Senaat, one of Abu Dhabi's largest industrial conglomerates, is studying Dh20 billion of potential investments in projects over the next three years as it seeks to further Abu Dhabi's manufacturing footprint.
Abu Dhabi's Senaat eyes Dh20bn investment
Senaat, the large Abu Dhabi industrial conglomerate, is studying Dh20 billion of potential investments in projects over the next three years as it seeks to further expand the emirate's manufacturing footprint.
The investments range from a planned Dh1bn expansion of Emirates Steel Industries (ESI), its steel manufacturing unit, and establishing an engineering base for National Petroleum Construction Company (NPCC), its oil and gas sector fabrication business, in South East Asia, said Hussain Al Nowais, the chairman of Senaat.
"Today we have about Dh20bn projects we are studying," he said. "Are we going to execute them? Maybe not but there are certain criteria we need to achieve before we proceed to make sure it fits into the strategy, makes sense, produces the right returns, adds value to the economy and employs the right resources. Once these targets are met we will execute them and this is over a period of three years."
Mr Al Nowais was speaking yesterday as Senaat announced net profit for last year of Dh1.3bn, a slide of 14 per cent from 2011. He blamed depreciation of assets for the decline. Revenues rose by 7.2 per cent to Dh12.3bn over the same period, with assets growing by 7.8 per cent to Dh25.4bn.
Government-owned Senaat, which recently changed its name from General Holding Corporation, has emerged as a leading player in Abu Dhabi's drive to build energy-intensive industries. It has invested nearly Dh16bn since 2004, with industrial investments reaching Dh2.2bn last year.
"We have been focusing on metal, in addition to food and building material, but we believe metal provides a comparative advantage in Abu Dhabi and we intend to make sure projects fit in with the overall government plan and produce the right economic returns," said Mr Al Nowais.
Under the Abu Dhabi 2030 Economic Vision, the Government intends to raise the contribution of industry to GDP from about 13 per cent currently to 25 per cent over the next 17 years. Senaat's growth plans form an integral part of the strategy.
ESI, the largest contributor to its bottom line, completed its Dh6bn phase-two expansion in the Industrial City of Abu Dhabi last year, bringing its output to nearly three million tonnes a year.
It is now mulling pushing ahead with a third phase, involving opening a facility in Khalifa Industrial Zone Abu Dhabi, or Kizad, to produce more than 1 million tonnes of steel piping. The deal will involve signing a joint venture with an unnamed Japanese technology provider.
"It is a heavy transport item and so it makes sense to produce it locally and it requires a water frontage so we will do it in Kizad in Taweelah and it is used in the oil and gas industry, which is flourishing and growing in the region," said Mr Al Nowais. "We have the potential to sell pipes across the Arab region at zero duties, which is an advantage."
NPCC, which provides onshore and offshore oil and gas fabrication, support and engineering, is also considering expanding outside the region.
"We already have a successful track record in India and are now looking at opportunities in Indonesia, Malaysia, Vietnam and Thailand to have a base, using our facilities in Musaffah to export steel structure fabrication and using the set up there to make sure we have the right laying and installing capabilities," he said.
Mr Al Nowais added it would also continue to invest in Agthia, its foods and beverage group, and Arkan Building Materials Company. Last year, Agthia acquired a Turkish water bottling plant with direct access to a natural spring water source. The move enables the company to enter the premium end of the market in the region.