Interviews

Contractor Interview: Dr Anil K Gopinathan Pillai, CEO, Airolink

Dr Anil K Gopinathan Pillai, chairman and CEO of Airolink, a UAE contractor is making rapid strides in the local construction industry

It’s not uncommon to hear stories of individuals and companies in Dubai achieving rapid success, given the fast-paced nature of business in a city where anything seems possible. Whether it’s tech start-ups, product suppliers or even homegrown engineering consultancies, entrepreneurs from all over the world have found a place to set up shop in Dubai and flourish.

However, achieving success is easier said than done, with the competition and challenges in the market enough to test the resolve of even the most strong-willed of entrepreneurs, especially in the wake of the infamous financial crisis. As challenging as it would be for any new business to survive in those conditions, it is doubly difficult for contractors, who have to deal with pressures from both sides – suppliers and clients – while also juggling project deadlines and deliveries.

Therefore, it may come as some surprise to hear of a homegrown contractor that has not only managed to surmount the obstacles before it, but also thrive, having carved out its own niche away from the spotlight. And all this while having been founded in 2008, right before the worst of the crisis hit.

This, then, is the story of Airolink, a contracting firm with ambitions to be a leader in Dubai’s construction, but also one determined to succeed on its own terms and at its own pace.

Back in 2001, Dr Anil K Gopinathan Pillai was just another postgraduate looking to establish himself in the world. Having graduated with a Master’s of Business Studies in Ireland, he says he felt that the moment was right to set up his own company in the country, sensing the opportunities present there.

“There was a small boom going on at that time, and construction was the biggest industry in Ireland,” he recollects during an interview with Big Project ME at his offices in Business Central Towers in Dubai Internet City.

“I didn’t have any connection to construction at the time. In fact, I started my own restaurant as an initial construction package, and that’s where I got the idea. I got a couple of subcontractors involved and that’s when I came to know that there was a huge demand for construction. This was when I thought about choosing that path.”

Having received rave reviews for the construction and design of his restaurant, Pillai decided to take the leap into the construction business, starting with a small contract for building cladding.

“I didn’t even know what cladding was at the time. They told me that it was stone, so I said no problem and started looking at how I could source the stone, then called the exact people and went on from there. I did it as a business – it wasn’t construction. I would call it a construction business. I was just arranging and managing things like, how much the fund was and how to best utilise it. That’s what I did.

“When I started, that was a small project, but because there was a huge demand for construction in Ireland at the time, suddenly we got a couple of new projects, along with the right resources. That’s the way we started in construction,” he relates.

Having begun by employing just two engineers, Pillai says that as demand continued to rise and everything came together, things began to progress rapidly over the course of the next few years – 2003, 2004 and 2005 saw the newly established company take on several important projects.

“Ireland was booming – real estate was huge, with the commercial and residential sectors hyped. But suddenly in 2005, we could see and sense that something was wrong. Clients were disappearing and we could see that a problem was coming.

“2006 was very bad – whatever clients promised, they couldn’t fulfil, whatever promises were made to our supply chain, it all collapsed. 2006 and 2007 were very difficult. We were dealing with China and Germany, we were taking stones and materials from different parts of Europe and Asia, but it was all collapsing, and we could see it happening.”

It was around this time that a friend of Pillai’s recommended that he visit Dubai, given the huge opportunities there at the time. With projects like Dubai Metro and Burj Khalifa under development, the city’s reputation as a hub for construction was at its peak, with billions of dollars being poured into projects of all kinds.

However, having just experienced one financial crash, Pillai was in no mood to take on unnecessary risk. Despite hearing all the talk swirling around about the projects planned at the height of the boom, he remained steadfast in his decision that he would only come to the UAE if he had a job in hand.

Therefore, having had his company registered with NATO as a military contractor in Ireland, he decided to tie up with a local company and won a global bid for a job at Al Minhad NATO Airbase in Dubai, allowing him to make the move over.

