ETA-Ascon: muti-dimensional and successful

ETA-Ascon: muti-dimensional and successful
By Saifur Rahman, Business Editor GULF NEWS Published: February 23, 2008

Syed M. Salahuddin, managing director of Dubai-based $4.3 billion diversified conglomerate ETA-Ascon Group, tells Financial Review of the opportunities arising in the neighbourhood

As high oil prices fuel the Gulf economies, local and regional companies benefit from the opportunities in their locality and beyond. For many local businesses, a proper footprint across the Gulf and South Asia regions, especially India, is vital.

Last time I interviewed you, your company had 26,000 people. I believe it has now reached 58,000, working in trading, shipping, construction, manufacturing, real estate, transportation, aviation and hospitality. How do you manage such a huge workforce and range of operations?
Honestly, I don't know! My people will be able to tell you more. However, providing accommodation for them has become the biggest challenge for us.

We are building large accommodation facilities. However, before the projects are completed, their housing facilities become inadequate, since, by that time, we have hired more people for new projects.

ETA-Ascon Group has been particularly active in trading, shipping and construction. Of late, you have also ventured into a number of new areas like the real estate and hospitality areas. Are you venturing into yet further activities?
We have started a $70 million steel rolling plant in Sharjah that is capable of producing 600,000 tonnes per year, including steel structures.

Besides, we as Non-Resident Indians (NRIs) are launching a new regional airline in India, which should take off in October this year. We are talking to manufacturers of regional jets including Embraer, Bombardier and ATR.

We have also entered the aircraft leasing business under Star Aviation, with a portfolio of eight aircraft in operation with some airlines. We are also manufacturing cement in Abu Dhabi, Ajman, and Bahrain, and in Bangladesh, where we see a lot of opportunities.

We have also entered into the hospitality sector, with three properties currently operational with 600 rooms in Dubai and Sharjah. We would like to roll out a new hotel chain under the Star branding. Right now we have Star Metro and Star Boutique brands operational.

You appear to have entered the manufacturing sector very late. Why is that?
One of the biggest problems we have is the lack of adequate gas supply. We have a number of manufacturing units planned. However, we cannot proceed due to a shortage of energy, especially gas. For example, we have a large fertiliser project planned.

For years we have been waiting for the necessary gas supply. The Qatari gas being brought to the UAE will merely meet the growing demands of the power and desalination plants.

So, we are now thinking of shifting the project to another location where we could get adequate gas supply. Besides, we have plans for iron-ore based industries to manufacture various steel products. However, the lack of gas supply is delaying those projects too.

What are the areas that you are currently expanding business in?
Geographically - India, and sector-wise anything from infrastructure to real estate. India provides the biggest opportunity for us, as we do see so much scope for growth and development there.

However, investment in infrastructure could unlock opportunities in other areas. For example, we have recently started a cargo rail service (Railway Wagon) to move containers between Delhi and Bombay, which will expand to all other major Indian cities as the economy grows there.

Developing a supply-chain infrastructure also provides a good business opportunity for us, while it also helps the country's economy: where demand for goods and services are expected to go. We are one of the 14 companies licensed by the Indian government to offer such a service.

Do you have plans as well in the power sector?
There we see huge opportunities. India needs massive amounts of power to be able to maintain growth. There is a need for massive investment, and the private sector could play a very dynamic role in coping with the demand.

We want to participate in independent water and power projects (IWPPs), where India could benefit from our expertise. We have the engineering and financial capabilities.

We are just completing an 800 MW power plant in Aweer with Siemens for Dubai Electricity and Water Authority. We have good capabilities in distribution.

Moreover, we have recently signed an MoU with the Meghalaya government to set up two hydro-power plants to produce 65MW of power each, with an investment of about $100 million each.

However, the implementation could take a long time. The biggest problem in that regard is lack of proper infrastructure. Getting the right land is a problem. Then the lack of a proper supply chain is another problem - that's apart from the social and political ones.

How's the shipping business? How are your companies coping with the strong demand in the Middle East and the Asia Pacific?
As 80 per cent of global trade moves by sea, we are also enjoying our share of the world's economic growth. Last year we carried 25 million metric tonnes of cargo, which we anticipate to go up to 30-35 million tonnes.

Due to strong demand, we are also expanding our capabilities. We have ordered 30 vessels worth $1.5 billion that will join our 35-strong fleet within four years.

Among the new vessels, the ratio between bulk carriers and liquid will be 50:50. As per market demand, we are also expanding our liquid carriers fleet to carry crude oil, clean oil and chemical and petrochemical products.

What about the real estate sector? Your company has made a strong foray in this sector lately.
Yes, we have a very good presence in real estate. We have a planned supply in excess of 15 million square feet of built-up area coming up in the next five years, with a potential value to the tune of $10 billion.

This includes a number of residential and commercial towers, a number of mixed-use projects in the UAE and India. In Dubai we are building two towers at the Business Bay, one at the Dubai International Financial Centre, two on the Palm Jumeirah Crescent, two towers at the Jumeirah Lake Towers.

We are also developing the Dh2 billion Dubai Lifestyle City. In fact, we are planning to develop Lifestyle Cities in other parts of the world. Meanwhile, in India we are building three townships, one in Chennai and two in Bangalore.

Overall, then, how do you rate your prospects in the UAE, Gulf and India?
We see strong and uninterrupted growth for the next ten years at least. The fundamentals are very strong, so we see no problem or issues.

The UAE, especially, has shifted away from the traditional economic activities to knowledge-based areas such as information technology, education, banking and financial services. They will continue to drive economic growth.

This in turn will create jobs for more professionals, and thus the demand for housing, power, water and infrastructure will continue to grow.