Creating a niche in storage tank engineering

This is the story of a commerce graduate, hailing from West Bengal, who started his professional life as an employee of a construction company in Mumbai and made his mark as an entrepreneur in Gujarat. Interestingly, he sold a majority stake in the company he started to a joint venture of a government-owned oil company, but still runs the business.

Asim Chandra was expected to find himself a typical 9-to-5 job and settle down given his family background. But he had different ideas. He started off with a construction company in Mumbai in 1980, moved to Vadodara in 1984 to join an engineering and construction company, where he learnt the ropes for his journey as an entrepreneur.

The 12 years that Chandra spent with the Vadodara-based company helped him, for it was his employer who encouraged him when he wanted to start a business on his own. The biggest support came from his wife.

“I am still indebted to my ex-employer who supported me and gave me the machinery to complete my assignment and fulfil my aspirations,” says Chandra, now in his late 50s.

“The biggest support was from my wife Sukla," he says. In 1996, he set up Anwesha Engineering and Construction Pvt Ltd, named after his daughter. His first contract was to fabricate a storage tank with an order value of ₹17,000.

There has been no looking back for him. His commitment and cost-effective execution of work opened the doors of even PSUs.

“I got my first PSU job on a nomination basis.” Chandra was the lowest bidder for a job and delivered well within the schedule. This earned him a reputation and expertise in the niche area of storage tanks engineering. He bagged orders from private sector majors, including Birla Cellulose, Nirma and Niko.

A little over a decade after he started his venture, Chandra felt he needed to rope in a partner to bring in systems and processes and thereby help the business grow. His ambition was to make his company big both in terms of size and value.

With the assistance of an adviser and an investment banker, discussions began with Indian Oiltanking Ltd (now IOT Infrastructure & Energy Services Ltd), a joint venture of Indian Oil Corporation Ltd (IOC), and a German oil tank maker, Oiltanking GmbH. In January 2008, executives from IOT came for due-diligence and valuation of the company. The level of corporate governance and financial compliance was such that the entire process was concluded in 48 hours, says Chandra.

IOT picked up an 81 per cent stake for ₹24.30 crore based on the then valuation of the company at ₹30 crore. Then IOT Anwesha Engineering and Construction Ltd (IOTAEC) was born that went on to become a multi-bagger for its investor and Chandra. He retained management control of the company that has 600-plus workforce.

The company posted an operating profit of around ₹55 crore on a turnover of ₹585 crore for 2014-15.

“More than the company name, clients remember my work,” says Chandra.

Notably, IOT made no financial contribution to IOTAEC and restricted itself to strategic support. Estimates based on the orders on hand and in the pipeline suggest IOTAEC is set to achieve sales of ₹700-750 crore with operating profit of around ₹75 crore in 2015-16.

Considering the investment opportunities in oil & gas sector and the company’s existing order position and brand value, analysts peg the company's valuation at around ₹500 crore.

This translates into over 15 times jump in the valuation of stakes held by the joint venture and Chandra.

With eyes set on a ₹2,000-crore turnover by 2020, Chandra is building India's first common user terminal for oil PSUs at Raipur. Two more are coming up at Tata Nagar and Nagpur.

Chandra is now eyeing the gas sector for opportunities. “Gas is an important economic driver. We recently finished the Kakinada-Mallavaram project. Similar gas projects will come up for pipeline and processing. So we are planning to go into those areas," Chandra says, adding that the company may also explore the civil segment of infrastructure projects such as dams, irrigation projects, canals, water pipelines and pumping stations.

“My target is to reduce the revenue share of oil & gas sector from 90 per cent now to 70 per cent in the next two years; the balance will come from other sectors,” Chandra says.

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