The success story of Oman's Reem Batteries is a classic example of how a turnaround can be achieved with foresight and a vigorous marketing drive.
From a bankrupt establishment in 1989 to a model industrial venture in the Sultanate today, Reem has come a long way.
Reem is now claimed to be the Middle East's largest dry-charged battery manufacturer, exporting 90 per cent of its production to more than 35 countries worldwide.
With a production capacity of one million units, which is fully utilised, Reem is looking at expansions, new products and new markets.
Tracing the history of the company, chief executive officer S Gopalan says, the original establishment started in 1985 was a nonstarter and folded up in 1989. However, in 1990, the Omzest group took over the management, infused new capital and brought in modern technology under a cooperation agreement with Johnson Controls Battery Group of the US. The factory was recommissioned in 1992 with a capacity of 150,000 batteries. "We have not looked back since then," says Gopalan.
During the last seven years, the company has seen a steady growth of 15 to 20 per cent a year, though in 1999 a major fire at the factory affected the production and profits.
The company is targeting a sales turnover of RO6.5 million ($17 million) this year with a growth rate of 15 per cent.
"Since we started focusing on export, we are doing well. Unlike the Saudi market, local demand is low in Oman. Purchasing power of people is also less. If you are to survive on local demand, it is impossible," he says.
Reem manufactures 175 different types of batteries, conforming to JIS,DIN and SAE standards. Besides the wide range of automotive applications offered, there are special batteries for the leisure segment and battle tanks. Its 12-volt batteries cover a wide range of capacities from 26 Ah to 230 Ah.
]"In terms of products, we have the widest range in the world, though there are much larger units producing massive volumes," says Gopalan.
"We have adopted this strategy because of a compulsion to grow. The Japanese, the Koreans and the American manufacturers specialise to serve their markets and are usually attached to the local vehicle manufacturers.
"Since we are not an OE (original equipment) supplier, we don't have to specialise in a particular type of battery.
"We realised that if we have to grow, we must grow horizontally and we kept on expanding, catering to various markets and developing them," continues Gopalan.
Reem is claimed to be the only ISO9001 certified dry-charged battery manufacturer in the Middle East and enjoys in-house technical capabilities. It is also regarded by Johnson Controls as very successful in transferring technology.
One of the key elements which ensured the success of Reem Batteries is the production of batteries to suit a particular climate.
Reem has its "Desert-proof" batteries for the Gulf conditions and products for the European and Scandinavian countries are designed differently.
"Usually battery majors don't do this and that is one of the reasons for the failure of many international brands in the Gulf," says Gopalan.
"Our quality is comparable to the Japanese and in price we are much better. That is why we have captured the market and are the leaders today," he adds.
products benefit from a superior technology and highly-skilled manpower.
"We have managed to optimise the design by using only 16 types of plates to make the various kinds of batteries," says Gopalan.
"We have also managed to position ourselves well in the market as a quality producer."
lan also says that Reem is the first in the Gulf to have service centres all over the region. There are close to 60 franchised service centres and the company provides one year warranty on the products in the Gulf.
Reem has two brands - Antara, which is sold in the Gulf countries, and Gulf Star, sold in Europe and other markets. It also manufactures for other private labels.
The salient features of Reem's batteries are:
Out of the 35 countries the company exports to, the prime markets include the GCC states, the UK, South America, Africa and West Europe. Saudi Arabia is the single largest market for Reem.
New markets the company has targeted are Australia, Peru and Bolivia.
As part of its export promotion, Reem participates in various exhibitions worldwide.
"The world's large players know us and what we do. It has helped us. In fact, large European firms have approached us for tie-ups," says Gopalan.
He says the company is looking for new avenues and is in talks with big players in a move to expand into the manufacturing of industrial batteries, UPS, VRLA and batteries for telecom applications.
Reem is also in the process of installing a plant for the production of battery boxes. At present they are imported from Europe and the Far East. The machinery has already been ordered and when commissioned, it will meet 85 per cent of Reem's requirements.
has a total staff strength of 280, out of which 220 are factory workers. It has achieved 48 per cent Omanisation and has the distinction of being one of the top five companies in this respect.
Gopalan says the company puts great value on discipline, whether the employees are nationals or expatriates, and has a very efficient grievances redressal mechanism. "The issue is not of skills. It is of attitude. Right attitude is the way to success," he says.
Competition in the sector is excessive and due to this margins are small. Since the main raw material is lead and the right buying of lead can make or break a company, there cannot be a wide difference in prices of quality producers, he says. "If someone cuts the price by 25 per cent, that means they are cutting the quality."
On the issue of dumping, Gopalan says Far Eastern suppliers are the main culprits. The government is considering an anti-dumping law which may come into force by the end of this year.
More free trade pacts with neighbouring and other countries will help boost exports, he says.
"Oman is extremely well-suited to be the industrial hub for the Middle East with a well-developed industrial climate. The laws are strict and the Capital Markets Authority is powerful and acts as an effective watchdog of the stock market," says Gopalan.
