Construction

We can outwit the competition – Shiraz Hasan, Tech Group, interview

How Tech Group has become a powerhouse of construction in Ajman

“Our philosophy is to think outside the box – we always believe that we can outwit the competition and that we can be smarter than anybody else out there. That is because we believe in innovating our processes and how we do things”

Given its proximity to the likes of Sharjah and Dubai, the Emirate of Ajman has often been regarded as the small fish in a large pond, developing projects that support local economic and population growth, but rarely making an impact beyond its borders. However, in recent years that perception has been changing, with the emirate launching several major tourism and infrastructure projects that aim to attract strong tourist numbers and investment.

According to a report released by Cavendish Maxwell earlier this year, Ajman has seen large-scale retail developments catering to the catchment population, as well as visitors from neighbouring emirates, being built across the city. Furthermore, last year the government of Ajman said it would be allocating 34% of its $321 million budget to supporting economic and infrastructure development, translating the Ajman Vision 2021 and the emirate’s future plans.

As a result of the infrastructure impetus from the government and increased activity from private sector real estate companies, Ajman could be seeing an improvement in its investor profile over the coming years, the report predicts.

This assertion is supported by Shiraz Hasan, CEO of Tech Group, an Ajman-based construction group that operates across various core disciplines in the construction industry. With operations that range from general contracting through to ready-mix concrete, electro-mechanical works, steel fabrication, aluminium and glass, interior and joinery works, concrete works and even a division that deals with petroleum products, Hasan says the group’s performance has been “exceptional” in recent times – a reflection of the potential of Ajman.

“It’s hard to pinpoint exactly, but at a group level – at a macro level – we have performed exceptionally well. We have grown between 20% and 25% year-over-year for the last four years. I think between 2016 and 2017, we’ve easily added another $27-32m in additional revenue to our group.

“The market has been challenging, but our philosophy is to think outside the box – we always believe that we can outwit the competition and that we can be smarter than anybody else out there. That is because we believe in innovating our processes and how we do things. We keep challenging ourselves and finding new ways and efficiencies – that helps us to compete in a bad market as well,” Hasan asserts during an exclusive interview with Big Project ME at his offices overlooking Ajman Corniche.

Established in 2003, Tech Group has become a powerhouse of construction in the emirate, as evidenced by the number of projects and sites bearing the logos and signage of the group’s various divisions. Since its launch, the company has been heavily involved in Ajman-focused projects but has also developed a regional presence, with operations in Saudi Arabia, Iraq and Sudan.

However, like many other businesses in the region, the group’s operations were hit by the financial crisis, and business went through a slump. It was in the wake of these challenges that Shiraz Hasan was brought on board to help steady the ship and turn things around, as he explains.

“Primarily, I’m a finance and mergers and acquisition person. I spent most of my adult life in the US, where I got my university education and went on to get public accounting certifications. I started with Ernst & Young initially, then I moved on to work with PwC on the mergers and acquisition side, but I do have some experience in the oil & gas industry in the US [as well].

“When I moved out here in 2010, I started working with the government of Ajman and tried to help them restructure a government-owned group of companies, primarily in waste management and in road contracting. There were six or seven different businesses [within that group]. I spent around three years turning around that entity, and then this opportunity came about. It was in early 2013 when I started with Tech Group and took on the challenge.”

Making the shift to a construction business, having come from such a different background, required him to make a significant adjustment, and circumstances at the time meant he had to make some hard decisions.

“It seemed very challenging initially, because I personally had no experience. I’m not from an engineering background and I didn’t understand construction [at the time], although I had been associated with road contracting previously, which has the same methodology, at a macro level. But given it wasn’t just one business – we had a group of businesses – and a lot of our entities were not performing well post the recession, it meant that a lot of work had to be done to turn the entities around and restructure them, set the teams up from scratch and come up with a comprehensive strategy to figure things out, and make a solid decision about moving forward.”

One of the first things he did is make the call to roll back Tech Group’s operations outside the UAE. This meant spinning off the Saudi Arabian ready-mix business and rolling back from Sudan and Iraq, where the group had a piling and construction business, so that his team could focus on the local market and make a strong impression there.

Another important lesson learnt during that time was to focus on improving efficiencies and cutting down on costs across the group, he asserts.

“At every level [we look for innovation and efficiencies]. We keep re-evaluating and re-engineering the processes, the structures, the teams, and we constantly try to go as lean as we can when it comes to a project, because the lesser the overheads, the more competitive you are in the market,” Hasan explains.

