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Interview

with Yatinder Pal Singh Suri, Country Head, OUTOKUMPU India

19.12.2010 / Energyboardroom

What were the main challenges you faced to establish Outokumpu in the Indian market since 2006 and how did you manage to overcome them?

The biggest challenge was how to make relatively unknown Outokumpu Brand a well-known Brand in the Indian market. The Indian geographic landscape is as big as Europe. While in Europe we have nearly 20 sales companies, here we have only one.

When Outokumpu came to India in 2006 we had to set up our sales team and activities with the local available talents who did not have exposure to the new applications and technologies that the company was bringing to the Indian market. Therefore, we had to pick up the best employees from various sectors with the local stainless steel background and who knew about the industry and were keen to learn more about special stainless steels.

First we had to train our team on the specifications of the products, the applications and innovations that Outokumpu is bringing to the Indian market – this was our first challenge. Right when we started the Indian operations the Outokumpu Group reorganized its sales strategy. Earlier Outokumpu was production driven but then we decided to be more focused on the end users and the applications. Outokumpu divided the market in six clusters and for each cluster in India we appointed a specialist focused on his area. The clusters were chemicals, petrochemicals, energy, oil & gas, Transportation, Catering & Appliances, Architecture Building & Construction and so on.

For each of these clusters we had to train them on the application areas where stainless steel can substitute the existing carbon-steel, which is corroding, or stainless steel which can be substituted with a superior stainless steel so that clients can get a higher life and lower life-cycle cost.

And then we had the challenge to transfer this knowledge to the Indian industry. If a client decides to use duplex he has to get it fabricated, and for that he must know how to handle it, how to weld it. The designer must know the properties of stainless steel. So you have to not only educate fabricators but also to educate designers, consultants, etc. This was actually a major challenge. Sometimes we wondered if we were in a sales activity or in an education one. So we had to go bottoms-up and top-down to enlighten the vertical chain.

In 2008 Outokumpu faced issues related to anti-dumping in the Indian market forcing the company to freeze investments of more than € 45 million. How did you overcome this situation and what are your investments plans for the country now?

Outokumpu had a definite plan for India of first establishing the sales company, start stocking material, do a feasibility study for setting up a service center, and maybe at some stage set up a Cold Rolling Mill. We completed the feasibility study in early 2008 and the Outokumpu Group decided to go ahead with the € 45 million investment that was basically a service center for profiled plates, coil slitting lines, Cut to Length sheets and polishing facilities for sheets. This was going to be the first state-of-the-art service center of its kind in India. But the local industry felt threatened and initiated an anti-dumping investigation on Cold Rolled products. The strategy of this company was to gain market-share for its enhanced cold rolling capacity while the investigation was taking place.

At the end of eighteen months the government made a decision that the product range of the local petitioner can fall within the ambit of anti-dumping measures. But anything that the petitioner does not make will not fall in the anti-dumping net. They also specified that new-age products such as duplex and some ferritics and high temperature grades will not be covered because they were not produced in India. So when it comes to niche critical products for the critical needs of the emerging infrastructure, Outokumpu doesn’t have barriers to support the Indian market anymore.

Regarding the investment plans, in 2008 we got the piece of land, but due to anti dumping investigations we had to return it. We didn’t want to invest and then find that we can’t import the input raw materials into the country. So that project was put on hold. Simultaneously we had gone ahead with similar project in China, which was inaugurated in June this year. Our Indian project is still on-hold because we await clear government policy on new investments so that these investments do not get mired by the tariff measures. We do seek some commitment from the Indian government on new investments in India. A company like Outokumpu can only add value to the local industry, since our products and technologies are non-existent in the country and they offer the much-needed quality of products to ensure sustainability of the Indian industry.

What are the main products Outokumpu provides to the Indian Oil & Gas industry and how can you help the local industry on its efforts to reach ever higher quality and efficiency standards?

