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Fostering Innovation Culture Across the Country
"Money and resources spent on R&D are not expenditure, but investment for the future," says Dr R K Malhotra, Director (R&D), IndianOil Corporation Ltd. He is of the view that focused R&D is the only way to provide cost - effective solutions to multifaceted challenges that the industr y faces. Dr Malhotra attributes the success of IOCL to continued focus on R&D, which has played a key role in the entire value chain of company’s business. However, he feels the need to develop strong linkages between the industry and academia by organising open forums and exchange programmes to offer the much-needed boost to research activities.

What role can R&D play in value creation of a company?
R&D is the prime mover of any progressive and technology-driven organisation. Any forward-looking company is known by the number of innovations and breakthrough technologies it creates, which is much more imperative for the energy sector. The energy sector in general and oil sector in particular, today, are facing multi-faceted challenges such as, scarcity of crude oil, volatility of crude price, stringent product specification and environmental regulations, and it is only the focused R&D work which can provide cost- effective solutions.

R&D has been playing an important role in the entire value chain of IOCL’s business. One shining example of R&D contribution to corporate business is IOCL’s market leadership in lubricant business. The technological prowess provided by the R&D for development of our SERVO brand of lubricants has made it possible to sustain the coveted status in spite of stiff competition from 20 multinational oil majors operating in India. Since its inceptionin 1972, IOCL R&D has developed more than 4000 product formulations accounting for 800 commercial grades at any given point of time, with 500 original equipment manufacturers’ and customer approvals.

India, today, imports more than 70 per cent of its crude oil. Volatility in crude prices and the impact on environment of oil products have forced the industry to look for yield maximisation through development and deployment of innovative secondary refining processes, lowcarbon footprint technologies and diversification of sources. In refining technology process area, our R&D centre has already made immense contribution by way of developing and commercialising number of technologies like; INDMAX, Needle Coke, Indalin, DHDT etc., which also are aimed at value addition to our refinery operations. We are currently focusing on technologies for reduction of hydrogen consumption, through innovative desulphurisation processes and also on development of novel catalysts and additives. All these developments will help in reducing the cost of operations of our refineries and also improving product yields and quality.

What edge do the companies get by way of having in-house research capabilities and how do you compare these with the work that is outsourced or carried out through strategic partnerships?
Having in-house research capabilities, or carrying out R&D through outsourcing and/or through strategic partnerships are different facets of corporate strategies to achieve business goals. Strategic partnership may work for specific development or problem-solving, but for an organization of our size, a strong in-house R&D is important for long-term survival and growth of the organisation. While IOCL has a strong R&D base of its own, we also have more than 35 research partners, both from India and abroad, covering many strategic areas of research.

In-house R&D structure provides you with innovative minds, who can interact with refiners and marketers and develop products and processes tailor made to maximise the profitability of the organisation, while providing leadership and future growthopportunities. Without strong in-house R&D capabilities, outside partners may even be hesitant to enter into a collaboration. I may support strategic partnerships, where the strength of both the partners is leveraged, so that it is a win-win situation for both.

What is IOCL’s research expenditure (basic, applied and development) and how do you compare this with the global players from the downstream sector?
First of all, in my view, the money and resources spent on R&D are not an expenditure, but investment for the future. There is no doubt that big scientific breakthroughs require big money. India’s investment in R&D is less than 1 per cent of its GDP, whereas Japan spends about 3.4 per cent and America spends about 2.7 per cent of their GDP on R&D. When compared to other global players in the oil and gas sector, IndianOil's research investment maybe lower in absolute numbers, which should be seen in the perspective of very high sales turnover (~ USD 73 billion in 2010-11). However, within India’s oil and gas sector, IOCL R&D investments are the highest. In the last five years, IOCL’s R&D investments have been about Rs. 827 crore and as per IOCL’s MoU with the Government of India for the year 2011-12, our target for R&D investment is 1-2 per cent of IOCL PAT (profit after tax). This is in line with the draft guidelines of DPE (Department of Public Enterprise, Govt of India) for public sector undertaking R&D institutions. Accordingly, in the year 2011-12, we have earmarked about Rs. 300 crore for R&D.

Coming to basic and applied research, our activities are mainly focused on applied research with time- bound action plans and specified deliverables. However, realising the importance of fundamental research, our scientists and engineers allocate at least 20 per cent of their time on basic research projects to make the company future-ready.

