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UAE Freezones Biz News Updates
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UAE- SIC plans expansion
The Shuaiba Industrial Company (SIC) recorded a total revenue of more than
Dh40 million for the second quarter of 2013, and is upbeat on its expansion
plans in the coming years, as the company continues to witness an impressive
growth rate in its newly opened Dubai plant.
A subsidiary of the Al Safwa Group Holding Company, a reputed investment
company in the state of Kuwait, the SIC is a paper packaging manufacturer
with a customer base that is spread over more than 26 countries. The company
is listed on the Kuwait Stock Exchange, and has a paid-up capital of
approximately 19.2 million and a market capitalisation of approximately 48
million.
In addition, the company also operates paper sack plants through joint
ventures with cement companies. One such operation is a joint venture in
Saudi Arabia that the SIC formed with the Yanbu Cement Company in 2008 to
create the Yanbu Saudi Kuwaiti Paper Products Company.
According to the terms of the joint venture the SIC currently has a 40 per
cent stake in the Saudi plant.
The SIC, which has its headquarters and base plant in Kuwait, recently
inaugurated its second plant in the Jebel Ali Free Zone (Jafza) in April
2012.
"Business has been unbelievably good," said S Farid Ahmed, managing director
and president of the SIC. "I never thought that our production would be at
this level so soon after opening [the Dubai plant."
Unlike the Kuwait plant, which produces paper cement bags along with
consumer bags for shopping malls and food and fashion outlets, the plant in
Jafza is currently only dedicated to industrial packaging.
"I had never thought that we would get even 30 per cent of the UAE market.
However, in one year of operations alone, we have obtained 60 to 70 per cent
of the UAE market," said Ahmed.
Progress and results
The plant in Jafza currently produces over 300,000 cement bags in a day and
has an installed capacity of 60 million bags per annum. According to Ahmed,
the company plans to increase production at the Jafza plant to 72 million
bags by the end of 2013 and achieve a target of producing 80 million bags
per annum in 2014. The Dubai plant has produced 33.6 million bags from
January to date.
The company's Kuwait and Dubai operations collectively boasted an impressive
revenue of Dh43,680,971 for the second quarter of 2013, as compared to the
Dh33,989,154 recorded in revenues in the first quarter of the year.
Production also increased with 40,527,000 bags being produced in the second
quarter of the year as compared to the production of 29,860,000 bags in the
first quarter of 2013.
According to Ahmed the Dubai plant makes approximately Dh100 million in
annual revenues. Collectively though, the two plants and the Saudi segment
of the operations make approximately Dh350 million in annual revenues.
According to Ahmed, the recorded rate of growth of the Dubai plant is 100
per cent.
"Percentage wise the Dubai plant has shown the most progress," said Ahmed.
Although, he adds that the plant's results are not as high as the company's
Saudi operation, since the level of in-house consumption is higher in Saudi
Arabia. The Dubai plant results have led to a series of expansions being
planned for the next few years. "Originally we planned to run production for
six or eight hours a day, but are now running productions for 24 hours,"
revealed Ahmed. "We are also planning to bring in more equipment next year
to meet with the growing demand for our products."
In addition, Ahmed also revealed that the company has plans to introduce a
consumer packaging segment at the Dubai plant, similar to the one at the
Kuwait plant which produces consumer bags for outlets such as McDonalds,
Hardees, Burger King and Starbucks.
"We want to expand both our industrial and consumer sides of production so
that we can provide all kinds of packaging solutions under one roof," said
Ahmed.
Free zone benefits
Speaking about the decision to open another plant in Jafza, Ahmed
highlighted the ease of operating in the free zone.
"Our main advantage in Dubai is logistics and gains. We get paper in
containers and we sell bags in containers so Dubai was an ideal choice. The
country is located at the very heart of our operations, so opening a branch
here would mean that we are as close as we can be to our customers," said
Ahmed.
In addition to having plenty of customers in the UAE and Oman, he explained
that exports accounted for almost 50 per cent of total sales for the company
and that the SIC exports its products to Iran, Kenya, Uganda, Mauritius and
India.
"If you want to sell the products locally, it is much cheaper as you are
taking advantage of the free zone and also the market is much bigger than
the one in Kuwait," revealed Ahmed.
Eco-friendly practices
Shedding light on the topic of what type of bags should be used to transport
cement, Ahmed explained that different types of bags, like plastic, could be
used, but that paper bags are preferred because they are environmentally
friendly, allow for cleaner printing and are easier to handle. He also
explained that filling paper bags is easier.
Speaking about the paper that is used in the production of the bags at the
plant, Ahmed revealed that raw materials for the cement paper bags mainly
comes from countries in the northern hemisphere, like Canada, Russia, Norway
and Sweden, that have coniferous forests.
The paper is harvested from softwood trees like pine and spruce that are
known for producing longer fibres.
"Hardly anything is added to the paper that is harvested so there are very
few chemicals in our products and the bags are almost 100 per cent natural
and biodegradable," said Ahmed. "We only use water-based glues and inks,
imported from Europe."
In addition, he explained that hardly any paper is wasted in the bag
manufacturing process. "Very little paper is left over in the process and
the amount that is left over is not wasted but recycled," Ahmed said.
Also, how long it takes for a bag to start degrading, he said depended on
several factors. "Left outside or in a landfill, if one of the bags were to
come in contact with moisture then it would take up to three or four days to
start degrading."
Ahmed concluded by saying that the business outlook for the remainder of the
year and the coming years looked "very bright" and that the company would
continue on its upward trend, particularly after the planned expansions came
to fruition.
Aug 09, 2013 |
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Courtesy MENAFN
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