Cathal McElroy talks to Trans Gulf’s chief operating officer, Sekhar Reddy, about managing the company’s transformation from a boomtown Dubai powerhouse to a post-downturn multi-national mover and shaker.
Sitting in the boardroom of Trans Gulf’s new headquarters in Dubai Investment Park, it is easy to appreciate the degree of change the company has undergone in the last few years.
Relocating the entire business to new premises is one thing, but doing that in the aftermath of a construction collapse which required drastic restructuring is another.
Add to this the step into the unknown that comes with venturing into markets as diverse as Morocco, Qatar, Kuwait, Saudi Arabia, and India, and one begins to wonder how on earth all this was managed in anything resembling a successful manner.
Sekhar Reddy, Trans Gulf’s Chief Operating Officer, has been at the helm during this period of transformation, and he explains that it has very much been a case of adapt or die.
“After the slowdown, we looked at things with common sense. We realised we needed to slow down, look into our system, see where we could make corrections and make sure that we could sustain through the difficult times,” he explains.
This restructuring required a reduction in manpower, which has seen staff numbers at the company’s Dubai operation drop from 650 to 350, and the number of workers fall from 2,500 to approximately 2,000.
Once the necessary medicine of these cuts had been swallowed, Reddy and the rest of the management were confident that, due to Trans Gulf’s background and experience in executing some of Dubai’s marquee projects, the company was still very much a going concern with a bright future.
“One of the turning points for Trans Gulf was Madinat Jumeirah [completed in 2003/4 and on which Reddy was Projects Director] in terms of the scope and challenges as a project,” he says.
“That brought Trans Gulf to the next level, wherein we had shown that we were a complete contracting company. We could go from re-engineering to cost management and then, of course, do the regular stuff like installation and post-maintenance works as well.
It was quite a learning process for the whole team. It was a AED 300 million ($81.7m) project of a fast-track nature, and we did it in 28 months. A development of that size has given my team, my management and I immense confidence in tackling jobs of that size.
Madinat Jumeirah was a great reference for us and it led on to other major projects like District Cooling Plant 2 in the Burj Dubai Development area with Emaar” he adds.
This confidence in Trans Gulf’s background, experience and pedigree has provided Reddy and his team with the courage to step beyond the company’s home turf and into new territories with the Trans Gulf brand. Qatar, in particular, has proved to be a happy hunting ground for projects with the potential to establish Trans Gulf as a major regional MEP contractor.
“Qatar has been great and the number of enquiries we have been getting is amazing. The jobs are all huge. We are not in a hurry and we are going step by step to consolidate the current push,” he says.
”We are getting quite a few interesting offers there that we have had to decline – straightforward offers. We don’t want to bite off more than we can chew so we are going one step at a time. We are just two years old there but already we have projects worth half a billion ($136.2m). Adding up numbers is no big deal: it’s how well you can manage it, that’s the bottom line,” he adds.
However, Reddy and Trans Gulf have not limited their aspirations to the gas-rich peninsula alone. Other ventures have seen the company probe a variety of markets in, not only the MENA region, but the Asian subcontinent as well. Perhaps the most telling mark of the boldness of Trans Gulf’s international operations has been its involvement in Morocco.
The company secured a AED 50 million ($13.6m) contract for the Ain Oudha Palace and has since been approached to work on luxury hotel projects there.
In India, the company is mounting a twin attack on the market in the forms of Trans Gulf Dubai and Trans Gulf India. The former involves a joint venture with Sterling Wilson which, Reddy says, is going on a “mega-project, project-to-project basis”, while the latter is a sole entity which has teamed up with Mumbai developer, Hubtown, and is already executing projects.
While Reddy says that Trans Gulf’s India operation “is just in its infancy”, he adds that current business there is “good enough for [Trans Gulf] to recover its costs” and set it up for “a great future” in the country.
Similar positivity surrounds the company’s dealings in the Kuwaiti market. Although an initial foray with joint venture partner Kazema Holdings proved unfruitful, Trans Gulf has since been approached by “a very active partner” there, which Reddy says has “quite a few interesting projects” lined up.
As appealing as all these markets are to Trans Gulf, it is Saudi Arabia that represents the biggest reward – and perhaps the greatest challenge. The company has yet to make an imprint on the Kingdom’s soil, but this has been due more to prudence than paralysis.
“We want to be sure we get it right when we move into Saudi rather than rush it,” Reddy explains. “We have been probing into the market in the last three years and the response has been great. There were quite a few companies which have shown interest in partnering with Trans Gulf to carry out some prestigious jobs.
“But we are just holding because our principal company, Al Naboodah, is moving in and we would like to be with them and be a part of their umbrella when executing the projects. It’s more of a management issue in terms of minimising the risk in a market that is right now booming. Definitely, we are very keen to move in – 2013 it’s happening for sure,” he adds.
