At the forefront
Al Omaniya Financial Services was recently rated as the No. 1 non-banking financial company in Oman. Malcolm Xavier Crasta speaks to its CEO Aftab Patel to find out the reason behind their success

What are the different types of financial services offered by Al Omaniya Financial Services outside of auto Finance?
We do almost all sorts of financing for movable assets such as auto loans, consumer loans, corporate loans, project finance, express business loans, working capital loans, bridge loans, debt factoring, bill discounting etc. Movable assets covers all sorts of personal automobiles, commercial vehicles, earthmoving equipment, construction equipment, plant and machinery, consumer goods such as funiture, home appliances, electronic equipments, computers, etc.

AOFS has been rated as the No.1 non-banking financial company. What has made it achieve this?
It is not just one simple factor but a collection of factors. You cannot build such quality in a business model over a short period of time. It is our entire philosophy which includes our belief and value system, the kind of transparency we have and how that then translates into technical things like – how your capital structure should be and what kind of manpower and HRD policy you should have. It is also not the first time that we have been rated No.1, in fact we have been consistently been rated as the best, so I believe that it has more to do with our philosophy; our management processes; the structure of our capital; the quality of business and service that we provide; the customer service that we have and also the honesty, transparency and new value added products that we bring.
Unless you provide value, a customer will not be interested. And even if he walks in he will not do so for the second time. You cannot build a top quality business if your customers are not coming back and new customers are not walking in. It is the sum and substance of all these factors as a whole that determine the success of a business, not just one.

Considering the recent downturn in the automotive industry and Al Omanya’s reliance on the sector, what has been the effect of the slowdown on the company?
There has been an impact but it has been limited, simply because we anticipated the downturn. We knew that the economy works in cycles – anything that goes up must come down. You should structure your organisation efficiently and have the flexibility to manage this volatility without sustaining a severe impact; this is the hallmark of a good organisation and it is the same with us. So, while there has been an impact, it hasn’t been so great that it destabilises the organisation. Since we have provided for these contingencies, we will maintain consistent dividends and earnings.

Has the recent downturn affected the way in which you provide financing to people?
Not to a substantial level – business volumes were lower because people were buying less but this was not severe enough that the organisation would need restructuring. If we had not anticipated this scenario and made serious errors in the product lineup, distribution methods and capital structures then as a consequence we would have had to make serious amendments. But, we had a very well developed and well defined product lineup and we already had a contingency plan for such a situation. As a result we did not have to make any serious changes in the way we approach customers.

What is the main purpose of your recent RO20mn bond issue?
There are three main reasons for it. The first being that all financing companies have to maintain a capital of RO20mn by June 2012 and this will help us to achieve the required paid-up captial. Secondly, what we are issuing is a long term bond, since we mainly finance long term. Technically this is called matching the maturities. Thirdly this would help us augment our long term resources for the company as we believe there is enough demand in themarket to deploy this kind of funds. We have a strategy in place which will reduce the down side risk to the minimum.

What are your fail-safes to prevent problems with money not being paid back on time?
In any business that deals with lending money, there are certain precautions to be taken. When you take into account the environment that you are operating in – legal, financial and cultural; and if you are careful you will acquire the book of quality assets. In spite of this there will always be some cases where such contingencies can happen and when the need arises, these problems will be handled. We pay particular attention to the business that we write and we have systems, processes, internal control and credit scoring systems in place, therefore such problems of delinquency are at minimum and usually legal recourse is available to recover such loans. As a matter of abundant precaution, the company anticipates and provides for such contingencies. The company is therefore very well positioned to address such issues. The fact that we have completed several cycles of business validates our business models.

What is your anticipation of the market next year?
I believe that, Oman in particular, should be on a growth trajectory soon. We have not been impacted as much as other markets outside the region, simply because the country as a whole is conservative and careful. Economies like these follow an anti-cyclical fiscal policy which means that in times when the revenues are low, when the private sector capital expenditure and consumption falls, it is substituted by much higher government spending. This is why we have seen projects of several billion dollars being awarded and as such the sentiment has improved. We didn’t have any problems with our banking and financial systems, in fact the government did not have to come and guarantee the deposits like was done in other countries. So, as you can see we have had several positive factors and I believe that at least by the end of next quarter we should see a moderate growth. It is very hard to state that the growth of 2008 might occur because for such a growth the entire world economy has to grow in tandem. In my opinion, as the oil prices are at a very healthy level, our reserves are good and there is a lot of construction and infrastructure spending happening, I think that at least in Oman the worst seems to be over.