Creatnet: Cleaning agent

Late in 2005, Shanmughan Manjunath, an engineer with Indian Oil Corporation, was found murdered in Uttar Pradesh. Prosecutors nailed a local businessman, whose petrol pump had been sealed by Manjunath for adulteration.

That same year, K.L.N. Sastri, then executive director of the Oil Coordination Committee (the country’s top oil policy body), estimated that adulterated fuels cost the country roughly Rs 40,000 crore a year—Rs 10,000 crore in industrial fuels alone—to say nothing of the health costs from emissions. But following widespread media furore, the government stopped issuing adulteration data altogether.

Flash forward a decade, and Manjunath’s story is now the subject of a major Bollywood motion picture. India, meanwhile, has slipped to become the worst polluter in the world, after the U.S. and China.

Public-sector fuel companies claim that adulteration is waning, but powering the nation’s boilers with clean fuel continues to be a gargantuan task. It is also set to come into sharp focus, thanks to the government’s manufacturing push.

Natural gas is the cleanest fossil fuel, but it’s also expensive and not widely available. So, most manufacturers use heavy fuel oil (HFO), a mix of the residual oil left after crude refining and diesel or gas oil. But this has two side effects. First, HFO is loaded with impurities. At least 2% to 5% of the oil turns into sludge during storage and cannot be burnt. When the sludge is thrown away, it contaminates soil and groundwater. Second, HFO boilers belch a lot of greenhouse gases and solid pollutants.

This is the grimy area that the Delhi-based startup Creatnet Technology has decided to take on. Its talisman: a water-in-oil emulsification technique that cuts down on air pollutants, prolongs boiler life, and reduces fuel consumption by at least 5%. Emulsification is still a rather inscrutable concept—a Google search yields a bunch of dense academic papers and a handful of commercial players—but more on that later.

At first glance, Creatnet seems to have set itself up to fail. It was founded in 2013 by college buddies Darshan Bhat and Sameer Shah, both 48 and hailing from Delhi, after a trip to Russia, where they first saw emulsification in action. They were impressed enough to take the plunge, even though they had nary a clue about oils.

Bhat is a veteran entrepreneur, immersed in garment design and export (his business involves underprivileged craftspeople), training programmes for entrepreneurs, and NGO work providing continuing education for Delhi teachers. Shah, on the other hand, has spent more than 20 years in industrial tools and timber. Thus, the first task was to find a technology partner, and the duo tied up with Russia’s St. Petersburg State Institute of Technology. The main fuel processor was built there and shipped to India, but trials went awry and the output was far below par.

Bhat and Shah were desperate to hire a local hand who understood the technology. They zeroed in on Ravi Deka. A self-taught techie, Deka had spent eight years working in areas such as clean industrial fuels and emulsification, out of Goa. He effected an almost immediate turnaround: He designed Creatnet’s own equipment, and by March next year, the company was ready with its first batch of emulsifiers. Today, it can process 400 tonnes of HFO per shift.

Globally, the shipping sector is the largest adopter of emulsification, followed by thermal power stations and refineries. In India, demand has been more diverse. Creatnet’s big wins include lead producer Gravita India, aluminium manufacturer Metenere, and pharma company Akums Drugs. It is running two trial plants for consumer goods major ITC and is courting other bigwigs.

But it is tough to scale this business. In FY15, Creatnet’s first full financial year, revenues stood at a modest Rs 26 lakh. Many clients turn up their noses at the idea of mixing oil and water. “It’s actually very disappointing,” says Deka.
On the upside, the founders say they have no real competition. They claim that while India has a few additive suppliers, emulsifying-machine vendors, and technology-solution licensors (my queries to a few of them got no response), none of them rival Creatnet’s end-to-end solutions: stable emulsions tailored for industry-specific needs, as well as technical consultancy to users.

To a casual acquaintance, Deka, 43, would seem a typical northeasterner (he grew up in Guwahati): plump, placid, and gregarious. But the veneer cracks the first time I visit Creatnet’s plant, a nondescript building off Rohtak Road in West Delhi. I find the approach road dug up, like an earthquake site, and call Deka to ask if there’s another way. “There is, but the main entrance should do if you’ve ever trained for an obstacle race,” he suggests with startling seriousness.

