Invest now if you have vision, cash

The downturn has to an extent reined in the skyrocketing prices that increased the operational costs of many businesses and manufacturing units. This is the time to invest if one has liquidity, said Lalu Samuel, Managing Director and joint venture partner of three companies based in Sharjah Airport International Free Zone (Saif), Clipsal Middle East, Pierlite Middle East and Gold Peak Industries, all involved in the manufacture of electrical/electronic components and accessories.

"You have to have the vision and capability to invest," he said. "You should have the liquidity, rather than look at banks for a 100 per cent financing. This time is an opportunity for those who have cash money."

Do you have units in the region outside the UAE?

No, our factories are based here, which is the base of our logistic centre, too. However, we have offices in each of the seven emirates and one each in Oman, Qatar, Bahrain, Kuwait and Saudi Arabia. We have an office in Jordan that also serves Syria, Lebanon and Cyprus; offices in Uganda that take care of the whole of Africa; [and] one in Egypt that takes care of Libya as well. We are quite busy in the meantime, as this region has lots of growth potential. The UAE offers excellent infrastructure for industries, including communication, transportation and productivity of the employees, which is much higher than low-cost countries.

Are you planning to expand?

Yes, we have expansion plans, and two weeks ago, the second phase expansion of Pierlite Middle East was inaugurated by Sheikh Abdullah bin Mohammed Al Thani, Chairman of Sharjah [Department of Civil] Aviation and Saif Zone. With this expansion, Pierlite's total investment in the Saif Zone facility has risen to Dh75 million. We are planning further expansions. Pierlite is the Middle East arm of the Australia-based Gerard Lighting, a manufacturer of light fittings and accessories with a $600m [Dh2.2 trillion] turnover and Pierlite is its second manufacturing facility outside Australia.

Clipsal Middle East is the local arm of the France-based Schneider Electric, a leading brand in home automation and electrical accessories. We have just completed building the premises for the expansion of our plant over 120,000 square feet. We are expanding into the manufacture of switches and sockets, PVC pipes, control systems, energy efficiency, networking products and light fittings. Our future plans include a centre of excellence for manufacturing that will support the whole region. We have about 800 employees in Clipsal Middle East, and about Dh250m in assets, including inventories. We started small in 1996 with a turnover of $600,000, from where we have reached about $130m. Schneider Electric is a €17bn [Dh76bn] company, employing 120,000 people worldwide. Gold Peak, which is the local arm of the Hong Kong-based Gold Peak Industries, a specialist in battery manufacturing, is still small and we are working on expansion plans.

Do you think that the local market needs such expansions?

We are looking to grab a larger share of markets we are serving – in about 62 countries, including the Gulf. We have done the expansion and we are committed to the region and the countries we are serving.

Is this a good time to expand?

Yes, this is the right time to expand or set up a business for those who have liquidity, as costs are lower now than during the boom. You have to have the vision and capability to invest. You should have the liquidity, rather than look at banks for a 100 per cent financing. This time is an opportunity for those who have cash money. This is the right time to construct and build and move forward.

How was your performance in 2009?

Last year, our UAE turnover decreased, but we managed to hold on to the profits by increasing efficiency, cutting down on expenses, but without retrenchment. We have cancelled advertising and promotion, cut down on transportation cost and negotiated lower prices for raw materials.

What was your annual growth prior to the downturn?

Since establishment in 1996, we've had an average of 32-35 per cent year-on-year growth. We look at this region as one that caters to 400 million people. The population of Arabic speakers in the 21 countries is about 357 million, so if you take even five per cent of that as the buyer base, we still have the same population as that of Australia.

To what extent is the dumping of pipes in the UAE market affecting your business – the issue you raised with the Sharjah Chamber of Commerce and Industry recently?

For PVC pipes, we have a 40 per cent market share in the UAE. Although we have a capacity to produce 350km per day, we are limited to 250km/day, as we are suffering from the dumping of Saudi pipes. These are sold in the local market for less than the raw material price, being subsidised by the Saudi Government.

Also, the UAE Government does not impose more than the GCC unified tariff of five per cent, whereas the Saudi Government imposes up to 20 per cent customs duty on our products exported to Saudi Arabia. Because of this, we lose out on the largest market in the region.

How do you see UAE as an investment destination?

If you look at about 100 cities in about 200 countries around the UAE, the latter is the best, as it offers an environment conducive to working and living – good infrastructure, safety, social atmosphere for the family and children, good health and international education systems. Of course I am optimistic, otherwise we would not be investing here.

PROFILE: Lalu Samuel Managing Director and Venture Partner, Clipsal Middle East, Pierlite Middle East and Gold Peak Industries

Samuel runs three companies based in the Sharjah Airport International Free Zone (Saif). They are involved in the manufacture of electrical/electronic components and accessories. He is also a member of the Board of Trustees of Sharjah Economic Excellence Award and member of Tatweer Administrative Board in Sharjah.

Samuel has a BSc degree. In May 1996, he started his businesses in Saif.

Follow Emirates 24|7 on Google News.