Digging In

As Genavco prepares to turn 50 next year, Asif Sayeed Khan, General Manager of the plant & equipment division, reflects on the construction machinery distributor’s growth over the years.

General Navigation and Commerce Company (Genavco) is gearing up to celebrate 50 years since its launch as part of the Jumal Al Majid Group in 1967.

The construction machinery distributor wants to mark the milestone next year by bringing together customers and a group of partners that has grown to 24 over the years, to thank them for their support.

“Our existence today is because they have supported us through this journey,” says Asif Sayeed Khan – General Manager – Plant & Equipment, Genavco. “We will invite them to celebrate the success of our business. Some of them are very old partners.”

One of those longstanding partners, the Wirtgen Group, recently paid a visit to Genavco. A delegation led by Jurgen Wirtgen himself jetted into Dubai in a demonstration of appreciation for its partner.

“Mr. Khalid Al Majid, Vice Chairman- Juma Al Majid Group, hosted a dinner for them and we arranged a visit to our facility. It was an occasion for us that the owner of the company came to meet the people and to assure their support for us,” says Mr Asif. “Wirtgen Group’s slogan is Close to customers⁵. That attitude cascades down to all their distribution channels and we also follow the same customer first principle. If our customer is in need we try to be there for them within 30-60 minutes.”

He adds: “Key to our success is quality of service. We assure our customers of 95 percent availability of all spare parts at all times. That plays a key factor in gaining customer confidence and living up to expectations. We have been recommended at each and every job site.

“Mr Wirtgen came himself this year and we had a discussion about our business plan and strategy and what we need to do more of to satisfy and exceed customer demand. With the results that we are bringing in they are happy and satisfied with the performance.”

Genavco has three business verticals working with 24 partners on an exclusive basis. The first is the commercial vehicle division which is Isuzu Automotive. The second, led by Mr Asif is the plant and equipment division which has 22 partners, and the third is the lubricant and oil division. Genavco is the distributor for BP products in the UAE.

The plant and equipment business is divided into six segments: road machinery; quarry and mining; material handling equipment; engines and transmission; earth moving equipment; industrial products.

“We are associated with 95 percent of major infrastructure projects in the UAE by supplying our various products,” says Mr Asif. “Our diversity gives us the ability to serve various market segments. When I joined the company in 1993 we did not have that range of products but we gradually diversified to cater to the entire industry.”

Road construction equipment is the biggest contributor to the plant and equipment section. Genavco supplies Vogele asphalt pavers which enjoys an 86 percent market share. It also has Hamm asphalt rollers which have a 46 percent share. And its Wirtgen milling products for road rehabilitation and repairs, have total dominate of the market.

Genavco focuses on selling the equipment but also does short and long term rentals and leasing over two, four or five years depending on the project size and the customer.

“That is a small part of the business but to support our customer base we do have this option,” says Mr Asif. “Sometimes we don’t have a product available to sell and so renting helps us to retain the customer by providing them with what they need on a short term basis until we can bring a unit in for them.”

He explains: “There are many companies that specialise in rental and leasing and they are our customers. We never wanted to project ourselves as a major rental player because we didn’t want to compete with our own customers but we do have a small fleet of rental units.”

It used to be more common for Genavco to sell directly to contractors at a time when the market was stronger and they were in need of the equipment on a short delivery basis, says Mr Asif. However since the 2008 financial crisis contractors are more careful about their capex and now look more to rental and leasing. “If you have a project that’s six to nine months long it makes sense to rent because you don’t know what’s going to happen afterwards. So the trend has changed,” he says.

Each of Genavco’s divisions have been affected differently by the recent market downturn following the drop in oil prices. Within the equipment segment, quarry and mining has started to pick up. Demand for aggregate, for example, is showing signs of recovery which is an indicator that the market is improving. “We have a diversified portfolio so if one of our segments is down another one is up,” says Mr Asif.

He admits that, like most companies, Genavco predicted a tough year in 2016 and has been cautious with its spending, but he is hopeful of an upturn soon. “2015 was our best ever year, even surpassing our 2008 figures, so that doesn’t mean 2016 will be a bad year! At this point we are at par with our budget for the year,” he says. “We would be optimistic for a recovery next year. Our clients are signing contracts now for delivery in 2017 because they are anticipating a price increase next year. Some of the business that we wanted to do this year will spill over into 2017.”

For its next move Genavco is looking at branching out into the waste management and recycling sector as the government pushes for more sustainable solutions to its waste issue. Currently most waste produced in the UAE goes straight into landfill which continue to pile up. And the construction sector is known to produce a huge amount of waste.

“That’s where we see the future,” Asif says. “In 2008 the government had started spending money in that area but when the market crashed the plans were shelved. Now, as the situation improves people are becoming more aware of the importance of recycling and the government has launched awareness campaigns around the waste issue.”

Genavco intends to focus on construction demolition (CND) waste, followed by domestic waste. It is in talks with a British company to work on a waste management and recycling project.

“Some companies are already doing it but the market has more demand and needs more players,” says Mr Asif. “The government role is very important. Because government did not make it mandatory, CND recycling didn’t take off to the level it should have been. But if the government introduces regulations that compel contractors to use a certain percentage of recycled material projects, it would obviously create a market for them.”