We have been talking with major Indian oil and gas clients such as ONGC and oil refineries. One area where the refineries and petrochemical plants are very keen on using duplex is for the storage tanks. As well on the oil rigs stainless steel is becoming more widely used as we are educating them on that.

Our market in Oil & Gas can be segmented in :

– upstream (exploration – production) divided with subsea applications (flexibles, umbilicals, flowlines ) and topsides ( mainly oil rigs and FPSO’s – boat acting as a platform – where we sell cable trays, fire/blast walls, desalination units, piping systems, firefighting systems.
– downstream ( refineries, storage tanks, flaring systems, heat exchanger units)
– LNG terminals ( process piping, storage.

On offshore one big challenge is the corrosion combined with pressure for ultra deep wells. The weight is as well an issue and once again duplexes are ideal steels due to higher mechanical strength compared with austenitics. Being the world leader Outokumpu is very well placed with all its range especially with high austenitics for chloride environments and all range of duplexes.

We sell all our range of products for the applications described above from thin coils for heat exchanger or flexibles to plates and tubular products for pressure vessels and piping systems.

This industry is very demanding quality wise and we carry all main approvals from major engineering, regulatory authorities or oil companies ( EIL, PDO, Shell, Aramco, Norsok, Statoil , Total etc..)

We have had many success stories and one of them is seen in the picture alongside.Currently engaged in supplying LP wire rod in Lean Duplex 2101 for weighing umbilicals and replacing heat exchanger tubes from seamless to welded in Duplex 2205.

Being a stainless steel company with the smallest carbon footprint, our focus is to be environmental friendly and our duplex grades strengthen our efforts by reducing corrosion rates, eliminating sandblasting and painting operations etc.

We would like to mention as well our new welded pipe mill in Saudi Arabia with a state of the art process line (up to 8″ NB and 8.2 mm wall thickness for the moment ) in all the grades. India will be served from this mill in priority.

How hard is it to convince your local clients of the long-term benefits of using Outokumpu’s products when in the short-term they represent higher investments?

The answer is Lower Life cycle cost ( LCC ). There is already a good level of local awareness of the advantages of stainless steel. You don’t have to explain much since the politician understands as so do the poor people who use stainless steel. I always show the photograph of poor people using stainless steel wares to tell the audiences that stainless steel is not elitist or expansive. If poor man understands the low life-cycle cost and stainless shine for generations, why the engineering community is not waking up to this reality.

In areas like desalination, people in India are already shifting to duplex stainless steel. A lot of duplex stainless steel material has started to come into India in the form of seamless and welded tubes and in the form of total equipments. Outokumpu globally is selling 20.000 tons of stainless steel directly to oil companies but indirectly through all the EPC companies you can multiply it by ten. So we can say that roughly 200.000 tons of stainless steel goes into the international oil and gas industry annually. If the world has understood the advantages of stainless steel in Oil and Gas, I am sure India will do it too.

What are your main ambitions and expectations for Outokumpu in India in the coming years?

One of the issues is that the EPC companies are always finding ways to reduce the cost of investments, but never worry about the comforts of the project owner. EPC companies need to change the mindset to create such facilities for the owner where corrosion is eliminated by using green materials like stainless steel to ensure maintenance free operations for decades? Let us stop thinking of only the initial up-front project cost?

In India, I believe most people already know about the advantages of stainless steel products and they need to know all its possible applications being done in the developed world. Outokumpu is the oldest global company in this segment and we are able to showcase to our Indian clients success stories and successful examples stainless steel applications and putting them in contact with our existing clients elsewhere in the world. Outokumpu is the only company which publishes a corrosion handbook which is like a bible for corrosion experts. It talks about all environments and suitable grades for each of them. We encourage and enjoy sharing wisdom between us and with the end-users. People appreciate that.

Our clients look at Outokumpu as technical experts who will give them all the technical support to be a winner in the end. That’s how we are enhancing our position and brand ourselves. Outokumpu is a different company, one that it’s opening a whole new range of possibilities to the Indian Industry to be the undisputed number one.

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