Galfar Engineering and Contracting Company has completed the process of incorporation and registration of two new companies - Unibeton-Galfar Ready Mix and Aspire Projects and Services - in the sultanate, Galfar said in a filing with the Muscat Securities Market (MSM) on Sunday.
Unibeton-Galfar Ready Mix is a 50-50 joint venture between Galfar and the UAE-based Unibeton Ready Mix, which is a part of the Abu Dhabi-based Al Fara'a Group. "Unibeton-Galfar Ready Mix will carry on the business of producing and supplying ready-mix concrete," said Dr Hans Erlings, CEO of Galfar, in the filing.
Aspire Projects and Services, is a subsidiary 99.9 per cent owned by Galfar. "Aspire Projects and Services will carry on the activities of small diversified engineering and contracting works," Dr Erlings said. Analysts said that the new subsidiaries will help Galfar reduce costs on the purchase of ready- mix concrete and focus on smaller contracts separately.
"Galfar is the largest customer for ready-mix concrete in Oman and the company would be capitalising on that opportunity by forming a joint venture. This would be a good viable option in the long run. It would help reduce cost and effectively utilise capacity," said Kanaga Sundar, senior analyst at Gulf Baader Capital Markets. Sundar said that Aspire Projects probably would focus on smaller projects while the parent firm will focus on large projects.
Anil Kumar, senior vice president of Fincorp, said, "Large contractors like Galfar buy ready-mix concrete mainly from cement companies in Oman. Setting up a joint venture for ready mix concrete would save on costs."
"Galfar is quite a well leveraged company. The debt to equity ratio is high. The company might consider transferring the new debt on new subsidiaries."
© Muscat Daily 2011
