TBY talks to Gholamreza Behmanesh, Managing Director and Member of the Board of Directors, Azar Ab Industries.
TBY When was the firm established and what was the vision behind Azar Ab Industries?
GHOLAMREZA BEHMANESH Azar Ab was established approximately 26 years ago. Actual production began when the manufacturing equipment was installed in our factory in Arak, which was around 1986. The aim was to produce heavy equipment for industry, boilers in particular: utility boilers, industrial boilers, and package boilers.
Azar Ab also produces equipment for oil refineries, the petrochemical, cement, and steel industries, and heavy equipment for other modern industries. All these products were imported from abroad before the establishment of Azar Ab Industries. Once the company was established and our technology transfer contracts with IHI and JSW of Japan were realized, we began supplying equipment to industrial users.
So far, Azar Ab has manufactured over 200 industrial, package, and utility boilers in Iran and abroad. At the moment, we have contracts for the construction of a complete power plant, like Bisotoun Power Plant, which is for two units of 320 MW, and Hormozgan Power Plant, which is for a 500 MW combined cycle plant. Also, we have built many more industrial boilers for petrochemical plants. We have also supplied over 50 heat recovery steam generators for combined cycle power plants and also for refineries.
In addition, we are also active in the cement business. We have constructed cement plants on a turnkey basis for Shahrekord recently, which was handed over to the client. We are also involved in the manufacture of hydro turbines. We have delivered over 40 hydro turbines, all of which are operational at the moment. Azar Ab hydro turbines can produce up to 250 MW of electricity. What we have discussed so far involves the engineering, construction, and equipment manufacturing sides of our business. As far as the steel industry is concerned we have only been involved in manufacturing. However, we have supplied large-scale equipment for the steel industry, such as for the Mobarakeh and Esfahan steel plants.
You have an interesting place in Iranian industry because you are an EPC contractor and a manufacturer of industrial equipment. Do you treat these as separate businesses or do you look for synergies when applying for projects?
Most of our projects at the moment are on an EPC basis. For the equipment that we are manufacturing for the first time, we try to get involved in the design and engineering process as well. We are developing our technology when we engage in the EPC process.
How do you ensure the continuous transfer of technology?
Until recently we were in contact with our technology providers. The contract is finished, but technology development is continuous. We are continuing our efforts.
Are you still working with foreign companies and contractors?
Yes. Before it was based on our contract. Now it is on a project basis.
You have a long-term program to update your technology to be able to compete on a global level. What are the cornerstones of this program?
Since our factory is basically designed and equipped for the production of power plant utility boilers, our main aim is to push forward this product line as our basic product. To do this, we are involved in continuously updating our technology base.
How many people do you employ in the Arak facility currently?
We employ 1,650 in our factory, and for the entire company you can add another 170 to that.
The production capacity of cement factories in Iran is on the rise, and has reached 100 million tons per year. Do you think the cement market has reached saturation point?
It all depends on our national economic growth rate, then there is a market for 100 million tons and more. There are many big projects in Iran that need to be implemented. Once they start, I am sure that more than 100 million tons will be required.
There are many countries around Iran that need cement. Do you have plans to export your expertise and build cement plants there?
We are at the moment negotiating with our neighbors for these projects and are very hopeful. In the near future, once our negotiations are complete, we will build cement plants for our neighbors. We have been discussing this possibility with Saudi Arabia and Iraq. Perhaps we will talk with Azerbaijan in the next phase.
Have you ever built a cement plant outside of Iran?
No. We have manufactured and supplied equipment to customers outside of Iran, but we supplied it through another contractor. Also a company that is involved with the implementation of cement plants has installed Azar Ab equipment in Syria.
Are there any new projects on the hydro-electric side of the business?
We have a project called Saimareh, which is named after a river, and we are working on a hydro-electric plant there. There is another project for which engineering work is being done now. Maybe some of the manufacturing will be done through Azar Ab.
What do you think your expertise is in oil, gas, and petrochemicals?
Our know-how is in the manufacturing of equipment for the power, oil and gas industry, the specialized equipment that is needed, is unique in the region, as is our qualified workforce. Most of our workforce was trained in Japan or by our Japanese partners IHI, in particular our engineering staff. We also have a technical cooperation agreement with FW of Spain.
Which major projects have you been involved in?
We just finished the supply of our equipment to Marun Petrochemical Company, where we supplied the utility units. In the petrochemical industry, we have supplied equipment that we specialize in, such as boilers and utility units. Now we are also supplying the Lorestan Petrochemical Plant, the Kurdistan Petrochemical Plant, and the Mahabad Petrochemical Plant.
Where do you see the biggest opportunity for expansion in the future?
Our company is involved in equipment that is needed in the petrochemical, oil, and hydro-power business. We are well equipped to supply this equipment because we have specialized equipment for all of these areas. If demand picks up in any of these industries, we are able to respond. Our major turnover base is going to be power plants, and this is our aim.
Do you have plans to expand your production?
Yes. We are in the process of expanding our factory in Assaluyeh. The plant will be operational in 20 months and we will then be able to expand our exports to other countries. When we get a location closer to port facilities we will be in a better position to export worldwide. We have big plans. First we want to focus on the region, and then on the whole world. Azar Ab is the largest producer by far of boilers and heavy equipment in Iran. There is no other company like Azar Ab in Iran that combines engineering, design, and fabrication of a variety of boilers and specialized and unique equipment. Moreover, the government does not allow any power plant to waste energy anymore, and all of the plants will become combined cycle. This means more business for us, so we have to expand production.
Are you a private or public company?
We are a private company. In the beginning it was public. We were privatized about six years ago.
What was the effect of being privatized?
In a private company, the level of efficiency is much higher. Projects are treated in a more efficient way. When you are a government company you are not experiencing the full force of the market. Therefore, your projects, jobs, and marketing are easier. You get a lot of government jobs and so the marketing is not so rigorous. Once you are private you need to be much more vigorous because your finances depend on it.
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