As we said the market here isn’t as formal and organised as in the US or in Europe, but we stick to our plan: develop a profound knowledge of the market and establish strong relationships with customers, and we can both help the Indian O&G industry to grow.

For now I will handle India directly, giving weekly reviews and decisions on things we need to work on. We have an India steering committee in place, with two directors – one of them the company president, which shows how seriously we take our work here – which will decide whether we should stick to our plans or redefine them in the light of what we learn. They will also ensure we move quickly and efficiently.
We think it is important for Murali, as our India business leader, to know the organisation is supporting him as strongly as possible.

Murali Narasimhan – From a group perspective it can be safe to assume Bangalore is going to be our India hub: Actuant already has two companies here; first Enerpac and now Hydratight. But realistically no single place can realistically handle the entire country’s needs, wherever it is based. So Bangalore will be the hub, but we intend to develop satellite bases across the country.

Our initial focus will be the western part of India, which is where the key O&G players are located. Progressively, we will work on developing the northern and eastern sides of the market. There is also a lot of development taking place at Kakinada in the south.

Alain Wald – Unlike the Middle East or Europe, where we have operations in Aberdeen, the Netherlands, Germany, France and Italy, it would be very difficult to handle both upstream and downstream markets from one place in India. Similarly, we have 6 or 7 bases in the Gulf Cooperation Council (GCC) from Kuwait, Dubai, Abu Dhabi, Qatar, Oman. No-one would have just one base from which to serve several countries, so in future we will expand out from Bangalore, closer to our customer-centres.

What are your final messages to the readers of OGFJ?

Alain Wald – The industry is moving very quickly and we need to move just as quickly, working within and alongside emerging economies because these are where the growth will come from. The Indian market is one of the foremost of these and we fully intend to pay very close attention to local market needs. Contact us and find out!

Murali Narasimhan – The global business landscape is changing rapidly, with tremendous focus being placed on the Eastern part of the world. We need to capitalise on this potential and harness this opportunity, and India offers extraordinary long-term perspectives and potential.

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