Asia & Pacific by Business Excellence Magazine

Asia & Pacific

Business Excellence Online

www.bus-ex.com ISSUE 1

Excellence

Asia

Responding to the challenges of growth

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Editor’s letter

Excellence inAsia EDITORIAL

Managing Editor Becky Done bdone@bus-ex.com Editor In Chief Martin Ashcroft mashcroft@bus-ex.com

DESIGN

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This special issue of Business Excellence, dedicated to the Asia-Pacific region, contains much of what you might expect from the area—gold mines in Australia, leisure resorts in exotic locations, transport & logistics (always a major issue for countries distant from western markets) and construction & infrastructure (ditto for developing economies). Between these covers are contemporary accounts of the challenges and achievements of Kalgoorlie Consolidated Gold Mines (KCGM), the operator Australia’s largest open cut gold mine (known as the Super Pit), and Newmont Asia Pacific, owner of the Boddington Gold Mine which is expected to overtake it. What you might not have expected is the remarkable story of Fortis Healthcare, which in ten years has become India’s largest private healthcare provider with a reputation for transparency and clinical excellence. Equally unexpected, perhaps, is the meteoric rise of Britannia Industries, founded in Calcutta in 1892 as a biscuit manufacturer, but which has catapulted to national prominence under managing director Vinita Bali in the last five years with a compound annual growth rate better than 20 per cent. India’s economic growth has brought enormous challenges for sectors like healthcare, infrastructure, energy and transport. Here we describe the Karcham Wangtoo Hydroelectric Project in Himachal Pradesh in north-west India, due to be commissioned this year, and the efforts of Bombardier India in modernising India’s rail transportation systems. From elsewhere in Asia we have multi-modal transport company SMRT, influential in the design and construction of Singapore’s sophisticated new driverless Circle Line metro system, and Trepax Innovation, a specialist contractor providing waterproofing, flooring, concrete repair and corrosion protection systems to a variety of customers across Thailand and increasingly throughout South East Asia and further afield. Business Excellence has built its reputation on the search for excellence, wherever it can be found. I’m sure you will agree—we’ve done it again!

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Contents

Oberoi Group Indian icons

This hotel group prides itself on offering superior service and first class hospitality from a variety of breathtaking locations.

Vilu Reef Beach & Spa Resort Simply speaking

Relaxed, stress free and above all, natural—most guests come to this Maldivian resort for its peace and beauty.

Fortis Healthcare Healthy processes

A provider of world-class medical care using economies of scale and improving efficiency to bring costs down.

Britannia Industries Fortune cookies

Being a successful food megabrand in India today carries with it some awesome corporate social responsibilities.

L’Oréal India

More than skin deep

This major consumer brand cares as much about sustainable development as it does about making women beautiful.

14 28 40 52 62

Contents JSW Steel

Forging ahead

This company has found that success comes from adding value to peopleâ&#x20AC;&#x2122;s lives as well as the product.

Tata Steel Processing And Distribution Ltd Steeled for service

Pulling off a shift in focus from a manufacturing orientation to viewing service as a key differentiator is no mean feat.

Bombardier Transportation India Ltd Going underground

Bombardier Transportation India plays a key role in Indiaâ&#x20AC;&#x2122;s commuter transport and metro systems.

Secure Meters

Very smart meters

This Indian company is making its mark on energy conservation, having spotted a smart business opportunity.

ABB Australia

Fast-tracking success

As 2009 drew to a close, this company achieved a remarkable feat of engineering collaboration, logistics and lateral planning.

72 80 86 96 106

Contents MEO Australia

The wonder of discovery

Creative thinking is applied to the process of building value through the exploration and commercialisation of hydrocarbon resources.

Technip KT India Ltd

Based on technology

Innovation and a determination to stay ahead of the competition has resulted in phenomenal growth for this company.

Jindal Drilling & Industries Ltd Partner of choice

Teaming up with a preferred partner can be of great benefit to oil and gas companies hoping to create a footprint in India.

Jaypee Karcham Hydro Corporation Ltd Tapping hydro potential

This hydroelectric project in north-west India is all set for commissioning and beginning to generate power.

Trepax Innovation

A service reputation

The birth of Thailand’s ‘Tiger economy’ and the rising demand for construction has laid strong foundations for this specialist contractor.

114 122 132 140 150

Contents McNally Bharat Engineering Company Ltd Going for growth

One of India’s leading diversified engineering companies is going through a period of meteoric growth.

KEC International

A growing superpower

As governments around the world invest in power infrastructure, competition has become rife within this specialist construction sector.

Dampier Port Authority Satisfying export needs

Australia’s second largest bulk export port is on the threshold of a major expansion programme.

Colombo Dockyard At the crossroads

Colombo in Sri Lanka is perfectly placed to catch passing shipping trade from Australia, the Far East, Europe and the Gulf oilfields.

Thome Ship Management Ltd Specialist seafarers

As ships get bigger, more sophisticated and more specialised, a new industry has grown up around operating and crewing them.

160 168 176 192 200

Contents Kishco Group

Fabric of society

The flow of discarded garments from the West into western India is supporting a thriving and lucrative textile industry.

McColl’s Transport

Being systematically better

The secret to success at this transport company has been to lock operational activities into standardised systems.

SMRT

Just the ticket for growth

After years of planning, design and construction, Singapore’s new driverless Circle Line metro system is ramping up to full operation.

Kalgoorlie Consolidated Gold Mines A positive impact

Operating Australia’s largest gold mine, KCGM has a positive approach to sustainability, employees and community.

Newmont Asia Pacific Pure gold

Newmont’s Boddington mine in Western Australia is set to become the biggest producing mine in the country.

210 216 226 236 248

Indian

icon

With many famous names in hospitality pres and approach, Alan Swaby looks at one grou offering superior service and hospitality from 14

Asia & Pacific

Oberoi Group

senting uniformity in appearance up of hotels that prides itself on m breathtaking locations Asia & Pacific 15

on’t you just love rags-to-riches stories? Well in this case, the story doesn’t exactly begin with ‘rags’—but it’s certainly a tale of a man who punched above his weight, was never afraid to take chances and continually seized every opportunity that came his way. And the story does end in riches—not surprisingly, as we are talking about a hotel group that is continually rated by guests as among the best in the world.

Asia & Pacific

Only about 20 per cent of our clients are from India, with most coming from the US and the UK

Oberoi Group

Asia & Pacific 17

Asia & Pacific

Oberoi Group

The story starts back in the 1930s when a smart and presentable young Mohan Oberoi was on holiday in the Himalayan town of Shimla—the summer refuge for the governing classes of India. Mohan’s head was turned by the grandeur of the ladies and gentlemen he saw in Shimla and without a day’s experience of hotel life to his name, he blagged his way into a job as cashier at the best hotel in town. He must have displayed something special, because four years later the general manager of the hotel—an Englishman called Clarke—asked Mohan to go into partnership with him in the purchase of another hotel in town. Mohan had no money to speak of but used his wife’s wedding jewellery as collateral to raise his half of the down payment. Clarke eventually wanted to return to the UK, and sold his share to Mohan who had shown himself

Asia & Pacific 21

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Oberoi Group more than capable of running the business. “Clarkes Hotel is still in the group,” says Prithvi ‘Biki’ Oberoi, son of Mohan and present chairman and CEO of the publicly listed company, “and retains the original name. It has a sentimental place in our hearts.” Sentiment only goes so far, though. The next acquisition Mohan made was the 350 room Grand Hotel in Calcutta that had gone into receivership when it lost business after a cholera outbreak. At the time, Calcutta was an important commercial centre. “My father got the lease in 1939,” says Oberoi, “just as World War Two was starting. It was a favourite with the British officers who were desperate to get one of the 1,500 beds that were squeezed into 350 rooms and were never empty for the duration of the war.” In 1942, Mohan pulled off what was probably the first hostile takeover in Indian history when he quietly bought up 51 per cent of the shares in Associated Hotels of India. When he announced his presence at the AGM, the British board of directors resigned en-masse but the chairman, Sir Edward Buck, agreed to stay on. At that time, in 1942, the group had 10 hotels and it now has 30—spread from Egypt to Indonesia— trading under the brand names of either Oberoi or Trident. Oberoi mistrusts the term ‘luxury’, thinking it overused; but there is no doubt that his hotels fall into the very highest possible category. Their downtown locations, in India’s important commercial centres, cater for business people; and for those seeking a leisurely holiday, they can also be found in stunning leisure settings. Despite being well into his 80s, Oberoi is still actively in charge of the group. He is only too aware that as he is in the business of selling service, one poorly trained or badly supervised employee could quickly wreck a reputation that has taken years to develop. “We have converted one of our smaller hotels into a training school,” he says. “Each year, we train 30 young men and women there who have been identified as potential future general managers. It’s a two year course, after which they get hands-on experience at front of house or in the restaurant, and then the best of them are sent overseas to get international experience.”

Asia & Pacific

Oberoi Group MEIKO For more than 84 years MEIKO has been using the most sophisticated technology to create the conditions necessary for superclean dishware. MEIKO technology produces sparkling

cleanliness

not

just

mass

catering establishments, restaurants, hotels, company canteens, hospitals and care homes but also across the world in the complex installations needed for airline catering, in all the high-speed ICE trains of the German railway system, on cruise ships and the VIP catering arrangements at Formula 1 tracks. Exceptional

quality,

outstanding

technology

and impressive customer benefits have made MEIKO dishwashers the most successful in the world. MEIKO (Asia) Techcentre Bangalore is one of MEIKO’s daughter companies which was founded in 2007. The company employs 23 staff. www.meiko.de

As well as future top management, the school provides a one year course for housekeeping executives and a two year course for hotel chefs. “Some people still have the idea that the whole of India is a health risk,” says Oberoi. “We want to categorically demonstrate that this is not the case.” The first quality all of the 12,000 strong workforce must demonstrate is fluency in English. They then need to show a willingness to leave bad habits—such as poor timekeeping—at home and provide the kind of discreet but attentive service Oberoi clientele expect. It’s not a cheap experience to stay at one of the group’s hotels. Prices range from US$300 to $500 per night, but Oberoi argues that this is good value when compared to an equivalent hotel in the US or Europe,

where prices will be two or three times higher. The single most important business sector for Oberoi is international businessmen. “Only about 20 per cent of our clients are from India,” he says, “with most of our clients coming from the US and the UK.” Not surprisingly, the economic climate has impacted on the group’s revenue. The accepted benchmark for occupancy is 70 per cent and in India this has slipped in the past couple of years to 65 per cent. The Mumbai terrorist attack in 2008 further compounded matters and put that particular hotel out of commission for 14 months. “The terrorist bombs and the subsequent battle with security forces,” says Oberoi, “did considerable damage and the hotel had to be practically rebuilt at a cost of $150 million.” Oberoi himself was in Mumbai that day and would have been at the hotel had it not been for another engagement. He has nothing but praise for the staff who risked their own lives to help the unfortunate guests inadvertently caught up in the tragedy. To reward their

Asia & Pacific

Oberoi Group

efforts, all staff were kept on full pay for the duration of the redesign and rebuilding work. Following the refurbishment, the hotel re-opened last year and retains its reputation as an icon of quality and excellence in the very heart of India. www.oberoihotels.com BE

Asia & Pacific

spea

Simply

Vilu Reef Beach & Spa Resort in the Maldives has performance. Operations manager Ali Yoosuf talks

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Vilu Reef Beach & Spa Resort

aking

received numerous awards and accolades for its s to Gay Sutton about the secrets of its success

Asia & Pacific 29

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Vilu Reef Beach & Spa Resort

aradise. Few places on earth more truly deserve that description than the Maldives. Lying in the Indian Ocean just north of the equator and some 700 kilometres south-west of Sri Lanka, the Maldives enjoys an enviable tropical climate with daytime temperatures of 30oC throughout the year. Said to be the lowest lying nation on earth, it comprises a double chain of 26 exquisite coral atolls spread over a massive area of 90,000 square kilometres. Some 128 kilometres south of the Maldives’ capital of Malé lies Nilandhe Atoll, a ring of serene reefs and islands one of which, Meedhuffushi Island, is exclusively occupied by the holiday resort of Vilu Reef Beach & Spa Resort. Owned by local hotelier Ahmed Siyam Mohamed, the resort was opened in October 1998 and developed to a single vision and theme. It is the first resort within the Sun Hotels & Resorts Pvt Ltd group, which currently owns four properties in the Maldives. “At conception, our chairman chose to keep the island as natural as possible,” explains operations manager Ali Yoosuf. “The island is quiet and calm—most of our guests come because it is peaceful and beautiful.”

Asia & Pacific

You won’t find any glamorous marble, glitzy Hollywood-style fittings or frenetic tour guides at Vilu Reef. The atmosphere is relaxed, stress free and above all, natural. “If you look at our main bar, for example, we have no tiles on the floor, we have sand,” Yoosuf says. “So you can put your feet down into the sand. And we believe this is a unique concept.” The resort’s architecture combines natural materials with natural shapes and forms. The roofs of the beach fronted villas, for example, are constructed to resemble the famous nautilus shell. The style is pure simplicity, and yet there are all the hallmarks of luxury: excellent food and drink is provided through a range of restaurants and bars; a variety of sporting activities are offered along with pampering at the health spa; relaxing boat trips and

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Vilu Reef Beach & Spa Resort

Asia & Pacific 33

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Vilu Reef Beach & Spa Resort

tours are available every day of the year; and there are evening entertainments for those who are interested. For those who are not, there is an abundance of peace and tranquillity. It is a holiday concept that works extremely well from the business perspective. The resort has consistently been averaging an annual occupancy of some 85 per cent, and this achievement has earned it the accolade of being the best occupancy-maintained resort in the Maldives for several years running. â&#x20AC;&#x153;We also have a large number of repeat

Asia & Pacific

Vilu Reef Beach & Spa Resort clients,” Yoosuf continues. “On average more than 15 per cent of our clients have been here more than once, and some have returned to us more than 12 times.” These repeat clients are treated as very special at Vilu Reef—on arrival they are made to feel doubly welcome with a floral garland and a special dinner on the beach; and for clients returning more than five times, there are complimentary trips and tours.

have been built over the gleaming blue waters boasting an open-air Jacuzzi on the sundeck, and five dedicated Honeymoon Villas. Understandably, the island is very popular with honeymooners, who are welcomed and catered for in a very special way. Greeted with garlands on arrival, they later enjoy an intimate honeymoon dinner on the beach.

“The island is quiet and calm—most of our guests come because it is peaceful and beautiful” Visitors generally arrive by seaplane, taking a 35 minute flight from the capital of Malé—a trip that sets the scene for the holiday to follow. For as far as the eye can see, there are small palm-covered islands with white sandy beaches and gorgeous coral reefs— and all of this is set into the jewel-like turquoise and pale blue expanse of the Indian Ocean. On landing, the welcome is typically warm and generous. Met by a team of smiling staff, visitors are greeted to the accompaniment of live Boduberu drumming and taken to the Nautilus Bar for check-in. Food is an important part of the holiday experience. The island’s main restaurant also goes by the name Nautilus, but there are plenty of other venues for a meal. The Sunset Restaurant provides fresh fish and seafood along with Thai and Asian specialities, or there is a beach buffet each week. The resort’s chefs also offer to provide catering for special events anywhere on the island. The accommodation includes 60 Beach Villas set on the palm fringed white sandy beach with breathtaking views over the lagoon. There are 20 secluded Garden Villas located in the landscaped gardens, each with its own path to the beach. In addition, there are 35 Jacuzzi Water Villas which, as their name suggests,

Also available is ‘Robinson Crusoe’—a private excursion exclusively designed for honeymooners. “We have a desert island about 40 minutes away by boat. It’s small and beautiful, and our honeymoon couples can spend time alone there together as part of their celebrations.” One of the greatest attractions of the resort is the quality of the snorkelling and diving that can be found on the conveniently located house reef rich in exotic marine life, which extends for some 7.5 kilometres to the north-west of the island. Reef sharks, eagle rays, turtles and a wide variety of colourful small fish can all be seen in abundance. Snorkelling and diving trips are provided by boat, and strict safe practices are observed. There is a lifeguard and rescue boat continuously on duty, while one area of the reef is reserved purely for snorkelling. If visitors stray beyond this area, the lifeguards advise them to return to the safe area. The sea plays a major part in many of the activities on offer at the resort. All manner of water sports can be found, from catamaran sailing to knee boarding, wind surfing and

Asia & Pacific

“On average more than 15 per cent than once, and some have returned

glass bottomed boat and banana boat rides. Island hopping trips to some of the local islands are provided, along with night fishing and big game fishing. For those who prefer less strenuous activities, the island’s Sun Spa offers many kinds of holistic treatments, from massage, manicure and pedicure through to the Indian healing practices of Ayurveda. Finally, the evenings would not be complete for many without entertainment, and Vilu Reef offers anything from discos, karaoke and live bands through to cultural shows and the hugely popular crab races. The list of accolades and awards the resort has received are too numerous to mention; but they include the Gulet Hotelo Award 2008 and the Thomas Cook Marque of Excellence Award 2008, both of which were based on the votes and comments of satisfied customers. None of this could have been achieved without highly capable and dedicated staff. While a number of international staff are employed at Vilu Reef, over 50 per cent of its employees are multilingual Maldivians. “Our staff speak a number of languages: German, English, Italian, French, Japanese. And this helps to make our guests comfortable and happy.” Training is also an ongoing process, and Yoosuf is a believer in continuously refreshing skills. “Our heads of department are very experienced people and provide training for their staff, but we also bring in outside trainers for each of our departments.” With highly trained staff on hand and a sensitive eye for design, it is clear that Vilu Reef will continue to be carefully aligned with the highly successful founding ethos of providing a tranquil and peaceful environment that is close to nature. www.vilureefmaldives.com BE

Asia & Pacific

Vilu Reef Beach & Spa Resort

t of our clients have been here more d to us more than 12 timesâ&#x20AC;?

Asia & Pacific

Healin

pro

Established less than 10 years ago, Fort largest private healthcare provider. Mana explains to Gay Sutton how the company while using economies of scale and impr 40

Asia & Pacific

Fortis Healthcare

ocess

tis Healthcare has become Indiaâ&#x20AC;&#x2122;s aging director Shivinder Mohan Singh y is providing world-class medical care roving efficiency to bring costs down Asia & Pacific 41

Asia & Pacific

Fortis Healthcare

ne of the greatest global success stories of the last two decades is the rise of India as an industrialised, businessdriven nation, and its emergence as a global economic force. Think of the steel industry, software and call centresâ&#x20AC;&#x201D;the list is continuously growing.

Asia & Pacific

Fortis Healthcare

“We won’t compromise on our world-class medical standards, on our talent or on technology. Therefore, to provide quality healthcare at prices that are affordable in India, we need to leverage process efficiency and economies of scale” Despite the Indian government’s intentions to create a national health service, healthcare still lags behind in this race for the top, however. Although some 70 per cent of the nation’s health infrastructure is owned by the government, only 20 per cent of the money spent is publicly financed. A massive

Asia & Pacific

Fortis Healthcare 80 per cent, amounting to four per cent of India’s GDP, is funded by the private healthcare sector and therefore paid directly through insurance or out of the patient’s pocket. That same private sector, however, has inherited a dubious reputation. Largely unregulated and unlicensed, it consists of a loose congregation of over 50,000 hospitals, 84 per cent of which provide fewer than 30 beds while only one per cent exceeds 200 beds. Lacking in transparency, it is often accused of overcharging, and blatantly making money out of ill health.

