On Small Cap Spotlight, Goutam Debnath, Chairman & MD of Oval Engineering Projects Limited, shares Oval’s journey from a modest consultancy to a pan-India infrastructure player in oil & gas and city gas distribution. A story of scale, resilience, and building capabilities across the entire energy value chain.
Mubina Kapasi: Hello everyone and welcome to SmallCap Spotlight. I’m Mubina Kapasi. This is a channel where we put the spotlight on small cap companies and today the company that’s with us is into infrastructure and specializes in city gas distribution among many other different sectors.
Goutam Debnath: I have with me the Chairman and Managing Director of Oval Engineering Projects Limited, Mr. Goutam Debnath. Thank you so much for joining us Mr. Debnath. I think to begin with if you could introduce Oval to all of our viewers just to understand the description of the company from your own words and also the last couple of years the kind of growth milestones the company has seen.
Goutam Debnath: Thank you. Thank you for having me here. Thank you for giving this opportunity to say about our company.
Oval Projects Engineering, we started in 2012, 2013, 7th October and we started with a very humble beginning. We started as a consultancy services to we have given services to ONGC, Oil India consultancy and in the beginning period we actually given the services of site management consulting services providing manpower to them for their managing their site and all and later on we gradually taking up projects like small projects, small fabrication jobs, small EPC job in terms of plastic installation, in terms of a separator installation and separator processing, small early production system and later on gradually we also started taking small pipeline jobs. From 2017-18 we have started taking city gas distribution job also.
We developed ourselves in such a way that every value chain of gas processing and gas and oil wherever it is going after actually discovered and coming up to the surface, we are providing the services to our client. We are providing service in terms of facility development and me as a chairman of the company, we started as a founder of the company. I started my career, I’m mechanical engineer.
I started my career from this oil and gas company itself. I started with Pondular and from Pondular we have providing, provided services to Swadhyarangu and Qatar foundation also. So, I had a very big experience and large experience in terms of providing this type of services earlier also and we have provided a steam client here.
Swadhyarangu is the biggest oil producing and gas producing company and Qatar foundation also. So, in that area we have provided the services from Pondular and we have gone through different kind of challenges over there. So, that rich experience in terms of maintaining the safety standards, specification and the complexity of the project and complexity in terms of engineering, complexity in terms of construction, maintaining that world-class standard.
So, I had a big and large experience over there. So, in 2013, I realized that why not this rich experience dedicated to our nation only. So, in that way we started from northeast.
I actually belongs to northeast but it’s 20 years I’m settled down in Tiliyans here and northeast, you know, northeast is also if you see the geography of oil and gas footprint, then you can see the western region and northeast region is producing oil and gas for India in little bit southern region KG basin. In northeast also Assam and Tripura. Tripura is the largest producing state, gas producing state for ONGC and for oil India, Assam is the largest producing, gas producing state.
So, now Assam and Tripura are now full-fledged producing gas and oil over there. Now government is pushing pumping money to connecting all eight northeast state with the Paradip, this Orissa to bring the LNG and all. So, we actually catering the services in these areas majorly but slowly we have started catering services to other areas also.
We have executed project in Jharkhand, a few projects in Bihar also. Now we are executing one milestone projects, RTP projects in Gujarat, we are executing projects in Bombay, we are executing projects in Kerala also and obviously in Assam and Tripura. So, starting from this area we have spread over whole pan-India basis.
Now we developed such a good team with us that we can cater all over India as well as we are ready to take up ourself in abroad also. Presently we are catering 11 states and giving services to 1GCE, Oil India, HPYL, GAIN, IOCL, all PSU companies, BBCL itself.
Mubina Kapasi: See the oil and gas sector is almost like an oligopolistic kind of situation right, there aren’t that many players.
But then at the same time you have L&T which is I imagine the biggest competitor out there catering to this particular space. So, I just wanted to understand that how would market dynamics work because you’re in infrastructure catering to the oil and gas sector primarily. So, how does it work, I mean how do contracts work, how do people, how do clients approach you and right now you’re only in India, is that correct?
