FINAL

EIL: CREATION OF A NATIONAL ASSET

It was soon after Indian Independence. The country was

consumed with the excitement of economic development
fueled by the vision, drive and contagious idealism of
Pandit Nehru. India had started to build its industrial
base, reflective of Nehru's passion for Science and
Technology. The call for Self Reliance was born to
buttress an independent foreign policy, amongst other
things. Against this background I was completing my
engineering at MIT. In between semesters I came home
and had the privilege of meeting Pandit Nehru,
Shastriji, Kidwai Saheb, Dr. Homi Bhabha and Dr. S.S.
Bhatnagar. Above all I was inspired by my father’s
ideals. In 1955, I joined Caltex in New York, as one of
four Indian engineers, to get involved in the
implementation of their Vizag refinery project. It was
only natural that during my first week in Caltex's
design office in New York, the question arose, "Why
can't we do this in India?".

This thought became an obsession as I went through the

design, construction and commissioning phases of the
Vizag refinery. In 1957 I quit Caltex to join Exxon in
Mumbai. While in Delhi I met with the Minister for
Petroleum, Mr. Keshav Dev Malaviya and mentioned to him
I was one of four Indian engineers who had been exposed
to refinery design for the first time. Would he support
the establishment of an Indian capability for refinery
design? With his vision for a public sector oil
industry, he reacted enthusiastically. He mentioned
that Gauhati and Barauni refinery projects did not
provide for participation of Indian engineers in their
design work. However, this should be possible in
respect of the Gujarat refinery, a few years down the
road.
In 1962, while with Exxon, I got a call from the MD of
Indian Refineries Ltd., Mr. P.R. Nayak, a highly
regarded member of the ICS. He inquired of my interest
to join Indian Refineries and lead a team of eight
engineers to the USSR to participate in the Detailed
Project Report of the 2 MTA Koyali refineries, with the
objective of maximizing the use of Indian equipment/
materials. Soon thereafter I was facing -40% C weather
in Moscow with a team that included Chandhok, Dixit,
Palit, Raghavan and Govinda. Later in the year
Malaviyaji visited Moscow for discussions regarding the
expansion of the Koyali Refinery and asked me, "Are you
ready to design the next refinery?" I replied that our
team should first do the detailed engineering in Baroda
for the off-sites of the Koyali refinery project. To
enable this it would be necessary for a small group of
Russian design specialists to move to Baroda to provide
supervision. Malaviyaji was to meet Prime Minister
Kosygin the next day and asked me to provide him a
written request for this purpose. Mr. Kosygin agreed.

In the process I incurred the displeasure of Mr. Nayak.

He felt that I should have first checked with him. He
also saw considerable risk to the refinery project
schedule since refinery design would be done in India
for the first time. On completion of our team’s work in
the Moscow and Leningrad design institutes, we returned
to India in 1963. The Central Design Organization (CDO)
got started in Baroda, as part of the Gujarat Refinery
Project, under the overall management of Gen. Sardanand
Singh. CDO was the forerunner to EIL. CDO proved to be
a great success and Mr. Nayak was now persuaded that a
separate design/construction company should be
established to implement refinery projects. He asked me
to evaluate three candidates for a joint venture
company with GOI, viz. Bechtel, Snam Progetti and Brown
& Root. I recommended Bechtel because of the depth of
its capabilities across several industrial sectors.
EIL was incorporated in New Delhi with a paid up
capital of Rs 25 lakhs, on March 15, 1965. This was 10
years after the start of a dream in New York that got
triggered with the question, “Why not in India?”. EIL
was a joint venture between GOI and Bechtel, with GOI
owning 51% and a Bechtel MD in charge.