The last decade has, however, seen a breath of fresh air blow through this stagnant marketplace. Launched in 2001, Fortis Healthcare began with the construction of a large high-tech hospital at Mohali in Punjab. It was the first of many. Ten years on, the company manages a nation-wide footprint of some 54 hospitals, roughly one third of which are large purpose-built institutions located in state capitals. One third came to Fortis through acquisition, and the final third are managed and run by Fortis on behalf of private or state owners. Today, the

Fairwood Fairwood

premier

end-to-end

consulting

organization providing architecture and engineering solutions for the past 20 years. Working with big healthcare groups like Fortis and Wockhardt, we have brought healthcare architecture and design to a whole new level in the Indian sub-continent. Our relentless efforts to perform better have given birth to unique ideas like Magic Module for highly efficient hospital design. Our extensive research on standardization of budget hospitals with focus of flexibility and expandability has resulted in affordable healthcare services for the masses.

company is India’s largest private healthcare provider and has achieved a reputation for transparency and clinical excellence. “Our vision,” says managing director Shivinder Mohan Singh, who has guided the company through this period of dynamic growth, “is to provide world-class quality healthcare to anyone who needs it in our country. We fundamentally believe we’re in the business to deliver top quality care. Therefore, our financial viability is a by-product and not

Asia & Pacific

Fortis Healthcare

the end game in our organisation. And that affects everything we do.” The company’s operational model is to deliver end-to-end healthcare with a full range of services, and to provide centres of excellence at each of its hospitals in six specialist areas: cardiac, orthopaedics, neurosciences, renal diseases, cancer and mother & child. From the very earliest days, considerable attention has been paid to achieving transparency throughout the organisation, and to refute the industry’s profit-oriented image. To begin with, the company publishes a price list for all outpatient tests and procedures, and ensures those prices are rigorously adhered to; however, it is with the costing for inpatient care that Fortis has been truly innovative. Where possible, clinical investigations and tests are done prior to admission. Meanwhile, a comprehensive range of packages has been developed for the different conditions and diseases, and this is used as an estimate for the final inpatient bill. “We then very closely monitor the estimate to bill ratio. Any final bill that comes to five per cent more than the estimate is examined by the head of the hospital to see if anything has gone wrong. Was the estimate right, for example, or were there too many diagnostics or procedures performed, was the billing correct, and so on,” Singh explains. “In India as a whole, it’s not uncommon for patients to be charged 250 per cent more than the original estimate. I am very happy to say that on average 92 per cent of our bills are within the five per cent of the estimate.” This same rigorous standardisation and verification has been applied to a wide range of operational processes over the last five years, resulting in increased efficiency and a higher patient satisfaction level. At present, 171 patient touching processes have been standardised across all the hospitals, and are monitored and managed on a daily, weekly and monthly basis through the Fortis Operating System (FOS). Enabled through a company-wide IT system, FOS enables the management team to ensure that activities ranging from waiting times for admission

and turnaround for tests and investigations, through to ambulance response time and time to discharge, are all performed to the required standard and efficiency. Having achieved significant benefits from FOS, the company has applied the same concepts to the development of an equivalent Medical Operating System (MOS). This monitors a whole host of parameters that measure the quality of clinical performance and medical outcomes, and is being used to improve medical excellence both at hospital level and across the group. Both FOS and MOS are playing a key role in continuous improvement at Fortis, helping it to achieve world-class performance and far greater efficiency. But they are also being mobilised to help reduce costs as part of the company’s bid to make healthcare more affordable for the local population. “We won’t compromise on our world-class medical standards, on our talent or on technology. Therefore, to provide quality healthcare at prices that are affordable in India, we need to leverage process efficiency and economies of scale,” Singh says. Everything from consumables and equipment through to technology, IT and the services of consultants

Asia & Pacific

and experts, are much more cost effective for the larger organisation. “And this is one reason why we’ve grown at the rate we have.” Fortis has faced many challenges during its 10 years in operation, and one of the biggest has been sourcing skilled staff. The company opened the first Fortis School of Nursing in 2001 at Mohali, Chandigarh, and since then, has opened four more, each providing full nurse training. “We are always adding to the training courses we provide, and always updating our staff,” Singh says. “For example, we run specialist ICU and critical care nursing programmes. We provide dialysis and paramedic training, and teach a wide range of technical disciplines such as radiology and pathology. We also provide a 17-day induction programme for every new nurse who joins the company.” Looking to the future, Fortis plans to continue developing its clinical excellence, and to cut costs across the organisation. “We are also developing different models whereby we can systematise, package and modularise our healthcare expertise, and take it out to the 70 per cent of the population living in semi-urban and rural areas,” Singh comments. “As part of this, we are committed to opening a dozen more hospitals in non-metropolitan areas over the next two years.” Fortis has undoubtedly established its place as the leading private healthcare provider in India. “But what we have done is only a drop in the ocean,” Singh continues. “There are 50,000 hospitals in India of which we have just over 0.1 per cent. Of the two million hospital beds in India, we provide just over 8,500, which is 0.425 per cent. So whichever way you slice it, we’re making a miniscule impact on the country’s healthcare. And the scale of that challenge is what really haunts us. We want to be clinically comparable to the international institutions and to do it at Indian prices—affordable for all. So we have a long way to go,” he concludes. If the company’s track record is anything to go by— expanding from one hospital to 54 in nine years and building a reliable and repeatable service based on medical excellence, care, quality and efficiency—then Fortis has what it takes to achieve this ambitious goal. www.fortishealthcare.com BE

Asia & Pacific

We want to be clinically comparable to the international institutions and to do it at Indian prices–affordable for all

Fortis Healthcare

Asia & Pacific

cook Fortune

Britannia Industries started as a Calcutta biscu Vinita Bali tells John Oâ&#x20AC;&#x2122;Hanlon about the respo

Asia & Pacific

Britannia Industries

kies

uit manufacturer in 1892. Managing director onsibilities of a food manufacturer in India today

Asia & Pacific 53

“S

ince Vinita Bali took over, Britannia has delivered its highest ever growth rate and been rated as India’s favourite food brand reaching more than 50 per cent of Indian homes.” Expected words, perhaps, from a growing manufacturer in the business of fast moving snack foods, but on this occasion they were spoken by President Bill Clinton, who invited Britannia’s managing director to address the closing plenary at the annual meeting of the Clinton Global Initiative (CGI) in 2009. Established in 2005, the year before Bali took up the reins of the listed Indian food group, CGI convenes global leaders to devise and implement innovative solutions to the world’s most pressing challenges. It gathers government officials, business leaders, and nonprofit directors from all over the world, creating opportunities for them to collaborate, share ideas, forge partnerships that enhance their work, and undertake commitments to action.

Asia & Pacific

The c our po and m sectio

Britannia Industries

challenge is, how do we take ortfolio and make it relevant meaningful to a large cross on of the Indian population?

Asia & Pacific 55

We partnered with the G for Improved Nutritio develop biscuits that ta were also carriers o

Asia & Pacific

Global Alliance on in Geneva to asted good and f micronutrients

Britannia Industries

Britannia’s commitment to action in 2007 was to impact five million Indian children in an attempt to tackle malnutrition. “I suspect this was rather a modest ambition,” Bali says, referring to the sheer size of the problem. India has 100 million children under five, and of these 47 per cent are malnourished, the largest single deficiency being of iron. Sixty per cent of schoolage children in India are estimated to suffer from anaemia. However, Britannia has a remarkable degree of market penetration, with half the nation’s households purchasing at least one Britannia product every month. “We partnered with the Global Alliance for Improved Nutrition in Geneva to develop biscuits that tasted good and were also carriers of micronutrients,” Bali explains. “And we partnered with an NGO in the southern part of the country to make these fortified biscuits available to 150,000 schoolchildren every day.” The pilot was validated, and now 10 million packs of Britannia fortified biscuits and bread are sold across India every day.

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Asia & Pacific

Britannia Industries Bali is a businesswoman through and through, having worked her way up through the ranks of Coca-Cola and Cadbury. Since joining Britannia, she has proved that ethical business can be profitable business. Under her leadership the company has enjoyed the fastest growth rate in its history and compound annual growth has been better than 20 per cent. “The company is more than twice the size it was; we have a presence in more markets; and we sell a richer and more diverse portfolio of products and snacks. During this time we have doubled our dairy business and quadrupled some of our nascent businesses—bread for example. We have pioneered new segments, the most recent being the launch of diabetic friendly cookies.” It was in 2002 that Britannia diversified into dairy foods by forming a joint venture with the world’s second largest dairy company Fonterra, buying out Fonterra’s interest in 2009. In 2007 it entered the bakery retailing market, an extension of its core biscuit ranges, Bali says, by taking a controlling share in Bangalore-based Daily Bread. In 2009 Daily Bread became a wholly-owned company within the group. “Our goal is a simple one: to sell more of our brands to more people in more places more times! We are in the food business, and the challenge is, how do we take our portfolio and make it relevant and meaningful to a large cross section of the Indian population?” Her vision is to accompany the typical Indian consumer through their day. “Most people consume cereal and cereal-based products, and then milk and milk-based products at different times during the day. As a company we have a strong portfolio in both sectors.” That is simple diversification; what is different is the increasing introduction of functionality into the product ranges, she says. “We have just launched a whole range of breakfast foods under the Britannia Healthy Start

Asia & Pacific

umbrella. If I look at it from the point of view of the Indian consumer, typically they wake up in the morning and have that essential first cup of tea with a Britannia Marie or arrowroot biscuit perhaps. At breakfast they have a choice of Britannia bread, cheese, butter, milk and, with the recent launch of Britannia Healthy Start, breakfast foods like multigrain porridge or traditional Indian cereals like upma or poha.” The need for healthy foods is clear; and demand is growing rapidly. “I think health is a big trend and we are well positioned to jump on to that opportunity. We have taken some concrete actions to drive that position forward. For example we are the only biscuit company in India to have removed transfats from all our formulations and recipes.” The CGI commitment was a step further. “Fifty per cent by volume of everything we sell is now fortified

Asia & Pacific

with micronutrients. Both these ranges and the more ‘indulgent’ foods like chocolate biscuits and filled snacks are growing at a double digit rate,” she adds. Britannia is forging partnerships with the UN’s World Food Programme, for which it manufactures special products, and GAIN, the Global Alliance for Improved Nutrition because being a food megabrand in India carries with it awesome corporate social responsibilities. Innovative thinking has been applied here, too. “We challenged our business to come up with profit improvement programmes every year that would finance the incremental cost of the micronutrients we add so that the consumer would not have to pay anything extra.” That is good for the consumer, good for the children, and good for the company too. Business excellence is pursued through a number of ongoing programmes, says Bali. “Each year we set rigorous targets on efficiency and effectiveness. We operate programmes like TQM and kaizen, not

Britannia Industries only in manufacturing but in other processes in the company and our supply chain. At any one time there are several hundred projects to improve process parameters, output ratios or effectiveness in the marketplace. You have to have those programmes, otherwise it is tough to compete in a market where margins are not that high.” Britannia exports five per cent of its products to 35 countries; manufactures and distributes its brands in the Middle East and Sri Lanka; and is so dominant in India that it could now be said that its health is directly linked to the health of the nation. Bill Clinton clearly thinks so: just three companies are chosen to present at CGI out of 1,500 contenders. “It was quite some recognition of our work,” Bali admits. www.britannia.co.in BE

Huhtamaki-PPL Huhtamaki-PPL is India’s leading manufacturer of primary consumer packaging and labelling materials. Huhtamaki Group has operations across 35 countries with revenues of US$3.2 billion. Huhtamaki-PPL has been in the complex world of designing and producing packaging solutions for over 75 years. It is perhaps this experience that places Huhtamaki-PPL in a unique position to understand customer needs and design optimum packaging solutions. Huhtamaki-PPL is a true onestop-shop offering innovations across flexibles, specialized pouches, labelling, specialized cartons, packaging machines, laminated webs, holographic options and premiums & promotions.

Asia & Pacific

More than

skind

The Lâ&#x20AC;&#x2122;OrĂŠal Group cares about more than maki Vishal Sahgal, industrial director of the Pune m to Jayne Alverca about the importance of prom 62

Asia & Pacific

Lâ&#x20AC;&#x2122;OrĂŠal India

deep

ing women beautiful. manufacturing facility, talks moting sustainable development Asia & Pacific 63

e w consumer brands are better known than those of the L’Oréal Group. The portfolio of 23 global brands including household names such as Maybelline, Garnier and Biotherm, as well as the L’Oréal Paris brand itself, are all at the forefront of their market, whether it be for cosmetics, skin care, fragrance or hair care. Headquartered in Paris, L’Oréal has over a hundred years’ experience in bringing out the best in women of all ages and races. Today, the group has a presence in 130 countries and its 65,000 employees were behind sales of €17.5 billion last year. L’Oréal’s presence in India dates back to 1994. “L’Oréal has a strong belief in the value of manufacturing close to its markets,” explains Vishal Sahgal, industrial director of the company’s Pune manufacturing facility. However, India did not begin a programme of liberalisation for foreign companies until the early 1990s, so at first, manufacturing was undertaken by a sub-contractor. “In 1998 we were finally able to move into direct production, driven by the belief that no one has more expertise than L’Oréal in the manufacture of the products that we are famous for,” he adds.

Asia & Pacific

L’Oréal India

Asia & Pacific 65

L’Oréal India

Sales of L’Oréal products in India have been meteoric. “We not only give products that are better in terms of quality and safety, we have also been instrumental in creating new markets. For example, hair colouration was revolutionised by L’Oréal when we introduced fashion shades which women had never used before. Our Colour Naturals brand is very accessible, costing close to €2, and it offers an international quality standard that was never available before. Similarly, we introduced Indian consumers to conditioners for the first time and they have quickly taken over from traditional hair oils,” he comments. Since 2004, manufacturing for hair care, hair colour and skin care lines for L’Oréal’s Consumer Products division and Professional Products division has taken place at Pune. “We need to attract and retain the best talent in order to grow; and our first location was simply too remote,” Sahgal explains. “Pune is where all our operations are now based and we have up to 600 people working for us

at any one time.” Sahgal explains that promoting sustainable development is a fundamental tenet within all plants and distribution centres that operate under L’Oreal’s umbrella. Environmental sustainability and corporate social responsibility (CSR) are the twin pillars that support this broader aim. Even within the vigorous framework that all L’Oréal manufacturing centres operate, Sahgal believes that the achievements of the manufacturing facility at Pune are something special. “Our Pune factory stands out within the group for its environmental achievements,” he asserts. “The state government of Maharashtra where we are based awarded the Pune factory first prize in the Excellence in Energy Management category in 2009 for its various energy conservation projects.”

Asia & Pacific

L’Oréal India

Galaxy Surfactants Limited Galaxy

Surfactants

Limited

has

developed

numerous

specialty products in the field of UV filter, mild surfactants, conditioners, betaines, protein, protein derivatives and botanicals. Galaxy has acquired a deep pool of knowledge that enables the company to anticipate and meet the needs of customers all over the world. The ultimate aim of our innovation is the product efficacy and how that benefits customers worldwide. Today we have our manufacturing operations in India and the USA, and new plants are being erected in India and Egypt to cater to the growing customer needs across the globe. Galaxy is truly a “Global Supplier to Global Brands”.

Within the L’Oréal Group, the Pune site has won a number of accolades. “We won the internal award for the best environmental project in 2007 for a project that involved using 320 solar cells, rather than expensive diesel oil, to heat water for washing in our processes. Two years latter, we again picked up first prize for a project that uses vermin culture to convert chemical sludge into useful fertiliser. This led to the proportion of waste being recovered from the site to increase from 95 per cent to 99 per cent,” he says.

At corporate level, the company’s Indian headquarters in Mumbai has achieved a rare synergy between its core business, which is beauty and good citizenship. A project aptly named ‘Beautiful Beginnings’, which is implemented together with the French NGO Aide et Action, aims to help girls from marginalised communities who were unable to complete their normal education to train as beauty therapists and achieve financial

Asia & Pacific

L’Oréal India

Weener Empire Plastics Weener Empire Plastics is a reputed rigid packaging supplier from India and has a JV with Weener Plastics Packaging Group from Germany. They have six factories in India serving the requirements of prestigious clientele like L’Oréal, Johnson & Johnson and Ranbaxy amongst many others. With a wide range of molding and decoration techniques in-house they help fulfill the needs of the rapidly growing Indian FMCG industry.

independence. “It is expensive and quite complex to organise so it is done centrally, but at present ‘Beautiful Beginnings’ is operating in Mumbai, Pune and Hyderabad and it represents wonderful opportunity for the girls involved,” he says. L’Oréal also believes that the world needs science and science needs women. The L’Oréal India For Young Women in Science scholarships programme, with the support of the Indian National Commission for Cooperation with UNESCO, has helped young women passionate about science to achieve their dreams and aspirations of pursuing a career in science. Established in 2003, it reaches out to deserving female students from Maharashtra and scholarships worth Rs.250,000 each are given to five young girls to pursue graduate studies in any scientific field. Thirty-five scholarships have been awarded to date. The Pune factory itself has recently picked up another prize, this time the internal Citizen of the World Award, for its approach to good citizenship within the community where it is based. “We do not like one-off donations and look for long term projects which will have a long term impact in the communities around Pune, where many of our staff come from,” he explains. “‘Project Care’, which won us the first prize, is an integrated project that looks at safety, health and hygiene, the environment and child education, which we deal with in turn on a quarterly basis with the aim of raising standards and improving the local quality of life. We rely on a mix of professional trainers and our own employees from these villages

who feel a huge pride in our work and whose voice is sometimes more acceptable to local communities than outsiders.” The project is ongoing and includes facets such as free medical check-ups for the elderly and a scheme to support schools with redundant laboratory and IT equipment that still has relevance in the classroom. The company is also involved in a partnership that will provide two new classrooms to a local school—at present the children have to study outside. On the procurement side, L’Oréal extends its values by insisting on a very specific vetting process. “Suppliers must pass our stringent quality requirements and also a Safety and Social Audit. We use external consultants like Intertech who will monitor for unacceptable practices such as child labour, ensure that minimum wages are paid and that there is no requirement for excessive working hours. The government has labour laws, but not all companies comply. We only want to work with those that do.” Meanwhile, Sahgal believes that the factory’s steady expansion creates a virtuous cycle in the local economy, as at least 50 per cent of staff are recruited from surrounding villages. “Last year we grew our capacity by 30 per cent and there is still enormous scope for L’Oréal in India. It is very important that as we grow, we give something back to the society that has contributed to our success,” he concludes. www.loreal.co.in BE

Asia & Pacific

Forgi

Pochappan Sasindran, chief opera plant of JSW Steel Ltd, tells Jayne from adding value to peopleâ&#x20AC;&#x2122;s live 72

Asia & Pacific

JSW Steel Ltd

ing

head

ating officer of the Vijayanagar e Flannery that success comes es as well as the product

Asia & Pacific 73

Asia & Pacific

JSW Steel Ltd

JSW Group is one of the fastest growing business conglomerates in India. Led by Sajjan Jindal, the organisation has grown from a single steel cold rolling mill in 1982 to a highly diversified enterprise worth $3.7 billion. Steel, though, remains at the core of the group and JSW Steel Ltd is India’s largest private steel company. Pochappan Sasindran is chief operating officer of the Vijayanagar Works, located in the Bellary district of Karnataka. It is one of three steel works that the company operates in India. Sasindran is quite clear that selling steel as a commodity is not what this company is about. “We don’t want to be known as a supplier of steel,” he states. “We see our task as working very closely with our customers to understand their precise needs and the application they require the steel for. Then we will come up with a customised solution of the highest quality. Our customers like what we do and how we do it; they are very loyal and keep coming back to us.

