By Gerhard Hope
With such iconic projects as Meydan Racecourse under its belt, Trans Gulf of Dubai has just signed JV partnerships in Qatar, Kuwait, Saudi Arabia and India, and is embarking on a major project in Morocco. GM Sekhar Reddy talks about how the company is thriving after the downturn.
Trans Gulf was established in 1972 as an electrical company, and set up its mechanical division in 1990. It started working in Abu Dhabi in 2009, and is now focusing on the rest of the region. Decisions on three major projects are pending in Qatar, while in Saudi Arabia, Trans Gulf has entered into a JV with major construction and manufacturing firm Alfanar; with Kazema Holdings in Kuwait; and with leading electro-mechanical contractor Sterling & Wilson in India. In Morocco, it has clinched an AED50 million MEP works contract for the Ain Oudha Palace.
In Dubai, Trans Gulf handed over its works for the Meydan Racecourse at the end of 2009, after beginning the flagship project in 2007. This is one of the largest projects completed within Dubai in the last year, replacing the existing racecourse at Nad Al Sheba. Billed as a city dedicated to horse-racing, the mixed-use development encompasses the Meydan Museum and Gallery, a 65,000-seat grandstand, a five-star hotel, ten restaurants, an IMAX cinema, a covered 11,500-space car park, a boathouse and two world-class race tracks.
Trans Gulf’s scope of work involved the full MEP installation for the 288-room five-star hotel, including air-con, electrical systems, water supply and drainage, full MEP for the Dubai Racing Clubhouse and for three levels of the grandstand, and all ancillary works such as floodlighting. Interestingly, the work also encompassed MEP systems for the network of underground tunnels providing the main routes from the horse stables to the main tracks, which involved specific lighting and ventilation requirements. Astonishingly, this fast-track project was completed in 20 months, sterling testament to Trans Gulf’s capability and standing as one of the region’s pre-eminent MEP contractors.
Reddy says the company will soon be relocating to new centralised premises in Dubai Investment Park, with its own warehouse and workshop facility. “At the moment we are quite scattered over Dubai, so the move is a logical progression,” says Reddy. It also represents a strong commitment to the MEP industry in the region, and indicates that Trans Gulf will be a major player for a long time to come.
A fully-qualified mechanical engineer, with a Master’s in HVAC and an MBA in Finance, Reddy has been with Trans Gulf for 20 years. He is an active member of ASHRAE as well as the Institution of Engineers (India). Trans Gulf is also a founding member of the Emirates Green Building Council. After a stint in Bahrain, Reddy moved to Dubai in 1990. “I joined Trans Gulf as a project engineer, and am now GM. We started out with a staff of 20 and 150 workers; we now have 650 staff and close to 2500 workers. Our turnover at the beginning was AED20 million, which peaked at AED750 million, and now due to market corrections is around AED500 million,” comments Reddy. “We did have a difficult six-month period adjusting to the new market situation, but thanks to the team we are back on track. We do appreciate that Dubai showed us the direction, and are using that experience to move forward.”
Reddy says Trans Gulf’s expansion strategy is predicated on sectionalised departments, all with their own HR/administration, commercial, finance, estimation, health and safety, procurement and engineering competencies. “That way it is easier to manage and spread the company’s working philosophy to all these areas. We do not want to reinvent the wheel every time we open a new division. So that is one of the major changes we undertook in our restructuring process.”
Reddy says the restructuring has incurred additional costs, but these have been offset by the growth opportunities leveraged as a result. “Skills have always been a challenge. Even now to get good people is a real challenge. Thankfully when things were really good, some of our good staff left for greener pastures, but now they have returned.” The company deliberately fosters an open, multi-cultural environment, with an emphasis on staff diversity. Employees hail from South Africa to the Philippines and the UK.
“We engineer, construct and maintain electrical and mechanical works. Our main target industries are hotels and resorts, district cooling plants, residential and commercial properties, shopping malls, infrastructure facilities and hospitals. We do not have many references with regard to the latter, but this is one area we would like to expand into. In fact, hotels and hospitals complement each other in the number of services that are required for a single property, and that is why we believe we can succeed in this sector as well,” says Reddy. Trans Gulf’s impressive reference list contains some of the best-known five-star hotels in Dubai, mostly along the Mina Sehayi coastline. “We have close to 20 five-star hotels in our portfolio,” says Reddy. District cooling references include the largest in the UAE, the 60,000 TR plant in the Burj Khalifa precinct, as well as other projects such as Dubai Healthcare City and Madinat Jumeirah.
