He lost a whopping $17m in the 2008 financial crisis. Now, Petrochem Middle East CEO Yogesh Mehta is making billions, expanding to Saudi, and partying - a lot
“Throwing epic Bollywood bashes? Check. Splashing $20m on a wedding? Check. Leading a billion dollar company? Check. Yogesh Mehta likes to play hard, but he works even harder.
The CEO behind the region’s largest chemical distributor, Petrochem Middle East, grew the company from a single facility in Dubai to offices in the world’s leading markets including the UK, India, China, Singapore, Egypt, Amsterdam and more.
It’s almost as though you could set foot anywhere in the globe and find yourself under the shadow of a Petrochem silo – literally – as we found ourselves staring at its flaming red logo while on a trip to Kurdistan in February.
It’s very difficult to survive just on the merit of giving timely service. You have to give the customer real value, and that comes from timely service, good price and good quality
And while the world of chemicals may not be as exciting as the Bollywood parties Mehta throws at his massive Dubai villa, it is the reason he can afford to move into an even larger home, where he plans on building a “bigger, better” private nightclub in his basement.
But then again, if you’re expecting over $1.5 billion in turnover in 2019, why wouldn’t you build anything you want?
It is no wonder Mehta cracks a smile as he tells us his plans to glorify his home.
“I love it. It’s a beautiful life”.
Dressed in a flawlessly tailored blue suit and pink pastel tie, Mehta – or Yogi, as he likes to be called – doesn’t seem to have a reason not to love his life. But looks are deceiving, as we quickly find out.
“Many people are living in denial. [They think] there will be good times soon. That will never happen”, he says.
He’s already on his second cup of coffee, having recalled his company’s loss of as much as $17m in the 2008 financial crash, only to face a similar fate in 2014.
And things are not looking up. Despite adapting to conditions by eliminating low-profit products and reducing costs and overheads, Mehta says the new world of chemicals is “ruthless”. Petrochem’s biggest challenge since 2014 has been relatively simple, but almost impossible to tackle: a tsunami of chemicals oversupply from China.
“It’s become a price market. You can have a shortage of money, but aside from that, there’s no shortage of anything. Price is king; not so much other things like service, or quality even”, he says.
“We live in an oversupplied world. There is enough of everything. Competition is so much that it’s very difficult to survive just on the merit of giving timely service. You have to give the customer real value, and that comes from timely service, good price, good quality and also matching the market prices, which means giving [customers] a lower price,” he says.
The Middle East has actually grown and done the right thing by producing chemicals nearer to the customer, so it’s like a hub and spoke
While Petrochem used to operate on a 12 percent gross margin, it’s now at about 8.5 percent.
“We’re lucky if we even make a 2 percent net margin on our term,” Mehta says.
But companies will have to adapt to the new age where only the fittest will survive, according to the CEO. Ever the optimist, he believes the low margins and oversupply will lead the “fly-by-night” operators to leave the scene.
“The old order is changing. The unprofessional people and companies are already going away, and companies like ours, that add value, who give value, and who have been there for many years, will remain”, he says in a firmer-than-usual-tone.
Once the market clears out the amateurs, the opportunities will come, says Mehta. And he plans on grabbing each and every one, particularly in Saudi Arabia. Petrochem serves as a distributer for the kingdom’s biggest local chemical titans including the Saudi International Petrochemical Company (Sipchem) and SABIC. Now, it is poised to embark on a string of acquisitions of Saudi Arabia’s best performing chemical manufacturing companies.
As part of its plans in the booming kingdom, Petrochem will open a massive storage and chemical facility in Dammam to draw product from other manufacturers for distribution in Saudi and the rest of the GCC. It will do the same in Egypt, where Mehta will expand storage capabilities and partner with local companies to boost its operations across Africa.
“The Middle East has actually grown and done the right thing by producing chemicals nearer to the customer, so it’s like a hub and spoke. You will always make money if you cut the distribution and logistical time”, he says.
And while oversupply may be Petrochem’s biggest challenge, keeping up with skills required for future, technology-led jobs, is another. Mehta’s firm, alongside many others, will have to equip their workforce for changes they might not even be able to foresee, fathom or adapt to.
“We are old timers. Do I care about technology? No.”
My experiences should be rallied into the company. That’s the only thing I want to give in the future
“But the millennials? They need fresh and new skills to compete. This even goes for the guy who irons my clothes. One day, soon, I’ll have clothes that don’t even need ironing. In a more intelligent world, you need intelligent skills to survive. Competition that will come in five years’ time has not even been born yet”, he says.
To stay ahead of the curve, Mehta has begun a wave of hiring young people, many in their early 30s, to be trained and prepared for when it’s time to take the reins of Petrochem. Among them is Mehta’s own son, Rohan.
The 31-year-old has led the company’s business development for six years, but Mehta says he “has really taken control of the company”.
“I feel that in another three or four years, I will be comfortable giving him more and more responsibilities and a senior role in the company. Young people are bursting with ideas. They’re bursting with energy to bring change into this world”, he says.
So where does Yogi fit into the new, youthful company at which he is – for now – at the helm?
“I want to give my experience and my leadership, [but] I want to lead from behind, rather than lead from the front. My experiences should be rallied into the company. That’s the only thing I want to give in the future.”
But he’s giving back beyond Petrochem. The CEO is a trustee in a $140m Hindu temple being built in Abu Dhabi.
“I am helping build that. I’m also doing philanthropy on human rights with the Vatican and the Church of England. My personal time is devoted to philanthropy and helping build this temple and giving back to society, and promoting the dance, drama, theatre and cultural scene here in Dubai”, he says.
The new landscape is ruthless. Price is king. Not so much other things like service or quality even It’s become a price market
But with his son being groomed to take his place, we ask Mehta if he is already contemplating life after Petrochem.
“I don’t know the meaning of retirement. I think I will be there until my last day,” he says.
“Life has so much to offer, and it’s been a beautiful life.”
We reckon anyone who spends their weekends partying with Bollywood stars in a private nightclub at their multi-million dollar villa has a beautiful life. The difference is that many of them – including Mehta’s son Rohan – will probably never know what it was like to sell their wife’s jewellery just to make ends meet.
“Can you imagine that... to feel that your wife must also think you are a failure?” he told Arabian Business’ sister publication CEO Middle East in January.
Mehta had come to Dubai in 1990 after operating, and closing, a failed business in India. He had borrowed so much money, he said, that no one would lend him anymore.
Perhaps that is the most beautiful part of Mehta’s life; that he never has to ask anyone for money at all, or feel like a failure, ever again. All he has to do is continue to win in the world of chemicals - and then throw a party.
In November, Yogi told Arabian Business sister publication CEO Middle East that the company has no plans to file for an initial public offering until at least 2022.
“We are watching the IPO market, but this is not the tie to do it. The markets are not ready at all. They will erode our value,” he said. “We see the demand supply situation and want to instead grow organically. So not until 2022.”For all the latest energy and oil news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.