Asia & Pacific

JSW Steel Ltd

“We concentrate on high-end applications,” he continues. “Slabs for ship building, for example, and coil for the automobile industry. We also do a lot of steel for oil and natural gas applications. Downstream, we have a number of operations to add value and so we sell hot rolled coils, cold rolled coils, galvanised and colour coated steel and special grades for the automotive and white goods industries.” Production this financial year at Vijayanagar will be about six million tonnes. Next year, Sasindran

anticipates that figure will be substantially higher. “Despite the economic crisis, we have not had to cut down our production. Rather, we have looked inward and reduced our production costs to remain extremely competitive. At present, we export to about 400 esteemed customers in more than 100 countries, with the steel we produce going to Europe and the US as well.” The plant started its integrated operations in 1999, expanding to seven million tonnes in

Asia & Pacific

early 2009. It is now acclaimed as one of the most modern, eco-friendly steel plants in the world. Eventually the plant at Vijayanagar will be capable of producing 16 million tonnes a year. “We wanted state-of-the-art facilities and so we turned to the world’s leading suppliers of technology to the steel world when we were designing the Vijayanagar facility,” explains Sasindran. “For example, Siemens VAI from Austria and the UK provided our Corex and blast furnace technology, while Man Turbo from Switzerland built us the largest 40 megawatt furnace blowers ever made. We also worked

with Paul Worth for critical equipment, SMS Siemag for steel making and casting facilities, MHI Japan for the new hot strip mill and Morgan from the US for long product mills. Some of the best technologies we have relate to energy and water consumption, which makes this plant one of the most efficient in the world,” he says. Sasindran explains that the group takes a profound interest in its impact on the environment—the ISO 14001 environmental management system is in place at each of the plants operated by JSW Steel. ‘A steel plant in a forest’ was the comment left in the visitors’ book by one impressed guest; and the area around Vijayanagar is carefully maintained as

Asia & Pacific

closely as possible to its natural pristine state. The site is also regularly benchmarked against the best companies of its type in Korea and Japan. The site employs some 4,000 people and staff are helped with housing, health and the education of their children. Sasindran is particularly proud of the company’s record for employing women. “Normally you would only find men and boys in a steel works. As an organisation, we are very concerned to promote the employment of women and we have a number of engineers who are women. We have also found that they make excellent crane operators.” Women are also being trained and placed in other jobs where they are not normally found, such as power-tiller and pump operation, mechanical and electrical maintenance and driving. Whenever possible, all employees are encouraged to develop their technical competence and follow a career path. In collaboration with the government of Karnataka, JSW has taken the lead in forming the Rajiv Gandhi Institute for Steel Technology, an institute that will offer high level training to meet the special needs of the steel industry. The company has also entered into a partnership with India’s leading engineering institute, BITS Pilani, which specialises in process engineering. The JSW Group dedicates approximately 1.5 per cent of profit after tax to a range of social development projects. The group is guided by the belief that the business is dependent on society for its growth and prosperity. Islands of prosperity cannot survive for long in a vast sea of poverty and unfulfilled basic needs, so corporate social responsibility is as important as profitability. “Our managing director Mr Jindal and his wife Mrs Sangita Jindal both take corporate social responsibility very seriously,” affirms Sasindran. “As a group, we are committed to all our stakeholders and want to do what we can to improve the lives of the people we work with and who live in the areas where we operate,” he says.

JSW Steel Ltd

A vast programme of activities related to corporate social responsibility is undertaken through a charitable trust, the JSW Foundation, which is chaired by Mrs Sangita Jindal. Children and education are a special focus. In one initiative to attract school dropouts and persuade them to stay on at school, the Foundation has partnered with the Akshaya Patra Trust to provide a nutritious midday meal to almost 150,000 children from 445 primary schools in and around the district each day. In another project, the company has made available Computer Aided Learning Centres (CALC) in 25 Government Schools. Numerous other projects are themed around health, culture and heritage, the environment and sustainability. The Foundation is also working on the restoration of two temples within the nearby Hampi World Heritage Site. Looking to the future, Sasindran is keen to see

production increase, and he also wants to see more diversification—a strategy which has served the group well over the years. “We already have many other interests such as aluminium, cement, infrastructure and mining. In line with this, the company has formed JSW Severfield Structures Ltd ( a strategic partnership with Severfield Reeve, UK ), and a state-of-the-art structural steel manufacturing facility, one of its kind in India, is fast coming up at the Vijayanagar complex. We are also a very large producer of electricity. Steel will always be important to us, but we have proved that there are many other areas in which we can be equally successful. But success is important not for its own sake, but for the difference we can make to people’s lives,” he concludes. BE

Asia & Pacific

Steele forser

Abraham Stephanos, COO of Tata Steel Proces talks to Jayne Alverca about the challenges of manufacturing orientation to viewing service a

Asia & Pacific

Tata Steel Processing And Distribution Limited

ed rvice

ssing And Distribution Limited, f shifting focus from a as a key differentiator

Asia & Pacific 81

hen the forerunner of Tata Steel Processing And Distribution was first established in India in 1997, the company already had the highest credentials. It was originally formed as a joint venture between Tata Steel & Ryerson, who were already established as global leaders and pioneers in the steel service centre concept. In January 2010, Tata Steel bought out Ryerson, resulting in Tata Steel Processing And Distribution Limited (TSPDL). The company operates as a wholly owned subsidiary of Tata Steel Limited with a portfolio that includes eight processing plants and 17 sales centres across India. Last year, sales revenue stood in the region of US$260 million. “We were a first mover in the Indian steel industry, establishing the service centre concept for the first time,” explains COO Abraham Stephanos, who joined the company thirteen years ago. Steel is integral to a multitude of manufacturing and industrial processes, but TSPDL works principally in partnership with automotive OEMs and their vendors, who account for 80 per cent of output. The remainder goes to the white goods and construction equipment industries— TSPDL is the sole supplier of FOP parts to Caterpillar in Asia Pacific. “In the first 12 years of operations in India, we have grown to a capacity of two million tonnes per annum and we have pledged to add a further one million tonnes of capacity by 2015,” says Stephanos. “Our challenge

Asia & Pacific

is to match and keep pace with India’s very rapid industrial growth if we are to achieve our mission to remain as the undisputed leader within India’s steel services industry. By 2015, I anticipate that we will be double the size with three times the revenue,” he states. The automotive industry is at the forefront of the world’s most efficient and sophisticated manufacturing and production practices. Dominated by international players with a global reach, there is a relentless demand for ever increasing output. “We have to keep pace with growth rates of 10 to 15 per cent per annum in the automotive and commercial vehicle industry and up to 40 per cent in the construction equipment industry market, while at the same time making sure that we can service a host of very diverse locations,” he says. Automotive OEMs and the manufacturers who support them expect suppliers who can match their own standards and who share their values. “Large international players expect the same service quality they can receive in Western markets. That is another key factor driving our orientation towards service. We think of ourselves increasingly as a service provider and partner, and this is what our customers most value. Managing this shift towards a service orientation is the biggest issue of all for us at the moment. “Our core processes are not particularly complex, but customer demands are,” he continues. “We are required to offer a sophisticated and very flexible service, which makes particular demands on logistics. The basis for competition is shifting—there are many new entrants to the service market and many other players have capacity, but they cannot match our service offering.” Steel is supplied mainly as a flat product in cold forming grades for use in subsequent sheet metal

Tata Steel Processing And Distribution Limited

Asia & Pacific 83

processes, but there are infinite subtle variations according to final usage. The TSPDL service proposition begins with minute attention to critical processing requirements like length tolerance, burr height, width tolerance, shape in roll formed section variance, pickled surface quality and so forth. Stephanos considers it a huge accolade that the company’s lead plant in East India (Jamshedpur) recently won the TPM Excellence Award from the Japan Institute of Plant and Maintenance. “The award, which was audited by experts from Japan, reflects our level of maturity and excellence in total quality management systems,” he says. “It is particularly gratifying as we are the first steel service centre globally

Asia & Pacific

to receive it. We found the engagement process to be an excellent operational initiative which unlocked the potential of staff at every level. Now we will extend what we have learned to our other plants.” However, Stephanos has much less control over other factors that contribute to competitive advantage. Despite distribution offering real-time data availability controlled through an SAP ERP package linked to India Tata Steel’s SAP network, transport and logistics is an ongoing challenge. Customers demand greater flexibility and smaller quantities in accordance with just-in-time principles of inventory control, but India still presents many inherent problems not encountered in the West. “The broad transport infrastructure is still underdeveloped and it requires a lot of time and expense to transport goods anywhere in India,” comments Stephanos. “We have

Tata Steel Processing And Distribution Limited remarked internally that it is cheaper to ship steel around the world than to transport it across India.” Keeping up with demand is another challenge. Steel itself was in short supply during the organisation’s early days; but although that is no longer the case, the cold forming grades that are the focus of Tata’s operations are still less common. “At present most steel is procured domestically because the lead times associated with imported supplies are prohibitive,” Stephanos explains. “The grades we work with are still in limited supply, despite the rapid expansion of the overall steel industry and so prices are characterised by greater volatility. We have to take great care in maintaining our inventory levels and managing the price-to-risk equation.” Stephanos adds that all manufacturing

industries in India must also contend with a skills shortage. “Getting enough people into the organisational and management pipeline who have the necessary skills and knowledge to take us forward at a time of great growth is always a challenge. We need to ensure that critical management posts are adequately manned at all times,” he says. “India has a huge IT industry which absorbs a lot of talent that is needed by manufacturers of all types. The IT industry itself also requires manufacturing expertise and so we are in keen competition. Our response is to offer a great deal of training and career support to develop the skills we need in people who have the right attitude,” he concludes. www.tspdl.com BE

Asia & Pacific

Going underg

As Indian overground commuter transport is expand off, Jane Bordenave talks to Rajeev Jyoti, president a India, about his companyâ&#x20AC;&#x2122;s key role in these developm 86

Asia & Pacific

Bombardier Transportation India Ltd

g rground

ded and upgraded and metro systems start to take and managing director of Bombardier Transportation ments and how the market is changing Asia & Pacific 87

Asia & Pacific

Bombardier Transportation India Ltd

ombardier Transportation India has been manufacturing components for India’s commuter rail transport network for over three decades. Part of the global manufacturing giant Bombardier Inc, the company employs 1,200 people spread over two plants in and around the city of Vadodara, Gujarat and another in Hyderabad Andhra Pradesh. In broad terms, the company manufactures trains carriages and their components for city metro systems and for India Railways, the nationally owned rail service. “Although India Railways is a very large, highly vertically integrated company, it is largely decentralised,” says Rajeev Jyoti, president and managing director of Bombardier Transportation India. “Consequently, it has a structure that is composed of many semi-autonomous units. The effect for us is that we are not dealing with one monolithic institution, but a string of customers, all housed within India Railways.”

Asia & Pacific 89

Bombardier Transportation India Ltd

A result of this vertically integrated structure in the client company is that they manufacture many of their own train parts. “Prior to our arrival, India Railways produced everything themselves, from locomotives to bogies [undercarriages] to electronics,” explains Jyoti. “This was largely a hangover from when India had a closed economy, with high import tariffs and taxes to prevent imports.” Now, the Indian economy has opened up and is trading with the rest of the world; however, the self-sufficient structure has partly remained. “As India Railways still produces much of its own infrastructure, we work with them in a complementary manner, supporting them in the servicing department, supplying spare and replacement parts, and providing them with electro-mechanical equipment that they do not make themselves. We also provide them with signalling equipment.” Nevertheless, Jyoti is seeing a paradigm shift within India Railways. “The company is starting to realise that its own products are not as good quality as can be brought in from outside and that some of its technology is outmoded. This has spurred a move towards greater engagement in public-private partnerships. India Railways believes that working in this way will not only help to upgrade its technology and rolling stock, but will also streamline and speed up production, so there is potential for growth here.” The company’s involvement with the metro systems is very different. “We supply everything for the metro network, including carriages, bogies, signalling equipment and electronics,” says Jyoti. The most notable metro project Bombardier has been involved with is the Delhi Metro. “The city is currently undergoing phase two of its underground rail expansion project. After an international competitive bid, we were awarded the contract in 2007 for completion by October 2010, in time for the Commonwealth Games. The total order is for 424 metro carriages, worth £410 million.” To cope with the increased output and short timescale, the firm built a new factory on a greenfield

Amphenol India Amphenol Interconnect India is a 100 percent fully owned subsidiary of $2.8 billion Amphenol Corporation USA. It is a leading player in the manufacture of high performance connectors and cable harnesses in India. With state-of-the-art manufacturing facilities at Pune and Bangalore, Amphenol offers value to its customers with innovative interconnect solutions. With

strong

engineering

expertise

and

delivery

precision, Amphenol India has positioned itself as a preferred partner of Bombardier Transportation India for the timely supply of cable harnesses. A team of core engineers has been initially working on-site at Bombardier India, facilitating the final termination of the cable harnesses. Amphenol India has supported Bombardier in its efforts to deliver trains to the prestigious Delhi Metro program on schedule. Amphenol India’s contribution to this program has been endorsed by the top management of Bombardier by way of a special recognition award. Amphenol India has pledged its continued support to Bombardier India and takes pride in being associated with it in building world class mass transportation solutions for India and beyond.

site in Vadodara, close to its existing facility. However, a new plant wasn’t the only thing that needed to be created. “We had to train people up across the board, in the different areas of manufacture, management and so on, all in a manner that fitted the timeline,” Jyoti explains. “These were our main challenges and are challenges that we have successfully overcome. It is not something that will just benefit this project—the whole contract provided us with an opportunity for growth in this manner. The construction of this new site has taken Bombardier to the number one position in the field of metro train manufacture in India.” The success of Delhi Metro even before its expansion is also making other cities look at improving their own infrastructure with a modern underground railway system. “Delhi

Asia & Pacific

Bombardier Transportation India Ltd Metro first came online in 2002 and was the first modern metro system in the country,” says Jyoti. “Now, places like Mumbai, Calcutta and Hyderabad are becoming very interested in installing a similar system. These cities have between four million and twenty million people living there and the numbers are growing due to their booming economies. So they have identified a need to update their infrastructure to cope with the sheer weight of numbers, with the solution being an underground rail system.” The company has recently made an investment in state-of-the-art robotic welding equipment and, in doing so, has become the first company using technology of this kind in India. “We use two different types of robotic welders at Bombardier,” says Jyoti. “The first is robotic hot bolting—using this system, the carriage shell is in fact bolted together, rather

Faiveley Transport India Limited From supplying steam locomotive injectors through one of its English “ancestor” companies in the mid 1800s, Faiveley Transport India Limited (FTIL) has come a long way and is today India’s No. 1 supplier of train brakes and couplers. Faiveley has always been associated with Bombardier as OE supplier of brake equipment on high-power electric locomotives supplied by BT to Indian Railways. With Bombardier’s recent entry into the Indian metro car business, FTIL also made its foray into this segment by offering products with large-scale localization in the areas of brakes, compressors, air conditioning and pantographs for Bombardier Cars of Delhi Metro project, maintaining global quality standards.

Asia & Pacific

Bombardier Transportation India Ltd

than welded, but in a manner that is just as secure as welding, if not more so. The second is for the manufacture of the panels that will go on to be bolted together as a carriage.” The panels in question can be up to 22 metres long and require extensive welding inside. The robots can weld over the length of these sheets to create side panels, ceilings, floors etc. The advantage of using this technology, Jyoti

explains, is that it ensures repeatability, quality and full integration of the body shell. “If we were to do this manually, we would need a large team of highly skilled welders and even then repeatability is not guaranteed. However, we haven’t done away with human welders altogether. Much of the welding on the bogies is done by hand, as there are so many small and complex parts to deal with that the robots can’t handle.” As the Indian economy continues to open up and grow, it needs companies that can lead the way with technology, know-how and specialised skills. As one

Ultimate Australia Ultimate is proud and privileged to be part of the success of Bombardier in India. This success is testament to Bombardier’s strength in the rail industry. Ultimate’s wide range of skills and expertise in the design and manufacture of interiors, doors systems, gangways, seats and other equipment for passenger rail cars is assisting train builders such as Bombardier worldwide.

of the world’s leading train manufacturers, Bombardier has the expertise needed not just to help in the current phase of commuter rail expansion, but also to take it into the future. Projects such as Delhi Metro have shown what the company is capable of, and other cities and expansion on the part of India Railways offer opportunities for further growth. You can therefore be certain that Bombardier will be bringing cutting edge commuter transport solutions to the cities of India for a long time to come. www.bombardier.com BE

Asia & Pacific

Very

mete

By spotting a business opportunity and building one Indian company is making a global mark on 96

Asia & Pacific

Secure Meters

ers

g a new organisation around it from scratch, n energy conservation, as Alan Swaby discovers Asia & Pacific 97

hen Margaret Thatcher privatised utilities in the UK, she transferred control from bureaucrats and civil servants to entrepreneurs and professional managers. In the process, the Exchequer received a healthy injection of funds and some individuals made a lot of money but beyond all that, the supply of vital services improved— ultimately giving the public better value for money. Other countries have tried similar schemes but not always with the same degree of success. Take India, for example. Just like the UK model, it had state electricity boards responsible for generating and distributing energy. The difference in performance, though, was enormous—compared with losses of, say, seven per cent in the UK, for every 100 units of electricity generated in India, the boards on average received payment for 35 units. There was no single reason for this wastage—inaccurate measurement, poor accounting, failure to collect what was owing and pilferage all combined to produce one highly inefficient service. In 2004, the government attempted to rectify the situation by introducing legislation which would separate generation from distribution and offer them both to the private sector. But it didn’t get off to a good start with the first state privatisation resulting in a dismal failure and even now, only the Delhi district standing out as a shining example of how it should be done.