Tell us about the breakthrough INDMAX technology developed in-house by the IOCL team and its commercialisation.
INDMAX, our flagship technology, is first of its kind in the world to upgrade residues to light olefins (propylene, iso-butylene, ethylene), LPG and high-octane gasoline. It is ahead of its competitors in terms of residue upgradation capabilities, high metal tolerance, yields of LPG/light olefins and high RON of gasoline. It is possible to make India selfreliant in LPG by adopting this technology. Also, there is immense potential in building the petrochemicals industry, based on light olefins such as propylene, butylenes, ethylene from residue feedstocks employing INDMAX technology.

The technology has been successfully demonstrated in Guwahati Refinery of Indian Oil Corporation Ltd. with installation of 100,000-MTPA capacity plant. This unit was commissioned in June 2003 and has been successfully operating since then, with heavy feed of about 4 wt per cent CCR contributing significantly to refinery’s margin. Now, Indian Oil is putting up a 4.0 MMTPA INDMAX unit at our upcoming grass-root refinery at Paradip.

Now, this technology is being globally licensed by M/s Lummus Technology Inc., US (a CB&I Company), with whom IOCL signed a cooperation agreement for licensing the technology worldwide. INDMAX unit is designed by Lummus with basic process design from IOCL, employing their proprietary efficient hardware components like Micro-Jet Feed Injectors, Direct-coupled cyclones, Modular Grid (MG) Catalyst Stripper etc.

We already have number of enquiries from abroad about INDMAX technology and we are quite hopeful that after the successful commissioning of 4.0 MMTPA unit at Paradip Refinery, this technology will be one of the most sought after technologies not only in India, but globally as well.

What were the major challenges that the team came across at the levels of development and commercialisation of INDMAX?
Refining technologies have long gestation period and a long journey in itself. It starts from lab-scale and then goes into scale-up from pilot plant to demonstration scale. The commercialisation requires support from a engineering group, which can be in-house or from an outside engineering company. There were three major challenges in commercialization of INDMAX technology. Scale up of reactor design: The process was developed in micro-reactor and pilot plant scale of capacity of 1 bbl/day. Design of a unit of 100000 MTPA capacity with unprecedented high catalyst-to-oil ratio, and higher steam dilution in the riser was a real challenge. This was successfully mitigated by development of a state-of-the-art process simulator, validation of the same with the existing FCC/RFCC units and studying of hydrodynamics in a Cold stand unit. Development of BDEP of the plant: The first step in commercialisation of a technology is to develop a Basic Design & Engineering Package (BDEP). There was no earmarked group in IndianOil with expertise and experience for development of BDEP. IndianOil management felt that this technology was to be implemented using internal resources, only to protect the secrecy. Due to its rich and proven experience/expertise in FCC technology, IndianOil R&D was entrusted to develop the process design of INDMAX plant while pulling the expertise and experience available in our own refineries. The basic design package developed by R&D team was reviewed and upgrdaded by a taskforce comprising experts from R&D and refineries divisions. BDEP was finally developed through an engineering consultancy company in India, based on the basic design package by IndianOil.

Investment approval: Historically, Indian refining industry has been dependent on foreign licensors with credibility of offering the knowhow of demonstrated technologies. Investment based on purely indigenously developed technology was a risky proposition. The proposal for investment on the first INDMAX unit was, therefore, critically reviewed by technical experts in the corporation. Based on the report by a special internal taskforce created to witness the features/benefits of INDMAX technology, IndianOil management accorded the approval for setting up an INDMAX plant at Guwahati Refinery at a cost of Rs. 155 crore and rendered all necessary support across its operating divisions for construction and commissioning of the plant.

It is worth mentioning that INDMAX technology was conceptualized, designed, constructed and commissioned based on completely indigenous efforts. This project was a showcase of team efforts, demonstrated by various work groups of R&D and refinery divisions of IndianOil with wholehearted support from the management.

Historically products and process improvements account for 80-90 per cent of R&D cost, but true innovation at the basic research level seems to be missing. May we have your comment?
As I said earlier, we have to identify critical areas related to our field of business. Being a commercial R&D, our focus is more towards applied and developmental side of the spectrum. Having said that, we do spend considerable time and resources in carrying out basic research so as to be future-ready.

Presently, we are engaged in some basic research in areas of our core competence like lubricant technology and refinery process technology mainly aiming at understanding the action mechanism and structure-property performance correlation of additives for lubricants, polymers and fuels. We have recently embarked upon new areas of R&D in Petrochemical, Solar, Bioenergy etc. besides exploring nano-technological interventions and understanding nano-science in downstream petroleum areas.

