By Abdel Qader Ramadan
Wadi Group President and CEO Tony Freji, has announced the company will invest EGP 460m over the next two years in expansion projects.
Expansion will occur in its primary activities in the fodder and poultry industry, as well as penetration into river transport following the success of its river port in Alexandria.
Freiji added that new investments will be used to build a new poultry farm in Wadi Natrun, to include 18 modern storage areas with air purification to protect the birds from bacteria and viruses.
He explained that this system is modern and costly, and if successful will be used by the company’s other farms. Freiji also added the company intends to establish a new plant for producing fodder in Sadat City to double production capacity from 350 thousand tonnes to 700 thousand tonnes.
The company also plans to expand its fish farms in Fayoum to increase its cages of sea bass from 30 to 50. Its fish farms in El-Tur in the Red Sea, the first fish cages in Egypt to be placed in the Red Sea, are also to be expanded.
Freiji added the company has already expanded its production of coolant cells, adding three new lines. Plans include an increase in production of “chick fattener,” upping production to 90 million chicks by year’s end versus the 65 million it currently produces.
He said the company is planning to make a “quantum leap” in the area of river transport over the coming period by increasing its storage capacity to 2m tons per year by the end of 2015. The company is working to build a fourth line of silos and horizontal warehouses to accommodate different grains and seeds which cannot be stored in vertical silos.
Wadi Group along with MedSofts jointly own a platform on the Nubaria Canal, one kilometre from the port of Alexandria. Freji said the company is currently looking to buy lands on the Nile to establish sub-ports along the Nile, which is nearly unexploited for river transport in Egypt. This will allow goods to be transported directly from Alexandria’s port or other ports and sub-ports belonging to the company.
“River transport has now become a necessity given the worn out state of the roads, traffic, and the lack of transport vehicles,” said Freji.
The company is planning to establish 3 to 4 sub-ports over the next two years, with the preliminary stages to establishing its first sub-port at “Kafr Daoud” almost complete.
“We will be building a limited number of barges [to serve as a fleet for the transport of goods]while drawing primarily upon those owned by the cooperative societies and associations,” said Freiji, “This is in order to focus our investments in building sub-ports.”
He also noted that the company is yet to face any intractable problems while completing the process to establish these sub-ports, which are to be established along the Nile from Alexandria to Aswan. Freji called on the government to further clarify the necessary steps specifically required to establish sub-ports, and to facilitate and speed up the process.
He added that 60% of the investments will be self-financed from Wadi Group and 40% will be from banks the company deals with, including CIB, Audi, Arab African International Bank, and the International Finance Corporation (IFC).
Ramzi Nasrallah, vice president and CFO of Wadi Group said that the self-financing will come through reinvestment of capital and increasing the capital of the companies that are part of the holding group. He noted that 3 of the 16 companies that are part of Wadi Group increased their capital this year. Al-Haditha Company increased its capital from EGP 30m to EGP 132m, Wadi A’laf from EGP 25m to EGP 100m and Wadi Food from EGP 25m to EGP 75m.
The company intends to establish a number of projects over the next two years to expand food production. These include building fish fodder and cattle fodder plants in Wadi El-Natrun, as well as projects to expand grape, vegetable, olive cultivation and fish farms.
The company’s expansion in the area of river transport, Nasrallah said, represents an important investment opportunity that is expected to increase the demand for this type of transport. This is especially the case if the government raises diesel prices, which at its current low and subsidized price level has not encouraged the use of river transport.
Nasrallah pointed out that the company’s project in Alexandria for unloading and storage contributed greatly to the reduction of congestion at the port of Alexandria. The company’s ability to unload goods from its boats without needing to stop at the dock helped raise the capacity of the port by 20%.
According to Nasrallah, in addition to relieving pressure on roadways, river transport also contributes to reducing the cost of transportation. By river it is possible to transport between 500 and 600 tons in a single shipments whereas road transport cannot accommodate more than 40 tons per shipment.
Nasrallah said that the company is looking to double its sales every three years, aiming to achieve sales of at least EGP 4bn by the end of 2016. Nasrallah added that the company’s sales since the beginning of the year through the end of May 2014 increased by 20% from sales during the same period during 2013. They are expected to increase over the second half of the year, the period in which the company’s olive crops are sold. This is in addition to the operation and sales of the company’s new plant for phosphate and calcium, which was recently established and has begun operating on an experimental level.
Nasrallah divided sales of the company into three sectors. The poultry sector earned EGP 300m in sales in 2013 and is targeting EGP 834m by the end of 2016; the agriculture and food industry sector earned EGP 130m in 2013 and is targeting EGP 318m by the end of 2016; and the industrial sector, which includes fodder, was EGP 1.537bn in 2013 and is targeting EGP 2.667bn by the end of 2016.
He noted that the company also plans to increase its land fleet. It added 15 vehicles during the last period and plans to add an additional 15 over the current year. The company currently has a fleet of over 100 vehicles.