Arabian Days

 

PUSHKAR GOKHALE, Head of Operations — Middle East, Godrej & Boyce Mfg. Co. Ltd., gives readers an overall perspective of the operations in the region.


Middle East Operations — Shifting Gears

The Godrej team in UAE. Front row (l-r): V. Balachandran, Pushkar Gokhale and Vinod Bhambhani. Back row (l-r): Rajavadivel, G. Srinivas, Dharmesh Salian, Abhijit Gupte, Kurush Shroff and Mahesh Sutar.

Other team members not seen in the photograph are Krishnaraj, Ramnath Nayak and Pavan Kumar.

 

he Company’s operations in the Middle East are all set to shift gears. The UAE branch office recently moved to a much bigger office-cum-warehouse set-up. Today, within a time frame of two-and-a-half years, we have shifted into a 6,000 square feet office-cum-warehouse space with a 12-member team, which is set to grow to 14 members by the end of this financial year. We also have a showroom in place at a prime location in Dubai. In another important development, we have also established a support office in Saudi Arabia. The fact that we have been able to carry out all this development in a different country/region, in the international arena, is immensely satisfying.

The operations have not just grown in size, but also in terms of numbers. The branch turnover has doubled every year for two consecutive years, and we hope to repeat a similar feat this financial year. The turnover in the region prior to the opening of the office was around Rs. 280 lakhs and today we are poised to cross at least Rs. 2,000 lakhs in this financial year. Besides strengthening the marketing network by appointing new channel partners, we have also been working on the market, on the end customers. We have bagged some prestigious orders such as the National Guards in Kuwait, Royal Guards in Saudi Arabia, Halliburton Group in Dubai, Olayan Tibet and Britten — Saudi Arabia, among others.

The Opportunity

“Oil Boils, Middle East Booms” — Record oil prices are leading to record government revenues, and all this is leading to a massive surplus resulting in investments in infrastructure and allied development. The Middle East region is presently bubbling with activity, especially the Gulf Cooperation Council (GCC), which comprises six nations, viz. the United Arab Emirates, the Kingdom of Saudi Arabia, the Sultanate of Oman, Qatar, Kuwait and the Kingdom of Bahrain. The major oil producers are on an expansion spree.

Saudi Arabia is pumping billions of riyals into infrastructure development. With good schooling and college education now being a focus area, the network of educational institutions is expanding. A host of projects have been announced in Kuwait. The Kuwait Oil Company (KOC) has ambitious growth plans, now that Saddam Hussain is no longer a threat. Qatar, which is hosting the Asian Games in 2006, is growing at an amazing pace, from the development of the airport to the construction of the sports city and hotels (around 50 four-star or five-star hotels are coming up in Qatar). There is major development in the banking sector too.

Dubai being the commercial and trading hub for the region, is drawing a lot of interest from companies across the globe. Take the case of the free-trade zones: the Jebel Ali free zone, which is the oldest of the lot, has close to 3,000 companies. The entire stretch of existing land is completely consumed and hence they are coming up with a huge extension. The SAIF zone (where we operate from) has crossed 1,500 companies. There is also the Dubai Airport free zone, the Internet City and Media City, along with the other free zones in Fujairah and Ajman. Pressure on trade has created a demand for warehousing. Third party logistics companies are expanding, trying to create more storage space and taking up more and more warehouses.

The mobilisation of the armed forces in the region is yet another trigger, which is fuelling the activity levels, as the setting up of defence bases and keeping them running needs lots of utilities and supplies.


Ruvenna attends to our Dubai Showroom.

Iraq and Afghanistan

In Iraq, a new currency was introduced, and a seminal law was passed to make the central bank independent. Consequently, the entry of foreign banks is progressing, with three foreign banks being considered for banking licences, among them the National Bank of Kuwait. At the same time one cannot lose sight of the opportunities in Afghanistan. A new banking law has been passed in Afghanistan, which should assist in attracting foreign capital. Now, many more boys and girls are in school; industrial parks are being built; and customs facilities are being improved. The opportunity here, too, is immense now that the nation seems to be settling down.

