Using their raw material, and through different joint ventures, NatPet is diversifying their production and adding value to the economy from the petrochemical sector.
Please provide us with a brief introduction and overview of Natpet as a relatively recently established petrochemicals company in Saudi Arabia.
Natpet begun commercial production in August 2010, we are less than 5 years old. 2 years from commercial production we have established two joint ventures using our raw material to go further downstream. If you look into most of the petrochemicals in Saudi Arabia, we are very progressive. We have a vision that we should not stay where we are. We should add value to the company and to the country. We should help more employment because in mega projects like Natpet, you employ a few hundreds and this is a one-billion-dollar project.
When you go down the chain, the investment is much lower and you employ a larger number of people. So, this is also our contribution to the country. It helps us diversify and lower our risks, of course; we are businessmen. Natpet produces polypropylene, about 400,000 tons, a world scale plant, using state of the art technologies by a company called Lyondell Basell, a very prestigious and famous international producer and licensor.
We are very proud that we sell in a year in about 60 plus countries, which is a big achievement because that means our strategy has been successful. We do not depend on one market or one region because of the economic risks involved, cost of logistics and so on.
Natpet has about 500 people and we have a Saudization rate of about 60%, which is very good for a company as young as ours.
I think it’s very important for the readers to know that even with our size but we are winners of very prestigious social responsibility awards like the King Khaled Social Responsible Competitiveness Award and the CSR Arabia (Corporate Social Responsibility) Award. These awards that go to companies who not only contribute money because that is easy.
We make programs for society like cleaning part of the Red Sea, we bring people together, we bring divers, other companies and non-profit organizations all together for positive initiatives such as this. Every year in schools we sponsor people to go and teach the young kids how to deal with the environment, we focus on ideas such as recycling and the importance of a clean society.
Natpet is exporting to more than 60 countries, you have got top quality partnerships and you are moving further up the value chain. I would like to first talk about the partnerships that you have with the UK. Can you tell me how those partnerships developed?
Our key UK partner company is called Low & Boner; it is listed on the UK stock Exchange and is a leading company in its area of business. I think it’s one of the best, if not the best in its field. Now, how did we come together? A lot of things led to that. When we started looking for projects, we talked to consultants, we met with people in international conferences and we had identified Low & Boner as a potential partner also because we understand the market needs the sorts of products we can develop from such a partnership. Then we go to companies that produce those products and so on. So, we were interested in this product, Geotextiles, because it’s a big demand in the area of civil works for things such as floods, roads and even for the railways.
We identified Low & Boner and then we came together on a 50-50 joint venture. That’s an immediate transfer of technology. We now have some of the best technology at our plant facility. So, we don’t even have trucks going back and forth. We just transfer the product directly to the plant. This partnership is good for the foreign partner who also wants to sell their product in certain geographical areas, and good for our technological aspirations.
The strong support of the government is a big thing here. I’m thinking about now exporting to 60 plus different countries and working further up the value chain. This is really the nirvana of what people would like to achieve. What’s the secret? How did you actually achieve this?
Everybody is asking this question. I have to say this is our secret and you can laugh, honestly, but I know this, I am very proud. Natpet is one of the companies that sells its products in a premium way. We don’t go and compete on prices. That’s not the culture that we have built in the company.
Having said that, it’s not only quality, it’s negotiations, diversification of markets, communications and reliability of supply. There’s a lot of secrets here – trust, technical services. You can talk about this all the time, but to combine them all together, I don’t think everybody is capable to do that and we are really recognized in the market to be a reliable company that does not go for pricing. We go for quality and for value so we can tell the customer “This is the value we give you” and the value will include a lot of things as I just mentioned. So, it’s very easy to go and sell any product, by the way. It’s not rocket science to go and sell any petrochemical product. How you sell it, how you do it, how you teach your people and build a culture, this is us.
What would you describe the core values of the company are at Natpet?
