• Home
• Agriculture
• News Article

Oman Flour Mills rolls out ambitious expansion plans

MUSCAT -- Supplying about 65 per cent of the requirements of the flour market in the Sultanate, Oman Flour Mills (OFM) , has been aggressively implementing an action plan that will catapult the company into a top regional industry player in the coming years.

The company in a series of expansion drives has boosted capacity as well as ventured out into related businesses. Since its inception as a joint stock company in 1977, the MSM-listed OFM has in a series of expansion increased its milling capacity from a modest 150 tonnes per day to 800 tonnes per day currently. In addition to flour milling, OFM also commissioned an animal feed mill in 1982 with a capacity of 1200 tonnes per day currently. It has a substantial grain storage and ship unloading facility at Port Sultan Qaboos to service the milling operations, which now comprises nominal grain storage of 120,000 tonnes and an unloading capacity of 500 tonnes per hour.

Because of the strategic importance of the food sector, OFM announced plans to set up an investment firm to manage its growing portfolio of existing investments and new projects. The new subsidiary, Atyab Investment is investing $100 million in new ventures that include Atyab Poultry, Atyab Bakery, The Bread House, Atyab Grains International, Sohar Flour Mills, American Institute of Baking (AIB) and Swiss Milling School. Currently, Modern Poultry Farms is 86 per cent subsidiary of OFM .

"The objective is to segregate the operations of OFM from other activities -- existing and forthcoming. The new investment company will manage all these projects for OFM ," Ali Habaj, CEO of the company told Times of Oman. "One has to keep on evolving because if you do not evolve in business you fade out. The economy in Oman is one of the best free economies which is very well regulated and at the same time very free," Habaj pointed out.

Habaj has been working with the company since 1999 and was promoted as the CEO of the company in 2004. In an exclusive interview he speaks about the company, its performance, expansion plans and updates of new projects that the company is currently undertaking.

Tell us about Oman Flour Mills ?
Oman Flour Mills was set up 30 years ago and was started as a private initiative. At a later stage because of the importance of the industry, the government became a majority shareholder. The company started as a flour milling and feed milling company and was one of the first companies to be listed on the MSM. Today OFM is owned 51 per cent by the government and public and private investors own the remaining 49 per cent. The government's stake is important because of the strategic importance of the industry.

What are the main products of the company?
OFM markets more than 20 varieties of its flour products under the brand name Dahabi which means gold. The products are consumed 75 per cent locally and while the remaining 25 per cent is exported to Somalia, East Africa, Indonesia, and parts of the GCC. The company also produces different animal feeds under the brand name Barakat. While the output from the feed mill is largely consumed within the Sultanate some amount of the products are also exported to the UAE.

Are you happy with the profits for the full year that ended in June 2009?
We are happy with our operational profit as we have reported healthy growth.

The net profit achieved is lower compared to the previous year due to the fall in investment value.

How has been the company's growth?
The company has been reporting strong year-on-year growth and is today one of the fastest growing companies in Oman. Although the financial crisis and the global meltdown have affected other sectors, the food industry as a whole was the least affected because the demand for basic food products remains stable.

The milling industry faces new challenges, and OFM has to deal with these changes and challenges with great deal of flexibility and finesse and make the right choices. Our growth is robust and we will continue to see such growth in coming years based on two factors. First the population growth in Oman is one of the highest in the world and secondly the country is seeing increase in number of tourists coming into the country.

Both these factors will help in consumerism, which is good for our business. On the basis of this we are growing at a very steady growth rate and are optimising our efficiency to reduce our costs.

Tell us about Modern Poultry Farm?
MPF is a subsidiary of OFM where we have an 86 per cent stake. It was established in 1989 and currently produces over 100 million table eggs per year sold under Dana brand. Having gained expertise in the poultry farm business we have now ventured into a partnership with the UAE-based IFFCO group to set up a new poultry project with an investment of RO25 million ($65 million approx.) in the Buraimi area to cater to Oman and other GCC markets. We have signed an agreement already and aim to set up one of the largest modern state-of-the-art poultry farm in the region. This project will see the setting up of a parent broiler farm with a facility to produce 50 million hatchlings per year, a broiler farm with a slaughtering capacity of 50,000 birds per day, and the capability to produce over two million table eggs per year. Work has already started for the project we expect it to be completed by two years from now.

What was the need to set up a new mill in Sohar?
With the strategic vision to expand its production coverage to different regions of Oman, Sohar Flour Mills is being set up with an investment of RO15 million ($40 million approx.) using state-of-the-art flour milling technology.

In its first phase, it will have a wheat milling capacity of 300 metric tonnes per day with a potential of expanding to 2000 metric tonnes per day in phases. The mill will be capable of producing all types of specialty flours and will cater to the Al Batinah and Al Dhahira regions and will develop exports to the GCC and other international markets. We have already identified the location and are in the final stage of tendering contract for the project. Also, we are in negotiation with the Sohar port authorities and have been appointed as the project managers for the government's new wheat silo.

What prompted you to set up Atyab Grains International?
We wanted to set up this company because OFM was already into buying and selling of wheat and had identified the huge potential of large scale trading. We were already importing grains in large quantities and have a silo facility at Port Sultan Qaboos where we can store 120,000 metric tonnes of grains.

Are you into baking and bakery business too?
A groundbreaking project in the Gulf region, Atyab Bakery, coming up in Barka at a cost of RO14 million ($36 million approx.) will be a fully automated production facility. This bakery will acquire the latest baking innovations to produce both fresh and frozen bakery products and confectionery items. Commercial production of this facility is expected to commence in the third quarter of 2010.Last year we also set up a subsidiary company named Bread House to market frozen bakery products. The Bread House offers complete logistical solutions for fresh and frozen bakery produce. In addition to this, it also provides retail-baking solutions -- bakery cafés under a franchising system. The company expects that the market would see more development with increased demand for such products in the future.

To complement the bakery and the baking business we are also setting up a regional baking institute in collaboration with the American Institute of Baking that will offer diplomas in baking and other courses related to the baking and food industry.

With the growth and development in the tourism and hospitality sector, this initiative will provide backbone support in developing human resources and impart training in the baking industry.

By Vinod Kumar PK

© Times of Oman 2009