Drake & Scull International (DSI), the Dubai-based engineering and services contractor, will look to refocus its regional strategy and capabilities on its MEP offerings, CEO Wael Allan told Big Project ME.
In the wake of the contractor posting its financial results for the fiscal year 2016, Allan said that DSI would be looking to build a clear path of sustainable growth, driven mainly by the core mechanical, electrical and plumbing (MEP) business.
The company posted a net loss of $214.2 million for the period, compared to a net loss of $255.6 million reported in the fiscal year 2015.
“At the end of the day, why do people come to Drake & Scull? It’s for our MEP capability, and it’s a great brand name with more than 100 years of experience in MEP,” Allan told Big Project ME during a wide-ranging interview at his office in Dubai’s IMPZ.
“Our strategy is very simple. We want to be number one in any market that we play in – in the MEP arena. If you ask me if we can be number one in Dubai’s MEP market, of course we can. Can we do the same in Abu Dhabi? The answer is yes. Can we become number one in Saudi Arabia? We’re certainly in the top three and we can get there. The same applies to Qatar.
“But when I take the Indian market, for example, we’ve got two streams at work there. Passavant is our wastewater treatment business. We’re good at that and we’ll continue to do that. But if you ask me, can we be number one in the Indian MEP market? The answer is no. So quite frankly, we’ll exit the MEP market in India in the long run,” Allan outlined.
“Our strategy is simple. Be number one, or at least in the top three, in any of the home markets that we play in.”
Allan added that this strategy would also extend to the other market sectors that DSI’s subsidiaries are involved in. While he said that certain sectors continued to see strong performance, others would need a rethink.
“We’ll continue to play strongly in the infrastructure area, in the building area and in the energy and environment area. Passavant is really our vehicle for the energy and environment market sector. Much of what is done in Passavant is very close to what we do in MEP.
“So it’s really an extension of our core competencies in MEP. The oil and gas sector is another market sector where we’ve performed extremely well. We’re very comfortable in that area as it’s an extension of our MEP capabilities.
“But where I think we’ve decided that we’ll exit is general contracting in all areas, except for the UAE, where we have a company called GTCC,” he revealed.
Having gone through a significant learning curve with the company, Allan asserted that it remained a valuable part of DSI’s plans.
“We’ve gone through the learning curve (with GTCC). We’ve paid for it and I feel that we’ve got something valuable there. We could make a difference and contribution in the general contracting area in Dubai, and possibly Abu Dhabi.”
Regarding operations in Saudi Arabia, Allan conceded that the company needed to make a reassessment of the situation there, given the challenges they’ve faced in that market.
“We’ve had our fair share of issues in Saudi Arabia, with oil prices going down, jobs being cancelled and on some earlier projects, we have significant and substantial dues with clients. I think Saudi Arabia is a unique market in a way – I don’t think you can run it remotely or without getting too involved in it.
“I would say that we could have done things better there. So now we’re looking to make sure that we focus on our core competencies in Saudi Arabia.
“I think we ventured into the general contracting arena in KSA when the market was extremely competitive and maybe we did not appreciate how much effort we needed to put in. So what we’re doing now is continuing our business there, clearing up some of the legacy issues and pursuing our claims vigorously, but also refocusing on our core competencies of bidding for MEP projects.”