Asia & Pacific

Secure Meters

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Secure Meters “A key factor bedevilling the energy industry,” explains Sanjaya Singhal, managing director of Secure Meters, “has always been the problem of measuring what is being produced and consumed. In the 1980s our family business began looking at ways of getting involved with electricity metering. Since then, not only have we gained considerable market share in India, we now are truly international, with 40 per cent of our $200 million revenue coming from export sales.” It could all so easily have ended in failure. Singhal had found what looked like an innovative solution from the UK; but the first 50 meters tested in India simply couldn’t cope with the unexpected surges in voltage and several meters actually exploded. As such conditions simply weren’t a factor in the UK, the meter’s designer had no solution, so Singhal took the significant step of establishing his own R&D department and building a meter that could cope with India’s irascible electricity supply system. Globally, the metering market is worth $8 billion and is dominated by three giants who account for around half the total. Beneath them is a second tier of six companies of similar size—one of which is Secure Meters. “We are an extremely self sufficient business,” says Singhal. “We make 98 per cent of what goes into our meters in factories in India and in the UK. About a quarter of the 2,000 people we employ are involved directly or indirectly with R&D; and each year we invest almost 10 per cent of our revenue in the search for new products.” In the beginning, it was almost enough simply to have a metering system that worked accurately. As an example of what can be achieved, one particular board in the state of West Bengal was running an annual deficit of £160 million when Secure got involved. Thanks to new equipment and systems, the loss has been turned on its head into a £150 million surplus. “There was a lot of scepticism from suppliers and consumers,” says Singhal, “to the extent that we had to send out dozens of teams to perform tests on individuals’ meters before their eyes and give them certificates of accuracy.”

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Secure Meters But little by little, the Indian electricity market is transforming itself from a run down third world system to a modern, efficient technology-driven one. Accuracy and reliability has bred confidence and a willingness to invest that simply didn’t exist before. Although the initial emphasis was on electricity, Secure now makes products for all forms of utility, as well as numerous applications for industry and commerce in general. In fact, Singhal believes the company’s success is driven by its ability to respond quickly and the emphasis it places on new product developments. “The only way we can compete with the two market leaders is by stealing business from under their noses.

We can, and do, develop products for seemingly insignificant markets. For example, we are now number one in Israel because we adapted our technology to the Hebrew language. The numbers are small but do that often enough and the contribution becomes meaningful.” With smart metering already a reality in certain countries, Secure is well placed for their wider acceptance and is already the biggest supplier to Australia. But the business is looking at the next generation of smart meters which will help consumers manage their energy consumption better. “Energy conservation already accounts

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Secure Meters Cinterion Wireless Modules Cinterion Wireless Modules is pleased to be the exclusive supplier of GSM modules to Secure Meters who is the leading supplier of AMR / AMI solutions serving a global footprint. Around the world, the majority of meters and concentrators with GSM technology is based on Cinterion Wireless Modules. Our products stand for reliability, quality, long life and innovation. In addition, Cinterion offers true global support and a future proof roadmap.

for 25 per cent of our profits,” says Singhal. “Products can be as simple as in-home devices that tell the consumer in real time how much energy they are consuming, and comparing that with historical data. When consumers see with their own eyes the extra cost involved in boiling a kettle full of water when they only want one cup, the decision to jettison bad habits becomes so much easier.”

In the UK, Secure has installed 250,000 in-home displays which have resulted in a four per cent reduction in energy use—well on the way to the government’s target of a 10 per cent reduction. But the possibilities are even more exciting. Soon consumers will be able to load into the system their budget for the year and let the very smart meters automatically manage energy use. Applications have started to go in so many directions. Control units have been developed for industrial pumps and commercial airconditioning. Secure has been testing one such device in its own offices and reduced air-conditioning energy by 11 per cent. Not all savings are as hefty as this; but each fragment benefits conservation and adds up to smart business sense for Secure Meters. www.securetogether.com BE

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Fast-tra

succ

As 2009 drew to a close and most Queenslan ABB Australia pulled off a remarkable feat of lateral planning. Its client, CS Energy, was ra 106 Asia & Pacific

ABB Australia

acking

cess

nders were enjoying the Christmas break, engineering collaboration, logistics and ather impressed, as John Oâ&#x20AC;&#x2122;Hanlon discovers Asia & Pacific 107

108 Asia & Pacific

ABB Australia

hen writing about ABB it is usually difficult to know where to start. The $30 billion power and automation group, with its Swiss origins, is as well known for its flat management and global communications as for its technology. And ABB Australia doesnâ&#x20AC;&#x2122;t make focusing any easier: with eye-catching contributions to the alternative energy, manufacturing and mining sectors as well as infrastructure of every description, ABB is nothing if not diverse.

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ABB Australia

However, one recent project really pulls together ABB Australia’s capacity to wrap up planning, design, manufacturing, logistic and commissioning capabilities in delivering an extraordinary result for its client. When Queensland’s main power supply company CS Energy needed a new transformer for its 750MW coal fired Kogan Creek generating plant, it not only needed a reliable solution for a unit; it needed it really quickly, to meet time-critical operational requirements. This was a businesscritical order and time was of the essence. ABB’s engineers quickly saw need for a design capable of meeting the challenging service conditions. They quickly came up with a robust solution, a purpose-built design to meet the needs of CS Energy. The client, aware that the normal lead time for a transformer of this size would normally be around eight months and extremely keen to get beyond the temporary measures it had to adopt to keep the plant running, took some convincing, says Julian Guild, ABB Australia’s

sales manager for power transformers. “We talked to our transformer factory in Thailand and were able to get them to commit to three months ex-works, including design.” That in itself was a remarkable commitment, and very attractive to CS Energy, but as Guild points out, you’d normally have to add another four weeks to the lead time to ship such a transformer weighing over 60 tonnes to Australia—and on top of that you’d still have to allow time to deliver it to the site and install and commission it. The thinking caps went back on as ABB and CS Energy tried to figure out together how not to squander the manufacturing time gain on logistics. They called on a specialist, Townley Group International (TGI) and between them came up with a plan to airfreight the transformer. That would potentially dwindle the delivery time to a couple of days, but there are not many aircraft that can carry a 60 tonne payload. However, TGI was able to arrange the charter of an Antonov An-225 strategic airlift aircraft.

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112 Asia & Pacific

ABB Australia

The fact that the only available slot was on Christmas Day was going to present some problems, but if it meant the transformer could be brought on stream before the end of the year, that would just have to be overcome. Convinced, CS Energy supplied ABB with a letter of intent in mid-September 2009, on the basis of which the project swung into gear. There’s no such thing as an off-the-shelf transformer, says Guild, and every one the factory near Bangkok produces is tailored to the specification of the client. However, there were some unusual needs in this case, related to the unusual method of delivery. “A transformer is essentially a pressure vessel; during transport you remove the mineral oil from it and fill it with dry nitrogen,” explains Guild. “But with the changes in altitude and therefore pressure, nitrogen is seen as a hazard: if it got out it could suffocate the entire aircrew! Very unusually, we had to keep the transformer ‘open’, so we fitted it with a dehydrating ‘breather’ which takes the moisture out of any air that goes into the tank. As soon as the plane landed we applied a vacuum to the transformer and refilled it with a dry inert gas ready for the road transport leg.” Working with Antonov engineers, the ABB design team fitted the transformer with anchor points aligned to the plane’s securing stations to ensure there was no chance of the load shifting in transit. The job required TGI to attend the loading in Thailand and supervise the road transport section up to the airport on Christmas Day: the aircraft touched down at 1500 hours on Boxing Day. The logistics and risk management involved made this a unique and outstanding project, says Guild. “To get the transformer to the airport on time, it was necessary to design and manufacture the transformer in less than half the normal period. Then we had to test it in the factory, pack it and prepare it for transport to meet a plane that had been scheduled two months previously! Between us we were able to coordinate that down to the minute.” After a six-hour road trip, the new transformer arrived at Kogan Creek and was installed during the holiday period—a critical operation, as Guild recalls: “Once it reached the site it had to be installed, something that normally takes a week or so; but we were able to do that in less than three days. We had three shifts working 24 hours a day between Christmas and New Year.” In the event, the handover took place towards midnight on New Year’s Eve—quite a tribute to the teams who redefined the term ‘unsociable hours’! The transformer has been fully operational since early January 2010; and Kogan Creek power station site manager Ivan Mapp was more than happy with ABB’s ability to deliver on time and on schedule: “We chose to work with ABB due to the expedience in lead time and their reputation within the industry. ABB offered a delivery time that was unmatched by any other competitor and we knew that they had the expertise and resources to deliver on what was promised.” www.abbaustralia.com.au BE

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The

wonder of

disco

J端rgen Hendrich, CEO and MD of MEO A the importance of creative thinking to b through the exploration and commercia

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MEO Australia

overy

Australia, talks to Jayne Flannery about build shareholder and environmental value alisation of hydrocarbon resources

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EO, which is listed on the Australian Stock Exchange, manages a natural gas project portfolio centred in Australia’s premier offshore LNG provinces in the Bonaparte and Carnarvon Basins of the Timor Sea. However, for Jürgen Hendrich, who functions as both CEO and MD of the company, discovery means something much more far-reaching than identifying the physical location of gas deposits. “Strategically, we search out angles to apply a different perspective to challenge prevailing paradigms. This is what differentiates us: we look for opportunities that others don’t see. As a company, we want a footprint in areas that are neglected, tired or overlooked where we can apply our technical imagination to create value,” he states.

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MEO Australia

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MEO Australia MEO relies on a unique blend of strategic insight and technical expertise supported by the finest geotechnical and commercial talent that Hendrich can identify. “From the outset, we have sought to attract the highest calibre staff. It is the collective, intellectual capability that our staff bring to the organisation which creates a whole that is greater than the sum of its parts. Talented people working in a stimulating environment with aligned motivation enables us to punch well above our headcount or market capitalisation weight,” he explains. Last year, MEO introduced the world’s third largest listed oil and gas company Petrobras, as a partner. “Petrobras entrusted us to continue to operate the permit on behalf of the new joint venture. This demonstrates our ability to make an impact on the industry,” he adds. 2011 has started on an equally positive note. MEO is finalising a farm-out of part of its 100 per cent owned NT/P68 exploration permit in the Bonaparte Basin, which contains two significant gas discoveries. Hendrich is reluctant to be drawn on details of the deal’s terms, but confirms that MEO will retain 100 per cent ownership of one of the discoveries. “The deal is important to us, because it introduces risk capital to the joint venture to support appraisal drilling operations which will hopefully lead to a commercial development,” he says. In the same region, MEO has also developed a commercialisation path and secured environmental approvals to install a three mtpa LNG plant (the Timor Sea LNG Project) and two 1.75 mtpa methanol plants (the Tassie Shoal Methanol Project). “Most of the discovered gas resources in the region are economically stranded, firstly because of the remote location from any potential onshore infrastructure,” he explains. “The second challenge relates to the quality of the gas. Natural gas often contains varying quantities of natural gas liquids, which are a bonus as they generate an additional revenue stream. Many of the stranded gas fields are deficient in natural gas liquids. In addition, natural gas can often contain inert components such as nitrogen or CO2. Where gas is

Australian Drilling Associates Australian Drilling Associates (ADA) is a well engineering and drilling project management company. We strive to provide efficient drilling solutions for our clients, delivered safely, on time within budget and with minimal environmental impact. ADA has successfully provided a full range of drilling project management services to MEO over the last two years including all the supporting functions, HSE and logistics for wells drilled in the Carnarvon Basin. Drilling operations were effectively conducted within the cyclone periods without incident or accident. Working closely with MEO and the Joint Venture Partners such as Petrobras, the wells were all drilled within AFE.

low in liquids it tends to be high in these inert gases. The gas in the region contains variable CO2 which needs to be removed from the processing stream, thereby adding to operating costs,” he continues. It is easy to see that the economics associated with this sort of venture can quickly become marginal. But innovative thinking at MEO has addressed these two key impediments. “In the project for which we hold approval, we have identified a natural feature on the seabed that in places comes to within 15 metres of mean sea level. We plan to make use of this natural feature to locate the processing infrastructure in the heart of the stranded gas fields and overcome the tyranny of distance.” The second obstacle is the high CO2 content. The Evans Shoal gas discovery contains approximately 28 per cent CO2, which makes it ideal for conversion into methanol. Methanol synthesis using steam methane reforming generates excess hydrogen. Adding around 25 per cent CO2 to the natural gas stream balances the equation and increases the yield of methanol.

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Methanol has historically been viewed as a poor cousin in the energy business, but Hendrich believes this is an outdated paradigm. “In China, methanol demand is growing very strongly not only as a traditional chemical feedstock, but increasingly as a fuel blending agent. Methanol plants in China use gas derived from pulverised coal as their feedstock. Methanol has myriad applications including plastics, diesel substitution and as an LPG substitute. It is not as deep a market as LNG yet, but we believe it will grow strongly as pressure mounts on more traditional energy sources.” From a commercial perspective, Hendrich prefers to hitch the company’s fortunes to a rising star rather than link them inextricably to the mature LNG market, which as a global commodity, is subject to full exposure to global cost competition. “As far as LNG is concerned, the high quality, easily recoverable, liquids rich gas resources close to infrastructure have been cherry-picked. Increasingly, we must look to develop the more economically challenging resources. That means finding ways to break the traditional mould. I believe that monetising higher CO2 gas resources via conversion to methanol represents another potentially attractive economic alternative,” he states. The company currently has around $100 million in uncommitted cash reserves. Hendrich and the team are actively seeking attractive new projects to add to the portfolio, both in Australia and overseas. “Ultimately, I would like to see us lauded for making a difference to the energy equation on the planet and to achieve that, we need to demonstrate that we possess the intellectual and technical horsepower to view opportunities and challenges from a different perspective. Ultimately to be relevant as a business, we need to deliver value not only for our shareholders, but for all stakeholders. That means continuing to identify and exploit value gaps if we are to remain relevant and become a partner of choice in project developments,” he concludes. www.meoaustralia.com.au BE

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MEO Australia

As a company, we want a footprint in areas that are neglected, tired or overlooked where we can apply our technical imagination to create value

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Based on

techn

Technip KT India is enjoying a period of phenom to Gay Sutton about his strategy for innovation 122 Asia & Pacific

Technip KT India Limited

nology

menal growth. CEO Ram Kishore Iruvanti talks n and remaining ahead of the competition Asia & Pacific 123

124 Asia & Pacific

Technip KT India Limited

ome marriages are a matter of convenience while others are made in heaven; and some are destined to produce a longlasting union of harmony. Just such a marriage took place in 1999 when Technip, a global provider of project management, engineering and construction services for the oil and gas industry, acquired KTIâ&#x20AC;&#x201D;the chemical process division of Mannesmann. With offices in Delhi, Rome, The Hague, and Claremont, USA, KTI had a worldwide reputation for high temperature reaction process engineering for the refinery and petrochemical industries, and the fit seemed perfect.

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126 Asia & Pacific

Technip KT India Limited

“We had been working on projects with Technip for many years and knew them very well. In ethylene plants, for example, we would work on the front or hot end of the plant, and they would manage the cold or back end of the plant,” explains Ram Kishore Iruvanti, CEO of Technip KT India. “The acquisition therefore provided vertical integration for Technip. Meanwhile, we transitioned into a project management company and have been able to participate in much larger projects worldwide.” This decade has been one of phenomenal growth for the company, so much so that the cold winds of recession which have depressed businesses around the world have hardly been felt. “When I returned from the Netherlands and took over as CEO here about five years ago, we were a €20 million company in terms of revenue,” Iruvanti says. “Today we are a €100 million company. And we have been playing a part in India’s drive to produce gasoline and diesel fuels to meet the Euro IV emissions standards. There has been, and continues to be, considerable investment in new refinery and petrochemical plants in India.” Today, Technip KT India is recognised as a market leader in a range of technologies for the hydrocarbon industry—for example, it has built 16 hydrogen plants in India to date. “Each project is unique,” Iruvanti asserts. “But the core chemistry and engineering remain the same, so you could almost call this a product line.” The company is also market leader in the construction of fired heaters and furnaces for oil refineries, and has built around 100 in India alone since its inception. It has developed a considerable reputation for sulphur recovery units; and has developed skills in designing and building modular plants in the hydrocarbon industry. “In these areas, which form around 50 per cent of the business, we are well known in the market. In another 30 per cent, we use other people’s technologies and share the market with other EPC contractors. For the remainder of the business, we provide engineering services to Technip worldwide, whenever they require our areas of expertise.”

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Being part of a large global group has also brought a series of benefits. Not only can the Indian division participate in much larger contracts with its parent company, but it is able to share technology and knowledge with other members of the group. Technip also continuously improves its engineering and business processes, systems and procedures, and standardises them across the group, only adapting them when necessary to the country in which they are being implemented. As a result, engineers moving from office to office within the group will find project planning and project management systems they are familiar with. â&#x20AC;&#x153;This then gives them confidence to exchange information, and increases mobility between the units. And this is happening more and more as we share knowledge and skills. And for our clients, these standardised procedures mean they can expect the same products and

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Technip KT India Limited

We have been playing a part in Indiaâ&#x20AC;&#x2122;s drive to produce gasoline and diesel fuels to meet the Euro IV emissions standards

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services in India as they have received from us in, say, Aberdeen, Paris or Italy.” To date, the majority of work in India has been for onshore refineries, petrochemicals and gas processing plants. However, Technip KT India’s strategy going forward is to consolidate and grow the home market, first of all bidding for projects as an independent unit, and secondly

130 Asia & Pacific

bidding on larger projects in collaboration with the group. Iruvanti would also like to see the company expand beyond onshore work and to develop its expertise in offshore work. The vibrancy of the Indian economy has not only presented opportunities, but also challenges. Consolidation in the EPC field has resulted in many small contractors folding and larger contractors growing to become more competitive. In addition, many of the international players have been entering the Indian marketplace. Attracted by the strengthening economy, they not only compete for contracts, but also for skilled personnel. “So we’re increasingly finding it important to create a working environment that both interests and challenges our engineers, and meets the growing aspirations of our people.” The company is rising to this challenge in two ways. Firstly, Iruvanti believes that working on large projects such as the Indian Oil Corporation’s isomerisation plant enables the company to manage a project through from concept to commissioning.

Technip KT India Limited

“And this keeps the interest of our engineers alive,” he says. Secondly, he is personally driving the activities of an innovation unit in India. “I want to keep the fires burning so that we come out with some interesting future product lines.” The unit is currently looking at a variety of technologies including carbon capture and wind energy. Carbon capture could, he believes, be of great value to the carbon dioxide recovery projects that will be going out to tender in the future. “These technologies will also be valuable from the sustainability point of view.” Looking at the immediate future, the company has ambitions to expand into industries upstream and downstream of its traditional area of focus, and thereby create a bigger footprint in the marketplace. “We already have the technology, although there are still a few technical challenges,” Iruvanti concludes.

Dresser-Rand Dresser-Rand

global

supplier

custom-

engineered rotating equipment solutions. During the last 12 years, Dresser-Rand has supplied process compressors for Technip KT India’s IOCL Guwahati,

IOCL

Mathura

NHTU

Revamp,

IOCL

Gujarat and HPCL Vizag-HGU projects. DresserRand is proud of this relationship and continues to provide Technip with superior value reflective of our technological leadership, service support and engineered solutions.

