Exclusive Interview: Khaldoun Tabari, Drake & Scull CEO

There is also a lot of synergy involved with using business units in one market for transference to another market.

A case in point, Tabari points out, is DSI’s German subsidiary (Passavant Roediger) that has developed several profitable water and sewerage treatment plants in Eastern Europe, China and the MENA region.

“The skill set required for, say rails, is the same as that required for MEP, so we work on economies of scale.”

In addition, the company has signed many engineering, procurement and construction (EPC) contracts, most recently one for pipeline installation at the Zubair Oil Field (one of the largest in the world) in Basrah.

“Iraq,” says Tabari, “is a focal market for DSI’s oil and gas business.”

The largest economy in the GCC – Saudi Arabia – is also DSI’s biggest market: “Saudi leads investments in the construction world and since we are an established brand there, we find that project pipelines are strong and contractors present.”

The company has already established offices in Iraq, India, Algeria and Vietnam with future expansion planned in other areas.

“Our key focus markets will be Saudi Arabia, India and Algeria. Gross margins from these are expected to improve since direct expenses related to the establishment of news offices in Iraq, India and Algeria are completely rendered and incurred.”

Tabari’s outlook for Oman is also positive largely due to the government support that is pumping money into sectoral growth outside of oil.

“Growth will come by expanding into newer markets or if we get more traction in existing markets. In a small market you should grow horizontally and in a large market you should grow vertically,” adds Tabari.

Tabari is surprisingly blasé about Qatar due to the delay in project awards in 2012. Ranked as one of the fastest growing economies in the world, the country’s ambitious infrastructure development plans under the National Vision 2030 and World Cup 2022, make it a poster boy to many in the construction industry.

He disagrees, “The market in Qatar has not taken off yet, though we have seen some movement in the last two months and expect improvement in the second half of 2013.”

With regard to partnerships, Tabari adopts a contrarian view, expanding when people are contracting, and contracting when people are expanding.

“Look at the current Indian market, for instance, it is ripe for acquisitions. Earlier Indian companies were priced at 20×P/E, but they’re relatively cheap now at 7×P/E. Such valuations aid partnerships, and in turn, help our expansion into a particular market.”