On completion of my responsibilities for the overall

management of CDO’s work and also the mechanical/
electrical/instrumentation installation for the 2MTA
refinery, I joined EIL at its inception. Others on
board were a Bechtel Manager of Engineering, MD Raff
Dorman and Avtar Singh Sandhu. EIL’s Chairman was Mr.
Nayak, then Secretary of the Petroleum Ministry. Our
first office was located in a small Golf Links house.
Following the signing of a contract for the EPC of
Madras Refinery’s off-sites (job 1007) EIL’s office
moved to the Allahabad Bank Building on Parliament
Street. Our initial lease for 20,000 square feet had to
be halved soon thereafter since other work expected did
not materialize. Cash flow was a problem and I went
without salary for nine months. About this time EIL had
assembled its core management team; Dixit, Raghavan,
Chandhok, Palit, Bery, Sharangpani, Dawda, Grover, B.R
Chowdhary, Malhotra, Mukhopadhya, Agarwalla and Kocher,
with Pargal and Mitra joining later. These were the
stalwarts who built the foundation of EIL. They, in
turn, brought on board outstanding supervisory talent
in the various disciplines. At the junior levels EIL
was able to attract from the best available in the
country, including several President’s Gold Medalists.
Most of the staff belonged to Engineering and
Construction. While Raghavan, Sandhu and Grover, in
turn organized a highly capable Engineering
organization, Dowda did likewise for Construction. All
told, this was a world-class management team.
A few months after the Madras off-sites contract we
signed a sub-contract (job 1015) with Snam Progetti for
the off-sites engineering of Lube India Ltd.’s
lubricant plant in Mumbai. To keep overheads low, the
new MD, Buck Forney rented a ramshackle office near a
dhobi ghat in Worli, Mumbai! When Franco Salembini,
President of Snam Progetti visited the office he
immediately directed that we move out to a better place
! The office then moved to its present location in
Nirmal building, Churchgate.

The EIL joint venture ran a rocky course, because of

differences between the two parties. Bechtel had failed
in its efforts to sell a package of five fertilizer
plants to the Government and furthermore wanted EIL to
sub-contract much of its work to San Francisco. In
contrast, GOI’s emphasis was on the rapid development
of indigenous capabilities. Additional work was not
forthcoming. The then petroleum ministry, Mr. O.V
Alagesan asked my advise as to whether Bechtel should
continue. I explained why this was not in EIL’s
interest. As it turned out, the joint venture ended in
1967. It must however be said to Bechtel’s credit that
they got EIL started on a sound commercial basis, in
sharp contrast to the other public sector design
organizations. This proved enormously beneficial to
EIL’s future development. As Bechtel pulled out, the
Petroleum Secretary suggested that perhaps we needed a
new overseas partner. I strongly felt that this, as
before, would inhibit our development. Instead, we
should be free to select the best possible overseas
collaborators, on a job-to-job basis, on competitive
terms. Of course this meant running the risk of
shutting down, in case we could not maintain financial
viability.

The next two years saw Mr. M.A Rao, retired Railway
Board Chairman, as EIL’s CMD. By then we had moved to
the PTI building on Parliament Street. With Bechtel
gone, it was a huge challenge for a band of sixty odd
engineers to command credibility. The only immediate
job prospect was IOC’s coke calcination plant at
Barauni on a LSTK basis. We had to win this job in
order to survive. Our competition was McNeilly-Bird, an
equipment supplier. IOC determined that theirs was the
lower bid. I saw the Petroleum Minister, Mr. Ashok
Mehta and convinced him that EIL, as a design company
would be a better choice from the standpoint of
developing indigenous know-how. At a meeting called by
the Minister and attended by the IOC MD, a surprised
Petroleum Secretary and me, the Minister asked whether
EIL could do the job at a lower price than McNeilly
Bird. Their price was Rs 2 lakhs lower than ours. I
dropped our price by Rs. 3 lakhs and the contract was
EIL’s. Since we were obliged to extend IOC unlimited
performance guarantees, we had to press our equipment
supplier AVB to oversize the equipment by a
considerable margin. We lived to see another day and
the project turned out to be an outstanding success.