“One of our strengths has been our ability to engineer specific solutions. We have done the Emirates catering facility, for example, which prepares around 165,000 meals a day. We took design responsibility for that, and co-ordinated with 14 nominated specialist sub-contractors, of which eight were from Germany, so it was quite a challenge. This was a one-of-a-kind, completely automated plant that we completed in 2008. It is one of the projects we are really very proud of,” says Reddy.
“Unlike a normal contractor, we team up with the project team. That is where I believe we score points compared to our competitors, because the customer service level in terms of deliverables is there for the people who work with us, and hence we have been preferred on jobs where we are competing. Our strength has been repeat orders, and we have been expanding our portfolio as a result. This sustained us even during the difficult times; these are the customers who continued to support us, and we are thankful to them and appreciate their confidence in us,” says Reddy.
Trans Gulf’s work on Meydan Racecourse is evidence of its specialisation in ultra fast-track projects. “If you look at the scale of a project like Madinat Jumeirah, we completed that entire job in 28 months. We completed the new halls at the Dubai World Trade Centre for Khansaheb in 16 weeks. There have been quite a few similar projects where we have teamed up with the project management team and consultants, to the extent where this capability is now a major part of our portfolio.”
This is not to say that the downturn did not have a serious impact. “Initially we saw a 35% decline in business at the beginning of 2009,” reflects Reddy. “It took us around ten months to restructure ourselves, and by the beginning of 2010, we were on track again.” Staffing levels were also reduced by about 20%, but have since returned to their prior level. Looking to the future, Reddy notes that Dubai Inc. is restructuring itself successfully. “Abu Dhabi is taking big steps going forward; Qatar and Saudi look like potential markets and, of course, Kuwait and India are equally attractive. So we are going to look at one area at a time, and are focusing on Qatar now. Our advantage is that local partners have approached us due to our excellent references, and we have been very careful in choosing our partners to ensure all our bases are covered,” explains Reddy.
Reddy says the current expansion drive, rather than being a response to the downturn, has “more to do with supply and demand at the moment and, of course, opportunities available. Our company philosophy has always been not to grow exponentially, but to operate in whatever market complements our strengths. The focus of the MEP market is shifting towards the rest of the region in terms of projects. Dubai was fast-track; what it achieved in five years, other places are just embarking on that process. Dubai has shown the way. Good companies will always have their share in this market, and this is what we are trying to explore.”
Reddy says the main challenge “is to keep the balance sheet positive, and employee morale high, which go hand in hand, and adapting to the new market needs. This is the basic formula for any company to succeed: how well it can adapt to the local conditions.” Reddy says “good MEP contractors will always have their fair share of work,” although margins will invariably have to be compromised on. And just as quickly as some new players have appeared, so have others disappeared as quickly.
“That is showing up as well in terms of unhappy clients, who we get repeated calls from to sort out their issues. I believe it is a learning curve, and I do hope the other regions take note of this. This is one of the reasons we have specialised in those segments where we can offer consistent quality.
“In terms of green building and energy efficiency, Reddy says “there is plenty to do, and the MEP contractor certainly has an important role to play in implementing practical, workable, adaptable and user-friendly solutions. We are seeing some positive moves by the construction sector, and as long as the commitment is there, it bodes well. The process though may take some time.” Concerning refurbishment as a potential new market in the downturn, Reddy points out “it is difficult to get into a live building to try and improve on its efficiency.”
With tourism and hospitality a major industry in the region, Reddy says energy efficiency should focus on this sector initially, with the development of practical schemes to rationalise power and water consumption and to reduce waste. “Educating the public in this regard is also important, especially due to the large number of expatriates from different countries and cultures. Each must be made to be responsible in terms of their usage of public utilities. So, yes, front-end contractors like us must take the lead. Of course, at the end of the day we can only do what the designer does – we have engineering capability, but must liaise with the consultant to see what is good for the project.”
Commenting on the trend of MEP companies moving into FM service provision, Reddy says “that particular sector has, to a certain extent, been neglected, and it has an excellent future.” He says Trans Gulf was contemplating launching a fully-fledged FM department in 2009, “but our priorities shifted somewhat in the interim.” However, the company does have a complete independent maintenance team taking care of its projects, which is one of its major revenue streams.
“What is happening is that clients are realising the importance of having good-quality MEP equipment and services.