Citec India, an engineering and information management services provider, is quite hopeful on expanding its business verticals. The company is also looking for opportunities in LNG segment for engineering services. Nasir Mulani, MD of Citec India, shares his views on current industry scenario and company’s business expansion plan with EPC World.
Tell us about Citec’s present key market segments and offerings. What new markets do you plan to introduce?
Citec group caters to miscellaneous industry areas with different focuses for each of the 10 Citec countries spread across the globe. Energy being our core area, our focus is more inclined towards Power – Thermal, Nuclear & Engine power and Oil & Gas – Onshore, Offshore, Pipelines and LNG facilities. We also have good presence in other verticals as well, like Process Industry – Pulp & Paper, Fertilizers and Chemical plants, Civil Industry and Manufacturing – mainly Vehicles and Material handling. Our Indian operations support almost all of these verticals. Further, we aim to explore the Marine and Shipping industry segments with our specialised product development competence in India. Our offerings can be summarized into Engineering, Information management and Project management services, more precisely as EPCM services overall.
Under the NDA regime, the government seems intended for clearing the bottlenecks for investment growth in the country. How do you see these developments as a consultant?
The government has considered investment in various sectors of which some would definitely affect our performance in the domestic market. For instance, the government has tangible plans for the power sector to meet the energy demand of the country. Heavy investments have been planned in the infrastructure sector. Improvement in quality of logistics and transportation will accelerate India’s attractiveness as a destination for manufacturing. Also the Make in India model will boost the manufacturing sector. This sends a strong message to both domestic and foreign investors that India is serious about business. Further these investments are large enough to sustain private sector sentiment and steer long pending ventures. However, the timely implementation of these policies would be the key. For now, it’s just to wait and watch.
Do you think the bad phase for Indian energy sector growth is over and it will now be on track?
The power sector being one of the most crucial yet the most deprived sector in the country, all eyes have been on what steps the government takes to revive the situation. Power projects throughout the country have been hit due to non-linkage with coal supplies resulting from regulatory complications. In this stage, end of the impasse on coal linkage comes in as a relief for the staggered projects to get kick-started. However, fuel availability for fresh capacity is still a grey area making private sector participation uncertain. Also the over assumption of increased fuel availability looks realistically difficult. It is encouraging to see the government so positive about the sector; but history reveals that this game of power is not a quick fix and will take years before it comes on track.
Your company is expanding its presence in the Oil & Gas sector. What is your opinion on the growth potential of the sector in present scenario?
To reduce India’s dependency on oil imports, the Government of India has adopted several policies to promote domestic production, including allowing 100 per cent foreign direct investment (FDI) in many segments of the sector, such as natural gas, petroleum products, and refineries. This has made the oil and gas sector in the country a better target for investment. Considering the international markets, the Middle East is the biggest contributor to our Oil and Gas business share. In the coming years, the greatest increase in refining capacities is forecasted from the Middle East and the Asia Pacific region, where demand for oil products will grow the fastest. Significant investments are being planned in the construction of additional refineries. The only challenge seen is that the scheduled projects are of high capacity and complexity, demanding specialized skills and highest quality of services. We are also quite positive about opportunities in LNG. Environmental friendly credentials and low costs are factors supporting the increased production of LNG, revealing an upward trend in the production globally. We see a rising demand for LNG terminals, where Citec conducts substantial engineering work currently.
What kind of trend have you observed in market in terms of project investment?
Presently, it can be said that the investment in projects is more shaped by government policy measures and incentives than the demand from competitive markets. Administrative signals or regulated rates of return have become the most important driver of investment as of now. Concerning energy markets, one can notice that much of the dynamism in this market is coming from smaller market players or new entrants who rely heavily on external sources of finance. In addition, more of brown field projects are emerging, replacing retired power plants with new energy efficient technology. In the Oil and Gas sector, there has been an increased investment in liquefied natural gas LNG facilities but as a long run prediction, high costs of gas transportation may weaken the interests of LNG buyers in regions like Asia with much cheaper gas supplies.
What kind of strategy have you formulated for the current fiscal to encash the growing opportunities?
Geographically, we are eagerly looking at expanding our business in Asia, specifically Middle East, and Far East. We already have operations in Saudi Arabia and Singapore, where we will be developing strong business development and execution teams to operate locally with the added support from our skilled resources in the Indian and European offices. We will take on larger and demanding projects, more of EPCM orders and partnerships. Some immediate actions would be expansion of our capacity and offices in India, organically and inorganically. Our approach would be to handle our capacity and resource in a way enabling profitability despite varying workload. We choose to develop specialized services in Power and Oil & Gas, which add more value to our customers.
According to analysts, global economic scenario has not yet recovered properly but India has intact growth prospects. What is your view on this?
The sectors like services, manufacturing, real estate, public sector, construction & utilities have been performing quite well in India and have further scope to grow. For several reasons, India has always been in the eyes of foreign investors, who held back due to unfavourable policies. With assurance of ease in business and needed and timely support from the government, it is foreseen that India will show an appreciable acceleration in its economy in the coming years.
The company was in process of expansion of its reach and also increasing the head counts. What is the current status?
In terms of reach, we have acquired a number of new customers from various geographies. We have stepped into diverse projects like Ethylene Crackers, Cross country Pipelines, LNG Facilities, etc which have richly added to our competence. Considering the headcount, we are growing steadily, balancing our capacity with the workload. 2015 will definitely see a vigorous expansion throughout the year across all our Citec India offices. We have strong recruitment plans aligned for the year and some of these are presently in the implementation phase. By 2017, we will grow twice our present capacity in India.
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