“But we believe that unless we continue to innovate and develop these new technologies, the competitors will catch up with us.” By personally driving the innovation process, Iruvanti intends to maintain that forward momentum and stay one step ahead of the competition. www.technip.com/en/entities/india BE

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Partnerof

Raghav Jindal, managing director of Jindal Jayne Alverca why the company should be and gas corporations wishing to create a fo 132 Asia & Pacific

Jindal Drilling & Industries Limited

hoice

Drilling & Industries Limited, explains to a preferred partner for international oil ootprint in the Indian market

Asia & Pacific 133

indal Drilling & Industries Limited (JDIL) was incorporated in 1983 with its prime focus on providing innovative and advanced technical solutions to the offshore drilling requirements of India’s oil and gas industry. “With modest beginnings but a mission to prosper with a strong emphasis on safety and quality driven by dexterity, integrity, professionalism, relentless commitment and operational excellence, JDIL is today uniquely positioned as a premium oil and gas drilling contractor, providing a wide spectrum of the highest quality services in the oil and gas sector,” explains managing director Raghav Jindal. From the outset, JDIL has benefited from the experience and technical expertise associated with being part of the D. P. Jindal Group, one of India’s most well-established and respected industrial organisations with revenues exceeding US$750 million and a workforce of more than 3,000. The group has a strong presence in India, manufacturing seamless (up to 14 inches) ERW and API 5L grade line pipes, and also deals in wind power generation, offshore drilling, directional and horizontal drilling, and mud logging services in the oil and gas industry. JDIL is a key contractor for the Oil & Natural Gas Corporation Ltd, the Indian government’s state managed enterprise, and also works closely with the US-based Nobel Corporation. Jindal explains that JDIL came to life as an intermediary to fill a gap in the marketplace and has since steadily progressed up the value chain. “We pioneered promoting the concept of chartering offshore rigs in the Indian offshore drilling industry, whereby rigs were hired from international companies and were then contracted to Indian E&P companies for their drilling plans. Understandably by this process, the E&P companies enjoyed the leverage of getting the latest technologies and specialised services and improving their chances of success. Moreover, the international companies who wished to work in India but could not do so primarily due to the regulatory environment, benefited from having an Indian alliance/partner with the capability of managing risks and shouldering responsibilities and liabilities, and that is where we found our niche,” he explains.

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JDIL is today uniquely positioned a a premium o and gas drill contractor, providing a wide spectru of the highe quality servic in the oil and gas sector

Jindal Drilling & Industries Limited

as oil ling

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Jindal Drilling & Industries Limited Accredited to ISO 9001:2008 standard, JDIL currently operates five jack-up rigs, which are all deployed in the shallow waters offshore Mumbai and have the capacity to drill to depths of up to 30,000 feet. These drilling operations are the key focus of current operations; and the drilling division has a turnover in the region of £170 million, which accounts for almost half of overall revenues within the group. Last year JDIL achieved the distinction of being

service quality, operational performance, equipment suitability and availability, reputation, reliability and technical expertise. “We are now positioned as a world class drilling contractor,” he states. “Our rigs have achieved a record for either zero or near zero downtime and this is a very important performance indicator in the industry because of the heavy losses that can rapidly build up when a drilling operation

one of a select group of companies that made it onto Asia’s Best Under A Billion list, compiled by Forbes magazine. Jindal believes that the company has won its leadership position by distinguishing itself from other service providers on the basis of superior

has to be suspended. Our quality management is second to none and the levels of efficiency we achieve mean that we waste absolutely none of our clients’ resources.” JDIL is committed to the achievement of a

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138 Asia & Pacific

Jindal Drilling & Industries Limited safe, healthy, injury-free and environmentally sound business for all persons and operations under its control, and to continuously improving the quality of work. JDIL’s excellence in providing quality services with high safety standards has resulted in it winning the safety award for ‘Without any lost time accidents’ from the International Association of Drilling Contractors, Houston, on many occasions. “Our staff are extremely well trained to respond to any situation or emergency,” Jindal continues. “Equipment and staff requirements are processed immediately and we maintain excellent communications with our customers and partners. Staff training is a very important element of our success and each of our rigs has an additional personnel component which is there to watch, learn and be trained for future operations. We give deserving and excellent employees the opportunity to achieve the necessary level of skill and expertise and to progress vertically to superior and responsible positions within the company.” Two years ago, a strategic shift to add value to the business by adding two new generation, state-ofthe-art, premium jack-up rigs—Discovery I and Virtue I—led to the creation of a joint venture, with JDIL having a partial ownership stake. “The management is our responsibility and brings a new challenge, but obviously we also have the chance to derive a higher margin than when we are working on a purely contractual basis,” he adds. He is keen to add more jack-up rigs, and is also keen to extend the company’s reach into more sophisticated drilling equipment and operations, tackling reserves located in deeper waters by adding semi-submersible rigs and drill ships. “We are among the top-end highly acclaimed service providers in India in this market, and now is the time to build on our achievements and reputation,” he declares. Although the domestic market will remain the primary focus of operations (as there are huge opportunities to be tapped in various disciplines within India’s oil and gas market), JDIL is also studying opportunities in the Middle East and the Far East. “In the near future with India’s insatiable appetite to explore oil and gas natural resources to fuel its

domestic growth, I believe demand for offshore and onshore drilling rigs and drilling services, technology and other oilfield services will grow substantially; and we are actively seeking out more partnerships with companies abroad who want to enter the Indian market. We have been in the drilling industries for more than two decades and are well versed with the operational, legal and contractual requirements for carrying out such operations. We would be a powerful ally to international companies wanting to work in India and be able to extend comfort to them by providing our expertise, skills and experience for drawing technical, managerial and marketing intelligence inputs and operational back-up support. Our financial stability, professionalism and capability to shoulder responsibilities and manage risk will certainly be beneficial for building cordial business relationships. “We also look forward to working overseas and we do not see ourselves as in any way limited by national borders. We will go to wherever there is a demand for our knowledge, expertise and capability,” he concludes. www.jindaldrilling.com BE

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Tappingh

pot

Jaypeeâ&#x20AC;&#x2122;s Karcham Wa west India is all set f generate power, as R 140 Asia & Pacific

Jaypee Karcham: Hydro Corp. Ltd

hydro

tential

angtoo Hydroelectric Project in northfor commissioning and beginning to Ruari McCallion learns from Mr D P Goyal Asia & Pacific 141

142 Asia & Pacific

Jaypee Karcham: Hydro Corp. Ltd

ydroelectric power has a dualistic reputation. On the one hand, it generates electricity without emitting tonnes of carbon dioxide (CO2) or other greenhouse gases into the atmosphere. The other side of the coin is that hydroelectric power dams have a history of drowning hundreds or thousands of square kilometres of land under millions of tonnes of water, which is then used to turn the generator turbines. But the recent emergence of ‘run-of-the-river’ hydropower projects presents a different story. They don’t require huge dams—essentially enough to store sufficient water to ensure peak demand coverage—and so they don’t drown the landscape. Run-of-the-river hydropower projects tend to be associated with smaller-scale storage requirements, perhaps supplying the needs of a local community, but that does not always have to be the case.

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Jaypee Karcham: Hydro Corp. Ltd

The Indian state of Himachal Pradesh is located in the north-west of the country in the south-west Himalayas. It is a mountainous region, with steep valleys and gorges cutting into the Himalaya ranges. The landscape is ideal for run-of-the-river hydropower—and it doesn’t have to be smallscale. The Karcham Wangtoo Hydroelectric Power Project is being constructed on the Satluj river in the Kinnaur district in the west of the state, between the villages of Karcham and Wangtoo. The river is fed mostly by the snow melt in the upper areas and by the monsoon in the lower areas, and is a vital supply to the region’s population—a consideration that received high priority in the design of the project.

“We have to divert just under half of the flow into a tunnel, which is discharged back into the river about 17 kilometres downstream,” says Mr D P Goyal, managing director of Jaypee Karcham Hydro Corporation Limited. “Outside the monsoon season, the water is held behind the Karcham Dam on a daily basis in order to enable us to meet peak demand, which generally occurs between 6am and 9am, and from 6pm to 10pm. The total area of land that will be submerged behind the dam amounts to only 62.61 hectares.” The first generating unit is scheduled to be commissioned in August 2011 and all four

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146 Asia & Pacific

Jaypee Karcham: Hydro Corp. Ltd

units by mid-November 2011. With the acceleration measures adopted under the inspiration and guidance of Mr. Jai Prakash Gaur, the founder chairman of the Jaypee Group, the project proponent is making all efforts to bring forward the commissioning by three to four months. When completed, the Karcham Wangtoo hydroelectric power station will produce 1,000 MW of electricity—so this is larger than a community-level run-of-the-river project. In fact, when it received the go-ahead, it was the largest such project in the private sector in India. The dam itself rises 88 metres from its deepest foundation level and is 182 metres long at the top, with four

Südkabel Südkabel,

Mannheim/Germany,

experienced

delivering cable systems for hydro power plants, delivered six circuits 400 kV XLPE-insulated power cables for the Karcham-Wangtoo Hydroelectric Project. Due to its special design, the 2,500 sq mm conductor cross section cables connecting the power station to the transmission system have a transmission capacity of 2,500 A each. Via these cables the entire produced electrical power will be fed into the Indian 400 kV power grid.

sluice spillway bays. The project has a head race tunnel 10.48 metres in diameter and 16.92 kilometres in length; four pressure shafts; an underground powerhouse with four 250 MW Francis turbines; a transformer hall; and a tail race tunnel 1.3 kilometres long and 10.48 metres in diameter. “The project was approved considering the power shortages in the power grid in north-west India,” Goyal explains. “Cuts and power outages occur often. The state of Himachal Pradesh has surplus power for most of the year and sells it to neighbouring states, including Punjab, Uttar Pradesh and Rajastan.” However, it is worth bearing in mind that Karcham Wangtoo is well into the Himalaya ranges—it is located at over 1,800 metres (6,000 feet) elevation and surrounded by mountains. Besides the hydropower station, the means to transmit the power has to be constructed. “We are investing in transmission infrastructure and building 217 kilometres of 400 Kv double-circuit lines from the power station to the grid point through Jaypee Powergrid Company Limited.” Besides the location being remote, the main challenges have been geological. “We encountered very high temperatures in the rocks—up to 98 degrees Celsius—when we were excavating the tunnel,” Goyal says. “We had to deal with highly fractured rocks, water ingress and soft strata also.” Jaypee

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used Atlas Copco tunnel drilling equipment, equipped with a special forepoling boom attachment, to help it complete the task before time. Apart from the physical challenges, environmental issues required extensive consultation and planning before clearances were issued by the government agencies. “Commencement of construction got delayed by about 23 months, from January 2004 to November 2005, while we waited for environmental and forestry approval,”

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says Goyal. Jaypee is optimising the construction period by deploying additional equipment and by recruiting additional staff—as at April 2010, the project involved 14,369 people, including contractor personnel. “When the project is running, around 750 people will be employed, including security staff.” And the challenges will not end once the ‘on’ buttons are pressed in 2011. “We get lots of silt in the river during the monsoon,” Goyal continues. “Clearly, that has to be kept out of the turbines and pretty much all of the hydromechanical parts, which would be damaged by it. We have

Jaypee Karcham: Hydro Corp. Ltd

constructed the largest underground de-silting basin to exclude silt particles down to a size of 0.2 mm and we also decided to invest in full tungstencarbide coatings for the runners. If one runner gets damaged, which is quite possible, it will take about 18 days to replace it, so we have built in 100 per cent redundancyâ&#x20AC;&#x201D;we have a full set of spare runners.â&#x20AC;? The entry of the private sector into power generation in India is relatively recent. Jaypee Karcham Hydro Corporation was set up seven years ago as the special purpose build-own-operate vehicle for the construction and operation of the Karcham Wangtoo Hydroelectric Project. The total cost of the project will be about US$1.5 billion by the time it is completed. It is unlikely to be the last such project in Himachal Pradesh as untapped potential for hydroelectric power in the state, especially run-of-the-river

schemes, remains very large. Jaypee Group already owns two other hydropower plants under operation; namely the 300 MW BaspaII hydroelectric project, also in the district of Kinnaur in Himachal Pradesh, and the 400 MW Vishnu Prayag hydroelectric project in Uttaranchal State. It undoubtedly has the experience and expertise to bring such opportunities to fruition. The Jaypee Group also plans to take up execution of the 2,700 MW Lower Siang hydroelectric project and the 500 MW Hirong hydroelectric project in Arunachal Pradesh State; as well as the 450 MW Kynshi Stage II hydroelectric project and 270 MW Umngot hydroelectric project in Meghalaya State in north-east India. www.jhpl.com BE

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service reputation

The 1980s saw the emergence of developing reg This development brought a rising demand for co Trepax Innovation. Director Paul Greenhalgh give business has evolved since Thailandâ&#x20AC;&#x2122;s â&#x20AC;&#x153;Tiger eco 150 Asia & Pacific

Trepax Innovation

gions, none more so than South East Asia. onstruction and laid the foundations for es Andrew Pelis an insight into how the onomyâ&#x20AC;? was born Asia & Pacific 151

152 Asia & Pacific

Trepax Innovation

hroughout the 1980s South East Asian markets grew to such an extent that they earned the label “Tiger economies”. One of the primary beneficiaries of this period was Thailand, and although the last couple of years of global economic downturn have impacted the country, the effects have perhaps been less severe than in other areas of the world. “Wherever I travel in the world, I get a good reception when people know that I am representing a company from Thailand,” says Paul Greenhalgh, director at Trepax Innovation. “People have a good impression of the country and a perception of hard-working people that are very service-oriented.” It is an image Greenhalgh says is both accurate and a key selling point. “We definitely try to drive home that point in our marketing and our customer service focus is something that helps to define our business.”

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Trepax Innovation Trepax is a specialist contractor, providing waterproofing, flooring, concrete repair and corrosion protection systems to a variety of customers across Thailand and increasingly throughout South East Asia and further afield. “We consider ourselves to be a turnkey company as we design, supply and crucially install these specialist systems for our clients,” Greenhalgh explains. The company’s history dates back to the 1980s when the economic boom in the region created huge opportunities for a variety of overseas suppliers, as Thailand built an industrial infrastructure that moved it beyond its more traditional agricultural roots. The new approach created an explosion of construction projects and at the time, the country did not have enough skilled engineers who fully understood how to use and install these specialist systems. “We started out in waterproofing, which is where the lower value markets exist, but at that time nearly all of the products had to be imported,” says Greenhalgh. “Trepax identified a gap in the market, as the end user still required installers with a technical capability, so we saw an opportunity to establish a contracting company with a technical marketing bias.” Englishman Greenhalgh joined the company around twenty years ago, having worked in the Middle East for a major construction company and then finding his way to Thailand through work associated with Trepax. His arrival saw the introduction of manufacturing from a 3,000 square metre factory in Bangkok, which directly employs around 90 people. “We are an SME-type of company and in addition to our permanent staff, we work with retained subcontractors, so, depending on work loads, we could have up to 300 people working for the business at any one time.” Greenhalgh says that Thailand’s well established education system enables Trepax to employ skilled engineers from various engineering disciplines. “We take people from engineering, mechanical engineering and chemical backgrounds as the country now has a good knowledge pool that we can

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Trepax Innovation

draw from,” he says. “The biggest change has been moving away from our dependence on imported products and raw materials as most of our needs are now met locally, thanks to the technology transfer. “This situation came about as more international manufacturers of construction products moved to Thailand,” he explains. “People learned from them and then set up their own businesses to support the local markets. Downstream development and the growth of the oil, gas and chemical industries in Thailand has meant more of the raw materials are available locally, which has been costeffective for us and has meant we can service the market much more quickly, and offer more choices to our customers.” The coating manufacturing process is labour intensive but delivers quality to ISO levels that meet both Thai and UK standards. Many of the activities onsite involve chemical compounding and processing and Greenhalgh says that having four distinct markets with a wide product range makes it hard to automate, so staff are trained to

multi-discipline. “Compared to businesses in Europe, we are not what you might call lean, as we take advantage of the skilled and cost effective labour pool here. As far as the final installed product goes, up to 70 per cent of our costs are raw materials, with only 30 per cent labour costs. In Europe the labour costs are generally the greater of the two in the equation.” Trepax is one of Thailand’s leading specialist contractors, but operating in four very different areas makes market share hard to quantify, as the markets vary greatly. “In terms of volume of work, our core businesses are flooring, waterproofing and concrete repair,” explains Greenhalgh, “but while corrosion protection is a newer market for us and in terms of square metres represents less volume, it is a higherend market and generates bigger revenues.” Strategic investment in specialist equipment has enabled the corrosion protection services business to become highly professional and it is always on the lookout for new market opportunities. “Our customer base is quite varied and we provide services for anyone from McDonalds, Coca-Cola and Exxon to BMW. Our business is growing progressively and we are always looking to increase our share of regional markets. Our current plans are to acquire more equipment to increase

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our capacity to support this. That and the building of overseas partnerships is a key challenge for our company, to ensure we have the capacity to support our growth in these areas. “Our business model is very different from our competitors,” he adds, “most of whom are multinational corporations that produce the materials but do not have the support services to install the product, so they rely on outsourcing where they lose control of quality. We are more interested in quality and we market ourselvesas a contractor with integrated manufacturing services. That means we avoid the all too common disputes between the installation contractor and the product manufacturer. We can deal with these problems internally and can quickly ensure that the customer is satisfied with what we deliver.” The biggest operational challenge, Greenhalgh says, is managing the labour intensive logistical processes associated with the transition from manufacturing to a frontended installation business with manufacturing support. “It requires a lot of organisation to bring the product from the factory floor to the installation area and a lot of skilled resources to deliver the final installed product to our standards of professionalism and quality.”

The global economic downturn has had some impact on the business, with automotive manufacturers in particular suspending some of their projects, but Greenhalgh says the recovery has been relatively quick, and Trepax has seen its turnover increase during 2010 due to its diversified customer base. This provides a solid foundation for expansion into new areas. “We work throughout South East Asia and this summer we opened a new manufacturing site in Hanoi,” says Greenhalgh. “This is a joint venture project with a local partner and we are also looking to set up similar ventures in Malaysia and the Middle East next year. The project in the Middle East is very exciting and we hope that this site will allow us to grow and service developing markets such as Iraq, Lebanon and Syria as well as other established countries in this region.” Closer to home he says that there is still plenty of opportunity within Thailand. “This is still very much a developing country and there are lots of opportunities here; we have won many projects in the established industrial and commercial centres and are looking to penetrate other growing areas. One of the burgeoning markets for us next year will be hotels and residential developments where there has been a clamour for new innovative interior decorative systems. This is a new market we will be looking to enter in 2011.” Greenhalgh has just come back from a visit to the Democratic Republic of the Congo where Trepax has a contract, deploying a 40-man team to supply and install protective linings to a copper mine expansion project there. It gives him the perfect opportunity to re-iterate his opening gambit. “Everywhere you go, people recognise Thai workers for their customer focus and high level of industry.” www.trepax.co.th BE

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Goingfor growth

Srinivash Singh is managing director of McNal Company Ltd, one of Indiaâ&#x20AC;&#x2122;s leading diversifie Here, he talks to Jayne Flannery about the co 160 Asia & Pacific

McNally Bharat Engineering Company Ltd

lly Bharat Engineering d engineering companies. ompanyâ&#x20AC;&#x2122;s meteoric growth Asia & Pacific 161

162 Asia & Pacific

McNally Bharat Engineering Company Ltd

n dia’s industrial growth has achieved almost mythical proportions and the country’s transformation is increasingly fuelled by homegrown entrepreneurial talent. McNally Bharat Engineering Company Ltd (MBE) has emerged as one of India’s leading engineering companies. Last year, it managed to shrug off the world’s economic woes and report net income growth of 50 per cent and a 19 per cent increase in net profit. Turnover has more than quadrupled over the last five years to stand at approximately £310 million. MBE builds turnkey plants and installations in the areas of power, steel, aluminium, material handling and disposal, mineral beneficiation, pyroprocessing and the pneumatic handling of powdered materials, particularly fly ash handling. Since it began to aggressively address the opportunities that India had to offer in 1998, the company has built up a portfolio of over 300 different projects. Managing director Srinivash Singh explains that success did not come easily at the outset. “There are many areas in engineering that were previously dominated by foreign companies. These were traditionally seen as having greater capacity and expertise, particularly in open cast mining. Indian companies found many segments of the engineering market difficult to enter,” he comments.

