What makes the eight SBUs at Essar Projects click? MS Ambegaonkar, Director (Global), Business Development, Essar Projects, explains the genesis, growth and value propositions of the company.
Essar, now a multinational conglomerate, began its operations with the construction of an outer breakwater in Chennai Port (the then Madras Port) in 1969. Since then construction has been at the helm of laying the strong foundations of the group as a whole, and over the last four decades, Essar Projects, the projects execution arm of the group, has grown to become the second largest EPC company in India, posting an order booking of about $6 billion in March 2011. During the current financial year, the company expects a 50 per cent growth in its annual revenue to $3 billion.
Four decades of project management experience has honed Essar Projects' skills in conceiving, designing, executing, commissioning and handing over of large-scale projects in the core sectors. Its EPC expertise envelopes a range of sectors like steel, hydrocarbons, heavy engineering, offshore, pipelines, power, ports & jetties and other infrastructure areas. It has constructed 14 mmtpa of refining capacity; around 9.6 mmtpa of steel capacity; laid more than 5,000 km of pipelines; developed 1,220 MW of power projects and has been involved in most of the ports projects in India. Essar Projects has worked for external clients like Oil & Natural Gas Corporation (ONGC), Gas Authority of India (GAIL), Bharat Oman Refineries (BORL), Indian Oil Corporation (IOCL), Paradeep Port Trust, Government of India's Ministry of External Affairs, among others. We have also acquired overseas experience in Indonesia, Sri Lanka, Myanmar and Madagascar. The successful execution of the Ambatovy Nickel Slurry Pipeline project in one of the most challenging terrains of Madagascar is a fine testimony to project management and execution skills in alien conditions.
Having built strong foundations for the Group's assets during 1989-2009, the last couple of years have witnessed a shift, with Essar Projects beginning to focus more on external clients. In 2010, 35 per cent of its order intake came from external clients and now, the company aims at increasing the share of external clients to 50 per cent in the current fiscal.
This shift in focus is mainly to leverage the opportunities emerging out of increased infrastructure spending, in India and abroad. As we know, the 12th Five-Year Plan projections envisage an investment of $1 trillion in development of Infrastructure in the country. So also, elsewhere in the world, but especially in the developing countries, infrastructure development is emerging as a priority. Apart from greenfield developments, transport, energy and utilities infrastructure are in line for vast improvement, expansion and upgrades presenting abound opportunities.
Against this backdrop, the sectors that Essar Projects intends to target are: power, hydrocarbons, pipelines, steel plants, ports, airports and civil and buildings segments. The geographies currently on radar are India, Middle East and Africa, South-East Asia, Australia and South America.
To cater efficiently to the diverse needs of these dynamic goals in the arena of increasing competition, Essar Projects has revived its business model, creating eight Strategic Business Units (SBUs)-that correspond to its sectoral capabilities-each with a CEO at its helm.
Further, corporate support functions like Business Development & Marketing, Finance, Commercial, Planning, Safety & Quality, Information Systems, Human Resources, Procurement and Construction Equipment have been centralised to achieve business synergies and provide effective support.
To prevent opportunities from being missed, business development & marketing functions are structured with sector-specific verticals and regional offices aligned to meet the needs of target sectors and geographies. Apart from zonal offices in India, offices have been set up in Abu Dhabi, Qatar, Saudi Arabia and Oman, each with a dedicated Business Development representative. Plans are on anvil to set up similar offices in Kuwait, Botswana, Australia and Latin America.
Makings of a globally recognised EPC company
This change in focus and approach is aimed at enhancing diversification and growth for the company, thereby impressing Essar Projects' EPC footprints within India and abroad.
The notion of Engineering, Procurement & Construction company is not very widespread in India, for there are very few companies that possess all three strengths. While most of the players are construction companies, Engineering is treated as a core specialisation and procurement strengths vary from player to player depending upon their market exposure and the nature of projects executed.
The cause for Indian Construction Industry not reaching maturity levels can be attributed to the practice of splitting most of the large projects-barring a few specialised ones-into smaller packages, allowing for small contractors to participate. These small players neither have the project management skills, nor adequate resources, which eventually leads to time and cost overruns, as well as a compromise on safety and quality standards.
On the other hand, Essar Projects, by virtue of being the projects' execution arm of the Essar Group, is one company that has been tried and tested for its strengths in Engineering, Procurement, Construction and Project Management.
As the second largest EPC company in India, through our experience of managing and executing mega projects in India and abroad, we bring to the table: innovative value engineering, global procurement skills, state-of-the-art construction equipment, skilled manpower and world-class project management capabilities that ensure timely and desirable completion of projects. Further, the Owner's Perspective embedded in the Essar Projects' psyche is definitely a plus point that works towards higher motivation, efficient completion of projects and a strong operator focus.
Going forward, Essar Projects aims at bringing to its clients, the complete EPC solutions, which prima facie may appear expensive, but works out to be efficient in terms of time and costs in the long-run. We intend to build our brand as a globally recognised EPC company.
The recent organisational restructuring and change in approach has geared the company towards this goal. Each SBU is responsible for its own strategy and committed to ensuring the profitability of its projects by adhering to budgets and timelines. Inter-departmental strengths in tendering, contract and project execution are being leveraged within the SBUs-across the projects. Hitherto untapped potentials in each sector are explored as more and more projects are pursued simultaneously-both within and across the respective SBUs. Further, grooming a second line of leadership with the support from centralised functions like Business Development and Finance is expected to facilitate talent retention and need-based talent acquisition, there by addressing the challenge of Talent Management that is plaguing the EPC industry today.
On the verge of take-off
With an external focus and strategy in place, business has begun to take off. Last year, Essar Projects bagged a couple of external orders such as Jurong Aromatics Complex Project in Singapore and a package in the IOCL's Refinery Project at Paradeep. The company is also executing an airfield project in Papua New Guinea and a multi-modal transport project in Myanmar.
The new organisational restructuring and business strategies are expected to ensure optimum allocation of resources and address business needs at various stages like projects tracking, prequalification, bidding, winning, execution to successful and timely commissioning. It would help achieve a diverse portfolio and repositioning in the EPC market. This would boost the brand image-not just for Essar Projects, but for the Group as a whole.