CONSTRUCTION MATERIALS

Oman 2020 | CONSTRUCTION | B2B

Oman's construction sector is facing a host of challenges, but Hempel Paints and Al Maha Ceramics are confident that a mix of forward-thinking business models, unique products, and strong government initiatives will help them through turbulent times and generate positive returns in the long run.

Andrea Negri
ANDREA NEGRI
Country Manager
Hempel Paints – Oman
Rajeev Singh
RAJEEV SINGH
CEO
Al Maha Ceramics

Can you walk us through your growth strategy for the medium term and tell us about how you expect the demand for your products to evolve?
ANDREA NEGRI In recent years, Hempel Paints has witnessed steady growth thanks to a successful strategy not only in the oil and gas segment but also in the decorative and marine segments. Similar to other Middle Eastern markets, we are the market leaders in Oman's oil and gas industry. Moving forward, we want to keep working with Petroleum Development Oman (PDO), Special Technical Services (STS), major contractors, and sub-contractors. In the marine segment, we resort to innovative coatings that comply with environmental standards and contribute to reducing fuel consumption. The decorative segment has witnessed steady growth, but the retail market has suffered a slight downturn. Overall, the Omani market is worth around OMR48 million, 80% of which is decorative in terms of volume. Most of the big paint manufacturers are present in Oman, so there is tough competition, especially since it is a relatively low-price market, where the main volume drivers are low-end products. The whole point is educating people that high-quality products cost less in the long term because they last longer. In the meantime, we are facing a price war. To tackle the competitive nature of the market, we are launching new products that are more appealing to the public. For example, there are certain paints that can guarantee a reduction in energy consumption by 3%. Moreover, we are revising our pricing strategy based on the simplicity of application. We are looking at providing products that are easy to apply and training the applicators on how to use the product properly. Through these efforts, we are able to save up to 30% in paint.

How is the local construction industry performing, and how do you expect to navigate the regional challenges?
RAJEEV SINGH The local construction market is set to grow at a CAGR of 6% between 2019 and 2024. In recent years, a number of large-scale projects across different sectors have been completed, while projects like the Duqm refinery are still ongoing. At present, Oman's construction sector is dealing with some economic challenges. Market consolidation, price wars, payment delays, poor liquidity, aggressive business practices, and rising levels of competition are reducing margins. Moreover, the volatility in oil prices and the COVID-19 pandemic is affecting the sector. That said, Oman's construction market is expected to be active in the coming years. Local companies are facing many challenges, but the biggest one is cheaper imports from India and China. Fortunately, authorities around the region are taking initiatives to curb this menace. Al Maha Ceramics' product range includes all kinds of wall and floor tiles. We are the only company to have tiles which are not just aesthetically satisfying but also functionally beneficial. For example, we recently launched Iprotect, an antibacterial and antimicrobial tile that kills 99.99% of bacteria. This product can protect inner and outer spaces. We also offer Barid, a high-SRI tile that reflects 100% infrared rays and reduces surface temperature by 20%. This product is recommended for exterior walls, floors, and roofs. We also produce anti-skid tiles and tiles for high-traffic areas. With its unrivalled quality and superior products, Al Maha is positioned between the mid and niche segments. While the product quality surpasses all the international standards, our prices are drawn up in such a way that the customer gets the most value for money. Our product superiority and distinctive range will grow and in due course we aim to develop the capacity to produce porcelain tiles as well as allied bathroom products like sanitary wares.

How is technology and research development shaping the industry you operate in?
AN Efforts are being undertaken to make smart coatings through microchips to reduce the need for inspections and costs. We are also working on becoming more environmentally friendly. Many of our factories are becoming highly automated, with our overall investment increasing yearly. We also plan to reduce the amount of waste we produce and move away from solvent-based products to water-based products.

RS Screen printing is being increasingly used to print designs on tiles, followed by rotor printing which is replaced by digital printing, the latest technology. The best machines come from Spain and Italy, which can print any photograph or design. These technologies make it easier for competitors to copy designs. The biggest challenge today is short product lifecycles. We have to be ready with a new product and design before the competition copies us.