The CEO Magazine - Asia Exclusive Feature
TUFF STRATEGICALLY OPTIMISED ITS OPERATIONS THROUGHOUT THE PANDEMIC AND NOW THE COMPANY IS THRIVING. UTILISING ITS RESERVES AND OWNING ITS OWN ASSETS WAS THE SECRET TO SURVIVAL, SAYS CEO NATARAJAN PAULRAJ.
Almost every business in the world suffered some form of disruption to its operations because of the COVID-19 pandemic, but for the energy and infrastructure solutions provider TUFF Group, the outbreak of the virus meant streamlining its operations with optimised suspensions.
“For two years, we just went into the hibernation mode,” Natarajan Paulraj, CEO of the Singapore-based company, says. “We reduced our outgoings considerably and went very quiet.”
Significantly scaling down operations for two years would threaten the existence of some of the most robust companies. TUFF, however, was not just able to survive, but even managed to hold on to all of its key engineering and project management staff, whose valuable knowledge would be vital to fully restarting operations.
“The way we survived is through prudent financial management since our incorporation, which allowed us to dip into our reserves,” Paul, as he is commonly known, says.
“On top of that, most of our infrastructure is owned by us, so we managed to hold on to it, and we knew that positive times were around the corner. We had to cut our costs, tighten our belts and wait for the opportunities.”
But waiting for opportunities did not mean jumping at the very first offer that came along. Regardless of how tough things got, TUFF remained discerning.
“There were many opportunities that came in, but the financial strategies were not optimal,” Paul acknowledges. “You need to have the ability to say “NO”. Some of the projects we were offered were not going to make money for the company, but instead would put the company in dire straits.”
TUFF’s Management Team, from left: Ganesh Paulraj, CFO, Natarajan Paulraj, CEO, Vinod Pillai, COO
“You need to have the ability to say “NO”. Some of the projects we were offered were not going to make money for the company, but instead would put the company in dire straits.”
Utilising its pool of reserves and owning its own resources outright helped to set TUFF apart from much of its competition during a tumultuous period.
“I looked at other companies around the South-East Asian region and various parts of the world, where they had rapid expansion, and consequently during the pandemic they had to let go of their most prized resources: people. And thereafter, even resorted to selling off their assets,” Paul says. “Gratefully, that was not the case for us and we managed to survive. But it was a very tough time nonetheless.”
MIDDLE EAST BOOM
TUFF provides engineering, procurement and construction services, as well as operations and maintenance, to partners in energy and infrastructure sectors all over the world.
At the present moment, business has yet to return to pre-pandemic levels of activity in the South-East Asian energy sector. Nevertheless, TUFF has returned to an appreciable level of normalcy working on numerous projects, with opportunities in the Middle East and Africa making up for the less than vibrant situation closer to home.
“I’m able to travel around Europe again, and to Dubai where we currently are executing two projects,” Paul says.
“It’s like pre-COVID-19 times, and business is booming in the Middle East. In South-East Asia I still don’t see that same level of fervour, but it’s there in other parts of the world. I see it in West Africa and in Brazil. Business is returning to pre-COVID-19 levels or better than pre-COVID-19 levels now.”
The conflict in Ukraine is also driving this uptick in the energy business in the Middle East. “There are a lot of oil and gas projects coming into Qatar, the UAE and other places because now the whole of Europe wants to switch from Russia,” Paul says.
“Therefore, they have to do multiple projects to increase the gas supply, and that’s happening all over the Middle East.”
“There are a lot of oil and gas projects coming into Qatar, the UAE and other places because now the whole of Europe wants to switch from Russia.”
But he is hopeful that normality will return to South-East Asia soon. “It may take some more time in this part of the world for things to come back to pre-COVID-19 levels, maybe at the beginning or the middle of next year,” he says.
A GOOD YEAR
TUFF is a mid-sized company, which is one of the reasons it has been able to remain so agile. “We don’t have big corporate procedures slowing things down,” Paul says. Speed can be extremely valuable in the oil and gas sector.
The floating production, storage, and offloading (FPSO) sector has been dominated by large engineering, procurement and construction companies, and also operations and maintenance companies, who have predominantly targeted the large-scale contracts.
This has potentially created a space in the mid-sized FPSO market segment and TUFF is poised and strategically positioned to bridge and close this gap by also providing services for major clients.
“We strive to procure items swiftly and decisively. If you take any oil and gas project, 40 per cent of the cost is on the procurement aspect. Consequently, if you can control your engineering and procurement, you can save at least 10–15 per cent of any capex,” Paul says.
“We pass that advantage onto our clients, so that is our value addition and competitive edge.”
“If you can control your engineering and procurement, you can save at least 10–15 per cent of any capex.”
On top of that, TUFF has a team of experts with extensive field experience – the same team it was able to retain throughout the toughest period of the pandemic. This expertise enables it to deliver bespoke solutions to a client’s exact specifications.
That’s part of the reason why, after two extremely tough years, business is booming for TUFF. “This year has been very good for us,” Paul admits.
“There’s not much competition. Many of our mid-segment competitors are not fully prepared to take on major projects post-COVID-19, or they have ceased operations. Through resolute leadership, we are here and we are executing prominent projects for some major league clients now.”
Paul thinks it will not be too long before renewables take up a major share of the energy market, which is one reason why the company is working on selling its technologies to the offshore wind sector. But he does not see any immediate threat to the oil and gas sector from renewables.
“We are expecting that in the next 8–10 years the oil and gas industry is going to climb to a peak, before other renewable energies can pick up a major share,” Paul says. “Starting from this year, we are in for good times.”
WORDS JACOB GOLDBERG • IMAGES ARINDOM CHOWDHURY
Reference: https://digitalmag.theceomagazine.com/asia/november-2022/invest/natarajan-paulraj/