Muscat: Salalah Mills Company has decided to postpone its proposed capacity expansion due to the current economic situation. The company’s board took the decision in its meeting on May 12, according to a stock market filing.
Further, a proposal to float a rights issue of 10 per cent to existing shareholders was also postponed to the first half of next year.
In August last year, the company had said its board had decided to add a new flour mill with a capacity of 600 metric tonnes per day. The project cost was estimated at OMR7.5 million.
The company’s board at the time decided to raise paid capital by 10 per cent by way of a right preference to shareholders in the first quarter of 2016, at a price of OMR0.750 per share.
The company had also said that the then current production capacity of Salalah Mills Company was 1,500 metric tonne per day.
Meanwhile, the total sales of the parent company had increased by about 2.3 per cent in the first quarter of the current year compared to the same period of last year. The total sales quantity in local market reached about 64.8 per cent of the total sales volume. The total sales value in the first quarter of 2016 was OMR14 million, showing fall of 7.9 per cent compared to the same quarter of 2015, because of sales amount decrease.
The subsidiary company (Salalah Macaroni) made a loss of OMR275,000 in the first quarter of 2016 compared to a net profit of about OMR88,000 for the first quarter of 2015 due to severe competition in the export markets. The management of the company is taking steps to open new markets and promote exports.
The parent company made a net profit of OMR1,045,308 for the first quarter of the current year, compared to OMR1,535,914 in the same quarter of last year, showing a fall of 31.9 per cent due to competition in the export markets. The group net profit declined from OMR1,287,863 made in the first quarter of 2015 to OMR769,957 in the first quarter of 2016, showing a drop of 40.2 per cent due to the effect of the subsidiary company’s performance.