MUSCAT -- The public joint stock Oman Flour Mills is weighing plans to set up a 300 metric tonnes-per-day-capacity flour mill at the Port of Sohar. The proposed venture will help meet escalating domestic demand for flour, which is expected to further increase as the economy grows, the company's Chairperson Manal Mohammed al Abdawani stated in her recently issued Board of Directors' Report for the financial year ended June 30, 2008.
A technical and financial study has already identified the potential for the new mill, with the Port of Sohar seen as an ideal location for the project. The venture, due to be operational in a couple of years, will help further boost Oman Flour Mills' current market share of 65 per cent. Established in 1977 with a flour milling capacity of 150 tonnes per day, Oman Flour Mills has undergone a succession of expansions that has boosted overall capacity to the present 800 tonnes per day.
The company also operates a substantial grain storage facility of 120,000 tonnes, as well as a ship unloading facility of a capacity of 500 tonnes per hour, at Port Sultan Qaboos. Sales of flour products climbed to 324,000 MT during the financial year, which was higher by around 5,000 MT compared to the previous year's volumes. Total revenues jumped by a hefty 49 per cent to RO 47.984 million, an increase of RO 15.8 million over the previous year. Net profit after tax also soared to RO 7.5 million, representing an increase of RO 3.5 million over the previous year.
In a bid to diversify its operations, Oman Flour Mills has launched work on an 'industrial bakery' that will provide quality bakery products to the local market. The new venture is expected to start commercial production by end 2009. The company also recently established a subsidiary firm 'Bread House LLC', which has obtained a franchise to market frozen bakery products in the Sultanate.
Both ventures are expected to further strengthen the parent company's bottom line. According to the Chairperson's report, the improved financial performance during 2007-08, is mainly attributable to the procurement of wheat at economical prices from Iran. Wheat prices on global markets continued to soar during the year reaching their highest levels in February 2008 amid fears of lower output on account of bad weather conditions.
Poor wheat crops in Australia and Europe last year contributed to high wheat prices. Other commodities like barley, soyabean, canola, and so on, are also under pressure due to reduced acreage, with more areas under cultivation for maize destined for ethanol production. "In view of these pressures, the Company has established a specialised section for market study in order to identify wheat and other grain price trends so that the Company may achieve economic saving from appropriate purchases," the Chairperson's report said.
By Conrad Prabhu
© Oman Daily Observer 2008
