A Quarterly Newsletter from the UAE and Oman member firms of the PKF International Ltd.

VOL 13, Issue 2 April 2011

Interview

Mr. Mohammed Abdul Ghaffar Hussain

Mr. Mohammed Abdul Ghaffar Hussain is the Managing Director of Green Coast Enterprises, a diversified family holding company with activities across the GCC. He also serves on the boards of a number of companies including Corys Industries, Hepworth PME (Qatar), Emaar Industries & Investments (Pvt) JSC, Emirates Money (Subsidiary of Emirates NBD PJSC), Emirates Technopack and Convenience Arabia. Mr. Hussain started his career with ABN AMRO Bank in London, as a member of the bank’s Leveraged Finance and High Yield Group and has 15 years of strategic experience in the Middle East and Europe.

Q. The Hepworth Group has operated for more than 35 years in the region. How has the Group’s business evolved given the dramatic changes in the region over the period?

A.: Hepworth has managed around 10% year-on-year growth since its inception. The only brief dip was in the early 90’s, around the time of the Gulf War, due to general unrest and instability in the region from which, as a matter of fact, we emerged stronger.

The Group’s core product line of pipes and fittings has applications across various industries and its reach is spread across various countries in and around the Middle East. We set up a Hepworth plant in Qatar around a decade ago and, presently, it is the largest plastic pipe manufacturer in Qatar. Hepworth has nearly 700 employees in Qatar, Bahrain, Oman and the UAE.

The key, also, has been the partnership base created across industries. Hepworth through partners supplies thermo plastic based products to Europe and Asia.

We took a step forward by establishing Corys as a holding company to Hepworth. It is a platform that allows us to pursue the goal of creating and establishing our own brand in the market.

Q. How has the Group managed to maintain its market share despite competition from other regional players?

A. With an increase in competition, the market share has reduced over the years although the market has grown dramatically. We have responded to this challenge by diversifying into various industries, and by creating new markets. In the plastics sector we are the largest systems provider in the UAE. Today we can safely say, we now analyze market data more closely to figure out ways to stay ahead in the game.

Q. Has the recent economic unrest affected the Group’s progress, given that there is an obvious link between your business and the construction sector?

A. We have not survived the aftermath entirely and the crisis has had its impact like on most companies. However, around mid-2007 we started working on a “sky is falling” scenario where we tightened credit control and processes and put a hard cap on inventory levels. We also reduced our market debt to nearly NIL by the time the financial crisis actually hit the market. However, we do have exposures to the Dubai market and, in hindsight, as a Group we wish we could have taken measures to diversify our market . Still we can hold our head high as we have a solid business and exceptional balance sheet in these tough times.

Q. Emirates Technopack, along with Kangaroo Platics, is a luminary in the area of flexible packaging materials and aluminium foil products. What factors have contributed to its growth?

A. Emirates Technopack predominately caters to the food sector. This sector has been practically unmoved by the crisis. The margins in the stream are low and the competition is high, so we are using our experience to keep our noses ahead. With Emirates Technopack we basically built on and continued the success of Kangaroo Plastics. In fact, Technopack is literally next door to Kangaroo.

Q. The client list of Kangaroo Plastics is quite impressive. How has the ‘Quality without Compromise’ tagline helped in this regard and has quality control played a hand in Kangaroo plastics being a market leader in its industry?

A. If you build a reputation for quality, you build goodwill in the market among your customers. It affords you some leeway to take your eye off the ball for a while, which I believe, we did while you ride the wave. However, there is only a finite time line on this phase. Quality means efficiency. Efficiency in supplies and deliverables consistently, time and time again. Quality therefore is a mindset. Even the slightest indicator that quality is dropping means a revamping of the outlook. At Kangaroo, we are constantly innovating with new products in which there are only about five to six players in the market, making us a decent player in markets from India to Turkey.

Q: What does the future hold for your Group in the Middle East?

A. The Group has come a long way from pipes and fittings, packaging and other investments and our portfolio is in a process of constant evolution. Our traditional investments have mostly been in stocks and bonds. We are continuing to steer clear of derivatives and other complex products. The mantra will be to be reasonable – ‘Steady as she goes’.

As a family owned business, we have invested into real estate in the UAE and we will continue to hold and expand in this sector.

Our real estate outlook has been conservative, mostly in Dubai on the east side of the creek. We have not ventured into the freehold areas and therefore our portfolio was not as heavily affected as others in the real estate market freefall.

On the industry side, things are a bit more exciting. We are looking at Saudi Arabia, Iraq and India as potential areas for Corys to invest. We will be selective.

Q: What role do you see your flagship companies and you yourself play in the future development of the region in the short and long term?

A. For the Group companies, we hope to play leading roles in the respective sectors. We wish to build an enterprise based on market reputation, financial strength, strong reserves and emphasis on quality that the generation ahead will admire. We wish to ensure employment opportunities for the future generation. In the long term, we wish to increase the R&D footprint in each of the group companies, so that we innovate from within rather than sourcing from outside. On a personal note, I believe that management should be left to managers. Over time I intend to take a step away from operations and concentrate on business development and strategy from a board level perspective.

I hope that other family members get involved more actively in the business over time but we need to put in place a strong protocol for how family members interact with the management. We have seen local family owned businesses split up due to differences. As a family and as a group, we intend and hope to stand the test of time.