Goutam Debnath: Yeah, right now only in India. We are planning for UAE and this GCC countries but presently we are in India. This in India basically PSU actually comes with this tendering method you know. So, if there is any kind of facility requirement over there, they will come with the tendering requirement.
So, if your refinery is there, they will split up the refinery in a seven to eight set segment of the plan model 1, model 2, model 3, model 4, model 5 like that. Model 1 there’s a separator you need, model 2 is you know this storage facility, model 3 would be any kind of refining facility and all. So, that each model will come with each tender you know.
So, we participate in those tenders and if you are qualified in terms of technically, they will go for the technical evaluation, how much experience you have, whatever the criteria they mentioned in the tender, how much experience you have previously to have in execution of this kind of project. So, if you qualify in technically, they will open up the commercial bid. Even commercial, they will go for a commercial evaluation and award the tender.
So, market is, getting into this market is very tough but because normal you know the EPC contractor who are executing civil jobs and other small jobs, they cannot enter into oil and gas sector. Because oil and gas sector is still maintaining a lot of standard specification, that is the basic requirement of them. So, that is why they go for the technical evaluation very thoroughly and they set up their criteria like that.
You have to go through that kind of criteria and the criteria basically mended upon that if you have the support one, if you have the experience of 3000 kiloliter storage facility development. So, you will get qualified in 6000 kiloliters. The 50 percent criteria you have to match previous, you have to have the previous experience.
And our strength is that over such in last 12 years, over developed, our whole team has developed themselves that we have experienced in each and every value chain of gas and well. After processing the filter well through pipeline, after that it is a terminal station, terminal station before going to the client and whole segments providing plant construction, providing, giving the services like engineering and procurement services over there and laying of pipeline and building up terminal station, all these activities we are actually doing. And now recently from last 10 years, CGD is in the market, city gas distribution, government is pushing like anything that you have to have the CGD development, all VSU has mandate.
Now in city gas distribution itself, we have rich experience in terms of building up CHG stations, pipeline, in terms of DPNG connections and all. So, in every value chain, we maintained ourselves in such a way that we do not have to think for any kind of, wait for any kind of market, that we are flexible enough to get the projects and execute in any segment of value, any segment of this chain. Our team is actually expert on that.
If you give us the plant EPC job, we can execute those type of project also. If you give the CNG station job, we can do that type of job also. If you give the pipeline job, we are expert in that also.
So, my team is 150-146 engineers with us. My whole team is expert in providing services in every value chain of oil and gas.
Mubina Kapasi: You mentioned briefly that you need to have a certain amount of work experience to qualify for certain kind of projects.
So, tell me, started off, of course, it is a brand new venture, right? You as an entity, as OVIL, when you formed, obviously, there wasn’t much in terms of this particular corporation’s experience. So, how were those earlier days? Was it, I know you mentioned you started off with consultancy. So, at that time, you were not actively involved in execution.
So, is that something that laid the foundations for you to qualify for many of the projects that you are?
Goutam Debnath: Yes. Yes, correctly. You correctly said that, mentioned that the consultancy services, first job we took as an EPC service is a 2.5 crore job as an EPC job on FlareStack.
At that time, the criteria was who has the experience of that FlareStack installation or installation construction or EPC job of FlareStack or any kind of experience having that consultancy background who can also give in the services of that. So, he also could be qualified. We took that experience and qualified that.
Mubina Kapasi: What are the biggest challenges? I mean, you know, you’re the chairman and managing director, OVIL is your brainchild and I’m sure it’s not always alone. There’s always a group of people. But yeah, I mean, individually, I have to ask you, what were the biggest challenges when scaling up, when growing, when making OVIL to what it is today? Challenges.
Goutam Debnath: Obviously, there are a lot of challenges we face and overcome those. I found the challenges of developing a skilled manpower group, which we have now. We have 500 people with us who are skilled enough.
