According to Petrochem CEO Yogesh Mehta the world is ‘oversupplied’, forcing companies to excel in an era of stiff competition and diminished margins, .
“there is enough of everything”. said by Mehta in an interview with Arabian Business,
“Competition is too much that it’s very tough to survive just on the basis of giving timely service,” he said. “You have to give the customer real value, and that comes from good price,timely service, good quality and also matching the market prices, which means giving a lower price to them [customers] .”
Mehta said that In the case of Petrochem, margins have eroded largely because of an oversupply in chemicals coming from China beginning in 2014.
“We used to operate on a 12 percent gross margin. We’re now at 8.5 percent, and we’re lucky if we make even a 2 percent net margin on our term,” he said.
Because of the oversupply and low margins. he believes “it is only the strongest and the fittest who will survive”added by Mehta.
He said “The fly-by-night operators will leave the scene”. “The old order is changing. The unprofessional people and companies are already going away, and companies like ours, that add value, who give value and who have been there for many years will remain.”
Mehta added, “What is happening in the Middle East is that people who just came were unprofessional and they are now suffering.”
According to Mehta, approximately in 2018 $1.3 billion in turnover has been generated by Petrochem and expects approximately $1.5 billion this year.
Petrochem plans to embark on a string of acquisitions of chemical manufacturing companies in Saudi Arabia and is exploring opportunities to produce chemicals both there and in the UAE over the next few years, .
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