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Interview

with Sajiv Nath, Managing Director, Endress + Hauser (India) Pvt Ltd

12.07.2011 / Energyboardroom

While most of our international readers know about Endress+Hauser at the global level, they are perhaps less familiar with its Indian operations. Could you please begin with a brief overview of this affiliate for our readers?

E+H marks its presence in Indian market since 1963. Initially, Toshniwal Brothers re-presented the group in the Indian market. Being optimistic about the growth in India, we later transformed into a Joint Venture (JV) agreement. Efforts to constitute direct presence in India were detained due to the law then, which allowed foreign entities to enter the country only through JVs or as sales representative offices.

The policy of “liberalization’ flourished post 1990’s. In the year 1994, E+H parted ways with their J.V on a mutually acceptable basis and set up an Indian branch office in Mumbai in 1994, followed by setting up Endress + Hauser India Pvt. Ltd., in 1999.
The Indian market offered good opportunities for increase in business volumes. We started the state-of-the-art manufacturing flow facility in Aurangabad in 2000, to manufacture flow meters to cater to Indian, South East Asia and South African markets. The Group, has expanded its existing facility and also started a new manufacturing facility to produce pressure and level instruments in the year 2008. From order to execution all the factories and facilities are run by ERP/SAP and have invested nearly 1Bn crores rupees (approximately $22 million) to build these facilities. India is rationally considered the main investment destination for the group. India is a sustainable market which also provides IPR (intellectual Property Rights) to protect.

You mentioned the late liberalization of this market. Were Endress+Hauser one of the first international companies to enter this market?

We were a relatively late entrant into this market due to the red tape prevalent in India. However, in the early days we were one of the few international companies who marked their presence into the Indian markets then with an indirect sales channel. However, had the doors been open to Liberalization earlier, we would have definitely been one of the first international companies to enter. Bureaucracy and red tape were the key inhibitors in the early days.

While looking at the performance of the Indian affiliate over the last five years growth has been high and steady – around 30% year-on-year from 2006 to 2009. Have the latest figures kept up with this trend?

Endress+Hauser India for a matter of fact has been growing faster than the historical trend over the last couple of years. In spite of economic slowdown in India during 2009, we grew by 25-26% while gaining more market share. We are currently second in the market in field instrumentation and prognosticate to have doubled our figures over a four year period at the close of our financial year in December 2011

Indian process industries that may require your services include water and waste water, food, pharmaceuticals, biotech, and oil and gas. What is the importance of the oil and gas sector for your Indian operations amongst the various industrial segments?

Oil and gas is among the top three-industry sector for Endress+Hauser globally as well as here in India along with the pharma, food and beverage industries. Our business is definitely increasing in oil and gas and we shall see more investment in new product lines and instruments. Investments from headquarters clearly reflect that we have solutions that are up-coming in India for the oil and gas sector. On a global basis, we see an increase of our business around 60% in the oil and gas sector. Further our global contract with Shell helps us to increase the business even more.
Our product line innovation is in line with the requirement of the customers.

There are indeed great opportunities in oil and gas in India, both upstream with the NELP rounds promoting E&P, and downstream with the continuous development of the refining business. Where in the value chain are you more involved?

We are mainly involved in oil, gas and refining sector which is attributed to the flourishing refining industry sector in India. However, we also see ourselves expanding into compressed natural gas (CNG) and liquefied natural gas (LNG). Endress + Hauser has core competencies on the LNG side.

You have worked with Reliance and ONGC. What do you identify as the main partnerships and projects that have driven your business in the last decade?

Reliance, as the largest private refiner, has been very important to us. We have a gamut of instruments in their refinery, especially in temperature and flow. ONGC has also partnered with us in multiple businesses: temperature, level, and flow instruments. Our focus is not just on supplying instruments, but also on extending our offering throughout the value chain. The actual benefits that Endress+Hauser provide through maintenance and commissioning services tend to extend across the value chain.

Worldwide the group is mostly known for measuring instruments and automation for process industries. To what extent has the Indian market been receptive to this industry and to your services?

We have evolved over time and I am pleased to say we find a great acceptance in this process industry. The public sector always requires a lot of documentation to establish that the instruments are well proven for both; a particular industry and for a specific application. The private sector is considerably less conservative, but nevertheless sticks to a stringent set of guidelines.

