Petroleum industry goes all guns blazing
The oil and gas industry has been instrumental in fuelling the rapid growth of the Indian economy. The petroleum and natural gas sector which includes transportation, refining and marketing of petroleum products and gas constitutes over 15 per cent of the GDP.
According to the Confederation of Indian Industry (CII), petroleum exports have also emerged as the single largest foreign exchange earner, accounting for 17.24 per cent of the total exports in 2007-08.
Growth continued in 2008-09 with the export of petroleum products touching US$ 23.63 billion during April-December 2008. In November 2008, the Cabinet Committee on Economic Affairs awarded 44 oil and gas exploration blocks under the seventh round of auction of the New Exploration Licensing Policy (Nelp-VII).
The overall number of blocks brought under exploration now exceeds 200. The allocation is likely to bring in investments worth US$ 1.5 billion. The eighth round of auction is going to be later this year.
Cement industry holds ground; all set for a year in the black
India is the second largest producer of cement in the world. Small wonder, India’s cement industry is a vital part of its economy, providing employment to more than a million people, directly or indirectly.
India has tremendous potential for development in the infrastructure and construction sector and the cement sector is expected to largely benefit from it. Some of the recent major government initiatives such as development of 98 smart cities are expected to provide a major boost to the sector.
Expecting such developments in the country and aided by suitable government foreign policies, several foreign players such as Lafarge-Holcim, Heidelberg Cement, and Vicat have invested in the country in the recent past. A significant factor which aids the growth of this sector is the ready availability of the raw materials for making cement, such as limestone and coal.
Cement demand in India is expected to increase due to government’s push for large infrastructure projects, leading to 45 million tonnes (MT) of cement needed in the next three to four years.
India’s cement demand is expected to reach 550-600 Million tonnes Per Annum (MTPA) by 2025. The housing sector is the biggest demand driver of cement, accounting for about 67 per cent of the total consumption in India. The other major consumers of cement include infrastructure at 13 per cent, commercial construction at 11 per cent and industrial construction at 9 per cent.
To meet the rise in demand, cement companies are expected to add 56 MT capacity over the next three years. The cement capacity in India may register a growth of eight per cent by next year end to 395 MT from the current level of 366 MT. It may increase further to 421 MT by the end of 2017. The country’s per capita consumption stands at around 190 kg.
The Indian cement industry is dominated by a few companies. The top 20 cement companies account for almost 70 per cent of the total cement production of the country. A total of 188 large cement plants together account for 97 per cent of the total installed capacity in the country, with 365 small plants account for the rest. Of these large cement plants, 77 are located in the states of Andhra Pradesh, Rajasthan and Tamil Nadu.
CIO India speaks to the tech heads – Alok Khanna, ED – IT, Indian Oil, Atul Rastogi, DGM – IT, GAIL, Murugesan Ganapathy, Sr. General Manager – IT, Ramco Cements and Mahendra Kumar Chaudhary, ED-CIO, ONGC, on what’s looming on the horizon for core industries. And here’s what they have to share.
What do you think about the state of the core industry in 2017?
Alok Khanna:We are very positive about the petroleum industry in 2017. We’re looking at it optimistically. We see a good demand this year.
In addition to this, the rupee has also stabilized and the economy is looking good. The energy sector is definitely going to have a profitable run this year.
Atul Rastogi: The kind of emphasis that’s being laid on the digital revolution will play an important role in the growth of the industry.
Murugesan Ganapathy: As far as the cement industry goes, our expectations are very high. We have strong hopes on a good financial year – we’re going to see a boom.
We are optimistic about 2017 working wonders for the cement industry.
Technologies to be focused on in 2017
Khanna: We’re working on most emerging technologies like AI, cognitive computing, and virtualization. We have already experimented with bots, and we have done proof-of-concepts in IoT as well.
The ambitious project we’re going to take up is the CRM project for our customer database of close to 12 crore customers.
We’re actively experimenting with AI as well, so once it matures, we’ll be able to incorporate that.
Rastogi: We are in the business of power transmission, petro-chemical manufacturing, and supply of LPG. As we are into diversified businesses, one thing that I believe will play a major role in 2017 will be our analytical capability.
For that, we have adequate platforms. What we will be focusing on primarily this year will be upgrading of skillset for our workforce.
Ganapathy: I see a lot of focus on mobility and mobile-based solutions. We’ll see all technologies being converted to mobile-based solutions.
Apart from this, visualization of data is going to gain a lot of focus. Data analytics is going to play a very important role in the near future. There’s a whole lot of data out there, and based on that, systems should be in a position to take that data and be able to analyze it.
At our organization, we’re using Ramco ERP. For analytics, we’re using a tool called Ramco Analytics, developed in-house, as a part of Ramco Systems.
We’re now trying to develop that as cloud-based technologies. We have our own datacenter where we maintain our DR.
Chaudhary: I believe data analytics will play a major role this year. Harnessing the data to derive meaningful insights is the key to leveraging technology.
It’s imperative to use analytics to make the organization more competent and efficient.
Challenges foreseen in 2017
Khanna: I believe figuring out how effectively data can be used is going to pose a major challenge for the industry. Capturing data and data storage is a part of our usual business, but we need to be able to use it and derive insights from it.
To make use of all this data that we have in store is a challenge that needs to be tackled with.
Rastogi: I see two major challenges: one is cyber security and the other is the understanding and skill requirement of people who will be working on these systems.
Ganapathy: Technologies keep changing every year. A lot of emerging technologies are coming up every year, and they cannot be ignored.
As tech leaders, we need to gear up our team to learn and adopt these technologies. It’s important for leaders to help their teams upgrade their tech skills and knowledge.
As the tech head at your organization, what would be your takeaways for your peers?
Khanna: I think CIOs should focus on adopting new technologies, because each of these technologies are bringing their own disruptive waves.
Tech leaders should be more open towards newer and emerging technologies and look for ways to incorporate them into their organizations.
Ganapathy: We need to identify the right people and help them get the right type of training. We’re not recruiting new people. With the available resources, we have to identify the right ones. It’s our job to create an interest for our employees to pick up skills in new and emerging technologies.
What impact is the GST going to have on your industry?
Khanna: The petroleum industry is definitely going to be impacted by the onset of GST. I think organizations ought to make a revamp in their infrastructure to incorporate the changes brought about by GST.
The industry has to be geared up for incorporating tax changes according to the new regime as well as the old.
Our systems will have to have provisions for both. At Indian Oil, we are already making the changes to the IT infrastructure. As far as the hardware is concerned, we are already making the changes to include the new GST tax structure.
Rastogi: I’m not in a position to comment on GST. We are not entirely sue about how GST will be playing out for the petrochemical industry.
Chaudhary: GST will play out favorably for the petroleum industry, so we are very optimistic about GST’s role in 2017.
Organizations should be geared up to incorporate the changes brought about by GST. At ONGC, we have already started making the required changes to our IT infrastructure.
Ganapathy: As a matter of fact, we’re still not very clear on how we’re going to handle all these changes. We’ll be brain-storming with our chartered accountants next week to put together a GST rollout.
We’ll also now have to figure out how to handle all the pending work orders and purchase orders.
Now, if we have 40,000 items, we’ll have to implement this in all of them, and it will be time consuming.