Having a set-up in the UAE gives us much easier access to the north African region, as buyers in countries such as Sudan, Algeria, Egypt and Libya can relate well with Dubai, due to its proximity, and also because these are Arabic speaking nations. Moreover, a lot of traders from countries in and around the GCC, especially from north and central Africa, and the CIS keep visiting Dubai to source goods and benefit from the high volumes.

The Challenge

Like us, all the global players realise the importance of having a presence in the region. Talk of any product line and you have a wide spectrum of products and suppliers — right from the cheap Chinese, highly competitive Korean, Malaysian and Thai products to the high-end European and American offerings. To cite a few examples, there are almost 40 players offering Storage Solutions alone in the UAE. For furniture there are even more players. The European brands, which were in the topmost price bracket have shifted their manufacturing bases to the Far East and hence have managed to lower their price points and thus ease out the price differentials. There is an intrinsic resistance towards the “Made in India” brand, which plays an important role in the decision-making process. The market expects the pricing of Indian products to be in the Chinese or Far East bracket, if not less, but in reality this is not the case. The Malaysian and Korean brands have in fact gained better respect than their Indian counterparts. The popularity of brands like LG or Samsung has contributed to changing the mindsets about Korean products.

One has to overcome all these hurdles to bag the orders, but the matter does not end there. It is equally important to meet the quality and delivery commitments, and measure up to the fit-‘n’-finish expectations of the customers (who will always compare us with other suppliers). It is only after meeting these expectations that one can expect repeat business.

The Approach

We initially started by strengthening the marketing network, identifying and appointing new dealers, establishing contacts, basically trying to increase our reach. Of course we also worked on supporting the existing dealers and generated substantial growth in their off-take as well. In the fiercely competitive environment here, where the rate of opportunity conversion is low due to the market peculiarities, inquiry generation and “more” inquiry generation are the major tools, which can help us achieve our required numbers and hence we are taking initiatives in this direction. We have already started participating in exhibitions, organising dealer meets, direct mailing campaigns and also planning some promotional activities. Additionally, we are working on the consultants (specifiers) and contractors’ community to get our products approved for specific projects.

We have now moved to a warehouse set-up and are on the threshold of taking off as a trading branch. We are in the process of building capability to stock, bill and trade from this office. The plan is to get started with stocks of our shelving/racking components, a few forklift trucks and spares for the forklifts. Stocks of products from other divisions like locks and Security will be made available in stages. Additionally, we will also have a service centre for our forklift trucks. Thus we will be able to offer after-sales backup for our forklift trucks, a major USP for a forklift manufacturer, which will go a long way in building customer confidence.

The Saudi Chapter

The Kingdom of Saudi Arabia is a very important market for us as the market size is much bigger than that of the rest of the GCC members (the other five nations) put together. The country’s span is vast and one needs a highly focused approach to be able to cover the market and be successful in achieving high volumes. The customs duties are much higher to protect local manufacturers. The level of resistance to products “Made in India” is much higher than in the other GCC countries. Keeping all this in mind, we initially deputed our personnel on repeated visits to the country to work on the market until our Deputy Manager Tajuddin Ahmed, through his efforts, found an effective way of setting up our own support office in the country through the Saudi Arabian General Investment Authority.

After a long process of over six months we have finally been able to set up our office in Saudi Arabia. Tajuddin has had to carry out a lot of groundwork to get this through, with the able support of Percy Fouzdar, Vice President (Corporate Affairs) and Company Secretary. Tajuddin is presently in Saudi Arabia working on the final formalities, subsequent to which both he and Mahmud Ul Haque, Assistant Manager (Storage Solutions Group), would be in a position to shift to Saudi Arabia on a Resident visa. We are the first Indian company to set up an office in Saudi Arabia through this route. This is yet another step forward towards the internationalisation of Godrej & Boyce Mfg. Co. Ltd.


Tajuddin Ahmed in our newly set up office in Riyadh, Saudi Arabia.

The Team

To achieve our plans and objectives, we needed the right team, which is now shaping up. I believe that I have a good team, capable of delivering and achieving the desired objectives and fulfilling the purpose for which they have been deputed here. It will be the endeavour of the team to ensure that we meet our goals.

 

 

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