Bahrain's Al Fayasil Group, which manufactures and exports water pumps under the Kratos brand for residential projects, is looking to penetrate the large Saudi market, said a top official.
General manager Arjun Murli revealed that the company is setting up a sales office in Riyadh, which should become operational in March 2016. They have already received a commercial licence to operate in Saudi.
“Till now, we have been exporting to Saudi Arabia only on a contract basis. It contributes less than 10 per cent of our export revenue,” he said.
Commenting on the entry barrier to Saudi Arabia, he said: “One of the biggest problems in exporting to Saudi Arabia is the fact that their pumps work on different electrical specifications than in Bahrain. We manufacture pumps specially suited to the Saudi conditions only when we receive a contract.”
According to Murli, the Saudi market doesn’t have any residential pump manufacturers. Thus, all residential pumps are imported either from China or from Europe. This leaves a gap in the market between cheap, Chinese-made products, and good quality but expensive European-made ones. Kratos is trying to fill this gap by providing pumps comparable in price to Chinese models and in quality to European models.
Murli explained: “In order to fulfil this strategy, we need to collect a large amount of orders from Saudi Arabia which will give us economies of scale and allow us to bring down costs. Thus, we are targeting all provinces of Saudi at once.”
Once this has been achieved, the company is also planning on expanding its manufacturing facilities, which currently produce about 25,000 pumps annually. The expansion will be to solely serve the Saudi market.
Currently, exports make up just under 30 per cent of the group’s revenues. It exports or re-exports pumps and sanitaryware to Oman, with pumps being the majority of products exported. “Oman, like Saudi, doesn’t have a local pump manufacturer for residential purposes. Kratos pumps thus sell quite well there,” said Murli.
Currently, the Al Fayasil Group generates most revenue from dealing with building materials, hardware, plumbing and sanitaryware in Bahrain, under its company Core Building Materials.
Commenting on long-term business prospects in the current economic climate, Murli said: “Under the wise leadership of the Bahrain government, many more people are attaining college degrees and professional qualifications. In a few years, these people will be in a position to build homes, and they will make a solid customer base for the company.”
“Despite the economic downturn, the government is still constructing and providing housing to low-income groups, thus the demand for our building products is still very high,” Murli added.
Murli says that he sees the water pumps business growing by 20 per cent in 2016 due to the Saudi expansion.