That sums up Deka’s propensity to surprise. He has sold luxury cars in an earlier avatar, but his passion is tearing down, rebuilding, and solo-riding old bikes. He says he did his first Bullet twin-spark plug conversion way back in 1998, almost 10 years before Royal Enfield managed to, landing him on a list of innovators selected by the National Innovation Foundation. Even before that, during his college days, he restored a 1952 BSA 650 twin rotting in the backyard of Guwahati’s road transport office. He cannibalised parts from tractors and diesel pump sets, while his bedroom served as the garage. “That’s one way of building things—bit by bit,” Deka says, “but I was this Johnny-come-lately when I joined Creatnet and had to get things moving.”

An unabashed foodie (his lunch consists of lassi and samosa), Deka explains emulsification by invoking a common kitchen peeve. “What happens when water splashes on hot oil in a frying pan? The water makes the oil explode,” he says. “That’s precisely why emulsified oil, with billions of water droplets, burns so well.”

Fuel emulsification has existed since the 1930s. But the technology gained prominence in the 1980s, thanks to the efforts of inventors like Eric Cottell. The basic chemistry is simple: Standard HFO is injected with tiny water droplets (2 microns to 10 microns), while additives prevent oil and water from separating. When normal HFO is burnt in a boiler or a furnace, the oil droplets are usually 100 microns to 200 microns in size. Because of this, some portion of the fuel doesn’t burn completely and turns into carbon deposits or escapes as particulates.

But with emulsification, the high temperature immediately turns these water droplets into steam, increasing the volume 1,700 times and causing a series of micro-explosions. These rupture the oil droplets into highly inflammable nano-sized mist, leading to optimum combustion, zero wastage, and cleaner emissions (see graphic). Emulsified fuel also uses 20% less oxygen and generates nearly 20% less waste heat.

Interestingly, these fuels can be used with middle and heavy distillates, which account for 60% to 70% of India’s crude import.

So, large-scale use could help shed the country’s import dependency.The pot of gold for Creatnet lies in reconverting companies that had switched to diesel or gas when fuel oils turned costlier. On average, Indian refineries produce about 14 million tonnes of fuel oils a year and export around 10 million tonnes, jacking up domestic prices. But free-falling crude has led to a significant price correction.

Two of Creatnet’s main target segments—manufacturing and power—constitute a market worth Rs 4,555 crore, at today’s pricing of Rs 26 to Rs 32 per litre of emulsified fuel. That’s a lot lower than industrial diesel, which costs at least Rs 43 a litre. There’s more. The conversion cost from diesel to fuel oil is negligible, about Rs 2.5 lakh a boiler. Also, most burners are engineered to burn multiple fuels, making the switchback simple. Creatnet has already helped convert two businesses from diesel. In the next three years, it aims to reconvert 5% of the serviceable fuel oil market, generating gross annual revenue of about Rs 10 crore.

The company plans to break even by the third quarter of this fiscal. It is also looking to raise about Rs 10 crore to finance expansion, including three new plants and a line of branded fuel oil. “We must also engage with some key players in the West, maybe Wärtsilä (Finnish) or MAN (German),” says Deka. “But we have to be in the forefront at home first.”

That will call for aggressive marketing. Bhat and Shah have hired Eeshwar Brij Chopraa—another unusual recruit, and a veteran of Citibank, Indiabulls Group, and Bata India—to lead that. A highlight of Chopraa’s career was his role in launching the Power range of sports equipment and sportswear during the 1987 cricket World Cup in India. He managed to sign up all the Indian stars, except Sunil Gavaskar, and says achieving similar persuasiveness in an altogether alien industry “is bound to be exciting”.

But analysts say it could be a case of green killing the green for Creatnet. A Delhi-based petroleum engineer who does not wish to be named says cheap and easily available green fuels like biomass have the potential to replace HFO. However, Deka argues that when a plant burns biomass products like rice husk, the particulate-matter emissions are as bad as with coal.

The biggest challenge for Creatnet remains the scepticism of disparaging factory bosses. “People are negative about alternative fuels,” says Deka. “They say, ‘If the concept is so good, why wasn’t it done before? If you’re so intelligent, you should be doing roaring business by now.’”

That doesn’t mean the DYI fan is planning a retreat to Goa. He quotes Robert Pirsig, the prophetic author of Zen and the Art of Motorcycle Maintenance, to prove that building Creatnet is as personal for him as decking up his beloved bikes: “In a car ... you’re a passive observer and it is all moving by you boringly in a frame. On a cycle the frame is gone. You’re completely in contact with it all. You’re in the scene, not just watching it anymore.”