You know, starting in these areas in northeast, it’s very difficult and executive project because people are not here and not accustomed with this type of projects. Most of the people who are in the skilled workforce, they are actually experienced with normal civil construction jobs and all. So, skill them and giving them training and all and accustomed with this type of projects, EPC, because northeast, earlier people used to come from outside, L&T, Kolpataru.
All big players are coming here and executing the projects. But from this place and educating the people, train the people and building up a team, that was the biggest challenge. Now, that challenge is overcome very nicely.
And this is now my biggest strength. This team is with us. Our attrition rate is negligible.
Mubina Kapasi: You know, the entire oil and gas space, city gas distribution space, there are a lot of changes that we have seen in the last decade, obviously, policy related in terms of pricing. Of course, that may not be directly connected to you. But to a certain extent, it is because it also depends on how much Capex oil and gas companies are doing, which would indirectly affect you.
So, I just wanted to know, what’s your view on the industry overall? How are you viewing it? Where do you think it’s heading?
Goutam Debnath: See, India, actually, you have gone through a lot of news in last that our government is pushing very hard to move for more and more oil and gas exploration. You know, we are 88% while we are importing from outside, as well as we are producing 50% gas only as our requirement. So, we have to go for now.
Government is coming with a new innovative ideas. Earlier, it was very, very limited to oil and gas PSUs like ONGCO in India. They used to give this land and lease agreement to those people only.
Then the government allowed for private parties. And a lot of private parties are coming. They are going for exploration and all.
New area has developed. New area, actually, this Andaman, you know, this island. So, they have come with the biggest exploration.
Jharkhand areas, they are going for shale gas exploration. So, this kind of lot of activities are going on. I feel that our Indian government will, after five years of time, we can reduce at least 50% of our import from outside.
So, that and huge investments are there. You know, alone in northeast, the government is pumping money 1 lakh crore for only oil and gas development. Only 1 lakh crore for northeast.
And the majority, 90% money is Tripura and Assam for developing them. And this pipeline grid, this grid is connected to the Paradeep. So, if there is any kind of deficiency in the gas, from this side, then from Paradeep to directly connected to the northeast.
So, government is very positive. And I am very positive as an industry. I’m very hopeful that we will be having a lot of jobs in the future.
And like, well, a lot of people is required, actually, to cater that market.
Mubina Kapasi: Okay, excellent. If you could walk us through some projects that you may have done, you know, something very challenging that you may have really overcome, maybe geographical, maybe in terms of the nature of project, if you could share something like that, of what Oval has managed to execute.
Goutam Debnath: My first APC, big job, biggest job was that Sonam Muraji CS. That was the biggest challenge that L&D was approached to execute this job. And they bidded for 320 crore that time, year of 2016.
And we took that job phase wise, and we have completed that job by 120 crore, compared to 320 to 120. So, we did it L&D. And even EIL was approached to get the job on nomination base from ONGC.
But ONGC supported us and ONGC believed in us. And they have given one job after that, they have repeated the order and all. So, that was biggest challenge because in terms of geographically also that the area was very remote and there are a lot of objections from the landowners to give the land to the ONGC.
So, we sorted out all those issues also. And we overcome that challenges and we execute the project nicely and for that Sonam Muraji CS that 104 megawatt power plant is running today. And our nation has earned hefty amount of money for that GCS.
We are proud that we have contributed our services to that ONGC and later on power companies. And another good job we have done in Jharkhand, there is early production system, the first early production system in Jharkhand for shale gas. And there, you know, the trapped gas in coal, that gas processing center we have developed in Jharkhand.
That was a very challenging job and we have completed very nicely on time.
Mubina Kapasi: Okay, let’s talk a little bit about the materials you all work with, commodities, and I’m sure a lot to do with steel, iron ore, etc. How do you deal with the kind of vagaries that come about, especially because, you know, once you bid for a project, there’s no room for change in the bid price.
But of course, there’s always room for change in commodities. These projects are sometimes long stretch.
Goutam Debnath: You are correct. You are correct. And we are keeping actually contingency, you know, when we are bidding for it, any kind of, we are keeping contingency, certain percentage in our bid so that we can tackle those situation in further future.
