with Vijay Srinivasan, Vice President & Managing Director, Invensys
Mr Srinivasan, you are responsible for strengthening Invensys’ business and success in the Indian Subcontinent. How would you define Invensys’ positioning and role within the Indian market today?
Invensys India is playing a highly important role for Invensys globally. In many ways, India is contributing more than just a business share. The country is a key contributor to Invensys globally. The infrastructure that we have in India supports the product development for a global consumption as part of Invensys Operations Management’s global R&D strategy. We are also providing global support with our engineering capabilities through our engineering center located in Chennai. Indeed, Invensys India has over 350 engineers who are focused only on large global projects. Chennai is one of the five engineering excellence centers around the world for Invensys Operations Management
Invensys India has two large facilities, one is in Navi Mumbai and the other is in Chennai, whereas the global development center is in Hyderabad. Furthermore, Invensys Skelta, located in Bangalore, focuses on business process management by offering software to enterprise customers and is used to improve the operational productivity of large refineries and power plants.
Another company under the Invensys umbrella operating globally is called Invensys Controls and is based in Pune. It operates as a separate company, whereas Invensys Skelta is a part of the Invensys Operations Management company. Lastly, Invensys Rail is again a global company, and in India they are based in Bangalore.
So Invensys is well spread out and doing a lot of things in the country. India is considered one of the key contributors to the business and name globally.
You have joined in 2008, when the world was on the verge of economic meltdown. How have you performed since you took charge of Invensys and what is the contribution today of the Indian subcontinent to the group’s global performance?
The global economic slowdown had no impact in India. It was a blip. If people had plans in the country they are not going to change them as the country has survived the crisis very well and the banking system is very strong. India’s foreign exchange reserves exceed 300 billion dollars. India is the second fastest growing economy in the world with huge investments being planned in enhancing the infrastructure and power generation capacity.
The GDP growth rate may slightly fall, but is still going to be around 8%. India could actually get 12 percent economic growth, but we are hampered by infrastructure barriers. I believe that the economy will be able to sustain a 12 percent growth rate for the next 25 years, once it has fixed all the infrastructure problems – O&G, power, roads, and ports.
Invensys is in two of these major areas. During the last three to four years we have changed our business focus in India. I would not say that we have entirely shifted our attention, but we have focused more on power.
Although the organization as a whole defined global business directions and priorities, we had to adapt to the Indian context. India is a unique market, very technical in nature. The kinds of discussions we have with customers are largely technically driven and people are very knowledgeable in their respective fields.
In the past, India was perhaps not able to find money to invest but now there is no shortage of money. In the last 10 years India has been investing aggressively, even if still not enough, adding capital stock to the installed base. There is still a long way to go compared to the rest but we are no longer short of capital. Today, the technical capabilities combined with access to capital are very promising for the industry to grow.
Manufacturing automation where India was grossly under-investing is going to rise rapidly, opening up significant opportunities for companies like Invensys
What is the breakup today between O&G and the other sectors?
Oil and gas is still more than 50 percent of Invensys’ business in India, although it used to be more than 70 or 80 percent.
The country has more than a hundred power projects going on today. Even if you take out the public projects, the capacity projection by the private sector for the next three to four years is significant. Also, India may get into nuclear. Considering how much potential there is in power, we have decided to set up in India a Center of Excellence for power.
Even though Invensys is investing more in power, the traditional strength of the company has been in O&G sector in India. Invensys has delivered India’s single largest refinery automation project – looking at the total installed capacity in India, this refinery represents almost 45 percent of India’s output today.
Would you agree that O&G clients would rather work with someone that actually understands their work?
Yes. We have to have a good understanding but we need most of all to be able to communicate because at a senior level, executives like me do not actually meet the operational engineers; we meet the top level executives who make the investment decisions. At that level they want to hear the macroeconomic problems that their industry is facing and how Invensys can help them to solve their problems.
