The Metamorphosis of Kec – Diversifying for Growth

KEC Spur Infrastructure is ushering in the next wave of growth for the EPC major

Over the last decade, KEC International, RPG Group’s flagship infrastructure company, has transformed from a pure-play power transmission and distribution company into one with a well-diversified portfolio offering solutions across industries.

This approach, along with a strong geographical footprint in over 105 countries, has placed KEC in a strong position in the market today, while lending it a robust business model. As a result, the share of the T&D business in the company’s total revenue has come down to 55% from over 80% and the non-T&D EPC project business has surged to 45% in FY22.

In the past seven years alone, KEC has diversified into six new business verticals, the most recent being the Oil & Gas pipelines business. As India moves towards becoming self-reliant in the energy sector by 2050, the Oil & Gas sector continues to play a pivotal role in the socio-economic development of the country.

In 2021, the Indian government announced investments of over ₹7.5 lakh crore towards creating oil and gas infrastructure over the next five years. This includes adding nearly 17,000 km of cross-country gas pipelines under the One Nation-One Grid programme. All of this bodes well for KEC International.

Pankaj Kalani, Chief Executive - Oil and Gas Pipelines business, KEC, adds, “When we ventured into this area in 2020, there were only 6-7 active players in the industry and many of the large players were out of competition. We were confident of leveraging KEC’s strong capabilities built over several decades in project management, Right-Of-Way (ROW) management and cross-country execution. This decision to diversify into the Oil & Gas sector seemed like the next logical step for us.”

The business focuses on building cross-country pipelines across India as well as in international markets. Last year, in a bid to accelerate growth, KEC acquired Spur Infrastructure, an Indian EPC company engaged in setting up cross-country oil and gas pipelines. “We were excited by the prospects Spur offered us — they had the relevant pre-qualifications, they were a young company, and were executing several projects in cross-country pipeline and city gas distribution. They had an unexecuted order book of close to ₹600 crore. All of this made the acquisition lucrative, and we felt that this was a good start to make inroads into this sector.”

There was a focused effort from both companies to enable a seamless and quick integration of Spur Infrastructure and its employees into KEC, and consequently the $4 billion RPG Group. Today, KEC’s order book in the Oil & Gas business has touched ₹1,000 crore, with the company executing nearly 28 live projects across India in all kinds of pipelines — Oil & Gas, slurry and water pipelines.

In recent months, the business has witnessed increased competition from subcontractors who are looking to get a larger pie of the market opportunity, and several large companies that were out of competition but are now seeing a return to the market.

However Pankaj is not worried. KEC's experience across industries and geographies lends it an edge over its competitors in the industry. “Because of our overall linear infra experience, we have the capabilities to handle several live projects at one time and expertly manage ROW issues, as well. Additionally, we are leveraging our expertise to enable fast-track execution of projects and have adopted various mechanisation and digital tools, such as semi-automatic welding, in many of our projects to enable quality-driven, faster and more efficient execution.”

With the competition growing in India, the business is looking to enter international markets by leveraging KEC’s vast global footprint and credentials, especially in the Middle East. It has already started engaging with some of the large contractors in the region and hopes to receive a few orders soon. In FY22, the Oil & Gas pipelines business of KEC International successfully achieved a top line revenue of more than ₹180 crore, and has targeted to clock around ₹750 crore this year. By FY27, the company is looking to cross ₹3,000 crore in top line revenue, across both its domestic and international businesses.

Pankaj shares, “We are slowly building capabilities — both human and financial — and are on the right track to tap into the enormous opportunities emerging in the Oil & Gas pipeline sector. We are hopeful that this new vertical will emerge as a strong growth driver for KEC in the coming years.”