For Dr Mehran Zarrebini, CEO of Van Dyck Carpets, growing companies and becoming a business leader in South Africa over the past 14 years has been anything but a magic carpet ride.
“I graduated at the age of 26. In 2001, whilst many of my colleagues were lured into the lucrative world of investment banking and management consulting (only to see their fortunes reverse in 2008), I decided to join my family’s business, which at the time was expanding its footprint in South Africa. The transition from academia to that of running an organization was certainly a challenging prospect. I had little experience working in any company and, certainly, nothing had prepared me for working in South Africa!”
Although that was the starting point for Zarrebini, his association with South African business essentially began six years previously when his father, Dr Mehdy Zarrebini, visited this country for the first time.
Post 94 euphoria was strong and South Africa was effectively a new business frontier when sanctions ended. Zarrebini’s father returned home with a joint venture under his belt. Together with listed local textile company, Ninian and Lester, PFE International launched SAPY. This successful Hammarsdale-based operation has established itself as a leading manufacturer of multi-filament polypropylene yarn for the textile, plastic and construction industries.
Whilst his father was making inroads in South Africa, Zarrebini, who had graduated with a degree in Chemical Engineering from Loughborough University at 22, was in the throes of wrapping up his PhD at Cambridge University.
By the time he completed his studies, the family was looking to relocate its United Kingdom based businesses which produced extrusion machinery and staple fibre for the flooring and geo textiles industries. Based on the success of SAPY, the obvious choice was South Africa.
Barely three years later, PFE International bought Van Dyck. Because the strength of the family business was producing raw materials for carpet manufacture, it was the perfect fit, says Zarrebini.
The Zarrebini’s vision was to leverage a strong brand that was traditionally associated with quality in South Africa and update it whilst, at the same time, growing their footprint in Africa.
Launched in 1948, Van Dyck was a respected brand in the flooring sector but had lost ground as it passed from owner to owner, finally being renamed when it was bought out by Belgian carpeting company Domo.
Zarrebini says that when they took over the company, it was evident that much of the machinery had been neglected and needed updating. After switching the name back to Van Dyck, the new owners invested more than R80-million in a state-of-the-art fibre extrusion line – by far the largest in Southern Africa – and upgraded and modernised the company’s tufting and needle punch looms.
Today, Van Dyck is the only local manufacturer that offers all types of soft floor coverings (tufted, needle punch and woven carpets). Instead of selling generic products and competing on price, they are now developing niche products.
These are directed primarily at the commercial market. Whereas, in 2004, the split between its residential and commercial markets was 50/50, residential sales have now dropped to the point where the ratio is 30/70.
Commercially, carpeting remains the floor covering of choice due to acoustic and anti-fatigue characteristics – carpets dampen noise and are more comfortable to walk on. Carpet tiles, which are popular in office environments, can be easily lifted and replaced if there is wear and tear in high traffic areas or if cables and wires running underneath need to be repaired.
In this space, he says, Van Dyck is developing more innovative styles and patterns and plans to invest in new machinery to produce additional products such as tufted carpet tiles for the commercial market.
Zarrebini also plans to grow exports significantly. Already, Van Dyck supplies 20 countries – including Australia which is “a big market”, Uruguay, Brazil, UK, Canada and the US. The company is very active in Africa as far as Madagascar and he says there will be a push to grow all the way to Kenya and Nigeria.
Although the highly competitive players in the flooring sector jealously guard information, it seems that Van Dyck has worked its way back to secure a 25 to 30% share of the local carpet market.
“We have grown that year on year since 2004 and aim to continue to,” says Zarrebini who has not only managed to get Van Dyck back on track but also spearheaded the investment of more than R350 million in downstream companies.
“Since arriving in South Africa, I have been involved in the start-up, acquisition and management of a number of businesses both locally and internationally, including some in Zimbabwe and Botswana. The businesses have been well diversified in the fields of plastic extrusion, property management, the manufacture of soft floorcoverings and, most recently, the recycling of waste truck tyres. As a group of companies, collectively, we now employ more than 520 people in the economically challenged areas of Hammarsdale and Umlazi.” he explains.
Whilst engineering the turnaround of Van Dyck, Zarrebini realised that costs could be significantly reduced by manufacturing raw materials that were being imported at high prices locally. As a result, PFE Extrusion was set up in Hammarsdale in 2008 to provide fibre and yarn to Van Dyck.
In addition to refining its floor coverings products, he has also looked at diversifying. This resulted in a joint venture with the Mathe Group in mid-2014. Van Dyck buys between 70 and 80% of the rubber crumb needed to manufacture acoustic cradles and underlays which are placed under carpets to minimise noise in high rise buildings.
