Serendib Flour Mills upbeat on business expansions

Thursday, 18 January 2018 00:21 - - {{hitsCtrl.values.hits}}

By Charumini de Silva

Serendib Flour Mills this week announced major investment plans to boost capacity and market share and venture into new business segments.

Newly-appointed CEO Mohamed Riyal said the company was keen on diversifying its expertise into animal feed and semolina milling as well as poultry going forward, while aggressively expanding the capacities and exploring export opportunities.

He said the firm will invest 12 million Swiss francs to set up a 500 MT capacity additional wheat mill at the existing factory in Colombo during the year, while investing another 15 million Swiss francs to establish a 300 MT capacity semolina mill next year particularly to cater to the increasing export demand in Far Eastern countries.

At present the company has 1,000 MT daily capacity, running at 90%. It was pointed out that the expanded 500 MT production will begin in April after the installation of machinery at its existing facility near Colombo Port.

“We are still studying on the semolina mill and looking at setting up the feed mill for poultry which will realise in 2019. The semolina mill will just look at the export market,” he added.

The firm will receive equity for the investments from its parent companies UAE’s Al Ghurair Foods (AGF) and Emirates Trading Agency (ETA).

Noting that the company currently enjoys a 27% market share, Riyal expressed confidence that they would be able to reach a 35% market share within the next three years. Out of the current market share 95% was through B2B operations, while the balance was retail approach of the business.

In addition, he said the company recently commenced operations on milling Indian wheat flour atta, which has a great demand from the Middle Eastern countries.

Pointing out that the firm exports 1,500 MT of bran to Maldives per month, he said they were keen on exploring other export opportunities in the Far Eastern countries particularly to Philippines.

The company recorded Rs. 18 million in revenue last year and was confident of achieving an income of Rs. 22 million by the end of this year. Currently, the firm employs around 400 individuals on payroll and has over 120 contract-basis outsourced workers.

Highlighting the challenges in the industry, he stressed that the Government having the power to control pricing mechanism was negatively impacting the business. “Despite price of flour being decided on international commodity prices, it does not apply in Sri Lanka. The price is controlled by the Government; hence there is no flexibility in pricing mechanism,” Riyal said.

The company imports different types of wheat from Canada, the US, Russia and Australia.

Riyal said the wheat flour market in Sri Lanka has grown steadily from 35,000 MT per month to 65,000 MT over the past couple of years owing to the high demand for flour-based products and due to scarcity in rice production in the country. “People like baked products now and tourists also prefer flour-based products over rice-based products.”