Therefore it is more the absorption of what we are doing elsewhere in the world and how we can translate it in India. One of the key inputs in India is in fact what Invensys is doing elsewhere around the world to solve large customers’ problems in O&G and power: our success stories, the solutions we have used and whether we can transpose them to India.
It is not always easy or straightforward to do that because adaptability is important. Invensys’ influence in India comes from the frequency of interaction with the clients. The Indian customer is very relationship-driven. They need to see you in action all the time, supporting them in their projects. Therefore it is very important to have relationships at all levels.
Customers want multiple levels of interaction. Consequently, we need to ensure that their technical expectations are met by our technicians and engineers. We are ensuring that there is going to be an ongoing continuous interaction between the technical staff and Invensys, considering that our sales team consists almost exclusively of technical people. Our people have been in automation all their lives; they have generally been loyal to their previous organizations and then to our organization and they are known professionals in the market. Thus, the connectivity with the customers becomes easier when they are carrying technical knowledge on our products and on the projects that the customer is involved in.
This advantage is not enough for business. It fulfills a necessary condition for the customer to gain technical confidence, but it is not complete. The other important aspect is our capacity to design their systems. We have project management professionals trained with PMI certification – available in India. We have invested in the PMI certification for every project manager at Invensys India – not all the automation companies do that.
We have got a competent team that has delivered the biggest refinery in India, the biggest power plant (UMPP – Ultra Mega Power Project) in the country, and contributed to projects in the Middle East and in Singapore.
Technical competency, delivery competency, and management are in my opinion absolutely critical. The management is of course an important factor in Invensys’ success in India. Customers want to have assurance that their projects will be supported, executed, and delivered. The management is responsible for customer satisfaction. For a company like us, we do get opportunities to present to top management of our customers, because automation is a small yet critical piece of a large plant project investment.
There are so many players involved in setting up a refinery or power plant. So in the case of a refinery, automation is between 6-8 percent of the project costs, whereas in the case of a power plant it is 3-4 percent. These are India numbers. I guess the global percentages could be slightly higher.
So, with being at the heart of the refinery or the power plant, they take us seriously. Customers spend a little more time trying to make a realistic assessment of the players in the market and whether you have relationships with the other providers. Luckily we are the oldest and most respected company in the automation field – 103 years.
How are you standing in terms of safety for the O&G industry?
We have a safety solution called Triconex. Triconex is used in almost all the refineries – Europe, US, Asia Pacific and in India. It provides an emergency shutdown system for the refinery. There are more than five million hours of non-stop safety operations in refineries using Triconex: there is no other comparable system which comes even close. Not even one million; that is the distance between Triconex and all the other competitors.
Similarly on the nuclear power plant, we are one of the three certified players. There is no fourth player… Invensys Triconex is one of the preferred safety systems for the nuclear power plants globally.
What is your main competitive edge to appear in the top rankings in your areas of activity?
Our major competitive strength is our technology: we can extract more value from our customers’ assets. And we have a whole suite of software solutions for refinery and power plant optimization.
How do we get more out of it from the existing investment? For instance, we worked with a refinery in the south of India where Invensys has helped the customer to be more profitable thanks to our crude blending optimization solution. This is the only refinery in the country in the public sector which is actually able to do that blending in a fine-tuned manner, produce the right product for the market when the price changes, and make more money.
With expanded infrastructure and expanded facilities here in India you are very near to the customers. To what percentage of their capacity are these facilities operating today and do you have any plans for expansion?
We are 100 percent fully deployed. As a result, we are hiring more people to prepare for future growth. The engineering center is particularly going to add significant number of people in the near future. Now that the campus recruitment season has started, Invensys is out there to enroll new engineers.
What are your incentives to attract people and retain them?