We were now successful in getting other work. Our

Government ownership, combined with the fact that the
jobs we sought were Government owned, helped us get the
support of the best overseas specialist companies.
Thus, we were awarded the Cochin refinery expansion
job, supported by Badger. We outbid Parsons, Mumbai,
and they were obliged to shut down their Indian
operations. Earlier, Lummus, Mumbai, had done likewise.
We targeted the study for the dry dock in Cochin. I saw
the Chairman of Cochin Port Trust, who laughing asked,
‘what experience do you have in this field?’ I
mentioned that we would obtain the support of an
experienced overseas company. We bid with Entrepose,
France, in competition against RPT of UK. It was only
after the intervention of Mr. V.K.R.V. Rao, Minister of
Transport, that we were awarded the study on the
grounds that we would develop indigenous expertise. The
intervention came only after the minister had sent his
Joint Secretary to visit EIL to make sure that the
company really existed! The study was performed
successfully under the management of T.K.D. Munshi.

Still hungry for work, we bid for the brewery facility

of Punjab State Industrial Corporation under
Mr.Tejinder Khanna, presently Delhi’s Lieutenant
Governor. We worked with Danish collaboration,
including the services of a brewmaster. The beer that
flowed out proved very popular. Not to be left behind,
the Haryana Government contracted with us to implement
a similar brewery and this was equally successful. The
project manager for these jobs was Prakash.

Meantime, Mr. Lovraj Kumar had been appointed Advisor,

Petrochemicals in the Ministry. He was very forward
thinking and I had known him since our days in
Allahabad University. He was negotiating an agreement
with Krupp of Germany for the establishment of an
Aromatics plant at Koyali. He asked whether EIL would
be interested in engineering the plant to Krupps
process design. This was a Godsend and stabilized EIL
operations for the first time. The job was completed
very successfully under Bery’s leadership. We had now
not only broken through the process plants market and
survived but had also stabilized our operations. Soon
thereafter Loveraj Kumar’s negotiations with several
international petrochemical companies for the
establishment of an ethylene complex at Koyali ended in
failure. They could not agree to GOI’s terms. He was
then able to get GOI to allocate enough foreign
exchange to buy the basic design of the various process
units from different licensors. EIL contracted with the
newly formed IPCL to engineer the entire ethylene
complex under the leadership of Dixit. This was
eminently successful, despite its enormous technical
complexity. EIL’s future was now secure.

By this time the Haldia Refinery Project started to

develop on the basis of French financing and under the
technical leadership of Technip. We signed a contract
with IOC for the EPC of the fuels portion of the
refinery, under Technip’s technical supervision. This
included the process design of Atmospheric/Vacuum
units. IIP/IFP was to provide licensor information for
the cat reforming and HDS units. We had to compete
against IIP for the process packages of the licensed
units. We quoted zero cost to IOC. We won the job, to
Dr. Ahluwalia’s, (IIP’s Director) considerable
consternation. This marked our entry into the field of
process design. Later, I tried to pacify Dr. Navarre,
President of IFP in Paris, carrying with me presents
from EIL. He was not amused and accused me of getting
the job on the basis of salesmanship only. The entire
EPC project was completed successfully under the
management of Sharangpani.

On Mr. Rao’s retirement in 1969, I was appointed CMD.

Before this I had to overcome the reservations of the
bureaucracy that I was too young for this job. This
included furnishing the Prime Minister’s office, at
their request, with examples of young CEOs in other
countries. I was interviewed for the job by a Committee
of GOI Secretaries. It was a brief interview.

We made further inroads into the petrochemical field by

successfully implementing a caprolactum project for
GSFC. Before award of the contract I recall making a
presentation to the GSFC Board that consisted of both
State officials and well known businessmen.

EIL soon signed licensing agreements with Foster

Wheeler for the design of process heaters, Lummus for
heat exchangers and Hydronyl for distillation trays.
This lead to the formation of the HMT department under
Chandhok and was very successful. This was part of
EIL’s deliberate effort to develop and maximize the
supply of Indian equipment in order to reduce the
country’s dependence on foreign credit. Such dependence
also limited the scope of EIL’s engineering due to the
inevitable involvement of an overseas engineering
company. At the same time we used every possible
opportunity to send our engineers to these companies to
participate in their share of the work. EIL’s
collaboration agreements were criticized by some left-
leaning members of the Congress Party. I invited Mrs.
Gandhi’s attention to this and was assured that she
would handle any political fallout.

