Jagdish Prajapati, Panam Engineers Ltd
Release Date: 0000-00-00As the founders of the company, could you start by describing Panam Engineers to our readers and the key milestones of its development since its establishment in 1998?
Panam Engineers was established in October 1998. Initially, the company operated as a trading company, and later on, went on to supply the world industry with instruments and fittings. In the initial stages, we started with export operations, generating 98% of the company’s turnover where only 2% came from the domestic market.
Panam Engineers’ initial breakthrough was in 1998, with one oil major oil company- Kuwait Oil Company -, to whom we supplied a lot of valves. From then on, there was no looking back. We executed a three years’ supply contract of industry valves and fittings of about 700,000 USD for this company.
After 9/11, we stopped a portion of our Gulf marketing. At that time, we had many customers from the US, the UK and Canada; we were concentrating mostly on the American and European markets, where most of our business originated from. Almost 50% of our production was exported to Canada.
In 2006, which represented the turning point in the company’s development, we realised that we needed the domestic market as well, considering its high potential for growth. There were many projects in the offing in India. We supplied our instruments and fittings to countries such as Japan and the US to be assembled, and these products would then be shipped back to India. It is from that moment onward that we understood we had to be in the local market.
From the initial stage, Panam Engineers enjoyed a growth of 35% to 40% annually, except from the period of 2007-2008 due to the economic recession. As Panam Engineers’ business model relied mainly on export operations, the company’s performance was bound to be affected by the crisis, and our turnover for the year dropped by 30- 35%.
Looking at the present, the predicted growth for 2011-2012 is around 25 to 30 crores rupees - around 6 to 7 million USD.
Apart from that, given the growth of our business in such a short period, we have bought over twenty hectares of land in Ahmedabad, in line with our expansion plans. This land will accommodate our complete in-house facility of in-house forging, separation of raw materials, stocking of finished stock along with replenishing our inventory from time to time so that we can cater to the market more effectively.
It should take off by mid 2012 and by 2013 we would have commissioned the plant. It will be completely in-house along with labs for testing, dormitories for staff, suites for the administrative staff along with suites for the regular staff and guests.
It is a massive project estimated between 6-7 million dollars, whose objective is to meet the escalation in the demands of orders and to increase growth in the international market. Along with expanding customer portfolio, the scale of the orders is getting bigger as well.
By 2012, there will be a massive demand in the domestic market for valves and tube fittings. We have various approvals from EIL, ONGC, etc. and we are on their tender list. Whenever they have a new tender, we are able to bid for it and if we meet the requirements, we are considered first.
As you commenced your operations in 1998 only, what have been the main challenges in being a late entrant in the market? How did you make your space in this competitive industry?
Up until 1990, there was not much of a market scope for the Indian industry, especially as far as valves were concerned. Indeed, the purchasing mentality abroad was laden with a few prejudices in terms of region, business ethics, etc. But once they came to the realisation that products from countries like India can be of high quality, they began wanting to trade with us more.
It was not possible for us to get an order from a large crude oil company before this shift in mentality happened; unless that product performed. In that year, the whole scenario changed and suddenly people were looking at India for valves.
The initial breakthrough for Panam came from the orders of the Kuwait Oil Company. Today, what is the importance of O&G for your operations?
In the Middle East, we had a very good marketing person who was working in the O&G sector there. His demise was a massive setback for us and consequently, we started to focus more on instrumentation of valves and fittings which are mostly bought in the UK, US, Canada, Poland, Germany and Russia.
We diverted our attention to the instrumentation over the business of valves. But we are going back to the business since we have received our letter of propriety.
As an Indian company, it must have been easier than international companies to compete in the market. To what extent have the company’s numerous approvals and certifications abroad helped you be strongly established?
We have the API certification (American Petroleum Institute). ISO 9001:2000, API 600 T Company, along with the BSI certification from international standards. These certifications have helped our credentials a lot; especially in the international markets.
Do you see a gap between Indian and international standards between quality and requirements?
There is still a little gap, as far the industry world is concerned. We are still not a 100% there.
As for the instrumentation industry, Indian companies and especially Panam Engineers are definitely at par with the top international instrumentation companies like Parker, and Hy-Lok.
The company has a strong geographical reach with the Navy Mumbai facilities, and it is to be increased in a couple of years as soon as the new plant in Gujarat is commissioned. As a manager, what are the main challenges in operating in such a large number of markets?
From the initial stage itself, we have had our own logistics team, picking up the materials in Navi Mumbai- most of them by air segments like DHL, from JNPT (Jawaharlal Nehru Port Trust), the Nhava Sheva Port, which is close by.
How has the break up of revenues evolved over the years?
Today the break up of revenues is 65% – 35%, however we are expecting that this balance should stabilize at 50/50. The domestic market is as good as the international markets.
How do you select the markets to target?
Since the main markets are oil and gas, we have a business in Canada (Alberta), in the IUS (Texas), and we also have four distributors in Australia, along with one in Brazil and in Mexico. ONGC, for instance, is expanding within Brazil.
The O&G and Power industries are booming. Recently, we have had an order from Mazegaon Dock for Shipbuilding for $1 Mil USD. We have developed similar products as our main products lines with the help of a chartered engineer.
With this good reference, we will be targeting other shipbuilding and shipping companies.
Do you think that the O&G and Energy sectors will drive Panam Engineers’ growth in the next future and what are the objectives?
Predictions are hard to make in India. India has opened up, and we have planned our growth accordingly. There are various opportunities and we are moving along at the right pace.
Within O&G, no one can predict the price of oil. Without power and petrol, the country will not be able to develop properly and reach its full potential, which is why these sectors are bound to grow.
In five years from today, will you have grown in line with the market growth?
The recession period had affected us largely, but it was a good decision to move into the Indian market. Last year, for instance, the company grew by 45%. In 2011-2012 again, we are expecting a growth of 35 to 40%.
We are very certain of our growth with the market for the next five years; that is why we are expanding our capacities. We are thus not dependent on people and we can stick to our delivery schedules. We are bringing up that particular plant to be self sufficient and cater to the market as it grows.
Since we are holding such a large facility, we need to take care to each and every aspect right from the workers’ welfare to that of the staff and administration. The workers in India are well protected due to their work unions, so one must always have a strategy in place.
We have a mutual agreement with the Gujarat government, which will assure us of all the necessary help. Hopefully, there will be greater orders and from there on, it is all about work and god’s blessings.
|Company:||Panam Engineers Ltd|