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MBE’s response was to bring in the best foreign technology it could find. Then, as the company grew, it began to design and develop its own solutions. A major milestone was entry into the fly ash handling business. “When we became involved around the year 2000, there was no recognition of the value of pneumatic handling of this material. Traditional methods were extremely wasteful of water and also had a huge environmental impact. We were able to guide people towards alternative solutions and provide better technology. Now we are one of the largest players in this sector,” he says. From this base, many new opportunities in mineral handling became apparent. MBE quickly became known as a pioneer in initial business areas—coal preparation, mineral beneficiation and bulk material handling. “At this point, we started buying up competitors who had good technology and also to reduce the impact of competition on the business.” A key acquisition was Sayaji Iron & Engineering Company Ltd, a leading manufacturer of crushing and screening equipment. With the input of McNally’s technological and design expertise, the acquisition meant that MBE could begin to directly manufacture many of the products required for its projects. McNally Sayaji Engineering Ltd (MSE) now has a wide portfolio of crushing, screening and milling equipment, pressure vessels, material handling equipment, steel plant equipment and process equipment like flotation cells, thickeners and slurry pumps. MBE soon went on to develop global ambitions. Realising that overseas acquisition was a short cut to developing a global presence, MBE bought out the coal and mineral technology division of KHD Humboldt Wedag, Germany, in 2009. Singh envisages that the German acquisition will be used as a springboard to develop a network of

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McNally Bharat Engineering Company Ltd

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McNally Bharat Engineering Company Ltd

subsidiaries across the world. China, Australia, Mongolia and South America are all within the company’s sights. Again, differentiation through superior technology will be the key to market entry in new geographical areas. “Research and development is of critical importance to us and we invest heavily,” Singh states. “In terms of our technology in materials handling solutions we have two main drivers. On the one hand we want all our mineral dressing equipment to consume less power and function in a more environmentally friendly way, but at the same time we believe we can achieve big gains in efficiency and productivity.” A subsidiary company, EWB Hungary, is in partnership with the Technical University of Budapest for finding new solutions to handle ash and other powder materials using dense phase pneumatic conveying and other innovative methods. The research and development department of MBE also works closely with a number of globally renowned research institutions including CMERI Durgapur, the Indian School of Mines at Dhanbad, the National Metallurgical Laboratories of Jamshedpur, the Indian Institute of Minerals at Bhubaneshwar and the Structural Engineering Research Center at Chennai. As a next step, MBE plans to set up its own Centre for Engineering Excellence. It is currently in the process of implementing a design automation platform through the acquisition of PLM and 3D modelling analysis software. The company is particularly keen to support and empower Indian engineers— at the outset, expatriate Americans took

care of major engineering, design and manufacturing projects, but the focus is now strongly on using Indian personnel. “We have clear plans in place to create a human bank of expertise,” says Singh. “By the year 2015 we have a vision of having 1,500 young engineers who are also familiar with our business and how it operates.” The organisation itself is structured into distinct business groups, which each take full responsibility for a given activity. “I believe that this de-centralised style of management and the creation of separate profit centres is a strong motivational factor. Incentives are tied directly to output and unlike a departmentalised culture there is nowhere else to allocate blame if things go wrong,” he says. Within the business, power and steel— the fundamental building blocks of any industrialised economy—stand out as being particularly fast growing. However, the company is nothing if not ambitious. “There are three new sectors that are very attractive to us,” he continues. “They are oil and gas along with nuclear power and the construction of cement plants.” Singh expects to announce new contracts in each segment within the next year. In terms of oil and gas and opportunities within nuclear power, he is looking to India’s huge domestic market. India’s rapid growth continues unabated and he is determined to play a major role in its future. The cement business meanwhile will be global from the outset. “There is a clear synergy with our existing business and we already have the infrastructure in place to establish a global footprint,” he concludes. www.mcnallybharat.com BE

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A growi supe

As governments around the world invest in pow within this specialist construction sector. Mr V. the strategy that has helped KEC International 168 Asia & Pacific

KEC International Ltd

ing erpower

wer infrastructure, competition has become rife Balasubramanian talks to Andrew Pelis about Ltd to make the most of the opportunity Asia & Pacific 169

ecent years have seen a boom in international infrastructure investment. One of the areas to benefit most from government spending has been the power construction industry which has seen demand soar; and at the forefront of the power revolution has been KEC International Ltd. The company, headquartered in Mumbai as part of the RPG Group, is very much regarded as a global entity. “Indeed, we are one of the top three companies in the world when it comes to building and constructing power transmission lines and towers; our focus is the engineering, procurement and construction of transmissions and power line construction, the construction of railway lines, telecoms towers, cables and water management,” states Mr V. Balasubramanian, vice president for International Projects. Despite its global reach, KEC has its foundations firmly set in India. Originally founded as Kamani Engineering Corporation in 1945, by 1950 it had established a fabrication plant in Bombay, to help supply the Bhakra Nangal Dam project. But it was in the 1960s when the company took its first significant steps towards its future destiny. “That was when the business moved into engineering and became the first Indian company to win a railway electrification order and was also awarded a full turnkey transmission line project in Sudan,” Balasubramanian explains.

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KEC International Ltd

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172 Asia & Pacific

KEC International Ltd

By 1982 the company was increasing its successful power transmission business and became an attractive proposition for the global RPG Group. Upon completion of the acquisition the company was renamed KEC International and received the financial backing to invest in operational infrastructure. “At the time of the takeover the company turnover was less than $30 million, today that figure is $900 million or Rs. 4000 crore,” says Balasubramanian. “We operate out of Mumbai and have three manufacturing sites based in Jaipur in Rajasthan, Nagpur in Maharashtra and Jabalpur in Madhya Pradesh. In these facilities, the company manufactures steel structures required for transmission and distribution lines, telecoms and railways infrastructure. Overall we have the largest production capacity in the world for tower manufacturing of about 150,000 million tonnes every year,” he continues. The sites boast state-of-the-art equipment, with CNC lathe machines hooked up to computer controls, allowing Balasubramanian’s team greater automated control and improved efficiency as they build bespoke transmission towers on single assembly lines. Roughly 4,000 of the 7,500-strong workforce are located at these three facilities, which have greatly benefited from constant investment: “As countries have invested in infrastructure we have consistently upgraded our own technology,” he says. “We have been operating CNC machinery for quite a while but there have been radical improvements and we are now able to operate CNC programmes from our design centre. There have been lots of improved processes which have created lots of optimisation.” Each factory operates to ISO9001 standards and the specialist nature of KEC’s work and requirements means that it typically works with the same international suppliers and customers across each project. “We predominately work with global suppliers that meet the tender specifications and individual country requirements for projects—across each of the various competencies we have a list of three preferred global suppliers,” Balasubramanian describes.

Quality, safety and protecting the environment are three key concerns for the company, he adds. “We try to address these issues with our training. For example, on some projects very specialist skills are needed during the stringing process to lay wire between the transmission towers; and the number of skilled people is very limited. It is a risky job and requires skilled project managers. “We have established our own training institute based in Nagpur, which ensures people are trained to work on projects around the globe,” he continues. “We also train our customers who are responsible for maintaining a site after installation and at any time we have up to 100 people training there. Our test bed at Nagpur is one of the best facilities in the world and can test a 1,200 KV tower.” In addition to its vast investment in training, KEC has placed a lot of expenditure and reliance on its JD Edwards ERP system. The system was introduced around five years ago and the company is currently migrating processes to create a fully integrated platform, as Balasubramanian explains: “IT plays a critical role for us in all our disciplines, from design to manufacturing and construction. Our ERP system is our oracle and we are currently integrating our manufacturing, design and project management systems. I don’t measure our return in terms of money but can say that our ERP system has helped us to win tenders, to improve margins and to grow revenue.” With investment in people, IT and equipment in place, KEC has built a platform able to cope with all the challenges the current environment can throw at it. “Operationally we are in a capital-intensive industry and capital is undoubtedly a challenge for any growth,” Balasubramanian admits. “The availability of manpower also creates difficulties at times and the logistics of transporting materials to

Asia & Pacific 173

locations in developing countries can sometimes produce problems. Over time we have also got used to the different approval requirements each government sets and communication is an important part of understanding the various processes.” In spite of the vagaries of international business— which can also include laying down transmission lines in inhospitable terrain—KEC has emerged as a world leader, a company willing to take up the challenge and experiment. In fact, it is a preferred vendor when it comes to emergency restoration systems (ERS). “We have always been prepared to work across country borders and to take on design challenges that other companies haven’t been able to accomplish,” Balasubramanian asserts. “This has given us an excellent reputation as we have expanded internationally over the past 20 years.” Most of KEC’s contracts are with governments; and each one can last between 18 to 24 months at a value of up to $100 million. The company has recently won contracts in Georgia and Tunisia and has over 100 projects ongoing. “We currently operate in 65 countries—fifteen countries in Africa such as Nigeria, Ghana, Kenya, Mozambique and South Africa; CIS

174 Asia & Pacific

countries like Tajikistan and Kazakhstan; and other countries in South East Asia. “In recent times there has been an international boom in infrastructure investment and we have seen a 70 per cent growth in demand for power in the Middle East recently, which has prompted us to build a fourth manufacturing site which will be located in Abu Dhabi through a JV over the next 18 months.” This new facility will be filled with the latest CNC technology; will produce another 30,000 million tonnes; and will create another 400 jobs, mainly for locals. So what is in store for KEC looking forward? “There remains huge opportunity for investment in infrastructure and our aim is to double our turnover within the next three years,” says Balasubramanian. “We are looking to Latin America now and have also looked to broaden our own services by providing water management services. Acquisitions may also feature along with new markets, new technology and new design; but our focus will remain to ensure we are competitive on margins.” www.kecrpg.com BE

KEC International Ltd

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expo

Satisfying

D m o M e o

176 Asia & Pacific

Dampier Port Authority

ort needs

Dampier Port Authority is on the threshold of a major expansion programme. Gay Sutton finds out from port development manager Dr Rochelle Macdonald how Australiaâ&#x20AC;&#x2122;s second largest bulk export port is preparing to satisfy the export needs of the rapidly growing oil & gas and mining sectors

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178 Asia & Pacific

Dampier Port Authority

f you think of the most exciting oil and gas development projects of recent years, names such as Gorgon, Wheatstone and Pluto are bound to spring to mind. And then you are thinking of Australia, a massive continent that already boasts some of the worldâ&#x20AC;&#x2122;s most productive mineral resources. The eastern seaboard, the south-east and far south-west may be its most fertile regions, but it is Western Australia that is home to these three projects. The state generates almost 40 per cent of the countryâ&#x20AC;&#x2122;s exports, and its output is growing. There are currently over $170 billion of major new resource projects either committed or under consideration in the state. Now, look a little closer and it is the Pilbara region in Western Australia that will receive

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Dampier Port Authority Shell Australia Redevelopment for fuel supply at King Bay Supply Base: Shell Australia has announced a commercial agreement with Woodside for the redevelopment of the fuel supply facilities at King Bay Supply Base, near Dampier. Works will commence in early 2011 and will include the reinstatement of the King Bay Supply Base import pipeline, a road gantry for truck loading and additional tankage. Shell marketing general manager Craig James said the facility was important to support shipping and local export industries in this booming region. Craig said Western Australia was a key growth market for Shell’s business and this enhanced facility would improve supply to customers in the Dampier area. “This investment is part of a larger capital program to support Shell’s aggressive plans to grow its fuels business,” he said.

the majority of this investment. The region is already the state’s most productive, a fact that conceals a curious paradox. Pilbara is sparsely populated, boasting less than 0.2 per cent of the nation’s population, and

yet it is considered to be the engine room of the Australian economy, responsible for approximately 20 per cent of the nation’s exports including various forms of gas from the massive oil and gas reserves off the northwest coast and iron ore from the mines. Small wonder, then, that this volume of traffic requires the services of the nation’s second largest and the world’s third largest bulk export port, the Port of Dampier. Located on the northwest coast some 1,260 kilometres due north of the state capital Perth, the port has enjoyed phenomenal growth since its launch in 1963 when it was first constructed by Hamersley

Iron (now Rio Tinto) to provide the export infrastructure to support its iron ore deposits some 320 kilometres inland at Mount Tom Price. The importance of Dampier to the development of the Pilbara region is

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Dampier Port Authority

indisputable, and this was recognised in 1989 when the Dampier Port Authority (DPA) was formed to oversee maritime activities at the port, when the North West Shelf Venture LNG exports commenced. Today, the port is a vital gateway for exports and imports into the Pilbara region. During the last financial year, Dampier handled $21.7 billion of goods and materials which included some $10.5 billion of iron ore for export, $7.4 billion of liquid natural gas (LNG), $1.3 billion of natural gas condensate and $1.4 billion of liquid petroleum gas (LPG). Other major products handled by the port included $515 million of anhydrous ammonia and $100 million of salt harvested from the salt plains close to

the port, as well as $221.5 million of general cargo. Over the last five years, trade through the port has grown at an average rate of 10 per cent per annum, and the projections show that growth is likely to

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continue as oil and gas production from the new offshore fields ramps up to full scale production, and iron ore production continues to expand. The Gorgon and Pluto projects

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Dampier Port Authority

Evans & Peck In WA, Evans & Peck recently provided advice to port authorities and mining companies in Dampier, Port Headland, Fremantle, Esperance, Bunbury and Cape Lambert. Evans & Peck first worked with Dampier Port Authority in 2004 as project managers on the Bulk Liquids Berth project. Since then it has continued providing project management support to the Port. As Dampier Port Authorityâ&#x20AC;&#x2122;s project manager for the DMSF, Evans & Peck provided options studies, design management and capital cost estimates. It also developed the business case, prepared tender documentation and managed the tender process.

are under development at the moment while Rio Tinto, still one of the regionâ&#x20AC;&#x2122;s major operators, plans to increase output of iron ore from 220 million tonnes to a forecast 283 million tonnes by 2013. The facilities at Dampier have grown over the years and currently include the sevenberth Dampier Cargo Wharf and the Dampier Bulk Liquids Berth operated by DPA, as well as a wide range of private facilities constructed and run by many of the portâ&#x20AC;&#x2122;s major clients such as Rio Tinto, Dampier Salt, Mermaid Marine Australia and Woodside.

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Dampier Port Authority POAGS POAGS is the pre-eminent supplier of stevedoring logistics and port management services in the Australian region. POAGS has had a presence in Australia since 1852, through its heritage as a shipping company, vessel agent and stevedore. POAGS until 2006 operated as P&O Ports Limited, and now offers over 150 years of Australian stevedoring expertise, which extends to port development, management and cargo handling services. POAGS

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The role of shaping the regional development strategy is something that DPA has been heavily involved with since its inception, in close partnership with industry, local communities and government. As part of its remit, it has formulated a long-term plan that analyses the optimal use of available land and infrastructure in and around the port through to 2060, looking particularly at the high value land in close proximity to the water, and then providing a strategy for the development of those assets. From this long-sighted perspective, DPA has produced

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Dampier Port Authority the Port of Dampier Development Plan 2010-2020, launched late last year. The port is now gearing up for an ambitious programme of expansion. “The Dampier Cargo Wharf, for example, has been at near capacity since 2007,” explains port development manager, Dr Rochelle Macdonald. “We are currently in the process of securing final funding approval for the new Dampier Marine Services Facility (DMSF), which has been designed to meet the rapidly expanding needs of the offshore oil and gas industry as well as the mining, processing and infrastructure industries.” The DMSF will more than double berthing capacity by providing an additional eight berths with facilities for vessels up to 65,000 DWT; an adjacent laydown area equipped with general cargo handling facilities and storage sheds; a roll-on roll-off wharf; and upgraded heavy load-out and rock load-out facilities. Designed to accommodate a diverse range of users and uses, it will relieve the current berthing congestion at the port, improve operational efficiency and provide built-in redundancy, enabling activities to continue even in the event of failure or shutdown at the existing cargo wharf. In addition to the construction of the DMSF, shortterm plans include the development of an alternative water supply option for port users, upgrades to the road network to the Burrup peninsula and a truck marshalling area at the port. Meanwhile, oil and gas client Woodside is due to complete the construction and commissioning of a new LNG facility at Burrup LNG Park later this year, and will begin processing gas from its prestigious Pluto project and exporting it from its newly constructed LNG jetty. Looking further into the future, assessment shows that the existing Dampier Bulk Liquids Berth will continue to have sufficient capacity for demand. Meanwhile the construction of the DMSF will certainly ease pressure and congestion in the short term, but with the Dampier Cargo Wharf due to be decommissioned in 2021 and forecasts for demand ranging from 10 to 17 berths, the pressure is likely to continue. The lack of new land available and ready for industrial use within the port boundaries is something of a

Westlink Shipping Westlink Shipping, a locally owned and operated company, has successfully been operating a fleet of modern self-geared vessels from SE Asia into Dampier for the past eighteen years. Our vessels are equipped with high speed cranes designed to lift heavy project cargo of virtually all kinds such as structural steel, pipe piles, subsea equipment and other project cargoes required by the mining, construction and oil & gas communities. Westlink Shipping takes great pride in offering flexible solutions service

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challenge, but DPA has identified a number of options. “We do have areas which could be rationalised to yield more space, and there are developed sites that could be used more efficiently,” Macdonald says. “For example, the road network within the port has the potential to be rationalised to improve both access and transport circulation, and to provide physical separation between the various activities and precincts. We also have rugged and precipitous areas that represent possible opportunities for levelling and conversion to developable sites, but noting that there are significant heritage sites in the area to also be taken into account.” There is also the option for further land reclamation, to extend the foreshore into the open waters of Mermaid Sound. “We are also looking to expand the boundaries of our responsibility,” Macdonald says. DPA has become involved in two exciting port developments elsewhere in

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the West Pilbara region: firstly, at Ashburton North, some 11 kilometres south-west of Onslow, plans are currently being drawn up for a new 8,000 hectare strategic industrial area large enough to accommodate major LNG developments. “Chevron is investigating the site to commercialise its Wheatstone gas discovery, while BHP Billiton Petroleum and ExxonMobil are considering using the site to develop their Scarborough discovery,” she continues. “The site will include a port precinct with multi-user facilities on the coastal strip and a multi-use infrastructure corridor.” The second development is the new industrial precinct and port proposed for Anketell, 30 kilometres east of Karratha. The aim is to provide deepwater iron ore port facilities to complement those of Dampier and