We have a team that goes around and selects colleges, maybe about 30-40 colleges in total, conducts campus interviews and tests, and eventually offers jobs to those who qualify. The secret is to focus on the candidates who really want to do engineering work. And we find that out by talking to them after the test. You have to find out what their true interest is. We want to know if they are going to stay with us. It is important to position in their mind what kind of organization we are. To promote the company, we focus on the longevity of the company in this field as the father of instrumentation and automation in the world and we talk about the kinds of customers we have globally. We are also able to give them global jobs. As every young Indian wants to get a global exposure for a while, we have to play on that aspiration as well
Attracting females to work for us in the engineering industry is hard. Diversity is an important matter for Invensys. Therefore we are encouraging lady engineers to at least come for the interview. We do have females in operations and in the back office. The recruiters have been told to go after women candidates and persuade them to apply.
Your educational background is dual: both in engineering and technology and in Management. Would you say it is better to have the mindset of an engineer or that of a manager to succeed in the Oil and Gas industry (O&G) in India?
The answer is going to have a dichotomy. In the past, someone running an automation company had to have a very strong engineering background. I do not think it is important anymore. Nowadays, you need to balance growth with profitability. And the investment in growth is going to challenge the margins all the time – do you put money into marketing, do you put money into facilities, do you over-prepare? All that is part of the management, and you do not need an MBA for that. An analytical manager with understanding of technology is what we need to succeed in business today.
With a strong presence in core sectors of the economy, Invensys is well positioned to tap the growth of the Indian economy. What will be the key in the five next years and what are your personal ambitions for Invensys India?
We are already diversifying into areas where the other automation players are not – or do not want to go. One area is what we call Invensys Total Maintenance (ITM). Under this division, we go into a process plant (eg., a refinery), and the plant normally comprises of all kinds of equipment from various players – it may be multiple automation and instrumentation suppliersnot only Invensys – and it is not the plant management’s core competency to continue managing all these assets. Especially in the future, refineries are not going to find engineers who want to work in those refineries. So we are building a model where we will take over all the automation and instrumentation assets and manage them for our customers.
We do it in a combination: onsite and offsite. We will have a team of people onsite as well as a remote asset management center – that we are setting up in Hyderabad – which will have high bandwidth access to the plant. This is a unique business model, analogous to the onsite-offshore model of the IT industry. This market is actually growing fast – we already have several orders -; therefore we are building a team in Chennai which comprises of experts from multiple vendors aside from Invensys.
On a different note, India currently imports 74 percent of crude oil requirements. Considering India’s difficulties in reducing dependence on oil, the country has to find gas. Invensys has already delivered the largest offshore gas automation project in the country – in the eastern part of the country. The gas automation requires certain specialized gas engineers, because exploration is very different. We already have that set of people within our company. Now that a lot more exploration is going to happen, with several players going for deep sea exploration in different blocks, Invensys has major growth opportunities.
India is also developing onshore gas fields. Exploration companies are discovering that that they can extract CBM (Coal Bed Methane) and shale gas from old rock formations in several parts of the country. The US is the biggest producer today and in India it is going to be very big business. If you go north and north-east, you will find all of these fields are under development. A site is already pumping out CBM gas near Kolkata. For all this extraction of gas, Invensys has a ready-made solution out of the box. India may be drilling a few hundred wells, but in the US it is 20,000 wells; In Australia it is 50,000 wells. How are you going to meter and flow and control the gas? Invensys has a solution to manage these wells, called “well head automation.” We have it tested and you can go live right now from the well you are drilling. And how many people are able to understand that technology? How many people have even heard the name of shale gas? Very few in fact; even in automation. Invensys understand this field very well and is ready to support its customers.
Do you have a final message to our readers?
At the end of the day, O&G is all about return on investment – whether the dollar you invest today will give you a hundred dollars tomorrow. Invensys offers a very strong business modeling capability both offline and online. What we do, unlike our competitors, is explaining to the customers the business model, and then implementing the same to meet their expectations and business requirements very well. There are only two or three global companies that can do this, and we are one of them and the best at it For us, the satisfaction of our customers is paramound and we deliver the same with our technology and our people.