Ajay Kalsi: A self-made man unafraid to take risks

Ajay Kalsi

Age: 49

Profile: Founder and chief executive of London-listed oil and gas outfit Indus Gas

Rank: 38

Wealth: $ 1.39 billion

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He is building a new wave pool for his daughter who is fond of swimming. The pool is about the size of four Olympic pools.

Ajay Kalsi of Indus Gas is known in Indian oil and gas circles as a maverick with passion. The story of his neighbours in a tiny locality off NH8 in Delhi, waking up to see a huge oil rig parked in his backyard has by now been retold several times to much mirth. He used his farmhouse to keep the oil equipment for several months, giving the neighbours a lot to mull about. The new entrant to our India Rich List is known for his non-conformist ways.

Kalsi truly hit the big league in January this year, when he raised Rs 1,164 crore by selling about 30 per cent of his stake in Indus Gas to investors on the London Stock Exchange’s Alternate Investment Market, where the company is listed for the past three years. Kalsi and his wife still own about 70 per cent of the company. But the stake sale has brought the publicity-shy entrepreneur into the public eye.

Valuations of Indus Gas had zoomed after it made new gas discoveries in the RJ-ON/6, its field in Jaisalmer, last December. Though much smaller than Cairn India, Indus has been able to capitalise on the huge interest in the energy potential of Rajasthan following the Scottish company’s success. In fact, one of the company’s blocks here falls within the original area given to Cairn.

Indus has been able to move quickly to start production, and gas from the field has already been sold to Rajasthan state electricity board’s Ramgarh plant. It is in the middle of a huge development phase drilling more wells to increase production, largely through hydro-fracturing. The company ended last year (April 2010 to March 2011) with a net loss of $ 2.42 million, though it made marginal operating profits of close to $ 1 million.

Kalsi has put in close to $ 200 million in the exploration and development of the block. Returns are expected to start flowing in as more wells go onstream in the next few years.

Kalsi comes from a business family originally from Kanpur, and had inherited his father’s footwear and minerals trading enterprise. Focus Energy, the Indian arm of Indus Gas, is better known in India by its earlier name Phoenix Overseas, which had significant interests in Russia.

Kalsi has an M Phil in Economics from Cambridge University and a B Sc from the London School of Economics. He has built a portfolio of companies that include commodity trading, real estate and Business Process Outsourcing (BPO). Over the years, he expanded his oil and gas activity to four fields, two of which are near the Pakistan border.

In Indian oil and gas circles, he is described as owner/ manager/ CEO/ geologist all rolled into one. He has, however, been able to remain way below the radar and is rarely seen on public forums. He refused to return calls or collaborate on this story. But Forbes India was able to speak to several people who have done business with him over the years.

Private equity investor Ajay Relan, the founder of CX Partners, met Kalsi while tracking his BPO business. “He is a self-made man who borders on genius. He asks outrageous questions and has the ability to venture into risky activities,” says Relan.

Kalsi’s grasp of the oil and gas business is astounding. He was able to produce gas even when many thought it was not possible.

Those who have known him longer speak of how as students, he and a friend were able to convince Suzuki to lend them motorbikes for a trip from England to India. People who are invited to his farmhouse near Delhi say it is like going into another world. Others speak of the new wave pool he is building for his daughter who is fond of swimming. The pool is about the size of four Olympic pools.

Upstream oil and gas magazine Petrowatch, in a recent piece, reported that Kalsi looks at his business through a completely different prism. Few small oil and gas companies think of buying an oil rig for work in a single block. Most would hire a rig for the required period. In June this year, the Indus Gas CEO bought an old jack-up rig from American company Transocean for its drilling commitments in the Gulf of Cambay. The rig was retro-fitted by Kalsi’s own team. Not content with this, the team also constructed its own seismic survey vessel to shoot thousands of kilometres of two-dimensional and three-dimensional seismic surveys. Focus Energy apparently invited bids from contractors for seismic work, but as it found the rates too high, it went ahead and built its own vessel, the report said.

High energy prices and the huge shortage of gas in India will ensure that any gas that is brought into the market is snapped up quickly. So Kalsi’s efforts at finding solutions to bring more wells into commercial production may well be in the right direction. If he is able to keep up the pace of production, he may not seem like such an oddball after all.