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KUWAIT/BAHRAIN
National Retreading Sizes up Bahrain Developments
for the 2022 World Cup to be held in Qatar. Both the governments are building a 43 km long bridge connecting both the countries. The US $ 3.5 billion project is expected to be completed by 2015. “The
Bahrain government is also building the Bahrain Industrial Gate to feed the requirement of Qatar in preparation to the 2022 world cup soccer,” Fahed informed.
Fahed Abdulsalam Alansari of the Bahrain based National Tyre Retreading
Falcon Opens in Saudi and Iraq
N Muthu, Manager, Tyre Division, Falcon International Tyre Retread Industry
Kuwait based retreading companies are spreading
their operations outside
the Kuwait market. With
the retreading market
limited in Kuwait and the
concept still not matured
to the fullest, Kuwait based company Falcon
International Tyre
Retreading Industry is
planning to set up two
retreading plants in a joint
venture in Riyadh, Saudi
Arabia and in Iraq. “We have already completed the plant construction in Riyadh. Equipment installation is under way and the plant should be operational in early 2012,” informed Mr N Muthu, Manager, Tyre Division, Falcon International Tyre Retread Industr y.
Falcon is installing an Elgi plant with a 13 tyre chamber in the new Saudi Arabia plant. The Saudi plant is planned to manufacture 1000 tyres per month. Responding to an enquiry about the investment made in the Riyadh plant, Muthu replied, “The Saudi partner has its own fleet and the plant will support the fleet’s retreading needs. We are also planning to enter the local market which we see as having a lot of potential.”
As part of making this deeper penetration into the Middle East, Falcon is looking at further expansion. “We are planning to have a presence in all the GCC states. We are planning another plant in Iraq,” Muthu revealed. With the withdrawal of US troops from Iraq, it is expected that the Iraqi government will announce major reconstruction plans throughout the war-ravaged country. When asked about the location of the plant, Muthu stated, “We have not decided on the location as yet, we will make a decision by early 2012. The plant could be operational by the end of 2012.” The company is planning to focus on streamlining operations in Saudi Arabia and Iraq before venturing into the other GCC
countries.
Falcon entered the Kuwait retreading market only a year ago. The plant is located around 30 km away from Kuwait city, retreading about 600 tyres from a plant with a capacity for 1000 tyres per month. “We are one of the major fleet operators in Kuwait, having 300 trucks and the in-house plant was set up to cater for our fleet requirements. We also entered the open market sometime back. Though the local market volume is very small,” Muthu said. The majority 74 per cent of the tyres retreaded are for the company fleet, the balance for the open market. The company is focussing on capacity utilisation from 2012.” The Kuwaiti retreader uses Treadsdirect products in a plant supplied from the Coimbatore based company. “We use around 12 kg of rubber on each tyre,” he said. Regarding the acceptability of Treadsdirect rubber in the hot conditions of Kuwait, Muthu replied positively, “Treadsdirect rubber is a proven product in various markets around the world. Though this is a very hot environment, the tread from the Indian company is doing quite well,” he added.
Finding suitable casings in the local market is always a major problem and Falcon is seeking permission from the government to import casings. “We are trying to get a government nod for the import of casings to overcome scarcity in the domestic market,” Muthu said.
With petroleum prices soaring around the world, the oil producing emirates of the Middle East are flush with funds. The sheikdoms are driving growth through announcing various construction projects. Bahrain, one of the smallest countries in the Gulf Cooperation Council (GCC), has recently announced a series of construction projects. The movement of trucks bringing material to construction sites should directly impact on the demand for the nascent retreading industry in these countries. “We have the lowest GDP in the GCC countries and saving 30 – 40 per cent in tyres would definitely affect the bottom-line of any fleet owner,” believes analyst with Ernst & Young, Fahed Abdulsalam Alansari of the Bahrain based National Tyre Retreading.
Bahrain is a modern Gulf economy, offering a liberal tax regime– with no income taxes, no corporation taxes, no wealth tax or capital gains, no inheritance tax and no restriction on repatriation of capital, profits or dividends and few indirect taxes. National Tyre Retreading is partnering with the Kuwait based Al-Zahem to set up a Marangoni plant in Bahrain. Explaining the objective of the foray, “We intend to change the perception about retreading in our country. The majority of people are just unaware of the concept of retreading except perhaps for a few big fleet owners. They just do not know. Retreading could save them lot of money,” explained Fahed.
Bahrain has got one small retreading unit using low quality rubber and catering to the price sensitive market. “The plant is harming the concept of retreading and our plant model would use a world-class product that gives the best result. It would also go a long way in developing the basis for retreading in our small country,” Fahed stated.
Meanwhile the new entrant is also eyeing the booming construction sector due to projects announced by the Bahraini government. “A few days back, the government announced a man-made island, while another two projects are in the pipeline, one is a residential project and another is an industrial park,” Fahed revealed. Besides that, the government has also announced a 350,000 unit residential project to be completed by 2030. The government plans to build 170,000 units by end of 2020; while another construction project driving this sector is a man-made island owned by Kuwait Finance Home (KFH,) regarded as one of the biggest projects in the small country. Moreover, it is much easier to tap the Bahraini market due to the sheer size of the country. “Bahrain is a small country where 60 per cent of the heavy trucks are owned by around 30 big fleet operators. We could visit them all in a maximum of two weeks,” Fahed stated. National Retreading plans to kick- start the retreading venture with Marangoni Ringtread retreaded tyres. “The casings collected from the Bahrain market would travel to the Al-Zahem Kuwait based retreading unit, will be retreaded and delivered back to Bahrain under special provisions of both governments as old casings are not allowed to imported or exported in the GCC states,” Fahed reiterated. Initially, National Retreading would practice this model to cater for the Bahrain market and observe how fast retreading is being accepted in the domestic market. “If the results are positive, we will immediately set up the retreading plant,” Fahed assured.
It has also been noted that there are a lot of ambitious construction projects being announced by the governments of Qatar and Bahrain in order to build the infrastructure
26 Retreading Business