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Interview

with Ragunath Bharath, Managing Director, Innovative Fluid Process

12.03.2010 / Energyboardroom

Your company was incorporated in 2001 which is quite late considering that the Malaysian Oil & Gas industry started with the Petroleum Act in 1974. What need did you identify that decided you to start it at that point in time?

Because in 1974 I was still in primary school busy playing marbles! During the nineties and early two thousand there were lots of projects in Malaysia, and most of them were awarded to foreign based EPC companies, especially the engineering part with the construction done by Malaysian companies as subcontractors. There was at the time a gap to fill in downstream Oil & Gas engineering, where not many players were competing and most were international companies. We entered the market to provide the engineering part of the business, since many Malaysian EPC companies were quite capable in construction but need integrated engineering services to execute successful EPC projects of the small to medium scale. Malaysian EPC companies had evolved from the Construction side rather than Engineering side. We support the Malaysia EPC companies in providing integrated engineering services which is extremely essential to execute EPC Projects successfully.

How is your client portfolio organized today and how do you see it evolve?

Most of our services are tailored for Malaysian based operating companies and Malaysian EPC companies; when they go for an EPC job we support them for the “E” part, while they do the “P” and the “C” part. We also provide support in field engineering work and technical evaluation. We want to be able to provide engineering services directly to major operating companies in the future. In the course of executing our work we constantly emphasize developing of Malaysian design engineering capabilities which is very important. Over this short span of time we have built our experience and profile and we are confident and committed to service our clients well.

When looking at you CV, we can see that you directed your career towards the Japan-Malaysia relationship, why did you make that choice?

I did not really direct my career, but it happened. I went to Japan in 1983 after completing my High School at St John’s Institution under a Japanese Government scholarship program (Mombusho), which enabled me to complete my PhD in Chemical Engineering following which I joined Chiyoda Corporation as a Process Engineer in their Yokohama office. While working at Chiyoda I was involved in Japanese and South East Asia projects, one particular one is Petronas Second Refinery -2 Project in Malacca. I was involved from detail engineering to commissioning stage. That is when I realized the shortage of downstream engineering services in Malaysia and decided to come back and work here.

What lessons did you learn in Japan that you can apply today and help you start your own business?

There is a lot really, but primarily it is technical knowledge and learnt how to execute projects. I understood detail engineering, and that as an engineer your eyes must be able to look at the dots, as by looking only at the general picture, you might not be able to solve the issues. It is something that I try to impart to our staff in Innovative Fluid Process: look at the details.

How would you describe your management style?

I am an engineer, and not much of a business person. I like to work with my people, have an open door policy. I think that as a small to medium size engineering company, the management must understand engineering and be involved in engineering. When we talk to clients for a job, they assess how capable we are. It is a challenge for me to be more of a business person since I keep an engineering mindset. Over the years I have adapted myself to the situation by reading, listening to many people and making business decisions.

It is very important to promote the Malaysian engineering trademark, but as we all know Malaysia faces trouble retaining its highly skilled engineers. How is IFP coping with this shortage?

In Malaysia it is relatively easy to find engineers with plant construction or operations background, but there is a shortage for design engineers, particularly for plants design. What we do is, choose fresh graduates with good academic results and with an urge to do design, those who like to see the dots. We hire them and train them for two or three years. We try to recruit fresh graduates on a yearly basis to maintain continuity. I realize that the general thinking here is after about two or three years in a company one feels he is skilled enough and can look for other jobs with better opportunities. Unfortunately, this duration is adequate only to get a general feel of the work but sufficient in depth. The challenge for the company is to continually provide more difficult task for the staff so that they do not feel stagnant in growth. Work challenges for professional growth is what food is for the body.

How is “Malaysia Boleh” translated in the reality of IFP?

“Malaysia Boleh” is a catch phrase to initiate thought in people. To me it means to believe in oneself and to have an independent mindset. What we try to do is to expose our engineers to many works by securing as many different jobs as possible so that they feel challenged and can learn new things every time. We must expose our staff to new challenges and help them develop their skills on the job. The management of IFP tries to secure challenging works for that reason. Of course after a year or so, some young engineers realized that they are not inclined to work in design and they leave. However it is part of the Malaysian culture to change and look around, we barely stay in the same company for a decade, and for that matter we barely stay in the same house. When staff aspiration and company growth matches, people stay on.

There is a big challenge in Malaysia which is to fill in the gap between eastern and western Malaysia, refineries projects. How is IFP capitalizing on these developments to ensure future growth?

Our main business is in downstream more than upstream so refinery jobs, gas plants or petro chemical jobs are what we aim for. We try to establish links with the contractors and project developers from conception, supporting them even before they secure the job. The most difficult part for us is that we are a service company, and they expect some of these services to be done for free. We do support project developers during the early phases of the projects on mutually agreed conditions.