Hedland. And having played a key role in the planning process, DPA will ultimately manage the new port and infrastructure corridors. Finally, the port is keen to play a more active role in promoting collaboration in port activities across the state. “We have recently expanded our Perth office and our vision for this is to foster a regional port centre for Western Australia, to build camaraderie between fellow Western Australian ports and to provide an invaluable opportunity to share knowledge and skills, particularly in planning and development. The dedicated team of men and women of DPA have the capacity to deliver outstanding results over the next five years (and beyond) as we think big, think smart, and think future in our decision making, our customer service and our new initiatives.” www.dpa.wa.gov.au/ BE

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At the

crossr

The Port of Colombo in Sri Lanka is a sto east-west shipping route between Austra the Gulf oilfieldsâ&#x20AC;&#x201D;perfectly placed to catc

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roads

oneâ&#x20AC;&#x2122;s throw from the main alia, the Far East, Europe and ch the passing trade

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ri Lanka has fantastic advantages of geography. It commands the west and east coasts of its teeming neighbour India: sea traffic round the Indian subcontinent has to skirt its southern tip, as does the long haul bulk cargo, tanker and container traffic that plies between east and west. That gives Colombo, Sri Lanka’s commercial capital, a strategic advantage that can’t be taken away; but in recent years there has been a falling away in demand for the facilities at the port, and in particular Colombo Dockyard, despite its considerable expertise and excellent facilities. It’s no secret that until recently Sri Lanka had been racked by internal strife for nearly 30 years. The conflict made shipowners wary of entering service arrangements with the dockyard as insurance premiums were raised, says Mangala P B Yapa, CEO and managing director of Colombo Dockyard. That conflict was comprehensively resolved a couple of years ago, and the way finally laid open for Colombo to take its rightful place in the maritime service industry. “Sri Lanka is now one of the freest and least troublesome areas in the world to carry out ship repairs,” he claims. The Colombo Dockyard Company is 35 years old, which means that it has operated for most of its life under war conditions—but it has still managed to grow consistently through that time, says Yapa. “That proves the operational efficiency, good management and competence of all the people involved. If they are given the opportunity to perform in a free environment following the war you can just imagine what we can achieve!” The fact that a controlling share in the business belongs to Onomichi Dockyard Company of Japan

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is another help, he adds. “We have a peopleoriented environment, and operate Japanese principles like kaizen. But we are not trying to recreate what Japan has done so much as to learn from them and work out what we can do in Sri Lanka with similar thinking.” Colombo Dockyard employs 1,300 people, supplementing them with contracted labour as needed. Of these, 500 have been trained in shipbuilding at Onomichi—shipbuilding is an important activity at the dock, though until 2005 it built only for the local market. “In 2005 we decided to take advantage of the boom in shipbuilding and go out to external markets. Now we have the capacity to build vessels of 100 metres and more in length. We can deliver four vessels a year and we are working to increase that to six.” In October 2010 the dockyard delivered the second of two passenger/freight vessels for the Indian government. And last year it also started work on the first of two 68 metre anchor handling tug supply vessels for Samoa. Highly technical and specialised ships like these are increasingly required in support of oilfield operations, and they can now be ordered with confidence and at a very competitive price compared with dockyards in other parts of the world, he says. “We have built nearly 10 vessels since we started in 2005, including two passenger vessels, four anchor handling tug cum supply vessels, two multipurpose supply vessels and two ROV platform support vessels.” The dockyard is also to deliver two high powered anchor handling tug cum supply vessels with 150T bollard pull capacity to Singapore owners, while three more improved versions of ROV/platform support vessels with oil recovery facilities—an improved version of the ‘R’ class that the dockyard has already built and delivered—are being constructed. Colombo has four dry docks ranging

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from 107 to 263 metres in length; however, much of the traffic to Colombo these days is made up of container ships. These ships normally dry dock at their destination ports either in Europe or the Far East, says Yapa. “Colombo is not a terminal port, so they put in here either laden or half full. But we recently launched our Afloat Repair unit to provide all the engine room, electrical and electronic, piping and deck work—anything at all for which you don’t need a dry dock.” These container vessels call at Colombo every two weeks or so, he continues. “We can have components waiting and install them at the next visit. We can even put repair personnel on board so the repairs can be carried out while the vessel is on the way to its next port of call. The advantage is that we have a duty free facility so all these things happen without attracting any custom duty, and that includes spare parts. An owner who has a fleet of container vessels plying to Colombo can keep his spare parts stored at Colombo Dockyard without paying any custom duty.” The dockyard is in partnership with OEM service providers: for example, Wärtsilä has its own service company in Colombo which is mainly catering for the power generation sector. Caterpillar has its own service agency, as do MAN B&W, ABB, Cummins, Hydrex and Yanmar. For example, if a ship’s Wärtsilä turbocharger requires balancing the dockyard will remove it from the ship, send it to the Wärtsilä factory where it will be tuned and balanced then re-install it. “The Wärtsilä guy will come and commission it, and the ship can depart with minimum delay.” No longer a risky place to carry out such repairs, Colombo is now seen as a better bet than rival yards in the Middle East, which following the unrest of recent months might now be perceived as being less stable than Sri Lanka—or indeed Singapore, which is becoming very expensive and is having skills problems. Most of the work done in the Singapore yards is carried out by contract labour, often underpaid in defiance of Singapore’s strict labour regulations. Quality has been seen to suffer as a result, he says.

Colombo Dockyard

Sri Lanka is now one of the freest and least troublesome areas in the world to carry out ship repairs

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Colombo Dockyard Circumstances have come together to provide a real opportunity for Colombo, Yapa concludes. â&#x20AC;&#x153;Being a developing economy means our labour and management costs will be lower than either Europe or the Far East. We have competent, directly employed people who can go on board and do the job but it is not just a question of manpower. We have a sophisticated IT system; our dockyard systems are ISO certified so we can offer a fully integrated stock management system so the owners will see how their stock is moving; and we can come to long term service agreements so there is no need for a superintendent on location constantly negotiating each job.â&#x20AC;? The odyssey of excellence continues... www.cdl.lk BE

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Specialist

seaf

As ships get bigger, more sophisticated, moving cargo, a new industry has grown Managing director of Thome Ship Manag Oâ&#x20AC;&#x2122;Hanlon how the company is handling a 200 Asia & Pacific

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farers

more specialised and more efficient at n up around operating and crewing them. gement, Bjorn Hojgaard, explains to John a step-up in scale

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home Ship Management was a general shipping services company until its present owner Olav Eek Thorstensen joined in 1977 and refocused it on its current core business. As managing director Bjorn Hojgaard describes it, the industry looks a lot like a maritime version of land-based facilities management, whereby the running of large and complex assets is entrusted to a specialist. Thome itself offers Scandinavian expertise out of Singapore, that hub of Asian and indeed global shippingâ&#x20AC;&#x201D;and that, Hojgaard says, is its USP.

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Thome Ship Management Ltd

The ship management industry was traditionally rooted in Europe, but the centre of gravity in shipping has moved and is still moving eastward, Hojgaard points out. “Around 50 per cent of the world’s tonnage is now owned and controlled by Asian hands.” Based in Singapore and with a major office and training centre at Manila, Thome has built up a serious presence and has established itself as one of the leading players in an expanding professional services niche where the relationship between agent and client is all-important. Over 20 years Olav Eek Thorstensen built up a network of relations with shipowners large and small, and did a great deal to professionalise the ship management industry. In 1991, Thome became a founder member of the International Ship Managers’ Association (now InterManager), set up to monitor and improve standards, quality, training and qualifications. It was a defining moment for Thome when it set standards not only well ahead of the industry at the time, but of the owners’ expectations too, embracing uncommon concepts like continuous improvement and becoming in 1992 the first ship management company to be accredited to ISO 9000. This approach was a key factor in growing the business. In the early years of this century, from having around 40 ships under management Thome found that it had 80, and was facing problems of scale. This had much to do with Hojgaard’s appointment in early 2008. Hojgaard had been a senior director with AP Møller Maersk in Singapore and Hong Kong, and had the international background to take advantage of the opportunities that this step-up in scale offered. Good ship management is founded on trust, and trust comes out of personal relationships, Hojgaard insists. “We have to be close to our owners and keep up an ongoing dialogue to make the relationship work.” This is done through the fleet crew managers, who are like key account managers, he adds. “Each of them runs a fleet of about 20 ships. They maintain the dialogue with the owners, and coordination between the ships, the office in Singapore and the owners’ reps wherever they are.”

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This is where Scandinavian management principles really come into their own. “We don’t believe in top-down management or control: decisions should be taken as near to the rock face as possible!” This encourages leaders at every level to switch on their brains and make decisions, he says: one is powerfully reminded of the ‘flat’ management model driven by another Scandinavian, Percy Barnevik at ABB. Ship management doesn’t really lend itself to centralisation, he believes, and placing too much reliance on fancy IT systems is no substitute for human decision making. “One of our key philosophies is that ships are run on board. You can’t sit in an office and control a vessel remotely! A good safe vessel that performs to charterers’

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In future the management of capacity will become equally important as managing the traffic flowsâ&#x20AC;&#x201D;but always secondary to safety

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expectations is one with good people on board.” Naturally the other side to this coin is that the ships’ officers and crew need good support from the 400 shore-based staff whose job it is to make sure the seafarers have the tools and the guidance they need to make the right decisions. Thome has something like 160 vessels under management, the bulk of them cargo ships and the remainder with two subsidiary companies. Thome Offshore, founded in 2005, manages 25 supply ships and support vessels for the oil exploration industry, and Thome Oil & Gas manages five production and storage vessels. In all, Thome Ship Management looks after assets worth around $3 billion. It’s an awesome responsibility, so it’s no wonder the company spends a lot on training the 8,500-strong pool of officers and ratings that crew its clients’ ships. About half of this training takes place at Thome’s own training centre in the Philippines, the other half at third party facilities close to the officers’ homes in Croatia, Romania, Indonesia, China and of course Scandinavia. “Training matrices make sure that specific responsibilities and vessel types are catered for. We also have a competence management system that maps out the gaps in an individual’s skills when they are on board a ship and makes sure those gaps are closed when they come ashore again,” says Hojgaard. This is a challenging and crucial time for the ship management industry and Hojgaard finds this very exciting. But he is very respectful of the relationshipbased culture Thome has built up, and wants to preserve it. “This company has done well for 35 years and I am not so arrogant to think that the way they do things at Maersk, for example, would be better.” There are perhaps 600 players in the ship management industry, and consolidation is inevitable. However, he thinks this will take place as the leaders

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scale up and smaller players become unviable, rather than through a spate of M&A activity. Mergers are rarely an unqualified success in this business, he says, often foundering on cultural incompatibility. In any case, Thome has no problem in growing; on the contrary, it is in the enviable position of actually having to put the brake on its potential for expansion. “We have found around 10 per cent per annum growth is manageable—much above that and you lose control. We have many owners asking us to take on the management of their ships and we can afford to be very selective now.” In a market where many struggle to hold onto their customers, Thome Ship Management is having to disappoint potential clients keen to place their assets in the hands of this market leader in safety, competence and quality. Little wonder this former

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sea captain enjoys his work so much. “As a ship’s commander you make an immediate impact: in my present job I can make changes that will affect the company and the entire industry in the long term, and that is truly exciting.” www.thome.com.sg BE

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Fabric of

In a fascinating insight into the flow of disc free ports of western India, and their subse and the US, executive director Nohar Nath Group manages the complex net of supply, 210 Asia & Pacific

Kishco Group

ociety

carded garments from the West into the equent return in different guises to Europe explains to John Oâ&#x20AC;&#x2122;Hanlon how Kishco , processing and demand

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ishco Group is a long-established family business, having been founded in 1938 by Mr KG Nariman and his father. Back in those days it was a manufacturing company, making high-quality suiting fabric as well as metal goods. Over the years and the generations, the family abandoned manufacturing and focused its attention and expertise on trading raw materials, eventually establishing itself as a niche player importing and exporting textiles, fibre and yarn and selling it to customers all over the world. Today the group is run by KG Narimanâ&#x20AC;&#x2122;s daughter Mrs Minoo Nath, managing director, who looks after the financial and administrative aspects of the business; and her son, Nohar Nath, who takes care of sales and marketing. Kishco Group trades in every kind of textile product category, whether natural fibre like cotton and wool or synthetic, polymer-based fabrics and blends. It can be regarded as a portal to the entire Indian textile industry in all its diversity, exporting anything from yarn to finished clothing, plain fabric in rolls, to value-added weaves like satin, denim, shirting and the like, any of which can be printed however the customer wants.

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However none of this primary work is done by Kishco itself these days. The staff consists of just 20 specialist managers, logistics experts, purchasing and sales people who maintain a unique network of contacts in the industry, not just across India but right across the globe. It is pre-eminently a textile industry supply chain player, whose strengths lie in its knowledge of the global market and its ability to leverage the strengths of India as the hub of this network.

Fundamentally the business imports raw materials, has them processed, and re-exports them in the form of product. The key thing is the raw material though, which is largely recycled waste. “The world generates a massive amount of textile waste,” explains Nohar Nath. “There are two sources, consumer waste—mainly discarded clothing—and industrial waste from every point along the manufacturing value chain. It all has a value and can be used to manufacture other products.” The business of sorting consumer waste moved from the developed world to Asia and

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North Africa as this labour-intensive activity became unviable. One of its largest centres is now the Kandla Special Economic Zone in Gujarat, 600 kilometres to the north of Kishco’s Mumbai base and to which unimaginable quantities of waste clothing is brought from Europe, the US and elsewhere. “We have a number of graders in Kandla who sort the material. We re-grade it into a number of categories—some new or good condition clothing can be sold in third world countries; some of it is used for fibre manufacture, and we make blankets or carpets out of it.” Kishco gravitated towards recycling as its experience grew and as the new textile business became more and more competitive. It has been given a fair wind by the growing need for corporations around the world to improve their green credentials and to be able to report eco-friendly policies in their annual reports. Though legislation and regulation is rudimentary at present, consumers already like to see that the clothes they buy contain a percentage of recycled material: when targets and regulations governing this come through, as they inevitably will over the next decade, Kishco will be in just the right place, Nath believes. An important product line would be industrial wipes, or wipers as they are called in India. Large quantities of cloths are used for cleaning anything from machinery in a factory to windows, floors, trains or ships’ engines. They are high volume, relatively low cost, but quite high spec products with regard to size, absorbency and other things the customer may need. “By buying recycled wipers the customer benefits twice—the cost is less and their reputation is enhanced. Our customers range from the smallest workshop to the largest corporation. For example, Walmart and Home Depot in the US use our product and put it on their shelves, while at the other extreme we sell to a lot of one-man units.” Until 10 or 15 years ago, Nath continues, while there was a thriving market for cotton and wool clothing waste it was not economical to recycle petroleum-based fibres like polyester and nylon. “Natural fibres are still easier to recycle and yield more value but the technology has changed and we are able to handle oil-based fibres using modern

Kishco Group machinery. We are constantly doing R&D work to see what different materials we can recycle and following that up with testing and market research.” As the price of oil escalates, the advantage of recycled over new fibre is irrefutable. While around half of Kishco’s direct customers are based in India, a growing number are in third world countries that are developing their own textile industries. Nath singles out Tanzania and Malawi in East Africa, and Senegal and Ghana in West Africa. “Tanzania is pretty much the hub for the textile recycling business in East Africa. The Chinese were and still are involved, but they mainly stick to new textiles.” Nevertheless, the Chinese product does compete with Kishco’s: such is their production efficiency that they can often offer a new product at a cost that competes with the recycled item. If cost were the only factor, that might be a problem, Nath admits:

“But many of our clients around the world actually prefer recycled to new product. The new product is rock bottom quality and the recycled as often as not contains better quality materials.” Kishco is planning to stick to its core business for the foreseeable future, and focus more and more on recycling. Recycling is a bandwagon, Nath concedes, and more people are jumping onto it; but demand will grow as long as the world population keeps increasing and there is no danger of the flow of raw material decreasing from the profligate West. “We do believe there will be subsidies in the pipeline for companies that do recycling. Hopefully we might get some of those in India too; we will definitely benefit if and when that happens.” www.kishcogroup.com BE

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Being

systematically

Company turnarounds require tough decisions Transport, the secret has been to lock operati as CEO Simon Thornton explains to Gay Sutto 216 Asia & Pacific

McCollâ&#x20AC;&#x2122;s Transport

etter

s and strong leadership. But for McCollâ&#x20AC;&#x2122;s ional activities into standardised systems, on

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n just 18 months the new management team at McColl’s Transport has achieved a significant business turnaround, returning what had once been a well respected family-run Australian transport company to profitability, and re-establishing its reputation for delivering quality services reliably and consistently. Brought in by the company’s new owner, 333 Management found staff morale at rock bottom with remedial action needed quickly. “The transportation industry tends to be very price competitive, and for many it’s a race to the bottom, with competitors vying to offer the lowest prices,” CEO Simon Thornton explains. And since 2005, when bought out by a private equity firm, McColl’s had lost its way and become one of those tumbling towards the bottom with decreasing service levels and increasing debts. The challenge was to reverse that decline. “We recognised that there were blue-chip brand name companies that could not afford their logistics to operate like that, and would be prepared to pay a modest premium for a company prepared to invest in systems to deliver a consistent and high quality service. Our strategy, therefore, was to divest areas of the business that made no sense for us and invest in those areas of the business where we could do well. We then began to lock-down everything we did into systems so that we could achieve repeatable and consistent results for our customers.” Of an original customer base of around 300, the cull was impressive. “We were really brutal. We got rid of all those who didn’t fit with our way of operating, and today we have just 15 customers that really matter to us.” The choices must have been difficult. But they were based on a thorough analysis of the company’s capabilities and resources, and by defining the way the company wished to operate. With a large fleet of 500 specialised tankers equipped to provide a high quality service for farm milk collection, the company already had a dominant position in the milk marketplace, and the facilities to deliver a value added service. At the other end of the spectrum, its large fleet of tautliners—large dry freight lorries—operated in a highly competitive and low value arena. “It was a $50 million division of our business but we made the decision to close it. And it has worked very well. We reinvested the money in technology and training to provide better services for our core customers.”

