Oman’s National Detergent Company (NDC) has revamped its distribution arrangements in Bahrain and Saudi Arabia with a view to increasing sales in the two kingdoms.

Chairman Abdul Hussain Bhacker said the previous distribution arrangement was unsatisfactory and that it led to serious payment difficulties and recovery steps including legal proceedings.
“The new arrangements are expected to strengthen the company’s sales and presence in the regional markets in the long run,” said Bhacker who described 2004 as an extremely challenging year. The company’s operating profit was RO310,470 ($806,400) against RO569,749 in 2003, but profit before tax plunged to just RO19,746 as provision had to be made to cover investments made by an associate company Keemya Oman SAOG, where, NDC said, serious irregularities were detected.
The troubles at Keemya Oman came on top of difficulties in a tight and competitive market. Bhacker told shareholders: “The detergent industry globally has been beset by intense competition, more so in the last two years. Multinational brands are fighting for an increased market share by offering promotions and incentives unheard of in the past. Your company also had to incur additional promotional and marketing costs for maintaining and improving its market share, severely reducing margins.” By the end of 2004, the situation was further compounded by steep increases in raw materials and packing materials. “The changed business environment has impacted your company’s profitability and these challenges are expected to continue in 2005,” he added.
The company produces detergent powders, liquid detergents, toilet soaps, shampoos and other industrial and household cleaning products. Detergent powder accounts for 80 per cent of the total volume. In Oman the company distributes its products directly. Abroad it depends on a network of distributors.
NDC reported its flagship brand ‘Bahar’ has retained its market leadership in Oman and registered growth in sales over the previous year. “The export market performance continues to be satisfactory and the liquid division has also done well, registering a handsome growth during the year,” said Bhacker without providing figures to substantiate his claims.
Among the significant developments in 2004 was the ending of a ‘toll manufacturing’ agreement with a major customer in the Gulf, which NDC said constituted a “significant” volume of the company’s business. The management has identified new markets and opportunities to reinstate the volumes with its own brands and those of others, said Bhacker. “Product extension opportunities are also being studied and necessary investments will be made to broadbase the profit portfolio in the coming years.”
Total sales revenues in 2004 amounted to RO8.18 million.
The NDC management quantifies the GCC detergent market at 200,000 tonnes per year. It says the market is split between high-foam and low-foam powders with the high-foam segment accounting for 75 per cent of the total. It estimates the overall market growth at 1.5 to 2 per cent, which is in line with population growth and reports that the market is dominated primarily by multinational brands in the premium segment, while in the popular and economy segments the regional players operate. Premium segment powders constitute 35 per cent of the total market, whereas the popular segment commands 55 per cent and economy10 per cent, according to NDC.