MUSCAT: Al Anwar Ceramic Tiles Company (AACT), which has a dominant position in the domestic ceramic tiles market with its popular Al Shams brand, is planning to expand its installed capacity by six million square metres in two phases. This will take its total capacity to 16 million square metres per annum.

”We have finalised our next expansion plan. This will be in two phases of three million each —enabling a total investment of about RO12 million,” said AACT Managing Director A. Shamsuddin.

He said that his company is in discussion with the government for availing additional natural gas to feed the new production line and the immediate gas requirement is for three million square metre capacity. “We should be able to get a positive response from the government.”

In case of a difficulty in getting additional natural gas, the company has another option of using LPG.

However, the company has to invest additional money for converting LPG into natural gas to feed the factory. “It takes only 12 months to complete the (first phase of three million square metres) expansion, after getting government permission for gas,” he noted.

GCC-wide presence

Shamsuddin said that his company has a good presence in other GCC markets with exports accounting for 55 per cent of total volumes.

Al Anwar Ceramic Tiles Company has a strong presence in the domestic market, where it invested significantly in strengthening branding and merchandising platforms. “We have achieved the position of the lowest cost producer of ceramic tiles in the region; consistent with our strategy,” he noted.

Shamsuddin said that the company is anticipating a sales revenue of RO18 million this year, as compared to RO15.89 million posted for 2009, while pre-tax profit is expected to move up to RO6.2 million from RO5.61 million.

Referring to the demand situation, he said, “We expect some uncertainties to prevail in the immediate short term, which could make market conditions difficult.”

“We expect the intensity of Chinese price competition to ease given their own cost, currency and freight increases.”

According to Shamsuddin, the overall size of the ceramic tiles industry in the GCC region is estimated in the region of 125-150 million sq meters per annum and roughly half of this demand is met by local GCC manufacturers and the rest by imports. “Saudi Arabia and the UAE are the two large markets,” Shamsuddin noted.

The GCC continues to remain a net importer of ceramic tiles, and the factors that fuel demand include opening up of property ownership for foreigners, growth in tourism, and the growing young population that props up demand for housing units. The company’s strategy
is to maintain its status as a low-cost regional producer going forward, which will help them challenge the prevailing competition in the region.