Face to face: Dr JR Gangaramani, Al Fara'a Group
The Indian-born building magnate talks about his plans for the future
The name of Dr. JR Gangaramani has been synonymous with the rapid rise of the UAE construction industry over the last 40 years. The India-born building magnate told Yamurai Zendera that his desire for success is still as strong as ever.
As co-founder of the privately-held Al Fara’a Group in 1980, Dr. JR Gangaramani has been involved in numerous projects across this country.
Under his building arm – Al Fara’a General Contracting – he is currently associated with government and private projects worth more than AED1bn ($272m). His appetite for being at the forefront of development in the UAE and further afield remains undiminished.
Gangaramani’s love affair with the UAE began when he arrived from India in 1974, after completing an engineering degree at Mumbai University three years earlier. He started his industry career as a project engineer on the Dubai World Trade Centre, at the time the tallest “hi-tech” building in the Middle East and a signal of things to come.
“Passion to build a culture of excellence in my domain of expertise keeps me motivated in my role,” says the Al Fara’a Group president and executive chairman.
To appreciate the size of the company as it stands today, one has to remember that is made up of 11 affiliates and employs just shy of 19,700 people across the UAE, Saudi Arabia, Qatar and India.
Referring to Al Fara’a General Contracting, Gangaramani says he‘s “very optimistic” about its business results for 2013, and for next year is encouraged by “an increasing number of solid and challenging projects being slated in the UAE and GCC.”
Immediate growth strategies have involved tapping into fast-emerging sectors such as healthcare, hospitality and education, as well as focusing on its bread-and-butter work of residential and commercial projects.
The oil and gas and infrastructure markets are also of interest to the company, while the return of confidence in the real estate sector is “giving us great stimuli to augment our capabilities for executing niche residential projects,” says Gangaramani.
One of the firm’s most recent project wins was the Awqaf building in Khalidiya, Abu Dhabi; the largest residential and commercial endowment (Waqf) in the UAE. The reconstruction of the late Sheikh Zayed bin Sultan Al Nahyan building that goes back to 1975 is expected to be completed by 2016, with Al Fara’a recently finishing the enabling works.
The firm is also more than halfway through Abu Dhabi-based projects including the Al Hilal Bank commercial office tower on Al Maryah Island, and Silaa Community Hospital in the Western Region.
Moreover, its partnership with UK contractor Wates has yielded joint venture education projects in the Al Zakheer and Al Foah areas of Al Ain under Abu Dhabi Educational Council’s (ADEC) Future Schools Project. In 2008, ADEC embarked on an ambitious program to build 100 new schools throughout Abu Dhabi by 2020.
Furthermore, it was the main contractor of the new Siemens headquarters at Masdar City, the first building there to be conceived, designed and built since the onset of the global financial crisis; and Gangaramani says this was a real fillip for the company to win the work.
The UAE will remain as the company’s primary marketplace as its full might is located there, but Gangaramani believes all serious contractors will need to respond to ever-more demanding and technically challenging projects.
“We tend to look and gauge our projects in terms of how much they will push the envelope of our infrastructure and capabilities, empowering us to find innovative solutions and generate greater value for our clients’ investments. Anything challenging appeals to us,” he says.
Al Fara’a General Contracting is in the process of finalising an ingress strategy for Kuwait and Oman, meaning that it would be located in every GCC country bar Bahrain.
Gangaramani says it has always been the aim to extend the firm’s reach throughout the GCC when the time was right. It is also keeping tabs on emerging construction markets in the Asia Pacific region, specifically in Southeast Asia.
“Our long term vision has always been that of consolidating our strengths not just in the Middle East, but throughout the span of the Asia Pacific. To achieve this, we constantly reinforce our infrastructure and operations through innovation, in addition to establishing JV partnerships in the regions which we wish to penetrate.”
However, he is equally enthusiastic by the growth he is seeing in the firm’s established markets of the UAE, Saudi Arabia and Qatar, where around 70% of its current portfolio is in public sector contracts.
“The UAE will always be a construction epicentre, and the Vision 2030 plan and Dubai possibly winning the right to host the World Expo 2020 can only bring even more substantial projects.
“Qatar’s construction industry remains as unfaltering as ever, and will continue to grow to provide facilities for the 2022 World Cup. Saudi on the other hand, is showing huge potential for mega-projects.”
Gangaramani says that one of the main challenges of operating across the region is ensuring skilled labour is deployed in the right place at the right time.
“In the Middle East in general, the manpower tends to be more labour-oriented than skill-oriented, so it is always challenging to find highly-seasoned workers who have a wealth of experience in their craft.”
He also says the region’s construction industry is unique from other parts of the world in that it is characterised by tighter schedules and budgets. This, he argues, has forced contractors to put renewed emphasis on value engineering and sustainability.
During the downturn, Gangaramani says the Al Fara’a Group survived by “concentrating on improving efficiencies and effectiveness by finding better ways to do things by promoting learning within the group.”
He admits that in the three years prior to the financial crash, the firm experienced “phenomenal growth” but was thereafter forced to consolidate its operations.
He says this meant focusing on value engineering and cost control, but he pointed out that the firm is now actively recruiting again to fill new positions. It is also putting even more emphasis on utilising all its sister companies to drive up efficiencies.
The last reported figures for the group, in 2010, showed that it achieved an annual turnover of AED3.5bn ($952m). In the year prior to that, it achieved AED3bn ($816m), with a cumulative compound net profit growth rate of 46.5% over the previous five years.
However Gangaramani refused to be drawn on whether 2013 revenues would exceed these or indeed give last year’s total, which hasn’t been published, except to say he is “very optimistic” about this year’s results.
“We are now in the process of discussing some key projects and hope to have them finalised in the near future,” he adds.
He says that the group is also on the verge of implementing enterprise resource planning (ERP) across its systems and utilising building information modelling (BIM) to “drive even more value to our projects”.
And as markets continue to strengthen, there is even talk of an initial public offering (IPO) in the near future.
“We are steadily and rapidly expanding the reach of our business, and confidence in the Al Fara’a name and brand remains ever-strong, so it would only be natural for us to open ourselves for public investment,” he concludes.