14 September 2003

MUSCAT — Omani Euro Food Industries SAOG (OEFI) is in the process of restructuring its capital. The company will be writing off 97 per cent of its RO4.3 million capital. “We have decided to write off 97 per cent of our capital to go ahead with the company’s restructuring plans,” the company’s chairman, Awad bin Mohammed Faraj Bamkhalef, told reporters here yesterday at a signing ceremony with the New Zealand Milk UAE. He said three companies would be injecting RO4.2 million fresh capital to OEFI. While two are foreign companies, the other is the Oman Emirates Investments Holding Co. SAOG.

The names of the foreign investors have not been disclosed. “One new investor is coming now. They have given their initial nod and we are holding talks with them about this.”

OEFI, a joint stock company promoted by Oman Emirates Investments Holding Co. SAOG, the Ministry of Defence Pension Fund, BankMuscat International, Kuwait Industries Co. Holding, Oman Medical Projects and Rossi & Catelli of Italy, has also obtained a soft loan of RO3.8 million.

“We have a grace period of five years for repayment of this loan to the government,” the company official said, hinting that the company would discus rescheduling this loan as it restructures its capital. The company chairman insisted that the restructuring of government loans “has not yet been finalised” but was still in the negotiation stage.

OEFI, well known in the market for their baby food product, Mother’s Choice, yesterday signed a milk powder repackaging agreement with New Zealand Milk UAE, the owners of Anchor milk powder, the second best-selling milk powder in Oman, next to Nido, the leader (in tin milk powder segment).

OEFI chairman Awad Mohammed Faraj Bamkhalef and New Zealand Milk UAE’s general manager Eddie Mulligan signed the agreement as the media persons watched.

Eddie, speaking to reporters after the signing ceremony said: “This is an extension of our existing business.” As per the agreement, OEFI will repackage Anchor milk powder in 2.5-kg sachets. The initial agreement period is for one year, but options are open for further renewal.

He pointed out that New Zealand Milk UAE would retain the ownership of the product and distribution would be done through their agent, Fair Trade.

According to him, for Anchor, the Omani market “is good and growing”. Eddie conceded that Nido “is the market leader” and said his company would watch its rival closely in respect of pricing his product.

The OEFI, he said, was the best company with their professionalism and high standards. “We are very much pleased with the positive reports that we got from the auditing team”, which had surveyed the OEFI factory in Sohar.

Oman’s milk powder market is estimated to be about 7,000 tonnes annually, distributed in tins and aluminum sachets. Of this, the latter is said to be only 30 per cent of the total market. There is always a price fluctuation.

Anchor milk powder is priced a little lower than Nido, but is well above other brands that are available in the shelves as Anchor’s manufacturers try to keep it as a premium product.

“We have to watch their (Nido’s) pricing closely. But all the markets are very different.” He said Taiwan was the high-end market while Algeria and Bangladesh were at the low end. Oman is in the middle in respect of price factor.

Hussain Mohammed Hassan Mossa, general manager of OEFI, who was present at the signing ceremony yesterday, said that according to the “ex-factory” agreement, OEFI would be repackaging 30 to 35 tonnes of Anchor milk powder. Nevertheless, “the capacity depends on the market behaviour”.

OEFI has already signed agreements with two multinational companies — one with S J Heinz, to manufacture baby food for them (under the brand name Farley’s Baby Cereals) — which has already been launched in the market and the other one was with Campina, a Dutch company to repack their product, Coast milk powder.

Heinz has already launched their baby food in the AGCC and is looking at other markets. Saudi Arabia is said to be the biggest market for baby food with an estimated consumption of 5,000 tonnes per year, followed by Egypt 3500 tonnes. Kuwait and the UAE demands are 550 tonnes each. Oman is a small market with just 300 tonnes.

The OEFI’s own brand, Mother’s Choice is targetting roughly 1-2 per cent of the Saudi market. In Oman it is 3 per cent.

Hussain said that beginning next month, OEFI would manufacture rusk under the same brand name, Farley’s on behalf of Heinz. “This will be under the ex-factory agreement.” OEFI’s cereal line capacity is 3,000 tonnes and biscuit line 2,750 tonnes.
 

By John Lopez

© Times of Oman 2003