As a result, public sector companies take longer to execute projects compared to private ones.

The market has predominantly consisted of PSUs but has evolved over time. I still remember the phase during 1980s, when talking about new technologies and software was not well accepted. Today it is the innovative technical “geeks” who drive the Indian market. In fact, Indian technologies are more driven by the end users than by EPCs. Endress+Hauser have been successfully able to identify certain “geeks” amongst these end users who have been receptive to technological change.

Endress + Hauser has expanded its portfolio to truly become “People for Process Automotation”

Are the factories in Aurangabad operating at full capacity?

Our local growth has been phenomenal. We have started fell the heat due to our growth rate being higher than our supply capacity. This is a happy and satisfying situation to be in but it creates huge demands on the supply chain management.

Obviously this strategic move aim to exploit a low cost and yet efficient Indian workforce. Delocalization implies investments. They are risky and usually go against public opinion. What were the other motivating factors behind this continuous investment? What does India have to offer?

The Indian workforce has tremendous technical skills. Thanks to this technical knowledge, that the employees have they can now be trained easily. Our fastest growing markets are Latin America, Asia, The Middle East, Africa, and Eastern Europe. It always makes sense to be where the growth is at its highest in order to serve the customers better.

Looking at the growth in the Indian market, the benefits far outweigh the risks. This benefit-to-risk ratio has been an encouraging factor to come to India and ruling out the possibility to go elsewhere in Asia.

I recently attended a meeting wherein, various Indian business leaders and managing directors had participated. As a part of the discussion, a question as to where do we see India compared to China in the next 2 decades was raised. To this most of us agreed that India will surpass China’s growth index. Though it is yet to be seen in the coming course of time, an optimistic feeling seems to be prevalent in the minds of associates of the business community.

This optimism and enthusiasm will drive the business and also we would see a lot of entrepreneurs coming from India.

In addition to the Indian market, the Aurangabad facility also directly supplies markets in Australia, South Africa, Singapore, Malaysia, Thailand, and Japan. What is the break between local market and exports, and was it a challenge to make international markets accept Indian products?

Yes, these facilities do supply to both the Indian as well as international markets, with the balance being 2/3 local vs. 1/3 exports. The Indian factory supplies to the Australian and South East Asian markets.

The acceptance of Indian products is much more prominent now as compared to 10 years ago. There are not many people working in the Aurangabad facility since, most production lines are automated. I always state to our customers that they get better products from India than that from Germany or Switzerland, The reason being quite logical that our factories in Europe installed their manufacturing equipment in the 1980s & 1990’s while that in the Indian affiliate installed the same in 2000 & 2008. Therefore, the later consist of equipments of much better quality. We believe in being global but act local.

Looking at the future, what are the critical factors, in terms of internal development or technological alliances that will take the business forward?

The group has an international and global alliance with Rockwell Automation. The synergy exists as they are into control systems and we are into field instruments. We also collaborate with Invensys at a global level. Most of these collaborations are driven by the customers that are looking for a “one stop shop.”

Product innovation and solutions for applications are going to be our motto going forward.

On a personal note, before joining Endress+Hauser you had almost two decades of experience in the automation industry working for companies such as Emerson and Bells Controls Ltd. What is there at Endress+Hauser that cannot be found anywhere else?

I think the main differentiating factor in Endress+Hauser is its human capital and their constant zeal to achieve more. In this regard, we are a distinct company along with being both flexible and customer focused. Given this strength we would like to see ourselves as number one in the market, perhaps in a decade’s time.

I also feel proud that we are one of the few family owned companies that has been highly successful and also remained sustainable.

What would be your final message to the readers of Oil and Gas Financial Journal?

It is ‘Safety’ that is going to be crucial for the better future of this industry. We need to ensure safety, evaluate situations, and prevent accidents. What happened with IOCL USA should not be repeated. Our role is to ensure proper optimization and automation of the facilities.

It makes sense to invest it back into safety. Businesses cannot be run at the cost of Safety. Endress+Hauser put a lot of efforts to spur innovation when it comes to safety. All of our equipments are of the required standards to ensure compliance with the stringent safety requirements. To conclude,’ Safety’ comes first while Sales second.

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