All Things Considered

How would you assess Adnip’s performance over the past year and what were the company’s major accomplishments?

We have experienced strong growth across all of our business lines over the past year. Our paper production line increased turnover from 65,000 to 95,000 tons in a 12-month period, and we were fully booked with no spare quantity left to sell. The new machine produces Advanced NTT paper, a higher absorbance, softer, and bulkier paper with very unique qualities that is only produced in Mexico, Chile, and the UAE. This new product opened the doors to the European market for us. Different multinationals have approached us to carry the commercialization of NTT paper. On the other hand, our carpet business also increased and we went from selling 200 million to 270 million per year. We improved the efficiency of the machines to produce larger quantities with less material wastage. Our medical devices segment also performed well in the production of auto-disable syringes used for vaccination, where we remain the major supplier for UNICEF and for the Pan American Health Organization.

Your paper business experienced a 30% production increase in only one year. What factors prompted such growth?

We have a long-standing reputation for being top-quality service providers. We are considered the best supplier in the MENA region and our client base comprises of people inclined to prioritize quality over price. For instance, we guarantee our customers that our paper will help them improve their production capacity and efficiency as its resilient and durable. Everyone values being quality orientated, from the chairman to every worker in our company, which helps us be an efficiency-conscious producer. If demand keeps rising as it has been until now, I will consider introducing a fourth machine to meet the market demand. On top of that, our new NTT technique is inherently eco-friendly since it absorbs much better and its more efficient when it comes to its utilization. Our plant is also equipped with a de-inking plant where we re-pulp our waste so we can reuse it and decrease the levels of waste to almost zero. Bearing in mind that an increasing number of clients opt to purchase environmentally- friendly products, our paper has become the preferred choice.

Your expansion process has also encountered some problems related to competition from mass-production companies. How has Adnip turned the tables against these competitors?

Mass production centers such as China, Turkey, or India represent our fiercest competition because they sell at lower prices and apply dumping practices when introducing their products into tertiary markets. However, our strength is in the quality rather than the quantity and we maintain a strong client base with companies that are conscious about quality and conform to tight schedules. Mass production competitors find it more difficult to comply with timings and deliveries and that is where they lose out in comparison to Adnip. We also cover the more protected markets, such as Saudi Arabia, where mass production companies have difficulties entering due to high taxes and strict requirements.

Which markets represent the bulk of your operations for the paper production line?

Our main market is Saudi Arabia, where we export around 40% of our production. In recent years they shifted from what we used to call 100% recycled paper or super commercial paper, which was 70% recycled-30% prime pulp, into prime quality paper, which is far more expensive due to its purity. This was to our benefit since we were producing this type of paper and introduced it into the Saudi market. We have a product line called Velvet, a high-quality prime paper that has become the beacon of our market sales in Saudi and the UAE. Other than that, we are also exporting to Europe where the biggest tissue companies such as Kimberly Clark are coming to the UAE and shipping our products to their markets. To the UK alone we ship 500 tons of paper every month. The UAE still represents one of our most significant markets since quality is the top priority here and this is our identity card.

The healthcare sector in the UAE is projected to become a USD20 billion industry by 2020. How will Adnip capitalize on this opportunity?

Our medical devices lines went through a long periods of stagnation before taking off. Until recently, we used to depend heavily on our global partners such as UNICEF to support the line, because there are many requirements, qualifications, and red tape to overcome before fully commercializing these types of products. We recently won the tender from the Ministry of Health and we are now working closely with the Union Defense Force, the armed forces of the UAE, and all of the medical entities in the country to supply them with our medical devices. Before the tender, we were known by just a few hospitals that have now spread the word about our products. My expectation is that within a year we will expand our plant to meet higher consumption needs and our products will compete head to head with the American and European brands established here. Our next step is to be qualified at a GCC level by the different entities in the region and start to get involved in tenders at a GCC level in 2017, which will enable us to double our capacity. The next step will be to enter new segments such as gloves, masks, gowns, and a wider variety of medical products to enhance our portfolio at a regional level.

Which markets have been more receptive to your reusable medical devices?

Around 90% of our medical devices are shipped outside of the UAE, mainly to Africa, Latin America, and the Arab world. We currently ship around 400 million syringes annually. Also, our partnership with UNICEF opens the door to countries where they have a strong presence through their programs from India to Lebanon to Southeast Asia. The wonderful thing about our auto-disable product is that people are avoiding diseases and further complications since they can only be used once, limiting the risk of cross-contamination, which is important for developing countries where there is little knowledge about the risks of re-utilizing syringes and this is where it is more marketable.

What strategy did you apply to grow your carpet production lines to match the success of your other two business segments?

Much in the way we did with our paper production segment, we focused on high quality and product diversification. By introducing new machinery for higher-quality products we also increased our profitability and today we are the only company in the UAE that produces Axminster carpets, which are mostly sold to hotels. With huge events taking place in the region in the upcoming years, from the Dubai Fair in 2020 or the World Cup in Qatar in 2022, we made the carpet business grow to cater for the booming hospitality sector these events create.

What do you see for the future of the company in the next three years?

The company is currently worth AED800 million and within two years we intend to become AED2 billion worth. The immediate plans for 2017 is to do mergers and acquire new business lines that will awake the interest of other companies. We are looking to diversify our scope to cover other industries such as aluminum, steel, carpentry, and the like. There is a great future in these areas and despite the current economic adversities I foresee great performance for Adnip in 2017.