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With the downstream market in Europe and US in recession, UK-based KBC Advanced Technologies is finding India's hydrocarbons market attractive. Ian Godden, Chairman, KBC Advanced Technologies Plc, an independent consultancy to the global energy and process industries, tells Kalpana Pathak that company has decided to shift resources from traditional markets to Asia, Middle East and Latin America. Asian market which contributes 40% to its current $100 million revenues, will go up to 60% in the coming years. Excerpts:
Your plans for KBC advanced technologies in India?
Our plans are in continuation with our growth in consulting and software business for hydrocarbons industry. We are known for downstream which is refining and petrochemicals. Our plans are to increase our positioning in hydrocarbons chain by moving upstream and downstream.
Having established our office in Mumbai two years ago, we are seeking to create for us a major hub both to serve Indian markets' upstream and downstream production and consulting software. We also plan to use this as a base of serving other markets including the Middle East.
India has some way to go before it becomes a world class oil and gas related country and we are trying to do our bit to help India reach there. In doing so, we would double our employee base here from the present 15, in years to come.
How easy or difficult is it for you to work in the Indian market?
The challenges are three fold: firstly, the ability to create a full range of expertise for both the client and ourselves. Secondly, given India’s reputation of being tough negotiators, the challenge of being able to make money and serving the market and thirdly the fragmented nature of Indian oil and gas industry which makes it difficult and complex for us to provide that full service. So while at one level we have more clients at another level they have not created an environment for substantial investments in technology and engineering.
How are you going to address these challenges?
Am not sure we would be able to change the negotiation habits of Indian companies as that seems to be a part of their DNA. But we know we can add value and bring quick results through a combination of our consulting and software services thereby providing good short term financial results. The willingness of Indian companies to accept challenge and discuss the same is very good.
The executives are open to ideas and in those terms India could be qualified a better market than most others. However, in terms of pace, India has extremes---fast and slow moving, both. There is a real mix in the market. But with us in the picture, we may contribute to improving the pace too.
So you don't see any downturn in Indian downstream and upstream segments?
No. We see a lot of investments and integration in front of us. We see upgrading of refineries. There is going to be a glut of refining capacity around the world but the place which would be impacted the most would be Europe. A little bit struggle obviously in Australia and Japan but the rest of the market we see pretty robust. The problem in front of India however, is that it is a highly fragmented market.
Do you see that consolidating sometime?
Yes. It has to. Else it will become uncompetitive at some point in time and that will be a disaster. China is driving away with a planned view of their oil and gas business in a systematic way by investing in technology and building their capabilities. They will be a winner in this sector. I cannot say India will be a winner unless India consolidates.
Until that happens I feel there is significant risk of either failure of one or two companies or is real problem with the profitability and thus re-investment capability of the industry. We see good results at the local level but fragmentation is an issue.