As part of our diversification strategy, we now

targeted non-ferrous plants. I invited Mr. Mohan
Kumarmangalam, the concerned Minister to visit EIL’s
PTI office. He was very impressed with both my
presentation and the functionality of EIL’s office.
That evening, in his speech to the Delhi Rotary Club,
he spoke of EIL in glowing terms. This was followed by
engineering contracts for Hindustan Copper and
Hindustan Zinc and marked our entry to the non-ferrous
field.

In 1972 I was offered the Chairmanship of ONGC and also

Membership of the Planning Commission. I elected to go
with the Planning Commission, with Mrs. Gandhi agreeing
to my also remaining CMD, EIL which now got upgraded to
an A category PSE from a B category. I had two other
colleagues on the Commission, both eminent economists.
My portfolio comprised Industry and Minerals, Power,
Transport, Communications and Science and Technology.
Soon thereafter crude oil prices experienced their
first hike. This upset the projections being made for
the fifth Five Year Plan. Mrs. Gandhi consulted the
Commission Members. I proposed that every effort be
made to increase production from investments already
made in the public sector. The Simla session of the
AICC passed a resolution to the effect that an Action
Committee be formed to improve the performance of the
Public Sector Enterprises. I was appointed its Chairman
and invited the following to join me:
V. Rajadhakshaya, Chairman, Hindustan Lever; K.M.
George, Chairman, AVB; C.P. Shrivastava, Chairman,
Shipping Corporation; P.C. Lal, retired Air Force
Chief; Nitish Dey, IIM, Calcutta and P. Fernandes,
Secretary, BPE. We conducted a management cum
operations audit of major PSEs, excluding ONGC. For
each PSE a two page report was submitted to Prime
Minister and a more detailed one to the Cabinet
Committee for PSEs. We had the full support of the
government. Our recommendations were approved and
rapidly implemented. The Action Committee was able to
help in turning the aggregate performance of the PSEs
from loss to profit within two years. An important
recommendation of the Action Committee that was
approved by the Prime Minister was the constitution of
the PSEB to select CEOs for the PSEs. To start with
then PSEB consisted of S. Moolgaokar of Tata’s,
Rajadhakshaya, George, P.C. Lal and Fernandes of BPE.

Concurrently with the Action Committee, the Malaviya

ONGC Review Committee was conducting its examination of
ONGC. As this Committee’s member, I had the opportunity
to review ONGC’s performance. Among the decisions taken
was the restructuring of ONGC and this provided for its
Offshore Operations as a separate division.

Soon thereafter the Planning Commission Members

presented the Fifth Five Year Plan to the Cabinet. As
part of my presentation, I put forth the case for the
development of Bombay High, then under exploratory
investigation with the support of the French. It became
apparent that earlier Mrs. Gandhi had been advised that
there was no oil to be found offshore. The Fifth Plan
was approved by the Cabinet and later by the National
Development Council.

I now met with N.B. Prasad, Chairman, ONGC. While

discussing his plans for Bombay High development, he
mentioned that he would like EIL to perform the design/
engineering for ONGC’s offshore facilities. He did not
seem satisfied with the performance of ONGC’s in-house
design capability. This provided the opportunity for
which EIL had been waiting since A.K. Malhotra had
joined in 1970. EIL’s Ocean Engineering Department was
now formed under Malhotra’s capable leadership. He
rapidly developed the company’s offshore capabilities
and workload, with the support of Crest, Inc.,USA This
involved highly sophisticated design for the offshore
facilities of Bombay High and later supervision of an
offshore terminal at Salaya. Because of his proclivity
for strategic thinking, Malhotra was also assigned
Corporate Planning. The newly formed Systems
Engineering capability was also put under his charge.

Special mention needs to be made of Dr. Mitra’s and Dr.

Pargal’s induction into EIL. At the suggestion of
Loveraj Kumar, I met Mitra in The Hague, where he was
employed with Shell as their expert in the maintenance
Shell refineries worldwide. I persuaded him to return
to India and join EIL, with the objective of
establishing a strong capability for providing
specialized maintenance services to IOC. He agreed, but
Dasgupta, MD of IOC’s Refining Division proved to be
very negative. This was a big opportunity lost to the
country. I entrusted Mitra with the overall management
of Process Design and front-end functions, including
our newly established R&D capability under Mukhopadhya
who made an outstanding contribution. Dr. Pargal, who
had earlier been my colleague at Caltex and later
joined ICI, was assigned overall charge of services
relating to project execution. Both Mitra and Pargal
provided invaluable support as I divided my time
between EIL and the Planning Commission.

