Al-Manar Group invests EGP 50m in brake fluids factory

Daily News Egypt
10 Min Read
Ahmed Nawara

By Ahmed Amer and Ahmed El Adly

Al-Manar Group has invested EGP 50m, including in value of assets and working capital, in its 6th of October City brake fluid factory, according to Ahmed Nawara, the company’s Deputy Chairman.

In an interview with Daily News Egypt, Nawara explained that the factory’s annual production stands at approximately 3,000 tonnes, of which 2,000 tonnes is brake fluid, with the remaining 1,000 tonnes as other fluid types.

Firstly, could you outline for us Al-Manar Group’s work?

Al-Manar includes a number of companies established in 1975, and is mainly related to the automobile industry, like Al-Manar AMIX for import and export which specialises in importing and exporting spare parts for European cars. It is an agent for a number of European products, and also imports different mechanical and electrical spare parts. The group also owns Al-Manar AMCF for manufacturing car fluid that was established in 2000, and has a factory in the second industrial zone in 6th of October City. The factory has a licence from the French-American company Honeywell to blend and fill brake fluid under its brand name, Bendix.

Moreover, the company was the agent for Honeywell in Egypt until it was able to acquire a licence for manufacturing inside Egypt. It sent a number of workers to the company’s labs in France, and the factory was established in accordance with the French specifications. After that, the group developed two brake fluid brand names: Guard and Alto. It also offers other products, such as radiators, batteries, grease, power steering fluid, and hydraulic fluid. The group has the ISO 9,000 quality certificate, in addition to ISO 14,000 for environmental management, and ISO 18,000 for industrial safety. At the same time, the group is currently working on finishing the procedures to acquire ISO 21,000.         According to the last certificate, the group’s lab will be certified to test car fluids for any other labs. In addition, the automotive market in Egypt is a very big one that amounts to approximately 6m cars, while the group’s product volume is small in comparison to the market’s size.

What are the company’s targeted expansions in the next period to keep up with the market’s size?

We have plans to expand in the market. The company is working now on obtaining the licence for engine fluid, where the consumption rate of this type of fluid is many times as high as the consumption rate of brake fluid. This will be through launching a production line inside the old factory, in which vast areas of land exceeding 10,000 metres are available. Al-Manar Group will add a production line with an investment cost of $1m, including buying the line’s equipment, including tanks, pumps, pipes, and lab tools. The company is also studying the buying of all the necessary equipment for running the production line. There is another factory working in filling the fluids, until the filling factory’s licence is acquired by the end of this year. We will start establishing it in the first quarter of 2016, to start manufacturing and filling fluids in March.

What is the company’s market share considering the strong competition in the engine fluids field?

The competition in the engine fluids market is very strong, and competitors are big names like Shell, Mobil, Misr Petroleum, and Copetrole. If we acquire 1% of the market, that would be enough to run the company at full capacity, because the market consumes huge amounts of fluids, even with the presence of these huge companies. The price is an important factor for customers when it comes to the buying decision, and the customer will not use engine fluid whose quality he does not trust. Al-Manar made use of the fact that its products have a presence in the market and enjoy a good reputation. We thought to produce engine fluids products under the same name to take advantage of that reputation.

How does the company market its products considering the strong competition from big companies?

When it comes to marketing, the company uses dealers. Big companies surpassed marketing by dealers, because their products have become a part of the market. We also have a company, Al-Manar Trading and Distribution, specialised in trade and distribution that distributes our imported and manufactured products. 85% of motor oils are produced in the domestic market by major companies such as Shell, Total, Misr Petroleum, and Copetrole, while the remaining 15% are imported oils. The company is currently distributing its products throughout a network of dealers and distributors. Once we achieve proliferation in the whole market, we will start running ads like the big companies do.

What are the obstacles facing the industry?

The group, as an oil manufacturer, faces many problems. People cheat in different ways. For example, they will open the original Bendix oil [packaging], take the oil inside and fill them again with other types of bad oil. The other thing is making a slight change to the original product name to make it seem as though it were an Al-Manar product for example. In this case, the packaging used is identical to the original product design and the font. Cheating companies rely on the consumers’ lack of information about different types of oil in the market. They market the fake products in remote areas, for example, in Upper Egypt or to the owners of taxis and microbuses, and at 70% less than the original price. This fraud affects the driver’s life, especially when it comes to brake fluids. The capping of deposits affects the import movement. The most important point in the auto parts import field is the entry of counterfeit spare parts coming from India and China, although the General Organization for Export and Import Control can refuse entry of major international products, saying it is sub-standard. Auto parts imports need to be tightly controlled.

What are the most prominent parts the company imports?

Al-Manar imports brake pads, filters, rings, pistons, starting motors, dynamos, lights, plugs, drums, clutch cylinders and other parts. We also import from French company Valeo, which has 150 factories worldwide. We import some products from Bendix, in addition to others produced by Mahle, which is the biggest manufacturer of engine parts and from which even Mercedes imports.

Does the company aim to expand in manufacturing oils?

The French company, Valeo, is negotiating with Al-Manar Group to manufacture brake oils at its plant, because Valeo is willing to take advantage of the African market via Egypt on two levels. The first is through obtaining a certificate of origin. Valeo will benefit from the COMESA and Agadir agreements, and its products will enter Africa without customs. On the other level, it will also benefit from lower shipping rates. Egyptian labour is also cheaper. I also met with Valeo leaders in Dubai last June, and offered them the prices. We are now awaiting a response to seal the agreement in October in France. This agreement requires that we increase the number of workers. We will add another shift, and employ 80 new workers.

Are you targeting entry to the spare parts manufacturing industry?

Copying original spare parts is the reason behind most road accidents. The company also has a plan to manufacture auto parts, but this requires a very large investment. We are currently conducting negotiations with Talaat Ghabbour, who owns a large filters factory in 10th of Ramadan City, to manufacture Guard Filters. It is planned that this will begin by the end of this year. This type of partnership is better than importing and looking for hard currency, which will provide a continuous supply.

The automotive components makers meet constantly at exhibitions. The possibility of operating manufacturers themselves is always under consideration. They could agree to this exchange and trade-offs of products. This could become the new form of investment during the upcoming period. For example, I manufacture engine oils or brake fluids at my factory, while another company manufactures brake pads for me. The deal will then be based on swapping depending on quantity. For example, I give them one tonne of brake fluid in exchange for a tonne of brake pads, according to the prices, and cross-reference the price difference.

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