Although this multi-national strategy is more of an investment in the future of Trans Gulf, the company is presently seeing signs of recovery from the trauma of recent years.
“2010 and 2011 were difficult years, but we can see that 2012 definitely looks more promising,” Reddy says.
“In 2011 we had a turnover of AED 380 million ($103.5m). The balance sheet was not great, but the most important thing was to sustain through the period, ensure the remaining employees were taken care of, and show the shareholders that the company was surviving with minimum damage to its coffers.”
While fiercely proud of the manner in which Trans Gulf has ensured its survival over the last few years, Reddy is quick to credit the role of other parties in helping to see the company through its rough patch.
“Thankfully the vendors and the key people who have supported us through this difficult period were quite patient,” he says. “We are a 40 year old company, as of 2012, and to this day we have never had a single overdraft in the company’s name. That is a record, and that credit goes to the management [at Al Naboodah Holdings] for contributing their part.
“It’s not that the company made money during the difficult period, but they ensured that the company was funded and stayed afloat during that time. We are also one of the very few companies that partially imposed salary cuts, but went back to the original levels when we realised that the cost of living had not come down – that gave a lot of confidence to the employees,” he adds.
This appreciation of how decisions at management level affect the company’s workforce is a common theme. Reddy regularly talks about Trans Gulf as “a family” and says that this culture in the company is something on which those on the outside often remark.
“When I talk to our principal contractors, our consultants, they see that family culture in the company and it is one area of my team where I am quite proud. I’ve seen that commitment to the company from our employees, which means I don’t worry about the results. I’m sure each one is putting in the best of their efforts,” he says.
With everyone seemingly pulling in the same direction and results now improving, Reddy looks back on the tougher times in an admirably philosophical manner.
“I see the downturn as having had a more positive than negative effect,” he says. “We have become better people, better analysts, and we have a better understanding of the scenario. We put more thought into the process so that the end product is better. We understand our strengths and weaknesses better: the strengths remain strengths but we have been working to improve the weaknesses, and we’ve put in a lot of work to make this happen.
“From the output perspective the efficiency levels have increased,we have a regular monitoring system and I see a lot of positivity overall,” he adds.
Reddy’s take on Trans Gulf’s future is also decidedly bright. He says the company is aiming for growth of 10 to 15% per year while making its international operations autonomous units. Closer to home, he is confident that the company’s UAE-based operations will benefit from the country’s positive economic outlook as a whole.
“Dubai and the UAE have a great future because their fundamentals are strong, they have a great infrastructure and are very well connected. All of these factors make this place the gateway to the rest of the GCC and the Middle East,” he says.
“Hospitality and hotels plays its part in that and, on that perspective, I think we are on the right track with around 25 five-star hotels that we have done in the past 12 to 15 years. We stand a great chance of getting more hotel projects in future.”
As for the company’s move to their shiny new headquarters in Dubai Investment Park, Trans Gulf’s chief operating officer could not be happier.
“It’s been fantastic,” says Reddy. “One of the best things is that it is no longer a fragmented company: we had offices in one place, a workshop in another place and stores elsewhere. It’s now all under one roof in a 90,000 square foot premises.” Transformation indeed.
Trans Gulf is preparing to set up a Facilities Management unit which will become fully operational within the next two years, according to Sekhar Reddy. The company already operates a maintenance unit which has been catering to in-house developments and projects on which Trans Gulf had carried out the MEP works.
Reddy said the company has been encouraged by clients and other parties to expand their sphere of operations into the Facilities Management market.
“We have been encouraged to move in a wider spectrum and enter into the open market where we could secure quite a few interesting projects – maintaining electro-mechanical in particular and maintaining certain other segments of the properties,” Reddy said.
“Right now the maintenance team is 200 strong and Dubai needs that. There a lot of beautiful buildings but they don’t have the necessary support, so that’s where we see a great opportunity,” he added.
Trans Gulf’s chief operating officer has revealed that the company plans to open a training facility for technicians in India by the end of the year. The company, like many others in the GCC construction industry, has found recruiting quality labour from the subcontinent a major problem for some time.
“There is a lot of demand back in India and other parts of GCC countries, so getting a good technical hand is expensive and retaining them is a challenge,” Reddy said.
“Based on that, we feel the need to have our own training unit wherein a fresh candidate is given a six to eight week induction programme – a proper training, a proper grooming of what Trans Gulf and what social issues are involved,” he added.
Trans Gulf aims to induct 300 to 400 technicians in 2013 from the north-eastern Indian training base in Jharkhand, Bihar. The training, which Reddy describes as “socially responsible” and “giving something back”, will aim to develop the trainees personally as well as professionally.
“The programme is well-structured to improve the personality of the individual in terms of their approach. We will have some yoga sessions and physical activities and then some exams,” he added.