'MSMEs in the Oil & Gas Sector Needs Special Attention by the Govt.'

A leading manufacturer of wire line & well service equipment, Gas lift equipments, Downhole tools and large OD casing connectors -- United Drilling Tools Ltd. has set an example of being an Indian company successfully working globally with it’s production facilities trimmed to customer's particular specifications to international standards in technical collaboration with reputed manufacturers of Europe and America.

In an exclusive interaction with Faiz Askari of SMEStreet, Mr Pramod Gupta, Managing Director of United Drilling Tools Ltd. expressed his views and perspective on Indian oil & gas sector. He also highlighted his experience of being part of this industry for more than two decades and pointed out some key industry concerns for today.

The edited excerpts:

As an entrepreneur, what are the key opportunities you foresee in the Indian oil & gas sector?

I foresee tremendous opportunity for an entrepreneur in Indian Oil and Gas Sector especially for MSME Industries. Indian Oil and Gas sector is purchasing more than 1 lac Crores rupees worth of equipment and services out of which approx. 50-60 % is being imported from foreign countries. A substantial portion of these equipment and services can be indigenized and that is why an entrepreneur can find a lot of opportunities.

You have been working in the industry for more than two decades, what are the biggest milestones you have achieved for your business?

We are primarily in Oil and Gas upstream sector i.e. oil exploration sector. We are manufacturing oil drilling machines and equipment used in oil exploration in on shore and off shore. We have indigenized several oil field machinery and equipments which otherwise oil companies would be importing from United States, European and Chinese companies. Further, we are manufacturing and supplying these items at competitive prices as compared to foreign companies. Therefore, we have not only saved foreign exchange by indigenizing these products but also save cost to Oil companies in India. We have also introduced new and better designs of these products through our R&D department so that they are most suitable for Indian conditions. This has also resulted into substantial rig time saving which comes to approximately 3.7 million USD per year for only one oil company i.e. ONGC. There are similar savings for other oil companies in our developing these products also. Last but not least, we are employing approximately 400 people whose livelihood is linked with our running this plant.

What are the key challenges that this industry is facing?

The major challenge which industry is facing is that oil companies are interested in purchasing foreign products even at higher prices and not giving proper encouragement to MSME industry in India. Inspite of Govt. of India order dated 23.03.2012 which has become mandatory on April 1^st, 2015, most of the Oil PSUs are not interested in implementing Govt. order and are trying to find ways and means not to follow the Govt Order.

As an MSME in the high end oil & gas industry, what are your key market observations?

No one in Oil PSUs wants to encourage MSME in its true spirit as indicated by us in our point no. 3. Also most of the PSUs in Oil exploration are discouraging MSMEs and are trying to get out of minimum requirement of 20% purchase as per Govt. Order dated 23.03.2012 by providing vague and incorrect information to MSME Ministry. Therefore, it is very difficult for MSME industry to be successful in the present scenario in Oil and Gas industry until and unless Govt. take some positive steps to implement the Govt. order.

What are the key flagship services you are offering to your customers?

We are manufacturing and supplying high-tech products, machines and tools used in oil exploration. Some of them are fast make-up high performance connectors, Wire Line Winches, Gas Lift Valve, Down Hole Tools. We are a qualified ISO 9001, 14001, OHSAS 18001 and API certified company and maintain quality standard specified by above.

Who are United Drilling Tools Ltd. flagship customers? Since you are working with your clients for a great period of time. Please share your mantra of such wonderful customer retention?

Our flagship customers are ONGC, Oil India, Jindal Saw, Welspan, Schlumberger, Baker Hughes, British Gas India, Delcom Oil Field Services, PT Rafi Putera and American Completion Tools. We are the only supplier of these products in India and no other company is manufacturing these products in India. Therefore, we are saving substantial amount of foreign exchange by supplying these products to Oil Industries. Our mantra for such wonderful customer retention is supplying international quality products at competitive prices within stated delivery period.

Please mention top three challenges that your industry is facing? Also suggest the best solution which can solve these challenges?

The top three challenges which our industry is facing are as follows.

(i)                Govt. PSUs are very reluctant in purchasing equipment and machinery required by them from MSMEs inspite of their good quality, competitive prices and in time delivery.

(ii)              Resistance by PSU’s in implementing Ministry of MSME Govt. Order dated 23.03.2012 even though it has become mandatory from April 1st, 2015.

(iii)            Preference of PSUs to procure equipment from foreign sources instead of developing Indian sources specially MSEs.

The best solution to solve these challenges is to strictly enforce Govt. order dated 23.03.2012 since it has become mandatory from April 1^st, 2015. In case where PSUs are not able to meet their targets, they should invite MSME’s, who can develop and supply the equipments needed by them and explore ways to develop these items in MSME’s by giving them incentives. Further, grievances of MSME’s should be addressed sympathetically to drive at a common solution within the stipulated time period.

Can you please highlight some of the business roadmap for next 12 months?

We are planning to penetrate more extensively in Indian market by developing new products and getting into providing Oil field services. Further, we are also planning to penetrate into world markets by providing international quality products at competitive prices.