Mubina Kapasi: Okay, understood. Now, you went public recently. So I want to know that what was the motivation for that? I mean, what do you think you’re being able to do right now that you couldn’t do when you were privately held or not?
Goutam Debnath: I feel that, you know, when you’re in public, the confidence level of investors or people around you that actually boosted up. And in the eyes of your client, in the eyes of your investors, in the eyes of, you know, banks also who are providing you the debt, they are also, because listing is not a small thing, listing you have to go through, you have to go through all kind of, you know, compliances and all.
So now you have overcome all the compliances and people started believing you, raising capital, working capital for any further future contracts and all. It is very easy after listing. Before listing, you have to go to only the bank and bank.
As much as you have, you can give your collateral, they can give you the, you know, limit. So after listing, that issue is certainly resolved and we are actually going for, now we are going for any kind of enhancement in our limit. In bank, bank are easily actually accepting our proposal and all.
That is very, and clients are also looking at us very nicely and they’re very safe in terms of, you know, if you are not listed and you’re private and you are dealing with the PSUR government, the government is to go through a lot of, you know, checks and balance. So in client size also, we are now listed and they are cooperating us better, in a better way compared to earlier cooperation.
Mubina Kapasi: Okay. So in a way, it’s also about a certain image that has to be maintained to be able to grab some of the bigger, more prestigious projects as well.
Goutam Debnath: Yeah, yeah.
Mubina Kapasi: Okay. I’d like to know if, I know you mentioned Northeast is very big for you and of course, you will look for opportunities, but I want to know that what kind of capex are you looking at? Because if you have ambitions to go to the Middle East and, you know, the emirate markets, so what is it in terms of capability that you will have to amplify where you may not be at right now currently?
Goutam Debnath: We are actually capable enough to execute the projects because I have that experience with me in execution in GCC countries, in Middle East countries, you know, UAE and Qatar and all. And so, obviously, Saudi is a similar one. Saudi is now investing huge in their new projects and all.
We have that capability in execution terms, but definitely we will not go alone. We will have local partners over there who can support us in terms of, you know, a lot of regulations to be maintained over there in terms of providing services, taking manpower from India and all. All Indian manpower is only working over there, not outside manpower, either Chinese or Indian.
So, we need to have that kind of support from local entrepreneurs over there in terms of funding as well as in terms of, you know, to handle the local issues. We’ll not go alone. We’ll have that kind of joint venture with some local entrepreneurs over there.
Mubina Kapasi: Okay, where do you see Oval maybe in the next seven to eight-odd years, either in terms of top line? Because I’m seeing you’re trailing 12 months and you’ve managed to double it. So, how do you see this move? What were the factors that contributed to the last 12 months? And if you could share some ambition you have for Oval.
Goutam Debnath: We have actually planned for 2029 to 2030. We are planning for 30% growth every year, CAGR 30% every year, and maintaining more than 18%, you know, EBITDA down the line. So, the top line and bottom line we have fixed ourselves. And 2029 and 2030, we can achieve this 500 crore top line.
That’s my ambition. All right, super. And I know you mentioned that you have a team of engineers, highly skilled engineers.
Mubina Kapasi: If I could know who is there in your core team to help you, you know, achieve this ambition, 30% top line, 30% bottom line, and of course, eventually to help you scale to international markets as well, which I’m sure will happen eventually. So, I want to know who is there in your top management team assisting you, working closely with you for this.
Goutam Debnath: We have seven core members with us who are actually heading different departments.
Somebody is heading mechanical, somebody’s electrical, somebody’s heading civil, and finance is heading by another person. So, all members are very important for me. And I can’t take anybody’s name, you know.
All are important for me. But including me, we are eight persons who are actually leading this organization for future prospects.
Mubina Kapasi: All right. Well, we wish you all the very best, Mr. Debnath. Thank you once again for joining us today on SmallCap Spotlight. Thank you.
Thank you. Thank you. Thank you.
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