One of the UAE’s longest-serving family firms is shifting management to a new generation. Meher Mirchandani and Chirag Lahori talk candidly about their vision for the Palmon Group
A fortuitous meeting in 1984 changed the life of Manohar Lahori, the founder of Mumbai-based garment manufacturer, the Palmon Group. On a business trip to London, Lahori stopped off in Dubai and visited Jebel Ali, where the UAE’s first free zone was in the process of being set up. During the visit, he met with Sultan Ahmed Bin Sulayem, who had been charged by the late Sheikh Rashid Bin Saeed Al Maktoum, the ruler of Dubai, with launching a cluster of businesses around the manmade harbour that would, in the future, go on to supercharge the emirate’s economy.
“Manohar didn’t really think he would come here and set up a factory, but Sultan Bin Sulayem told him ‘you tell me what you want and we will build everything for you’,” recalls Chirag Lahori, the nephew of the founder, and a director at the Palmon Group. “He was told that the country wanted companies to come to the UAE and establish themselves, and that it would be a win-win for both parties.”
As it turns out, Sultan Bin Sulayem was right. Since setting up shop in the Jebel Ali Free Zone in 1985, the Palmon Group has gone from strength to strength. From its original core business of clothes manufacturing, it has branched out into a series of other sectors, including logistics, warehousing, fashion, facilities management, food and beverages and interior design. The group also has extensive investments in property both in the UAE and overseas.
In part, that diversification was driven by circumstances beyond the company’s control. Founded in 1974 with just ten garment-making machines, the Palmon Group made its name by shipping apparel to high-demand retailers in the US and Europe, including the likes of Marks & Spencer and Gap. At its zenith, the firm had 3,000 workers based in plants in Jebel Ali, Fujairah and Ajman, as well as offices in London and in the World Trade Centre in New York.
But as Chinese manufacturers began to flood the market with cheaper goods in the late 1990s, it became less and less economically viable for UAE-based firms to keep their production lines open. In 2008, the Palmon Group closed down its last major garment factory in Jebel Ali.
While Manohar Lahori has presided over the firm’s move into new sectors, and retains overall control of the business, the next generation is clearly stepping up to the plate. Among the most prominent players in the company today is Meher Mirchandani — the chairman’s daughter — who is managing director, overseeing the group’s Palmonade luxury kitchens division, the Secure Plus facilities management unit, plus the contract furniture arm. She is also the founder of Meher & Rhiddhima, the Dubai-based fashion brand.
As director of operations and business development Chirag Lahori jointly runs all those divisions, minus the fashion brand. In addition, Kunal Lahori (the chairman’s son) runs the group’s new food and beverage division with his wife. Reshma Lahori, Manohar’s wife, looks after Desert Blues, the firm’s garment-trading business.
In person, Meher and Chirag are an intriguing double act. The cousins regularly finish each others’ sentences, and clearly have an impressive depth of knowledge about the group’s various businesses. When questioned as to whether it’s an advantage to be working with members of your own family, both — characteristically — answer at the same time.
“It’s fun — I love to work with my family,” says Meher. “I feel you don’t have to be superficial; you’ve known each other since childhood so you don’t misunderstand each other. We have an inbuilt understanding, and we’ve never had any disagreements.”
“If I have something on my mind, I’m just going to say it, and I’m not going to think twice, because it’s family and they won’t take it the wrong way,” agrees Chirag. “When you’re about to throw in your ideas and give your thoughts like that it makes a person more open and more free towards his or her concept. Some of the businesses we are currently running have happened because of that openness and communication we have at the top level.”
Whatever the reason, it’s a combination that appears to be working. As the group is private, exact numbers are hard to come by, but the cousins say that overall revenues have rising by between 12-15 percent per year over the last five years.
Much of that growth can be attributed to the Palmon Group’s real estate investment portfolio. The firm has invested in industrial, commercial, staff housing, and retail sites across Dubai, including in Al Quoz, Jebel Ali, the Dubai Marina and Business Bay. It also has holdings in Switzerland and India, which it says are mainly commercial real estate leased out on a long-term basis to several multinational corporations.