“When I came here, I didn’t get too many bad feelings, setting up the company was very easy. I thought it was going to be difficult, but it was very smooth and we did everything [with no issues]. I thought that maybe we would need six months to set up, but within two weeks, we were ready to go.

“But when I came from Ireland to here, I could see that people were selling their ideas. Whatever people had as an idea, they would try to sell it. This was the way business was in the UAE, people were very flexible and everyone had a business idea. It was very challenging, everything was promised, but I felt that there was going to be problems – people were talking about millions, but they didn’t have a single penny in their pocket. You can smell it when people are just talking and not dealing in reality.

“I was very clever and clear when dealing with these types of people. I thought that we were not seeing the exact market, I felt we were being given a false idea. So then when we got the project inside the base, I was very careful in dealing with the situation. I thought it would be best if I didn’t go outside for a project.”

With this cautious approach in place, Pillai didn’t have to wait long for his hunch to pay off. By the time 2009 rolled around, while Airolink was working on the first of several projects on the Australian NATO base, the general construction market was in freefall with companies laying off workers in droves and struggling to stay afloat.

Having established itself as a military contractor, Airolink was able to expand operations to Al Dhafra Air Base in Abu Dhabi, working for the Americans armed forces. However, as market conditions calmed down, new opportunities were opening for the contractor.

“We were doing civil orientated projects inside the base and we suddenly got an inquiry from Abu Dhabi Municipality – there was a big tunnel being constructed in Abu Dhabi and they were stuck with contractors, so we got an inquiry about doing some huge diaphragm walls. We were doing taxi bases at the time – heavy concrete works – and we were good at it.

“So, we enquired with Samsung C&T [the main contractor] and they gave us a project. That’s how we came out from the base and into local projects. We were very careful in how we dealt with people. When we moved out of the base, suddenly people were coming to us and talking about doing towers and this and that. We didn’t touch any of those areas – we came out on a mission, and we wanted to finish that.”

Only after they had successfully completed that project did Pillai and his team look at the opportunities in the market and conduct in-depth research into where they might be able to best succeed.

“There were a huge number of projects that people were talking about, both residential and commercial. We did our research about what was the exact market we wanted to cater for. There was a huge demand for schools at the time. Dubai was very shabby at the time – there wasn’t much work, people were bankrupt and most of the construction and material supply companies were putting up notices.

“On the other hand, we thought that Abu Dhabi was a silent market. We enquired there about what was a good market – residential was one, but could we do residential? We looked at government projects, which were good, but then we thought, what about the education sector?”

This led to the start of the contractor becoming known as the go-to firm for the construction of educational facilities, with several projects under their belt and currently underway. The first was a design and build project that allowed the firm to showcase itself at the ministry level, Pillai says.

“The concept for the project was good and the ministry was very happy with us. We got the green light from all the departments involved. In fact, we made a big noise at the ministry level, across all the departments, because in 93 days we finished phase one of the project. We gave them an exact construction plan and schedule, we guided the client throughout the process – telling them not to spend large amounts of money, giving them exact amounts [in terms of materials and supplies].

“We made a design according to the construction plan and explained everything to Abu Dhabi Education Council. We showed them that we could do a school in 93 days. So suddenly, from there, we got six schools from here and there. We finished all of them on time, and I think we now have more than 32,000 students studying in our facilities.”

Last year, it was reported that Airolink had an order book of $1.08 billion, with several prestige projects in the pipeline. Looking at the current state of the market, Pillai feels developers are performing quite well despite the challenging conditions. As a result, he says there are opportunities available for contractors who are clever and capable.

“The demand for contractors is huge, but most of the contractors are overstretched. I can see that the liabilities are huge. All the old players – the top 10 or 15 companies – are overstretched and have liabilities. Either they’ve become degraded or they have stretched themselves out and now have to downsize.