By this time EIL was strongly established as an

engineering and construction company known outside
India as well. EIL figured prominently In Hydrocarbon
Processing’s list of worldwide job awards. Overseas, we
had provided limited support to Snam Progetti in their
engineering of the Shiraz and Tabriz refineries in
Iran. In Iraq we had signed an agreement with SOIDC, a
state owned organization providing engineering services
to the country’s refining industry. Several EIL
engineers were assigned for on-site support to SOIDC.
India had close relations with Iraq and was the first
country to purchase their nationalized crude oil. As
Member of the Planning Commission, I represented India
on the Indo-Iraq Joint Commission for Economic Co-
operation. On one occasion when I was in discussion
with Iraq’s Oil Minister, Mr Hamadi, in his office in
Bagdad, he got a call from President Saddam Hussain who
wished to meet with me. This was a good meeting and was
given wide publicity in the local papers. All this
helped EIL in Iraq and also IOC in the purchase of
crude oil. About this time I got a letter from
Bechtel’s Raff Dorman that they would be interested in
getting back with EIL. But this was not possible. Also,
Hans Uhde met me, at the suggestion of the then
Petroleum Minister, Mr. P.C. Sethi, to ask whether I
would be agreeable to Uhde starting an engineering
operation in India. I responded that EIL still needed
some protection from international competition.

Following the successful completion of the Haldia

refinery, EIL signed up with IOC for the EPC of the
Mathura Refinery in’73/’74. This was a Russian financed
project. In a meeting in the Planning Commission with
Deputy Chairman, D.P. Dhar and Petroleum Minister D.K.
Barooah, I had to fight hard to maximize EIL’s share of
the total project.

While on the Planning Commission it was also brought to

my attention by the Cabinet Secretary and Economic
Affairs Secretary that they were having difficulty
meeting the foreign exchange requirements for importing
adequate supplies of fertilizer. Our public sector
plants were operating at inadequate capacities, many of
them because of design/equipment deficiencies. The
Action Committee for Public Sector Enterprises sought
to address this problem. In addition, it was decided
that two new fertilizer plants, based on fuel oil would
be set up at Bhatinda and Panipat with the shortest
possible project schedules. These projects would be
entrusted to EIL in collaboration with Toyo
Engineering, who had a successful track record in
India. This decision attracted the criticism of vested
interests inspired by both political considerations and
a threatened Fertilizer Corporation of India (FCI). I
accompanied our Foreign Minister, Sardar Swaran Singh,
for discussions in Tokyo with the concerned ministers
and Prime Minister Tanaka, to negotiate Japanese credit
required for the two projects. This was done.

EIL signed a contract with Toyo, assuming EPC

responsibilities with Toyo support. Under the
leadership of Bery, the projects were an outstanding
success. They were completed within 36 months and
incorporated a greater indigenous content than any
other fertilizer project upto now. The all-important
ammonia synthesis compressors were supplied from India
for the first time. I was able to get BHEL, Hyderabad,
to license manufacture of the compressors from Snam
Saipem. Because of the difficult feed stock, we tied up
with Veba Chemie of Germany. They owned and operated
fuel oil based fertilizer facilities, using Texaco
technology for partial oxidation, as in our case. They
were to review Toyo’s process design from the
standpoint of an operator. To get Toyo’s buy-in to this
review, I met with Chairman of Mitsui, the owners of
Toyo. He agreed to share the cost of Veba’s review with
EIL. Even though this was a small amount it was
strongly opposed by FCI, on the grounds that this was
unnecessary foreign exchange expenditure. We were able
to overcome the objection and the foreign exchange was
approved. Veba’s operational review proved invaluable
and ensured smooth plant startup. Later, FCI approached
EIL for assistance in such a review of their fuel oil
based project.

Bhatinda and Panipat marked EIL’s full fledged entry

into the fertilizer field. Earlier, EIL had supported
Kellogg in their design of IFFCO’s ammonia plant at
Kalol.

