Building on synergies

V Sundaresan, Director and General Manager, The National Detergent Company talks about its takeover of Al Ahlia Detergents Sohar factory. An OER report

What is the idea behind the acquisition of Al Ahlia’s factory in Sohar?
This is something that we had been looking around for and we had our own plans for expanding our capacity. For the last few years we were constantly growing and we were in need of additional capacity. We have been allocated a fairly large tract of land in Sohar Industrial Estate and have plans to shift part of our machinery there over a period of time. When Al Ahlia closed down four years ago we were seriously looking at buying the company in a running situation, but we were not able to determine the financial liability of the company to any great accuracy, so the shareholders decided not to venture into it.

Nevertheless, we made an offer to buy their machinery and they were prepared for it, but we could not arrive at a feasible value. As the company went into liquidation and things were put up for sale, we took the necessary legal clearances and made a bid for the company. The Ministry of Commerce and Industry found our bid of RO2.55mn to be the highest and we got an approval to acquire the plant and machinery. We got physical possession in September 2011.

How much work has taken place on the plant since September to get it up and running?
We have planned to do it in two phases – in the first phase we plan to do some ground work and start commercial production from January 2012. The next phase which will take another six months to one year, we will revamp the entire plant and machinery, increase capacity, correct the process flow. Hopefully by the next year we should have the full plant ready. We will invest around RO1mn over these two phases.

How much will the plant add to your capacity?
The acquisition will double our capacity from 30,000 tonnes per annum to 60,000 tonnes per annum, but we may take a decision to increase our capacity there and reduce our capacity in our existing plant in Ghubra, over a period of time. Eventually we would like to have all our production in one place as that would give us an advantage, but that will take two to three years.

How will the acquisition benefit The National Detergent Company?
We already had a plan to shift our base to a bigger capacity plant and the Al Ahlia factory fits into that. Secondly, being in Sohar there should be certain export advantages in terms of freight and the development of the Sohar Port. Our overseas market accounts for 75 per cent of our sales and being in Sohar should benefit us in exports. Though the freight scenario has changed recently due to the rule of using only vehicles registered in Oman, earlier shipping out goods from Sohar used to give us a saving of 8-10 per cent on freight costs compared to Muscat.

How has the company fared in 2011?
The GCC markets and the Middle East accounts for a bulk of our exports and despite the unrest in the region, these countries have shown good growth helping our sales. NDC’s export volumes grew by 12-15 per cent in 2011.
 

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