Al Gurg Paints (AGP) is projecting stronger results post-2016 following somewhat sluggish growth in the general paint market in the region, particularly the UAE, says a senior official of the company.

The Sharjah-based company expects to gain from new contracts, internal marketing developments, the export potential and mega projects likely to come online within a couple of years, said AGP general manager Sunil Gudur.

“Post the economic downturn the paint industry has been amongst the hardest hit as a considerable number of projects were scrapped,” he said.

Gudur added: “AGP has been no exception as the past few years have not seen any substantial growth due to the downturn. The figures – both top and bottom line – reflect a straight line rather than any upward curve and according to management the trend is likely to continue for some time to come.”

The company is part of the Easa Saleh Al Gurg Group, one of the top family-led conglomerates in the GCC.

The paint company is a licensee of world-class brands like Dulux, which caters to premium needs in the decorative segment, and Leighs, which offers robust coatings for the heavy duty segments such as the oil and gas, petrochemicals, and heavy industries.  The company also promotes its own homegrown label Oasis, which has been rebranded and relaunched in the decorative segment and traditionally has been a strong player in the general industrial category, focusing on the highly competitive domestic decorative segment as well as exports.

Overall, AGP has maintained a supply of over 15 million litres per year with the three brands contributing more or less equally.

But year 2016 could be the beginning of a turning point, Gudur says, citing a combination of new account wins, new dealers ap-pointed in the domestic market and interesting breakthroughs in exports which “continue to offer opportunities for large volume.”

AGP’s management also feels the UAE and other GCC states will witness improved construction activity from late 2016-early 2017 for global events such as the Expo 2020 in Dubai and FIFA 2022 in Qatar and mega railway projects. Gudur cautions all new projects should be well scrutinised from various standpoints so that they are not launched and then abandoned.

“Paints is not a very high-margin industry for the manufacturer and a couple of major losses can set the company back from which it is extremely difficult to recoup,” he warns, adding that enforcement authorities should help prevent the inflow of cheap but non-performing products.  

AGP exports to over 15 countries in Africa, the Commonwealth of Independent states, the Indian Ocean periphery states and Af-ghanistan on a regular basis.

OASIS’ APPEAL

Price-competitive brand Oasis could see its share scoring over the other two labels due to “high pressure faced by customers on prices” and a “weakening of the premium equity that Dulux has in the market,” opines Gudur, who adds that Dulux continues to be specified for premium and super-premium projects and will continue to do so.

“As the economy continues to struggle, AGP is banking on its rejuvenated Oasis brand to garner better market share in the domes-tic and export markets.” An Oasis showroom has been rebranded at a strategic location in Dubai, complete with its own tinting sys-tem and an offering of over 5,000 shades.

Although the decorative segment is quite overcrowded, the initial response to Oasis has been very encouraging and AGP has estab-lished a network of over 50 dealers in a short span of 10 months. “Its USP of being a truly local Emirati brand with international quality and coming from the stable of Easa Saleh Al Gurg has struck a positive chord. And its positioning as ‘a premium brand at an affordable price’ has certainly found appeal with the dealer fraternity since they stand to gain more with Oasis sales due to its attrac-tive pricing policy and dealer schemes,” highlighted Gudur.

“An added advantage is also the fact that brand Oasis’ has been approved by the Heritage Committee of Dubai Municipality, providing authentication of the brand’s quality and finish. Little wonder Oasis was approved for the Dubai University project recent-ly.”

MANUFACTURING

Gudur: initial market response to the rejuvenated Oasis brand ‘encouraging’

The company’s production facilities can manufacture over a million litres per shift per month and raise output significantly if nec-essary by introducing additional shifts, equipment and manpower. The company has been awarded the EPC (Environment Perfor-mance Certificate) by the Federal Ministry of Environment & Water back-to -back for the last three years.

As well as being an ISO 9001:2008 certified company it has won the Dubai Quality Appreciation Programme accolade in 2011 and the International Business Award (also known as the Stevie Awards)’s Turnaround prize for displaying consistent growth year on year. The turnaround award was given because AGP had been at very nominal levels in terms of profitability and in three years profits grew more than 300 per cent from 2007 to 2010, Gudur explained.

The company has medium-term plans for introducing some state-of-the-art technology coatings in niche segments which it says will be green and premium in nature. The new offerings will be in speciality sectors instead of the traditional decorative and heavy duty segments.

PROJECTS AND PROMISE

The company has supplied to some iconic projects. Dulux has been used in projects such as the Seven-Star Cleveland Hospital, Al Bustan Mixed development and New York University in Abu Dhabi which used premium and super-premium emulsions such as Magic Touch in large quantities. Currently, Dulux is adorning the walls at the prestigious Al Maktoum Hospital in Dubai.

In the oil and gas category, Leighs products have gone into the projects of Adco, Zadco and Adma Opco that require protection against corrosion. Leigh’s products, including the bread-and-butter offerings of zinc rich primers, intermediates of micaceous iron oxide and PU-based top coats, remain popular. The star Leigh performer is a vinyl ester (glass flake epoxy) called Dura Glass VT 30 and Dura Glass VT 40 which the company says is the only product used by major oil and gas players such as the ones just mentioned.

Leighs has also been requisitioned for the Jumeriah Beach Project in Dubai.
Oasis has become a preferred supplier to majors including Zamil, Mammut and Federal Transformers as well as players such as Balmer & Lawrie, Al Fujairah Steel Barrels and a host of other customers on a regular basis. Overseas, Oasis is well established in the West African states of Gambia, Guinea-Bissau, Mali and Senegal and in the Central African market of DR Congo and continues to consolidate in Mozambique and Angola. 

Discussing the home market, Gudur commented it was a difficult one to be in with the expatriate and local mix being at a percent-age ratio of 88:12 and “repainting not being very high on the agenda for the bulk of the population.”

On the positive side, Dubai being a Mice (Meetings, Incentives, Conventions and Events) state, it attracts large numbers of visitors which necessitates the upkeep of real estate assets such as hotels and hotel apartments that would need paint.

Also promising for the business is the participation of paint companies in mega railway projects and projects linked to the Dubai expo and the soccer extravaganza.