COMPANY SNAPSHOT
Date established 1963
Main business sectors Construction, engineering, manufacturing and shipping Main countries of operation Bahrain, Kuwait, Qatar, Saudi Arabia, UAE
Chairman Abdulla Ahmed Nass

STRUCTURE
One of the largest family conglomerates in Bahrain, Nass Group has its roots in a civil construction and general trading business set up in the 1960s by Abdulla Nass, a local entrepreneur. Today, the industrial group comprises 34 companies and six associates, spread across the Gulf.

Construction remains the core focus. The backbone of the group is the publicly listed Nass Corporation, which is itself dominated by the flagship Nass Contracting Company. The corporation, which is 51 per cent owned and controlled by Nass family members, registered a BD121.5m ($322m) turnover in 2008, its strongest year to date.

Most Nass businesses are firmly aligned behind the main contracting arm, and it is not uncommon to find half a dozen Nass-owned companies working alongside each other on a single project.

The group benefits from the links between its subsidiaries. When Nass Contracting wins a contract, its Delmon Ready-mix arm will typically provide the concrete, while  Nass Mechanical, Nass Electrical and Nass Plumbing supply the relevant Materials or services. The group has pursued this approach on several large industrial projects in  Bahrain such as the Durrat Al-Bahrain real estate scheme, the Hidd power and desalination complex, and Khalifa bin Salman Port.

While the bulk of its workload is in Bahrain, the Nass Group has gradually expanded across the Gulf through its affiliates. These include Al-Ghanim & Nass General Trading & Contracting Company in Kuwait, Nass & Partners in Saudi Arabia, and Qatar Al-Attiyah International Group. The group's general trading business diversified rapidly from the 1980s onwards to include marine transport and ship repair, which is linked to the core business through offshore engineering and drilling subsidiaries. The Nass Group also owns a specialist shipyard, the only one in the Gulf to have engineered and built a jack-up oil platform rig.


OPERATIONS
The Nass Group has a strategic interest in the health of the Bahraini economy, not least because much of its business comes from public sector projects. Sameer Abdulla Nass, the group's vice-chairman and former chief executive officer, sits on the country's 16-member Economic Development Board. Chaired by Crown Prince Salman bin Hamad al-Khalifa, the board represents an attempt by Manama to galvanize economic growth through a range of co-ordinated industrial projects.

This sits well with the Nass Group's own integrated contracting strategy, and gives it an advantage when bidding for government contracts, not least in the transport sector. One of Nass Contracting's biggest projects to date is its work on Khalifa bin Salman Port and industrial area at Hidd, which entailed dredging 24 million cubic metres of material.

Nass Contracting is now overhauling the traffic system linking the new port, which began operations in April, to the other side of the island, where there is a direct connection to Saudi Arabia via the King Fahd Causeway This is part of Manama's plan to have a seamless road system connecting the new deepwater port with the nearby Saudi market. Despite its extended family of companies, Nass, like many Gulf contractors, has found it necessary to partner with other international firms on some projects, to achieve economies of scale or simply to acquire expertise.

The company struck up particularly close relationships with South Africa's Murray & Roberts (Middle East) and the US' Great Lakes Dredge & Docks while working on the port. Nass and Great lakes are now working on the dredging contract for Diyaar Al-Muharraq, a BD1.2bn reclaimed island project in Bahrain.

Nass and Murray & Roberts, meanwhile, have worked on a range of local projects, from the World Trade Centre to the infrastructure for Durrat Al-Bahrain, a resort on the southeast coast of Bahrain. Other important international partners for Nass include Contrack and the Shaw Group, both of the US.


AMBITIONS
The Nass Group has proved a success story so far, but remains slow to expand beyond its base in Bahrain. Most work that has come in from markets such as Saudi Arabia and Qatar has been modest in scale, and there is little sign of aggressive bidding and pursuit of contracts on the part of the group's foreign affiliates.

This may, in part, be due to the comparative good health of the Bahraini construction market, which Nass dominates. But the health of the local economy is by no means guaranteed and, for a company used to rapid growth, Nass is approaching a crucial point where it threatens to outgrow its home market.


