Engineers India not scared of recession in West, sees good growth this fiscal: CMD Vartika Shukla

Despite an expected slowdown in capital investments in foreign markets because of high crude prices and the recessionary environment in some major economies, Engineers India Ltd (EIL) is not significantly concerned about its order book.

EIL Chairman and Managing Director Vartika Shukla in an interview with Moneycontrol said that the company is well positioned for growth both in India and from the international market as well. “EIL is well poised to work on both of these angles, both in the conventional space as well as in the space of transition for tomorrow,” she said.

She said EIL has done the groundwork for future orders and expects a lot of projects it has bid to mature in the coming year. Edited excerpts:

The prime minister has talked about how India will be collaborating with international players to not only make energy affordable but also to move towards sustainability. EIL has been very active in the hydrocarbon space, how are you pivoting in that direction?

EIL is the core of the growth of the hydrocarbon sector in the nation. We have huge international footprints as well.

There are two things when we look at the prime minister's speech on decarbonisation; one there is a huge scope in the sector itself, to bring in technologies and innovation, and to reduce the carbon footprint in the conventional oil and gas space.

The second element is to bring up competency and capability to look at green technologies, whether they are biofuels or green hydrogen.

EIL is well poised to work on both these angles, in the conventional space as well as in the energy transition for tomorrow.

EIL has a significant presence in India and also does projects in the Middle East/West Asia. Given the crude price volatility in the last one year and its effect on global capital expenditure, how is EIL’s international pipeline is shaping up and how do the next 18 months look like?

Moving on from where we are positioned, we have had a lot of groundwork being done in the last year or so. We're not just well-positioned in India but also a global player. We have done a $20 billion refinery in Nigeria and are doing a $2 billion refinery in Mongolia.

We have a very good order book position with the ADNOC (Abu Dhabi National Oil Company) group of companies. EIL is riding the investment cycle upwards, both in the domestic as well as overseas markets. We are very well-positioned with our Abu Dhabi office team which is working out of the Middle East region and are well poised in Africa.

We've got a new $22 million order in Guyana for a power plant and in times to come, I will be happy to share an order of about $40 million in another African country. In India, we see a large investment in refineries integrated with petrochemicals.

We're working with a lot of our clients who are looking at integrated petrochemical complexes.

We are also stepping into the electric vehicle space, where you have a large volume of the two-wheelers and three-wheelers going into EV space.

We have a lot of release of feedstock for petrochemicals and therein we see huge potential in petrochemicals.

We are currently executing the Barmer refinery on behalf of HRRL (HPCL Rajasthan Refinery Ltd) which is over 25 percent petrochemical intensity, one of the highest in the public sector.

It is very complex and it leads to a lot of competencies to be built both within the company and also with our stakeholders, partners and vendors, whom we very closely associate with

That's an excellent question. Moving on from where we are positioned and we have had a lot of groundwork being done in the last year or so.

We're not just well-positioned in India, but we are also a global player. Put in context, we have done a $20 billion refinery in Nigeria, we are doing a $2 billion refinery in Mongolia.

We have a very good order book position now with the ADNOC (Abu Dhabi National Oil Company) group of companies.

And this is a cycle and EIL is riding that cycle, upwards in investments, both in the domestic market, as well as overseas.

We are very well-positioned with our Abu Dhabi office team who's working out of the Middle East region, very well poised in Africa.

We've got a new order of $22 million in Guyana for a power plant and in times to come, I will be happy to share an order of about $40 million in another African country.

In India, we see a large investment in the refinery, but integrated with petrochemicals.

We're working with a lot of our clients who are looking at integrated petrochemical complexes.

We are also the stepping in onto the electrical vehicle space, where you have a large volume of the two wheeler, three wheeler going into the EV space.

We have a lot of release of feedstock for petrochemicals and therein we see huge potential in petrochemicals.

We are currently executing the Barmer refinery on behalf of HRRL (HPCL Rajasthan Refinery Limited) which is over 25% petrochemical intensity, that's one of the highest in the public sector.

It is very complex and it leads a lot of competencies to be built in both within the company, and also with our stakeholders, our partners, our vendors whom we very closely associate with.

What is your total order book right now and what kind of growth are you expecting in the next 18 months?

Our order book has doubled in terms of new orders secured in comparison to the last year and we have a month-and-a-half to go. So we are very, very well-positioned in terms of the business growth that we are seeing.

We are very focused. Our business strategies are very clear and very well-defined, not only in the nation but in the international market also.

And we see a lot of turnaround happening, a lot of maturing of projects that we have bid for in this year as well as in the coming year.

(EIL’s order book as of December 2022 stood at Rs 7,865.6 crore, with 57 percent of it being consultancy projects and the rest turnkey projects, according to an investor presentation made by the company on February 4)

Would you like to give us some indication of what the growth could be like?

There are many things that are work in progress. If you see your number in the last nine months, we have done about 17 percent higher in terms of revenues. We have to build our margins this quarter.

Typically, the realisation happens in the last quarter when everybody closes their books.

So we see good year-on-year growth compared to the last financial year also, and the conversion of this order book into the actual realisation of revenue and the bottom line is likely to see results in the upcoming year.

If we look at the last quarterly result, the top line grew quite significantly, but there was a significant decline in the bottom line. What has happened here and if this is not really something that you're concerned about?

Absolutely, that's of no concern to us, not to say that we are not focused on that. We are very focused on our margins. We realise those numbers.

As I mentioned, the nine-month results are better than the year-on-year. With respect to the bottom lines, a lot of closure of financials happens by the end of the year.

So I think it would be mature to look at it at the end of the year, rather than kind of look in nine months.

The conversion of a lot of work into revenues takes place when we close the accounting books at the end of the financial year. Also, we have segmental revenue in the consultancy, which is very, very robust, as that has always been our niche, and in the LSTK (lump-sum turnkey) segment. And things are being worked out to bring up the revenue and margins in the LSTK segment.

All in all, I would say that by the end of the year, the results are going to bounce back when you compare 2021-22 to 2022-23.

Women are now the heads of top public sector undertakings, be ONGC, NHAI or EIL. Do you think the glass ceiling is finally breaking?

I have never believed there was a glass ceiling. It's always on your merit and your competency and the ability to see things in a leadership role.

What matters is what you position, the company and the portfolio you deal with in terms of business growth, in terms of business strategy and what value you bring to the table. And that I think is gender specific.

So I am, of course, fortunate to be here heading one of the most prestigious organisations in the world. Our teams are committed to the growth of the organisation and I'm committed to them to lead from the front to make sure that growth happens.