KEF Holdings is gearing up to set up new manufacturing plants in Saudi Arabia, Oman, Qatar and India. KEF Holdings is a successful venture in the UAE that makes specialised pressure control valve, steel castings and cathodic protection equipment for oil and gas pipelines and power industry.
What started 10 years ago as a scrap-dealing business, it now supplies specialised valves to the Dolphin project in the GCC, Oman and Qatar LNG projects and the Trans-Canada oil pipeline linking Canada and Alaska and intends to become the largest valve-producing company in the world.
Despite the recent doom and gloom predictions, a recent partnership between KEF Holdings and the Dubai International Capital, the emerging market investment arm of Dubai Holdings, seems to be the beginning of an initiative to capture a share of $4.1 billion (Dh15bn) market in the oil and gas industry.
Faisal KE, Chairman, KEF Holdings, told Emirates Business the expansion plan was charted out after DIC acquired 45 per cent stake in KEF Holdings. KEF Holdings owns two subsidiaries – JC Valves and Emirates Techno Casting (ETC) UAE.
Originally, Faisal, an engineer, started his small business as a scrap dealer with $25,000 capital in 1995. Last year, the group's turnover was Dh500 million. With the current expansion plans in partnership with DIC, the group intends to become a $1.5bn company within four years. The specialised valves, mostly imported until now in the GCC, are used in the oil, gas and power industries to regulate the flow of oil to the processing units and storage facilities.
KEF subsidiary, Emirates Techno Casting, is one of the largest valve-casting foundries in the world, specialised in high-end project-oriented big-size castings using specialised alloys. And, JC Valves, a manufacturer of industrial valves, is in the process of setting up a facility in Mahindra World City, Chennai, India, for companies like Reliance, ONGC, British Petroleum, Reliance and Indian Oil.
Faisal decided to sell 45 per cent stake in his company to the Dubai Holdings group to fulfil his dream of developing the largest valve-manufacturing company in the world. In Saudi Arabia, KEF Holdings is working closely with Saudi Aramco to sell the entire production from the proposed Saudi plant in Jumail.
With the projected expansion of the oil and gas industry, especially the creation of a wide network of oil and gas pipelines criss-crossing the region, the demand for pressure vavles is likely go up. "We can produce about 15,000 varieties and sizes of pressure valves, which range in weight from 5kg to 15 tonnes per valve. As they are used in the sensitive oil and gas pipelines to regulate pressure and ensure smooth flow of oil and gas, the material used should be without any impurities. I have started my business as a scrap dealer and now we are using scrap steel worth $300 per tonne to make quality special steel for making these valves as per American specifications," he said. Steel sorted out from scrap is refined and recycled in different phases before the actual valve is made. A high-pressure valve used in an oil pipeline is replaced every three years and there will be regular demand from the oil and gas industry, he said.
As the valve-manufacturing cost in the United States and Italy are going up, KEF's state-of-the-art facilities will be able to sell the same products at a 30 per cent lesser cost. "Many international companies wanted to buy stake in KEF Holdings, but we chose Dubai Holdings because my intention was not to make big money, but to contribute to the local economy… because my small business started and flourished here."
"ETC supplies specialised castings for the oil, gas and power industries. For several decades, the demand for valves in the oil and gas industry in the entire GCC market had been met with imported valves from Europe and the US." He said the total market for such valves is $4.1bn and "our current market share is only less than one per cent".
"We have come out with the final product only in 2008. New manufacturing plants are coming up in Abu Dhabi, Jumail, Saudi Arabia, Qatar and Oman. Our plan is to keep the mother plant in the Hamriya Free Zone and set up vale-manufacturing facilities in these countries." The initial investment for the plants is $500 million, he said.
After getting an engineering degree from MIT Manipal, Karnataka, Faisal did an MBA from TAPMI Manipal and acquired an MS in Industrial Engineering from the University of Chicago, US. After working for two years in Inductotherm New Jersey, he returned to India to run his family business in 1992. He came to the UAE in 1996 and set up his first venture in 1997.