MEED ASSESSMENT
Like many diverse conglomerates, the Nass Group's strength is also potentially a weakness. Where it scores an advantage over other family businesses is in positioning its subsidiaries around its core contracting business.

Other, more opportunistic businesses in areas such as food and transport could be sold in the future, if the group was ever forced to rationalize its operations.

There are, however, other areas into which the company could expand, including specialist manufacturing and engineering services, particularly those related to the oil and gas industries. Nass has also developed a niche specialism in offshore and marine works, which could be developed further.

Bahrain has for decades proved a reliable source of business for the Nass Group, and there is no reason to think this will change. It is a small market, however, and one in which competition is growing.

The group's cautious approach to expanding abroad may seem sensible in light of the economic downturn, but limits its growth and competitiveness. The loss in January of a $545m resort deal from Sama Dubai should also caution the company against relying too heavily on the Gulf's civil construction market.

NASS AND THE BAHRAIN HOUSING MARKET

The diverse array of companies that make up the Nass Group are an integral part of the Bahraini economy. Employing about 7,700 people in total, they produce 1 million tonnes of aggregates, 200,000 tonnes of asphalt, 70 million gallons of desalinated water and 30,000 tonnes of ice every year.

Nass subsidiaries help feed the domestic construction industry in particular. Delmon Ready-mix, which was founded in 1973, operates five plants across the island, producing 80 cubic metres of concrete every hour. Delmon Precast Company, meanwhile, produces and sells precast concrete floors and roofing slabs forthe local building industry. Other Nass companies also provide clients with everything from interior decorating to street cleaning services.

Industry health

As a bellwether of the Bahraini construction industry, the group's performance last year suggests the sector is in relatively good health.

Revenues at Nass Corporation, the main contracting wing of the group, rose to BD121.Sm, from BD77.6m in 2007. First-quarter profits also showed a solid performance, rising by 33 per cent year on year to BD3.9m.

Yet Bahrain, and by extension Nass, has not been isolated from the real estate slowdown that has affected most parts of the Gulf.

While the kingdom has not had the sort of property speculation scandals that have dogged cities such as Dubai, some projects have been delayed, as a shortage of bank credit and the drying up of off plan property sales has starved developers of cash. Nass had one sizeable contract cancelled in January, for work on the $545m Salam resort near the Formula One circuit in Sakhir, which it was carrying out in a joint venture with South Africa's Murray & Roberts (Middle East). Work was close to one-third completed on the beachfront development when the developer, Same Dubai, cancelled the contract.

So far, however, such reversals have tended to be the exception rather than the rule. Most luxury real estate developments in Bahrain, such as Amwaj Islands, Marina West and Durrat al-Bahrain, were already approaching completion when the regional market started to wobble last year. Low-cost housing schemes are also moving ahead. The $3.2bn Diyaar al-Muharraq scheme, which involves a large amount of reclamation work, has been closely tailored to the demands of the local property market.

Comprising 13 islands and covering 12 square kilometres of reclaimed land near Bahrain International airport, Diyar al-muharraq has emerged from nearly three years of design changes as a mixed-used development containing low-cost housing.

Nass is working on the first phase of dredging in a joint venture with the US' Great Lakes Dredge & Dock. The scheme will contain about 30,000 properties, many aimed at first-time buyers, and is intended to reflect the government's plans to improve access to housing for poorer Bahraini families.

Cheaper housing

As in Saudi Arabia, low-cost housing schemes are expected to form a sizeable chunk of new civil construction work in Bahrain in the coming years. Private developers estimate the kingdom needs about 80,000 new low-income and social housing units by 2020, according to a recent report by UK consultant CB Richard Ellis.

The government has committed to fund the cost of building 43,000 homes by 2014. In February, the Housing Ministry announced the government would issue almost $800m in bonds to fund future spending on low-income properties.

Such projects represent a significant opportunity for companies such as Nass, but it will not only be competing for government contracts. In recent months, several private developers have launched schemes focusing on the lower end of the housing market.

The potential growth of the local mortgage market also means that demand for housing should remain relatively healthy.

As of March, the number of personal loans secured by property had a total value of 613300m, which, at about 5 percent of gross domestic product, is well behind more mature markets such as Europe, where the rate is typically 25 per cent or more.

by Digby Lidstone (www.meed.com)