The Palmon Group declines to provide an overall value for that portfolio, citing the fluctuating property market values in Dubai. However, it does state that those assets account for up to 90 percent of group revenues in any given year.
Outside those investments, Chirag describes the group’s performance in 2013 as stable. Further breaking that down, he describes the kitchens and Secure Plus facilities management businesses – which has clients like Volvo, TNT and the Jumeirah Group - as experiencing “marginal growth” while there was a better performance from the warehousing and logistics divisions. The latter sector is of particular interest to the firm, which is investing substantially on buying up plots of land in the Dubai World Central (DWC) and TechnoPark (a subsidiary of Economic Zones World) areas of the city, just south-east of the Jebel Ali Free Zone.
“This is a very crucial year for us,” says Meher. “We’re looking at taking advantage of the logistics corridor that runs between Jafza and Dubai World Central, and that’s something we’re going to expand in a very big way.
“We have already got approval for a plot of land in TechnoPark, and we’re in the process of acquiring one in DWC; we’re talking to the DWC authorities about that now. We are looking to build a good logistics park to suit the requirements of our clients and then lease it to them.”
Chirag adds that the plots of land – the first of which is 100,000 square feet — are “on average, between AED15-20m [$4-5.4m]”.
“Those two are already in the pipeline, but we are very open to looking at different options in the real estate market,” he says.
More growth has been found in its interior design, kitchens and furniture businesses. Palmon is the exclusive UAE dealer for Ernestomeda, a major Italian brand that manufactures and exports roughly 70,000 kitchens a year around the world. In addition, the firm also represents US kitchen appliances brand Sub-Zero, and fitted around 1,800 specialist fridges into apartments in the Burj Khalifa in Dubai. It has provided 150 kitchens for the first phase of Al Barari – the luxury eco-development based just off Dubai’s Sheikh Mohammed Bin Zayed Road — and also supplied 60 kitchens to Lime Tree Valley, part of the Jumeirah Golf Estates.
“We also have a lot of high-profile high net worth individual clients, so we do a lot of work in locations like the Palm Jumeirah and Emirates Hills,” says Chirag. “We’ve also done some really exclusive kitchens for members of the royal family in Al Ain and Abu Dhabi. The cost of a kitchen for a sheikh in Al Ain came to almost AED1m.”
So what exactly does an AED1m kitchen look like?
“Usually these kitchens are around 500 square feet, so around the size of a studio flat,” says Meher. “We use the finest appliances — equipment from Gaggenau or Miele, for example — and provide exclusive marble worktops and high-gloss lacquered cabinets that look modern and contemporary.”
Another new sector that the group is exploring is restaurants, with its first – El Sur in the Westin Mina Seyahi hotel — opening last year. Offering contemporary Spanish food, the critical reaction to the group’s first foray has been pretty impressive, and the duo say that they have plans to keep on expanding.
“There are already some plans for some new concepts, so we’re looking at spaces in the Four Seasons [scheduled to open in Dubai by the end of this year] and other new hotels,” says Chirag. “We also have a few interested franchises from the US and UK, so that’s something that we’re considering, as well as our own concept restaurants.”
Outside the UAE, the group is also looking at expanding into the rest of the Gulf.
“We are looking for strategic partners in countries like Qatar and Saudi Arabia, which is a massive market in this region,” says Chirag. “Besides that, since our base was back in India, and now that India is really opening up, we would like to set up more bases in India as well, because I think people are really demanding high-quality solutions and products, so we will be looking at different sectors there.”
Further down the line, there seems to be little hint that the group will go public, although Meher says that her ambition is to list her fashion brand in the next 15 years or so. For now, the target appears to rest very much on growing the business the Palmon Group is already operating.
“We want to grow the individual businesses we are in, like the facilities management business, the furniture and interiors — all of this is very promising with the kind of real estate boom that’s taking place in Dubai at the moment,” Chirag says. “We are very dynamic.
We are interested in opening up to various business fields and sectors, and want to be one of the big established business groups in the region, synonymous with great brands, great products and great services.”
The story, it seems, still has a long, long way to run.