“At Airolink, we don’t have the same liabilities because we’re relative newcomers to the market. Whoever comes in with good ideas and intentions and a proper management, they are the one performing right now.

“We’re a good-sized company and we’re eager to go for bigger types of projects. Our capacity was $272 million, now we’re at $1 billion. We’ve created a good set-up and we won’t have any additional costs for setting up. We can merge with other sets of people [in a joint venture] and go for projects. We have a good facility with the banks and we’re performing. Right now, we’re planning on achieving $2.72 billion as project value. We’re focusing on a couple of good projects in the $272 million to $545 million range.”

Pillai reveals that the contractor is set to deliver projects worth $190.5 million in 2018, adding that 2017 and 2018 have been quite healthy, with a rough estimate of projects worth $1.63 billion in the pipeline.

Although the plan is to expand the project order book and grow organically, Pillai asserts that Airolink will continue to operate as a true EPC contractor. He has no interest in diversifying the contractor’s operations and moving into specialist fields.

However, having acquired a reputation as a design and build contractor, he is adamant that his experience has taught him that this is the way forward for the company and the industry. With costs an increasingly important factor in the decision-making process, he believes clients are starting to come round to the idea of having a one-stop shop for design and construction.

“Clients themselves are starting to come to us with ideas, but they can’t coordinate them well. That’s where we step in and give them an idea of how to do things. If you go to a consultant, they’ll give you hundreds of ideas, but they can’t give you a contractor’s point of view. We are the people on-site and we know where you can and can’t make a profit.

“Developers are now tapping into that knowledge. We are educating clients about the ways they can do it. They’ve even given it a name – early contractor involvement. They have matured and decided to tap into the knowledge that design and build contractors have.”

Looking ahead, Pillai says this attitude is only going to continue, with developers increasingly aware of the money spent, especially with VAT now a factor to consider.

“Before 2015, people had passion. They weren’t thinking about profit or loss, it was all about prestige. Now, people are very careful. Whatever they’re spending, each penny is being counted. I don’t think people have that old passion anymore, they’re more focused on profit-making.

“But if you’re not thinking about profit-making, then you won’t succeed as a business. As such, clients are giving more value to the contractor’s perspective than they did in the past. It was always the client and the consultant, and then bring the contractor in later. That model has changed as the market has gotten more mature and competitive.”

Despite the changes all around the construction industry, Pillai says one thing that remains constant for him is the staff that make up Airolink. He asserts that one of the core values he’s instilled in the company is that of understanding the value of people.

With more than 18 nationalities under the company umbrella, there are around 2,700 employees working for Airolink. By the last quarter of 2018, he intends to more nearly double that number.

“I know the value of people. When I take on board a new employee, I don’t say that a new employee has come into my company. Instead I say that a new family has come into my company. I have my schoolmates working with me, I have my collegemates working with me. These are 20-year relationships. I have employees hired in 2008 working with me till today. When I registered my company, there were eight people – of them, six are still working with me now.

“We never terminate people without a reason and I always tell my employees that we show our strength by recruiting people. We never say that we don’t have projects and that we have to terminate people. For the last 10 years we’ve been growing, and now my idea is to come up to an employee strength of 5,000 by the last quarter of 2018.”

Pillai points out that Airolink offers employees numerous educational processes and opportunities, creating a culture of support for professional development across the board, whether for construction jobs or support staff in Admin or HR. Furthermore, it’s a policy for the company to recruit fresh graduates and people with limited experience, so as to develop employees who are committed and steeped in Airolink’s culture and ethos.

“We motivate them. If someone wants to leave within a year, we never say no. It’s their right to leave or continue. Our staff retention is quite high, but then again, it’s not a massive footprint. We’re quite a tight little bunch that are adaptable to both big projects and smaller ones. That’s another reason why we’ve been here for the last ten years, because we haven’t overextended ourselves on projects or staff,” he concludes.

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