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Home: Issue 3 2011 › Nerves of steel

Nerves of steel

Nerves of steel

01/05/2011 | Channel: Manufacturing

Having taken advantage of a gap in the marketplace , Al Ghurair Iron & Steel is planing to expand in order to handle strong demand for its products

Conceptualised in 2006 to cater for the booming demand in steel across the Middle East and Northern Africa, Al Ghurair Iron & Steel is the first and only steel cold rolling and galvanising complex to open in the United Arab Emirates. Part of the larger Al Ghurair Group, it came into being after a significant gap in the local market was discovered: “There was a huge shortage, resulting in imported material coming into the region and there were no other producers of galvanised steel working within the UAE so the Al Ghurair Group saw this as a big opportunity. We have been in commercial production since April 2009 and have been running at 100 per cent capacity ever since,” explains Abu Bucker Husain – the CEO of the company.

With a presence in over 20 countries, Al Ghurair Iron & Steel operates in a way that achieves results despite the complicated nature of trade in a region where most business takes place not with cash, but on open lines of credit: “We do not offer credit and therefore there is a pocket of customers that are unable to buy from us directly, so they continue to import or buy from other stockists or traders that we sell our products to. That’s how there is an opportunity for other traders to work and co-exist with us. We also sell to major customers and end users and the way we produce is against specifically placed orders,” explains Abu Bucker Husain.

Initially the company experienced similar issues as those previously mentioned as he explains: “One of our biggest challenges starting out was getting the banks to give us a line of credit to procure our raw materials which make up around 90 per cent of our costs. Being so high in value and in such high volumes they require a lot of credit and it took some work to get the banks to trust us, as we were a new company. This was where carrying the Al Ghurair name helped us and we started to receive very low lines of credit at first. As business grew and our sales generated cash the banks felt more comfortable and the credit limit became bigger and bigger.”

A similar complication came in the form of human capital: “There is no local labour available here so our labour forces were brought in from other countries, primarily India. The challenge is to attract people to come over from their home country. To do this we have set up a number of different schemes and incentives to retain our staff,” he adds.

The company’s main production lines include a semi-continuous pickling line, a 6-Hi reversing cold rolling mill and a continuous galvanising line that together produce hot rolled pickled and oiled coils, cold rolled full hard coils and hot dip galvanised coils. The primary raw materials used in Al Ghurair Iron & Steel’s products, HRC and zinc, are procured from reputed world calss Tier 1 steel mills and zinc smelters from across the globe.

“Currently we have three major lines of production. Our facility produces 350,000 metric tonnes of pickled and oiled coils, 250,000 tonnes of cold rolled hard coils and 200,000 tonnes of hot tip galvanised coils per annum,” Abu Bucker Husain continues: “We also have provisions to expand the capacity of our plant if needed to meet increased demand. This will allow for production of over 400,000 tonnes of galvanised coils each year. We are already running at the top end of capacity so the only way we can grow at this time is through expansion, and we are aggressively working on plans for this and hope to finalise this by the end of this year. By expanding we could then begin increasing our product portfolio and be able to sell more to our existing customers.”

Expansion will also provide a solution to a problem the company has faced already: “There are certain markets that we have entered before and had success, however we did not continue in them as we did not have the quantity of products needed to supply everyone. In the future we can look to establish ourselves more firmly in these markets and do so on a more consistent basis,” he says optimistically.

While still a young company, there have been a number of developments in the last two years that Abu Bucker Husain is keen to point out: “Today if a customer walks into my office and wants material the earliest we can supply them is towards the end of June. The popularity of our products means we are fully sold out for March, April and May and this surplus demand has been present since we started our operations. Customers are aware and happy with the quality of our products and we offer expert local services that ensures quick delivery and faster technical support.”

“The quality of our products is really our biggest strength,” he continues: “We buy our raw materials from world-class tier one mills from countries such as Japan, Korea, Saudi Arabia and Australia and we don’t compromise on the quality of the material even though it costs us a lot more. There are a lot of companies that buy their materials from tier two or tier three Chinese mills in order to manage their costs, but we pay a premium on our raw materials and it really pays off in terms of achieving high acceptability of our products.” A fully functioning quality assurance department exists within the company. Equipped with a laboratory and inspection facilities manned by qualified and trained personnel, testing and monitoring is vigorously carried out to ensure finished products are made to the highest standard and fully comply with the quality policy of the company.

Being located close to the sea ports of Abu Dhabi and Jebel Ali, Al Ghurair Iron & Steel also possesses the ability to provide hassle-free shipments of orders, both in containers and by break bulk. Similarly it uses the road network and systematic transport facilities to deliver material to the client straight from the mill.

Close relationships and co-operation with customers is also essential in driving the company forward: “We know what the requirements of our clients are and we know we can’t afford to delay or slip when making deliveries to our customers as this would have a huge impact on their business. We don’t like failure and that is why we make sure our customers get the materials they want on time and as per the schedule we have agreed,” Abu Bucker Husain stresses.

After the amazing success of Al Ghurair Iron & Steel in little more than two years, he has a strong idea of where the company wants to be in five years time: “In that time we will definitely have completed our expansion plan and would like to be the leading galvanising company in the region, used by customers across most Gulf Co-operation Council countries. We will then have a very strong position in terms of market share and positioning and this will give us better control when purchasing raw materials. We want to be market leaders in terms of the pricing and the quality of the products we make.”

In early April, Al Ghurair Iron & Steel will be a co-sponsor of this year’s Arab Steel Summit in Qatar where all the major steel companies in the region are expected to attend before participating in the eighth International Construction Technology and Building Materials Exhibition. Taking place in Doha at the start of May, more than 50,000 trade visitors are expected to be drawn to the event and each will get the chance to admire a company growing at a phenomenal rate with a solid vision for the future.

Al Ghurair Iron & Steel LLC
Employees 350
Products Steel cold rolling and galvanising complex