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McCollâ&#x20AC;&#x2122;s Transport

As weâ&#x20AC;&#x2122;ve differentiated ourselves in our three business areas, more and more business has been coming towards us Asia & Pacific 219

Today, McColl’s operates in three principal markets: the farm milk collection service, transporting milk between factories, and transporting chemicals—and it has seen business increase significantly in each area. Alongside this rationalisation, the company has implemented a business improvement programme based on locking all operational activities and events into defined business systems—a concept it calls being ‘systematically better’. At the heart of the newly tuned internal administration lies a specialist transportation ERP system that had been in the company for 12 years but only used for its invoicing capability. This has been cleansed and populated with accurate data and is now being configured to manage the business administration faultlessly from end-to-end, from initial order entry, through truck scheduling and materials ordering to customer invoicing. Beyond this, great improvements have been achieved at the driver level. A $1.6 million investment in a GPS truck management system named McColl’s Co-Pilot is significantly improving operational efficiency as well as driver safety. Installed in every truck, the system monitors and measures all aspects of the equipment’s activity in real time. The control centre therefore records and monitors where the vehicles are, how they’re being driven, whether speeding or driving in a fuel efficient way and so on. “We can then reward drivers who are driving efficiently, and improve the driving skills of those who are not,” Thornton says. With a fleet of 200 prime movers and 500 tankers and trailers travelling around Australia and an annual fuel bill of between $14 million and $20 million, even a small percentage improvement in fuel efficiency significantly impacts the bottom line. “One of the big issues in Australia is managing driver fatigue and we have strict fatigue laws that govern this,” Thornton continues. “However they’re difficult to manage unless you put in some systematic way of doing it.” Most companies operate a paper management system using driver diaries that are filled out and checked retrospectively, but McColl’s is going to be the first in Australia to manage this also in real-time electronically. When the driver gets in the truck he punches in his pin number and it keeps track of him, reminding him when he should take a break, and

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McCollâ&#x20AC;&#x2122;s Transport

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McColl’s Transport

alerting the control room if he fails to do so, making it easier for drivers to manage their safe driving hours. “We have found this is a great differentiator with our clients. We have legislation called the Chain of Responsibility, which extends the liability for road transport offences to our clients and their respective clients. We are therefore managing the Chain of Responsibility for everyone and ensuring the rules cannot be broken.” The Co-Pilot is currently being integrated into the ERP system, and once completed, each driver will receive their job instructions in the cab, including sat-nav directions to the pick-up and drop-off points, instructions about the plant layout and the loading and unloading operations. “Everything is documented, even down to which hose to use, so there is a systematically reduced likelihood of a mistake.”

The second major investment is in a driving simulator costing around $1/4 million, which is due to be delivered shortly. The aim is to improve safety by simulating normal driving conditions and then presenting the drivers with almost everything that could go wrong, whether that’s losing the steering and brakes or a pedestrian stepping out in front of the vehicle. Simulator training can then be provided to improve any skills deficiencies. Early on in the change process, the company brought in a safety specialist to analyse the accident rate prior to the takeover; and one of the key findings was that many drivers continued for excessively long hours, and this rang some warning bells. Although a drugs and alcohol testing regime had been in place it had not been effective, so the team implemented a strict regime, testing 20 per cent of its 600+ drivers every month. “Early

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on we lost a lot of drivers because they knew the game was up,” Thornton comments, “and we fired everyone who tested positive. Then after a few months there were no more problems.” Putting all these programmes in place has resulted in significantly increased consistency of service, which is appreciated by customers who are prepared to avoid the ‘discount transport trap’ in return for the safety and reliability. 333 Management took over halfway through 2009; and the figures speak for themselves. “Our net debt has been reduced from $71.8 million to $36.6 million over the past 18 months,” Thornton says. “And we see plenty of opportunities to expand. As we’ve differentiated ourselves in our three business areas, more and more business has been coming towards us.” But the company is remaining true to its principles: it will not accept every contract on offer. “We will not be all things to all people,” Thornton concludes. “We are very specific about what we offer, and we’re very disciplined in how we deliver it.” www.mccolls.com.au BE

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McCollâ&#x20AC;&#x2122;s Transport

Asia & Pacific 225

Just the

ticket forg

After years of planning, design and construction, Sing metro system is ramping up to full operation. Khoo H modal transport company SMRT, explains to Gay Sut operating and maintaining the majority of Singaporeâ&#x20AC;&#x2122; 226 Asia & Pacific

SMRT

growth

gaporeâ&#x20AC;&#x2122;s sophisticated new driverless Circle Line Hean Siang, executive vice president at multitton how the knowledge and experience gained from â&#x20AC;&#x2122;s rail systems is benefiting rail projects across Asia

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roviding transport services to the discerning public of Singapore, Asia’s most sophisticated and cosmopolitan nation, is a challenging but rewarding task, and one that SMRT has been performing since 1987. A truly multi-modal transport company, SMRT’s operations encompass three rail networks and a light rapid transit, an extensive bus service and taxi services, as well as engineering, project management and consultancy services. All of this is managed through three executive vice presidents: one to oversee the operation and maintenance of railways as well as engineering, consultancy and product services; a second to oversee the commercial operations, taxi and bus services; and the third to manage the company’s finances. The company’s origins can be traced back to 1987 when the government formed Singapore MRT within MRTC (predecessor of the railway arm of the Land Transport Authority, or LTA) to run its newly built 52-station subway system. A group of senior MRTC officers were transferred to SMRT to form the core team for this purpose. Both SMRT and MRTC were then under the same executive director; and it wasn’t until 1995—when MRTC was hived off to become part of LTA—that SMRT came into its own as an independent corporate entity. Until then, SMRT was essentially a train business; but after merging with Trans-Inland Bus Services, or TIBS—basically a bus and taxi business—in 1999, it grew into the rail, taxi and bus business we know today. In 2000, SMRT became publicly listed on the Singapore Stock Exchange.

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SMRT

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SMRT

“There were changes in our top management in 1995,” explains Khoo Hean Siang, executive vice president, trains. “Having begun as a statutory body, we moved to a more dynamic and commercially minded leadership.” Diversification into bus and taxi services quickly followed after the merger with TIBS in 1999, and by 2003 under a new CEO, the company had begun to exploit the previously under-utilised commercial spaces at its MRT stations and terminals, renting them out as retail outlets. Perhaps one of the most impressive of these is the Raffles Xchange, an underground shopping mall refurbished in 2005 at the Raffles Place MRT Station, one of the busiest stations in the central business district within the national network and laying adjacent to the legendary Raffles Hotel. There has also been more creative use of the advertising space. This has resulted in the company’s earnings increasing three-fold. However, along with privatising SMRT, the government also decided to take a new approach to the rail transport system and introduce competition. Previously, all new rail systems would have been handed over to SMRT to operate and maintain; but in 1998, when the new 16-station North-East Line was still under construction, the government invited a selection of other companies to bid for the licence but asked SMRT to refrain from bidding. The winner, SBST, has since become another rail operator. In 2000, however, when the government did not exclude SMRT during the tender for the operation and maintenance of the prestigious new Circle Line, SMRT won the franchise to operate and maintain the system for an initial period of 10 years, to be renewed for another

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30 years subject to good performance. The 34 kilometre Circle Line system, including the extension, is a driverless, completely underground system using state-of-the-art technology, with 31 stations linking Singapore’s thriving commercial and business centre to all the radial transport routes, tourist, leisure and the old residential areas, before finally terminating at the Harbour Front Station. When the fourth and fifth stages of the Circle Line become operational in October this year, it will be the world’s longest fully automated underground metro system, and is expected to carry half a million passengers a day on its three-car trains. The opening of the Circle Line Extension is expected in 2012. The line also delivers another interesting record. “We now have one of the deepest underground depots in the world, Kim Chuan Depot, which has the capacity to accommodate up to 70 three-car trains,” says Khoo. The depot performs multiple functions—not only is it the maintenance centre for the rolling stock and network, but it also houses the system’s vital operations control centre, and is the main storage facilities for materials and parts as well as for stabling some of the trains for the Downtown Line. “For operational efficiency and cost effectiveness, we have exploited the driverless technology and stabled some trains outside Kim Chuan Depot,” he continues. “The rationale behind this is that it will enable us to conserve energy. It takes power to return the trains to the depot when the operations close down at night; therefore, we will park them at strategic locations on the network and send our staff out to clean them. Before sending the trains out for service every morning, the health status of the train is first checked remotely at the operations control centre and only after they are confirmed fit for service will they be sent out by activation of a button. Thereafter the trains will operate according to the timetable to meet the needs of the commuters.” Safety, service quality and efficiency are top priorities for SMRT. Having had the opportunity of being involved in the design review of the Circle Line and participating actively throughout the project implementation stage since winning the contract in 2000, SMRT has used its past operating experience to benefit the Circle Line system, incorporating more user friendly features. This has been made possible through the success of the working relationship established with LTA and the contractors. In addition, after the line was handed over by LTA to SMRT, SMRT also put the system through a programme of extensive preparation, and testing began. “We simulated and practised all the possible incidents that could occur, and developed processes so that we will be able to recover from them

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in the shortest possible time,” Khoo explains. The system is now being opened section by section. “We continuously improve service quality of sections opened at a later stage using lessons learnt from the previous stages.” The new Circle Line has also been a catalyst for change on SMRT’s other rail operations— the original North-South and East-West MRT lines and the small automated Bukit Panjang LRT line. “A large part of our work involves maintaining and upgrading our trains and technology, and our engineers are in the process of replacing the fixed block signalling technology on the older lines to the new moving block signalling system that has been installed on the Circle Line. Although it requires substantial capital investment, we consider it a necessity because it will deliver significant improvements to our customer service and reliability, and cost savings in terms of maintenance,” Khoo says. “At the moment we are also operating the signalling from two control centres, but we will be merging these and housing them together at the underground depot. This will improve our coordination between the lines, resulting in overall operational efficiency and better customer service.” All this work requires a significant engineering team, and of the 6,200 staff employed across all divisions of the SMRT Corporation, 450 are highly trained graduate engineers attached to the train division. Some 200 undertake the daily maintenance work and the remaining 250 work on projects, system upgrades and the development of new technology. “Our strategy is to ensure we have a robust succession plan in place for our engineering capability. Therefore younger engineers begin in the maintenance department, learn the ropes and then progress to the project group, where a lot of technical experience and knowledge is required.” One of the significant achievements of the project group, and one which offers considerable opportunity for future revenue growth, has been the development of a sophisticated automatic fare

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collection system boasting robust detection and high durability, as well as environmental friendliness and cost effectiveness. “We will be installing these gates throughout the MRT network to replace the existing obsolete gates,” Khoo reveals. The company’s focus now is on taking the technology to the wider world. “We first took the product to market some six years ago but we were not very successful. However we have since learned how to be more market orientated and competitive, and we will be taking the product back out into the Asian market.” Over the years, SMRT has acquired considerable knowledge and experience of designing, operating and maintaining both driven and driverless MRT systems, and has

a growing consultancy arm that offers advice on all aspects of MRT, from initial design and specification through to operations and maintenance. Among the many international projects it has worked on to date are the Palm Jumeirah monorail in Dubai which it also operated for three years, and MRT systems in Korea, Mumbai, Chennai and Ho Chi Minh City. With significant rail development planned for countries such as Vietnam, Malaysia, the Philippines and Thailand, Khoo sees tremendous opportunities for growth. “Looking forward, our focus will be on operations, consultancy and product development, and we should be able to make significant headway in the world arena,” he concludes. www.smrt.com.sg BE

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As operator of the largest gold mine in Gold Mines has a positive approach tow and the surrounding community. Andre 236 Asia & Pacific

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estern Australia is a vast, arid region that on the face of it offers little encouragement for prosperity. Yet in 1893, the discovery of gold near Kalgoorlie-Boulder was the catalyst for an oasis. Since 1893, when Irishman Paddy Hannan first made his famous discovery, more than 55 million ounces of gold have been mined from what became known as the Golden Mile. For many years the site was split up into various mining activities, until businessman Alan Bond (of Americaâ&#x20AC;&#x2122;s Cup fame), began buying up the individual leases to create one big pit, in order to mine the area far more economically.

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Bond failed to complete the takeover but in 1989, the entire area was combined as a single, amalgamated site (the Super Pit) under the management of Kalgoorlie Consolidated Gold Mines Pty Ltd (KCGM) to manage the assets and operations of joint venture partners Normandy Ltd and Homestake Gold of Australia Limited. Today the Fimiston Open Pit, colloquially known as the Super Pit, is Australia’s largest open cut gold mine.

It is located off the Goldfields Highway on the south-east edge of Kalgoorlie-Boulder, Western Australia. “We are a twenty-one year old gold mine and we also mine a small amount of silver,” says Russell Cole, general manager at the Super Pit. “Today we’re a fifty/fifty joint venture between Barrick Gold Corporation and Newmont Mining Corporation.”

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Kalgoorlie Consolidated Gold Mines The Super Pit is currently the largest gold producing mine in Australia—it is 3.7 kilometres long, 1.6 kilometres wide and will have a depth of 660 metres when finished. “We also operate an underground mine at Mount Charlotte that runs to a depth of 1.2 kilometres, which has been functional for 48 years,” says Cole. KCGM currently produces up to 800,000 ounces of gold each year, with the on-site process plant working through 13.5 million tonnes annually. Cole cites historical activities as one of the major current operational challenges. “We are the fourth generation of mining to go through the area—there has been lots of mining activity here over the last 110 years. A significant amount of alluvial work and underground mining took place in the past and the old pits do present an extra hazard to us; we run three extra drill rigs to confirm where the old holes are located.” However, KCGM has been able to draw on the considerable experience of the two corporations that own the venture, implementing safety measures to world class standards. “We have two owners and each has its own unique initiatives on safety and continuous improvement—it’s a luxury having two corporate offices to draw on. We also follow ISO standards,” explains Cole. An important part of that process is ensuring that KCGM’s 700-strong workforce (as well as its 400 longterm contractors) is well-informed on operational developments and how they impact upon safety and the environment. “We run training courses, with the majority done in-house,” Cole explains. “We have an integrated approach with regular refresher courses covering safety and operations, environmental and community relations training—our view is that you need to develop your workforce.” Staff retention can be a challenge but Cole suggests KCGM has a unique advantage in terms of recruitment. “We are potentially entering another boom cycle and we insulate ourselves a little bit having a large city close by. Most of the other sites around the country are remote and we are able to recruit people that want to live in the city.”

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Part of the company’s drive to develop its workforce has been to instil a distinctive set of company values. “We have six core values that embody all that we do and we say to our workforce that if any activity doesn’t align with our company values, we question whether we should be doing it.” These core values are a very important part of KCGM and the foundations upon which its culture is built. “They have been designed to create a clear understanding of what is important, valued and acceptable at KCGM and cover good practices in safety, the environment and social responsibility; an ‘ownership of the company’ mindset and an awareness of the need to act with a sense of urgency in a safe, timely manner,” Cole affirms. Investment in fleet at KCGM is currently continuing apace, with plans to acquire six new trucks and two new hydraulic shovels in the next twelve months, adding to an impressive range of trucks, shovels, wheel holders, graders and wheel dozers. Cole says there are a number of suppliers who operate an on-site service, providing maintenance on their machines. With a long-term investment approach from its owners, KCGM recently announced it has extended the mine life out to 2021, following extensive consultation with the local community. “We have just started the last of the cutbacks involving cutting back one side of the pit; and the exploration department is looking at ways to further extend the mine life,” Cole explains. He is quick to reassure that any future expansion will not adversely impact near neighbours. “There is an urban myth that the gold seam runs underneath the city, but in reality it runs from north to south. We have a good, positive relationship with the local

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community, and we take great care to ensure that our operations don’t impact upon them.” Existing planning indicates the Super Pit will close in 2021, and the company is investigating ways to economically extend the life of the mine beyond that date. However, the company recognises the importance of involving the local community in the closure conversation. “We are at the point where we have a long-term sustainability programme, but our main focus is to define where the end of the mine life could be and to talk to people about what the site could be when we leave. “Talking about closure will help us understand important community views on what KCGM should be doing to ensure that if we do close, our withdrawal from the community is done in an agreed way with agreed outcomes,” he concludes. www.superpit.com.au BE

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Pure

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orationâ&#x20AC;&#x2122;s Boddington mine in Western Australia producing mine in the country, but is not al responsibilities, David Hendricks hears Asia & Pacific 249

ustralia is a land blessed with natural resources. It is the worldâ&#x20AC;&#x2122;s second largest producer of gold, with 58 producing gold mines, of which the Super Pit, a Newmont/ Barrick Gold JV at Kalgoorlie, Western Australia, is currently the largest. But not for long. For its part, Denver, Colorado-based Newmont Mining Corporation is the worldâ&#x20AC;&#x2122;s second-largest single gold mining company, with significant assets or operations in the United States, Australia, Peru, Indonesia, Ghana, Canada, New Zealand and Mexico.

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The Asia Pacific region will shortly become the company’s largest production region when the Boddington mine in Western Australia overtakes the Super Pit. Officially reopened on 3 February 2010 the mine is expected to become Australia’s largest gold mine once it reaches full production. “For a while we’ll be producing nearly half the volume of Newmont’s global gold output— approximately two and a half million ounces annually,” says Tim Netscher, senior vice president of Asia Pacific operations. “Of course, gradually we’ll have projects coming up in other regions, and the volume from this mine relative to the company’s total production will go down. And Boddington will also produce a fair amount of copper.” Mining began at Boddington in 1987, when Billiton (now BHP Billiton) was the main owner and also owned the Worsley Alumina refinery, a large-scale processing plant about 150 kilometres away on the coast. Boddington has changed ownership over the

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years, and in 2001, when the market for gold was in decline, mining at Boddington was stopped and a maintenance program put into effect until 2006, when an expansion was begun by joint venture partners Newmont Boddington Limited (two-thirds) and

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AngloGold Ashanti Australia Limited (one-third). Three years later Newmont bought out its partner. Since the best gold at Boddington has been mined in its early years, the remainder is a lower-grade ore, and the priority now is to move and process large volumes of material. The mine is sizable enough to allow a large-scale operation, with the processing plant within conveying distance from the mine. “The mine has to be large in order to make the economics work,” says Netscher. “The key to success is sufficient scale and world-class operating techniques, in terms of double-sided loading of trucks, efficiency in use of the amount of cyanide per ton of gold, and other measures. “We have benchmark standards that we have to deliver to. We’re mining around one gram of gold per ton of ore, with large-scale equipment. At full

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production, we’ll be moving 10 million tons of material per month. In a month, we will process about what we process at our

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Jundee and Tanami mines in one year, and at Waihi in two years. That gives an indication of the size of the processing plant. The only other mining operation this size in our portfolio that moves comparable quantities of material is Batu Hijau in Indonesia.” Netscher reflects with pride on the evolution the mining industry has undergone over the decades. With over 35 years’ experience in the business himself, including gold, copper, nickel, cobalt, coal and platinum group metals in South Africa, Indonesia, the US and Australia, he’s seen the giants like Newmont embrace a smarter way of mining, learning a better way of using resources, of improving energy consumption, water use, safety, relations with local communities and indigenous peoples, environmental concerns and regulations, sustainability, and the other factors that are changing the image of an industry that historically had a track record of being not exactly the most socially and environmentally responsible. “To put it into context, I’m spending more than half my time on what we call the soft issues. And the same applies to my counterparts in Newmont’s other regions. If we’re developing a new mine project, associated with it are hard measures such as on-time delivery, on-budget delivery, fit for purpose and so on. In this industry 25 or 30 years ago, that would have been typical. Today it’s less than half the focus, because the majority of our effort is on those other issues. And we have no choice ethically or legally except to do those properly. Quite frankly, it takes years to build a company’s reputation, plank by plank by plank, and it takes only one or two incidents to destroy that reputation, so you don’t want to get into those situations. You simply have no choice but to devote the time to them. “I’ve been very fortunate in my career,” Netscher continues, “in that I’ve been exposed to those soft issues in various countries, so I understand cultural sensitivity and I honestly believe in those things. I couldn’t work in this industry if I was destroying the environment or if I wasn’t advancing local and indigenous people. Whenever I leave a job or a project, I want to leave that community in a better position than it was in before I got there, across the entire spectrum of issues. And if I don’t believe that honestly myself, then it’s time to hang up my boots. And I look for that sort of thing in the people I hire as well.” www.newmont.com/asia-pacific BE

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