The most important thing we want to do is to be the company of choice. We have always been hovering around that area. So, it’s not only for the employees but for the society, for the investors, for the suppliers and for the clients. So, this is a company that you want to deal with. You want to work with this company. Whether you are an employee or even a supplier, you say this company is respectable, they pay on time, they are very good in communication, they respect their word. With the clients of course you have to have proper supply, reliability, quality, consistency, communications and with the employees you have to attract good people because there’s competition today for good people. So, you have to attract people who can make a difference. At the end of the day, people make the difference in business.
Thinking about your international export market, you are at 60 plus now. How did you develop those markets more precisely? What’s the key to being able to building relationships and develop an international customer base?
To build markets you have to understand the markets. So, you need to understand your product in terms of the supply and demand situation, who are the players, the distance, the cost, the quality of the competition and what these markets are looking for at the end of the day. There are people that we visit directly and deal with them company to client and there are people who deal through traders. You cannot cover the whole world on your own. That becomes very expensive. So, we also select good traders who understand the clients, understand their needs and can make this match between them and us.
Thinking about the market, you have huge companies here like SABIC and Petro Rabigh. How do you compete in the market with these big players?
Leading companies such as these are competing on the global stage. They are not competing with you really and you are not competing with them. You are competing with the world. When you go to China, you are not competing with SABIC and Petro-Rabigh. You are competing with Exxon Mobil, TOTAL and companies from China etc. You are competing with everybody. So, I don’t believe it is the right thing to say we are competing with them or they are competing with us. We are competing with everybody and they are competing with everybody because our markets are international.
A key motto of the group is commitment to share holders and society. The CSR and what you do and obviously you are really taking a lead for society with bringing development and advanced technology to industry in Saudi Arabia. Can you talk a little bit more about how important that is for your philosophy as a company to be really developing not just the economy but also society?
Our philosophy is very simple. We believe in our hearts any company whether it is a public company or a limited liability or joint stock or even an establishment, you have to do something for society. I am not just saying this to please anybody. It’s my opinion and our opinion in the group that you cannot go into a country that gives you so much, you are blessed with these resources and all this government support and you have to give back not only in the form of employment which is very important. We employ, we train, we are very keen in that but we also directly contribute to society in selected areas whether they are in taking care of environment or in making programs to help people understand and learn about saving the environment, but to also contribute directly. We sponsor people in universities and schools, we do a lot of social programs like this so that it is a part of our social responsibility. So, when you go and win awards like King Khaled – and this is not the first year, by the way. For 5 years we have been winning but the first time ever no. 1 in 2014. So, that’s prestigious award. We take the prize from the hand of the Crown Prince. So, it’s not just any prize. And then we also won a social responsibility for the Arab world. We won the first position in the medium sized companies, which is another achievement and these people don’t give you prizes just because you talk. There is a big criteria, by the way, it’s not just easy.
Now, just a final thing about strategic plans, thinking forward. Up until now Natpet has proven a very robust business from a financial perspective. Can you tell us about your future plans in terms of expansion and growth and what can investors get excited about?
The key area we are concerned about is to go further downstream. First, selfishly speaking, we make more money but other than selfishly speaking, this is a contribution to the country because by making money you are also doing other things to the country and employing more people, you transfer the technology, you are teaching these people this technology and maybe someday we and others can even start investing in research and development. We don’t mind investing upstream, as you said, vertically when the opportunity also arises. We are open whether inside the kingdom or outside the kingdom, but that depends again on a lot of economic factors and so on and investment and opportunities but we are open. So far we are focusing on the downstream. We believe it’s good for us and good for the country.
And how important are partnerships for achieving that?
Very important because when you go further downstream, you are getting closer to the market. When you are a commodity, you are far away from the market. You start the plant, then we do something, then we give it to another plant most probably to do something. Then it goes to the end user, most probably. So, you don’t go to the end user directly. Once you go downstream you go further to the end users. Once you go down further to the end user, things are more complicated because continuous development of the product, you don’t have that. You have one part and this current technology itself is not available. I mean, you cannot come and say “I am going to build the plant to do compounding just like that.” You need a partner who has the technical knowhow and knowledge and experience. So, we have always been open to joint ventures and partnerships at the end of the day.