How is your client portfolio organized? Is it only Malaysian companies or are you diversifying it?

At present our main focus is with Malaysian companies, but last year we got registration with Petroleum Development Oman (PDO) and Qatar Petroleum (QP), following the government’s initiative to promote Malaysian service providers outside home market, and thanks to the efforts of MARTRADE. We also took a small equity in an Indian engineering company called Anewa Pvt Ltd in Hyderabad since we are a small organization and needed to expand our resource base.

When PETRONAS started internationalizing, it brought along companies like Scomi or KNM. Are you ready to follow them and take some of the big jobs that PETRONAS has to offer?

Our target is not the big jobs. As we say big jobs are for the big boys. We target smaller jobs; every time a plant is built, there are many revamping and modification jobs involved since after two or three years of operations, there is need to implement new systems, debottlenecking and so on. We do not want to compete with bigger companies whenever there is a big plant project going on. Our strength is in the revamp and modification work of existing facilities.

For niche players it’s easier to partner with other small players, but you still need strong resources. How do you manage to remain a small attractive niche player while not facing restrictions in terms of human resources capabilities?

When we started our operations we were hiring engineers from India and the Philippines to come and work for us on a contract basis, but we soon realized that it was not sustainable as they wanted to go back to their family, and their own country was getting competitive. That is why we changed our strategy and tried to attract young Malaysian engineers to come and work for us, even people who do not have an oil & gas background but willing to learn. However we still needed more resources to convince the clients that we have enough resources to execute bigger jobs. We did not want to simply outsource our projects to other companies. That is why we took an equity in an operating engineering company in India. As you know India is quite saturated, so we choose a company that had been growing for the past four years, with about hundred over people working, executing engineering jobs from India, Singapore and from the Middle East.

Many EPC companies face trouble in delivering projects on time, what do you put into place in order to surpass your competitors and reduce delays?

For EPC jobs, the engineering part is very small in terms of value but the implications are huge. Our focus being on revamping and modification, we place people on site to work with the contractors and understand what is going on. We verify whatever drawing is given to us before we start any design, which has in the past saved a lot of time and avoided many mistakes. But this takes resources and from the beginning we need to spend more time and money, but this improves our quality and raises our profile in the industry.

What would be the project that represents the most IFP’s capabilities?

One that we are doing now is for a Petchem plant in Johor for the installation of two high pressure steam boilers. They already have their steam systems but they want to increase steam capacity. They buy their own boilers but we do the engineering which is very challenging since the drawings are not as built. We have already installed one boiler and the second is being commissioned. We did the engineering design and a Malaysian contractor did the construction.

You are a niche player who hasn’t been in the industry for a long time. How did you manage to build your credibility?

We are an engineering company, we are not selling a particular product so we cannot go to see client, show them something and tell them “this costs hundred ringgits”. What they see is our face, our CV and examples of projects we have worked on before. So this relationship is based on trust. At first they might not trust us, and will give us smaller projects or not even consider us. Once clients believe in our capabilities they will give us more jobs and tell others about us. That is how we started our activities, and we now have to keep a high level of service to grow in the same way.

You seem to be a company that works on quality more than quantity. How do you choose your projects?
We really do not choose the projects but we choose serious clients who understand the need for good engineering to support their projects and also who have adequate financials. At the end of the day ours is a business and we have overheads and profits have to be generate to keep going forward.

You are committed to being an advanced engineering company. How will you achieve this?

Our present business is EPC engineering, but we also have an interest in NGL Technologies which is a process license holder. NGL Technologies has developed and patented a system to enhance recovery natural gas liquids. This system uses crude oil as absorbent to recover the light ends in the gas stream so that we can achieve higher crude oil production and leaner gas. We want to go in this market and are trying to offer it to clients, but in Malaysia people are quite reluctant to adopt new technologies.

You are diversifying through NGL Tech, but still work mostly in the downstream sector. What are your plans to enter upstream?

Indeed we are focused on downstream, but over the years we realized that upstream in Malaysia is a bigger market. NGL Technologies is our first step to enter the upstream market, which is a great solution for operating companies especially at a time when the price of crude oil is still very high. Materializing this technology is one of our dreams.

What are your plans to develop IFP in the short and medium term, and how do you want to support the development of Malaysia?

Malaysia has been continuously putting a lot of emphasis on improving its human capital, in our field it is to create good engineers and to become an engineering hub. Our country has well established systems for training of doctors or lawyers, but we have to develop more engineers and to attract more people into this profession particularly for the Oil & Gas industry. IFP’s aspiration is very much in line with this and we believe we are contributing in our own small way toward this objective. We are also active in MOGEC an association which represents the oil & gas engineering companies in Malaysia. By the grace of God we will continue to grow in depth and in width and become stronger and bigger. We position ourselves to always better fit the needs of a changing market.

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