In the months leading up to the January 2018 introduction of value-added tax (VAT) in the UAE and Saudi Arabia, there was much speculation around its impact on the construction sector, with some companies expressing concern that it might negatively affect their market performance.
Indeed, at last year’s Construction Week: Leaders in Construction UAE Summit, Deloitte Middle East noted that VAT would likely impact cash flow.
MVL Firestop, however, had a more optimistic view of the situation – not surprising, since the firm saw its sales nearly triple as an indirect result of VAT.
“In November 2017, we experienced our highest sales for the year,” says Karim Elshafie. “We almost tripled our normal monthly sales.”
The general manager of MVL Firestop explains that the spike in sales was primarily due to clients making sure that they completed their orders before VAT took effect, adding: “We haven’t faced any problem since it’s been implemented.”
MVL Firestop is also helping several of its clients manage their expenses by shouldering the price difference – basically absorbing the 5% VAT rate, reveals Elshafie: “We are helping clients, since VAT is in its early months. We reduce the product price so that when the VAT is added, they still pay the same price as before.”
He emphasises that while the company will not aim to shoulder these added costs “forever”, the firm can do it for now, to help clients complete existing projects.
Other than bearing the added cost of VAT, the company – whose fire-stopping technologies have been certified to Underwriters Laboratories (UL) and Factory Mutual (FM) standards and approved by the Dubai Civil Defence (DCD) – offers a number of free services.
Elaborating on this, Hani Khawaja, chief operations officer of parent company MVL Group, says: “In addition to the competitive value that MVL Firestop’s UL-certified and DCD-approved systems introduces to the market, our business model offers free training on direct application and free inspection with certification issuance, exposing customers to real savings.”
As a subsidiary of MVL Group, Khawaja continues, MVL Firestop “leverages the group’s economies of scale across its value chain, including procurement and logistics expertise, to provide its customers with products that are not only high-quality, but also value-driven”.
This balance between quality and value has elevated the group’s position in the industry, and has helped drive the success of its fire-stopping business, as is evident in its 2017 performance, as well as the company’s expectations for 2018.
Describing MVL Firestop’s performance last year as “remarkable”, Elshafie says that the company handed over nearly 90 projects in the region – a number that it aims to raise to 201 this year.
Market-wise, 2017 saw MVL expand into Turkey, where it is involved in an airport expansion project. Saudi Arabia was its priority, however, due to the country’s Hajj authority joining its roster of major clients.
“We have a product, the DC68, which is MVL’s top seller for the Saudi market,” says Elshafie, explaining that the fire-resistant coating was used on the Hajj tents in the kingdom. “I believe DC68 will be one of our top-selling products in 2018. It is transparent and odourless, and doesn’t change the texture of the material.
“You can spray DC68 on anything that absorbs water, and that material will become fire-retardant, ensuring that it doesn’t catch fire.”