“The Mathe Group began supplying Van Dyck with rubber crumb made from recycled waste tyres in 2012 when we were expanding and had begun manufacturing acoustic underlays. There was synergy from the start as Van Dyck was trying to source rubber crumb locally instead of either importing it or buying it from the Western Cape and Gauteng. From PFE International’s point of view, it made sense to secure the company’s supply chain, so we formed a joint venture with the Mathe Group in 2014.”
The Mathe Group’s 850 sq/m facility New Germany facility processes just three tons of radial truck tyres per day. This meant that Van Dyck’s production was soon constrained by current capacity. Investing in the joint venture facilitated the construction of a new 2 500 sq/m factory and a 1 000 sq/m warehouse in Hammarsdale that will be fitted out with R20 million worth of state-of-the-art equipment. It will dramatically increase capacity to approximately 150 000 tyres. This will, in turn, enable Van Dyck to diversify into other products that utilise rubber crumb creating further additional revenue streams.
Zarrebini is not totally focused on the numbers through. To broaden his management skills and knowledge, he recently completed an MBA (cum laude) through the University of Stellenbosch Business School.
“It was an invaluable and important transitional stage in my personal and professional development as a leader. Having the opportunity to study again certainly made me realize that self-reflection and self-assessment enhances your capacity to think strategically and lead effectively. The three years of learning was for me a life changing experience,” he says.
He likens this to his experience as part of a five man expedition that set out to climb the 18 605 foot (5 671 metre) Mount Damavand, a semi dormant volcano in Iran.
For Zarrebini and the rest of the experienced team of mountaineers that accompanied him, climbing at such a high altitude required acclimatization as the oxygen saturation level in their blood stream declined.
“I was told that, in normal circumstances, when it gets to below 70% – as it did with me – one would be in hospital as the onset of pulmonary and cerebral oedema advances. The choice that I had to make at that stage was between descending 4 000m on the back of a donkey or sleeping with intense headaches and hoping that the medication that I had been given would work during the night and I would wake up in the morning. I decided to take the less embarrassing but riskier option of sleeping and hoping for the best.”
Summit day was a long climb, ascending the final 1 600 metres took approximately eight hours. But Zarrebini says that the view from the summit, a vast panorama of mountains, valleys and desert, made perseverance worthwhile.
There was also a downside. “At that height, you can only stay at the summit for approximately 15 minutes since most of what you are breathing is sulphur from the semi dormant volcano. At that extreme altitude, there is little oxygen. If you do plan on surviving – which was on my agenda that day – it is advisable to not to be too pretentious, and not to hang about for too many photo opportunities!”
The reason that Zarrebini tells this story is to point out that reaching the summit is not the whole experience. “When people talk about mountain climbing, and specifically during the first three days of acclimatization, they only ever talk about reaching the summit and the preparation involved in doing so. They never tell you that when you are at the summit, you have only reached half way and that the other half involves a second long and arduous trek or climb back down which can be almost as long and as tough as the ascent,” he points out.
Business wise, he hasn’t reached the summit yet.
“Over the years, I have witnessed many successes but also faced numerous challenges in many aspects of running and managing a business. Many of those stem not only from the ever more complex trading and operating environments and seemingly endless economic headwinds that South Africa has encountered since 2009 but also, many have included the individuals that I have come across along the journey.
“Those who accumulated power and influence along the way enhanced their capacity to serve only. Make no mistake, it is the commitment to service, not the access to power and influence that is an essential ingredient of leadership today. Needless to say, those individuals’ careers were never realized to their full potential. As global interdependence deepens in the decades ahead, the forces that compel all of us to work together to shape a shared destiny will only grow stronger. Given this reality, leaders must be guided by a set of values that unites, not divides,” he says.
Also on his list of priorities is ensuring that the companies under his watch make as little impact on the environment as possible.
Van Dyck Carpets is both ISO 9001:2008 and ISO 14001 accredited and, in 2013, became one of just a handful of companies with ISO 14064-1 accreditation, requiring annual reports on greenhouse emissions.
From the outset, he says, PFE ensured that existing and new equipment met strict international standards. The focus was on innovation and resource efficiency, especially when it came to energy and water.
He adds that he wants sustainability to become and even stronger part of the Van Dyck brand in future. Already, the company is researching the use of raw materials that will reduce reliance on oil derived products such as nylon and polypropylene. They could include yarns and fibres derived from organically grown crops.
When it comes to the Mathe Group, he acknowledges that his company’s investment will go some way to helping reduce South Africa’s mammoth stock pile of waste tyres that are both an environmental and a health hazard.
Overall, Zarrebini observes that a business leader is not only accountable to his shareholders but also to a variety of other stakeholders. “We must build and cultivate sustainable and trusting relationships with the different stakeholders inside and outside the organisations with which we work and coordinate their actions (with ours) to achieve common objectives – sustainability and, particularly in South Africa, legitimacy. Our success should be measured not only in terms of superiority (within a) competitive landscape, but on the strength of our relationships and moral excellence,” he says.