“When it comes to the manufacturing and contracting units – like our wood joinery unit, the aluminium and glass units and the steel fabrication units – we keep an eye out for any new technologies or automations that would help us cut down costs and increase production. Cutting manpower costs is one thing, but at the same time, if there is a technology that helps you produce double your current amount in a day and uses similar technology, then that’s the kind of stuff that we’ll always keep an eye out for.”

As a result, over the last three or four years the company has invested more than $100 million into the business, in its factories and operations, including buying new and modern machinery and equipment, as it looks to keep its edge in an increasingly competitive market.

“Our biggest focus has been construction, which incorporates all our business units except for petroleum. Steel has been a major focus – we’ve put a lot of effort into upgrading our plants and equipment, we’ve bought new automated CNC machines and fabrication equipment, new cranes and all. We now have a pretty modernised steel fabrication and cutting factory.

“We have also gone out and sought a dealership with Emirates Steel, which will boost the variety we can offer to our customers. We have been dealing with Turkish Steel and with some local steel mills as well, but this deal with Emirates Steel really put us out there, in terms of giving options to customers about whatever steel they want to choose,” he elaborates.

Furthermore, Hasan reveals that he wants Tech Group to diversify its offering even further, explaining that despite construction being the main focus, he encourages the team to look beyond it as well for new business opportunities.

“We’re looking at eco-related projects, like waste-to-energy, waste-to-RDF, desalination, wastewater treatment and a whole host of other opportunities. We’re even looking into solar. We’ve not necessarily started everything yet, but there’s a lot of groundwork that has happened and we feel very confident that we’re going to have a solid impression in the environmental business market.

“Without going into too many details, we have a partnership with an international company, a 50/50 partnership, and one of the areas we’re exploring with them is desalination. For our first project, we’ve already secured a location to set up the plant, and right now we’re going through the environmental and feasibility studies. It’s soon to become a reality.”

Returning to the present, Hasan says the group plans to step up its recruitment plans as it looks to build upon the good performance of the various divisions in recent years. While this can be viewed as a somewhat surprising stance, given the challenges the UAE construction industry is facing, he’s confident this is the best time to make such a bold move.

“Surprisingly, in a market where you’ve seen so many layoffs and bad news in the recruitment market, we have – just over the last year – hired more than 120 professional staff, and we’re constantly recruiting. I think right now in the market we’re one of the biggest recruiters.

“We’re expecting to see major progress in the waste-to-RDF facility and the desalination plant. The water treatment facility is already ongoing, and there are a couple of other major projects where we’re expecting to be partnering with a couple of other international companies. So this is a major focus for the group right now, along with construction,” he asserts, adding that within construction, the group is approaching a turnover of $190.5 million, and that his target is to increase it to $272 million by the end of 2018 or early 2019.

In addition, Hasan reveals that with the group’s construction-focused entities performing so strongly, he intends to take the natural next step and look at the real estate development sector. Given that the group has already formed a reputation as a one-stop shop for massive real estate projects – as evidenced by the success of its work on the massive Sharjah Waterfront project – he sees no reason not to consider moving into the development of projects.

“We’re primarily a construction group and we’ve not really been in real estate development, but it is something that we think may gel well with our businesses. We’ve just started one major project, which is a 27-storey tower in a prime location in Ajman. That’s something of a trial run, you could say. We’ll see how well that project performs in terms of rate of returns and all. If it does well, then we’ll look at multiple different venues and markets in the UAE.”

While these ambitious plans are very much in play, Hasan adds that Tech Group is also focusing on expanding its core competencies beyond its current Ajman boundaries. Dubai has become a major focus for the group, with its MEP division already securing some major projects in the neighbouring emirate.

“As we’re adding more capacity and as we’re growing, we’re hungry for more work. Dubai is a major market for us. Our MEP division has secured more than a couple of hundred million dirhams worth of work in Dubai, while Tech Construction is set to follow next. We’re trying to work out the licensing requirements and all to set up our base in Dubai. Our other entities have already been involved [in projects in Dubai], and they’ll continue to stay involved and look for more market share,” he says, acknowledging that there will be challenges along the way.

“There are issues in the market. We know that the liquidity situation is not very good and that a lot of contractors have had payment issues. That’s something that we’re totally aware of, and when we’re going and bidding for new projects, we’re going to be very cautious and select them carefully – the developers and clients that we want to work with.

“The risks are there, but we have more of a conservative approach. We don’t like to over-expose ourselves, so I think we’ll come out fine,” he concludes bullishly.

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