DSI says diversify to survive economic downturn

MEP contractor starts operations in Algeria, establishes Indian office

Khaldoun Tabari says diversify to survive in 2012 (Getty Images)
Khaldoun Tabari says diversify to survive in 2012 (Getty Images)

Companies that diversify their operations have a greater chance of surviving the current uncertain economic conditions, the CEO of Drake and Scull International, said on Sunday.

In an interview with MEP Middle East, Khaldoun Tabari said that the MEP industry needs to swiftly adapt and devise ways to move forward in response to unforeseen events in the global market.

“Uncertainty is becoming a predominant trend in the lifecycle of businesses and therefore risk management has become crucial to the survival of companies, especially in the construction industry where the required operating capital to maintain the business is quite substantial,” he said.

“There are generally varied frameworks that help contractors mitigate their risk exposure and the rest is a function of the flexibility of your business model and proactive responsiveness to the changing dynamics of the construction industry,” he explained further.

“[Therefore], the most effective way to control external risk is to diversify through countries and product offerings to mitigate exposure.”

“We have realised that one of the key solutions is the need to remain responsive to local markets, while at the same time, achieving regional efficiency through integrating and coordinating operations across all markets and allowing for the transfer of knowledge from one operation to another,” he added.

Tabari said that DSI would continue to diversify as it was pivotal to the continuity of business as growth plans were implemented.

He added that he was cautiously optimistic about 2012, especially in light of the economically volatile situation around the world.

There would be sustained growth in the region due to government spending on infrastructure developments, which remains a strategic priority for governments and an area that DSI intends to capitalise on.

“Based on our secured backlog of AED6.7bn, we expect that next year we will approximately grow around 20% to 25% in comparison to 2011,” Tabari said.

Having started operations in Algeria and established an office in India, Tabari said they would be focus areas for the coming year.

“We are currently extensively bidding for projects in the MENA and Asian regions through the MEP, Civil and Water and Power divisions and we are proactively seeking to develop our integrated service offering and to diversify into various industry sectors in emerging markets,” he concluded.

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