Ironically, after I left EIL, the company was debarred

from implementing public sector fertilizer projects as
a result of a decision taken by a committee chaired by
Homi Setna, then Chairman of FCI. The committee was
charged to decide whether EIL should share public
sector fertilizer projects with FCI and FACT.

In 1973, at the request of the Atomic Energy

Commission’s Chairman, Dr. Vikram Sarabai, we
contracted to support AEC in the design of their heavy
water plant in Gujarat. This took EIL into a whole new
field.

With a sufficiently strong Balance Sheet now, it was

time to move into our own building. I saw Mr. Om Mehta,
Minister for Works and Housing and he allotted office
space at EIL’s present location.

By this time EIL had emerged as the most capable

engineering company in Asia, outside Japan. Its staff
totaled 2700. It had accomplished the following:
 1. Diversification embracing petroleum refining,
petrochemicals, fertilizers, non-ferrous metals,
ocean engineering, systems engineering and heavy
water.
2. Entered the international market.
3. Helped develop Indian equipment, greatly reducing
the amount of foreign exchange required for
process plants.
4. Started a process R & D capability in Gurgaon,
that included the use of pilot plants.
5. Fostered a management culture that emphasized the
induction, retention and development of the best
available talent from within and outside the
country. This would not have been possible without
the invaluable contribution made by R.D.Gupta who
managed the Employee Relations Department and a
succession of highly motivated Finance Directors,
Messrs. Aiyar, Poulouse and Ramaswamy.

The key to our success was the care given to our staff.
Any employee wishing to resign had to first see me and
in almost all cases I was able tos resolve their
grievances. In 1974, in an effort to get the Bureau of
Public Enterprises relax their salary policy as
applicable to EIL, I invited Finance Minister, Mr. Y.B
Chavan and Petroleum Minister, Dr. Triguna Sen to visit
EIL. We made our case by presenting EIL’s Five Year
Plan. They agreed and we were able to make a
significant improvement in our salary structure.

In December 1974, it was discovered that I had an

unusual case of glaucoma. I resigned from the Planning
Commission and returned to EIL fulltime. Early in 1975
I visited Tripoli, Libya, and had discussions with
their Oil Minister, Mr. Mabrouk, and sold him the idea
of a joint venture company with EIL in Tripoli. This
would help EIL penetrate the overseas market further.
My execution of an MOU to this effect with the Oil
Minister in consultation with the Indian Ambassdor Mr.
Talyerkhan, attracted the attention of several of the
other embassies in Libya. However, on my return to
Delhi, the Ministry of Petroleum objected to my
execution of the MOU, without their prior approval. The
External Affairs Ministry supported my position, but
this did not change the Ministry’s stance. Thereupon, I
offered to resign from EIL, but Malaviyaji pursuaded me
to change my mind. By this time my eye condition had
deteriorated further and on my doctor’s advise I was
obliged to seek medical treatment in the US. Since this
required regular medical surveillance, I decided to
stay back in the US and with a heavy heart sent in my
letter of resignation to the Prime Minister.

From the US, I tried to keep in touch with EIL. I

recall the time when EIL was under the threat of being
divested by the previous Government. I spoke to the
decision makers at the political level and also wrote
an impassioned article in the Business Standard on how
EIL’s divestment would prove fatal. Fortunately, the
threat was averted.

Over the years, EIL has made remarkable progress. It

has weathered competition from overseas companies, but
not without a significant loss of its experienced
engineers. Presently EIL has an impressive workload and
has much to be proud of under the leadership of Mukesh
Rohatgi. An eye-catching project is the cleanup of the
Jamuna river and hopefully this will extend to the
Ganga as well. As a national company, there is much to
be done in the field of water management, clean coal,
non-conventional fuels, energy conservation,
environmental engineering and project management in
fields hitherto not addressed.

Finally, I am deeply touched that you have decided to

give me this lifetime award. There is yet another award
I would greatly cherish: make EIL No. 1 in the world
during my lifetime.
So will you please hurry up!!

God Bless EIL.

M.S. Pathak
11th March 2009