The Chinese industry is working closely with universities to promote basic research, which is a missing link between universities and the industry. What are the reasons that in India we have failed to bridge the gap, even though the topic has been the centre of discussions in many eminent forums? In your view, how important is it to bridge the gap now and is it an imperative to create a talent pool for the future?
In my view, the reason for the missing link between universities and the industry in India is the fact that the focus of research in the industry and academia is quite different. While the Industry is more interested in carrying out applied and commercial research, which can yield quick dividends for the company, academic institutions are more focused on basic research, resulting in good international publications. It is very important to bridge this gap. In this connection, we have already made strategic alliances with premier educational institutions in India like IITs, Indian Institute of Sciences (IIsc), Bangalore, University of Petroleum & Energy Studies (UPES), IIIT, Allahabad etc. We even have an industry-academia programme with the University of Deakin, Australia. As part of these strategic alliances, we are taking Ph D and post-graduate students to work on industrial projects. The talent pool so generated will either be absorbedin IndianOil or shall be available for the entire Indian oil and gas industry.

Another pioneering initiative by IndianOil Board is the “Scientist exchange programme with academics” under Sabbatical scheme, where two-way knowledge flow is ensured. Under the scheme, our scientist can go to any Indian or foreign university for upgradation of their knowledge, and researchers from academia can spend few months in our R&D centre and work on projects of mutual interest. Under this scheme, recently, two of our scientists have visited University of Illinois, US and University of California (UC), Davis, and reciprocally, one scientists from UC, Davis also visited our R&D centre.

What are the key challenges, which the industry as well as educational institutes need to overcome?
The curriculum of our universities is not in direct sync with the current needs of the industry. Further, bright students from premier institutes do not pursue higher education as they are able to get good jobs through campus selection. Although we have large number of engineering colleges, there is a big shortage of quality, employable engineers in India. We have taken several initiatives to reinforce the industry-academia relationship and are doing our bit to fill the gap.

One such measure is that under IndianOil Golden Jubilee Fellowship programme, we hire Ph D students for pursuing Ph.D in areas of mutual interest with a fellowship offer which is 25 per cent more than the CSIR/UGC JRF/SRF fellowships.

What steps should be taken by the industry, universities and authorities to connect the two?
Like IOCL, various other industries should implement such exchange programmes with academia in India and abroad, and promote more research fellowships. The industry should also appraise academia about the specific industrial challenges and problems, which can be solved jointly. On this part, academia should set up strong linkages with Industry and organise open forums for industry leaders to showcase their strengths in specific domains. Possibly, such linkages can be facilitated by the alumni, who are occupying senior, decision-making positions in the Industry.

Despite the fact that India has immense talent pool, the talent remains underutilised; may we have you comment on the measures that should be taken by public as well as private sector undertakings to accelerate work an the fi eld of research?
While immense talent pool is available in India, the basic reason for their underutilisation is the lack of specific skill development programs in their curriculum. While this problemmes is general for overall industries, it is more critical for R&D institutions, where it is really difficult to find the right kind of talent and aptitude for undertaking the challenges of research and development activities.

Consortium of public-private partnerships along with organisations like CII, FICCI, PETROFED, PETROTECH, SIAM etc. should take lead in conceiving such skill development programmes. The industry on their part should encourage and sponsor such programs in order to make use of the talent so generated.

In order to foster the culture of innovation across the country, the Prime Minister of India has recently set up a National Innovation Council. As a part of this initiative, Ministry of Petroleum and Natural Gas, Government of India, is in the process of setting up two Sectoral Innovation Councils for Upstream and Downstream petroleum industry. I am sure this initiative will enhance the quality of R&D activities in our industry.

Many researchers cite funding of projects as one of the key challenges which restricts them from pursuing research many a times. In your opinion, what role can the government, public and private sector undertakings, and venture capitalists play to boost investments in the fi eld of research?
As I said earlier, India’s investment in R&D is less that 1 per cent of its GDP, which needs to increase in the coming years. With this increase, it should be able to take care of the paucity of funds for research work in Indian organisations. While the Government is doing its bit by providing income tax benefits on R&D expenditure, and also several indirect tax benefits for commercialisation of technology based on indigenous R&D, private sector also needs to play its role, whose share in the country’s overall R&D expenditure is only 20 per cent. This needs to be raised significantly in the coming years.

Fortunately, at IndianOil, there is no fund constraint for R&D activities and, in fact, our R&D budget outlay is increasing for the past five years. In my view, there is also need to take up R&D in mission mode in areas of national importance and here the industry, academia and government can all play a major role by identifying such areas and pooling resources, including the expertise available.