Like in the large cap category, we find a number of mid cap companies which are rewriting the rules with their performance. A few examples would be illustrative. Gulf Investment services has faced tough challenges over the past five years on account of global and regional developments which have hurt its investment portfolio, but it is wiser, thanks to the experience. The company is now more cautious in making further strategic investments. The company has become more prudent in managing its portfolio investment, with a judicious mix of aggressive and defensive stocks, Moreover it has diversified into comparatively bigger economies such as Qatar and Saudi Arabia. Ahead of the curve As one of the premier diversified non-banking finance companies in Oman , engaged in providing vehicle finance and loans to SMEs, National Finance Company enjoys a robust sourcing, underwriting, collection and operational model commensurate with the size and risks of the underlying asset class. The company's major strengths are its customer base, dealer relationships, strong business practices and experienced and committed workforce. Oman Packaging has been able to increase the volume and service to the customers with an increase in installed capacity by 70 per cent during year 2010-11. The company is always trying to broaden its market base in local and exports to GCC, African and Asian countries. The increased plant capacity expansion helped the company in maintaining its strong competitive position in the local market which has contributed the major portion of its total sales. It's export market comprises of the UAE and Pakistan where volumes are increasing gradually. Majan College has grown in leaps and bounds with various achievements to be proud of including its numerous graduates gainfully employed and working in all sectors of the economy. All its undergraduate programmes are validated by the University of Bedfordshire . At the postgraduate level, Majan hosts a number of programmes. Master's programmes in Business (MBA) and Computing are offered by the University of Bedfordshire . Organisational Leadership masters are offered by the University of Glasgow . The college goes through an institutional review by the University of Bedfordshire , every four to five years. The college has initiated the process of identifying areas for the next strategic plans for the years 2013- 2018. It is planning to increase the range of its academic provision at both undergraduate and postgraduate programmes along with its resources. Realising the limitations of the local market, National Gas Company looked beyond Oman . The company's business outside Oman has contributed positively through growth in bulk LPG market in UAE and Synthetic Natural Gas projects in Saudi Arabia and the UAE . The company is in the process of consolidating its position in the UAE by boosting its storage and service capabilities, which is expected to be operational before the end of 2013. This would not only result in operational efficiency, but also reinforce the company's capacity to provide superior service and reliability to it's UAE clientele. The company also launched its first venture out of the middle-east with its acquisition of Shell's LPG assets in West Malaysia . This acquisition positioned NGC's subsidiary NGC Energy Sdn Bhd as the second largest LPG supplier in the peninsular Malaysia , and laid a firm platform for the company to benefit from growth opportunities arising in the high potential Southeast Asian region. NGC also signed a JV agreement with Buzwair Industrial Gases, Qatar to set up a subsidiary that will target industrial gases opportunities arising in Oman . To sum up one finds that these companies have employed a number of differentiators like consolidation, expansion, tapping overseas market and constant review of strategies and performance to rise to the top. 1 Gulf Investment Services Holding Company Weathering the storm Prudent management of portfolio investment, with a judicious mix of aggressive and defensive stocks, has helped Gulf Investment Services Holding Company withstand challenging times Gulf Investment Services Holding Company is involved in making strategic and portfolio investments in different sectors in and outside Oman . The company explores strategic investment opportunities with the promoters of profitable and nationally important projects in Oman . The company has faced tough challenges over the past five years on account of global and regional developments which have hurt its investment portfolio. This has made it more cautious in making further strategic investments. It has also resulted in a slowdown in expansion of the operating business of its subsidiary within the GCC region. The investment portfolio of the group recorded a gain of RO1.89mn in 2012 despite the fact that the Muscat Securities Market (MSM) ended the year with a marginal gain of just over one per cent and most GCC markets were lackluster. This reflects a prudent management of Group's portfolio investment, with a judicious mix between aggressive and defensive stocks and also its diversification in comparatively bigger and diversified economies such as Qatar and Saudi Arabia. The company is currently focused on expanding its financial service business through the subsidiary company, Gulf Baader Capital Markets (GBCM) in the GCC region through alliances in each country, diversification of investment portfolio into strategic investments and building upon its current investment in the rea estate sector in a judicious manner. Outlook The long-term business plan of the company focuses on minimising the exposure to market investment and diverting the resources to business investment which would provide the company with sustainable revenues and profits. The environment for strategic investment in the near future remains a challenging one. 2 National Finance Company Driven by legacy National Finance Company has a mature understanding of the market and has developed systems and processes that are constantly updated to meet market demands and face challenges posed by a changing business environment As one of the premier diversified non-banking finance companies in Oman , engaged in providing vehicle finance and loans to SMEs, National Finance Co enjoys a robust sourcing, underwriting, collection and operational model commensurate with the size and risks of the underlying asset class. The company's major strengths are its customer base, dealer relationships, strong business practices and an experienced and committed workforce. In vehicle finance, the company operates through established dealers as well as direct customer relationships while in the SME market the business is more focused on direct marketing. In 2012, National Finance raised an equity capital of RO7.5mn from its existing shareholders through a fully subscribed rights issue. The equity capital has now increased to RO25.06mn which means that the company has already achieved the 2016 target regulatory capital of RO25mn. The company continues to adopt a conservative approach to credit approvals as a result of a perception of heightened credit risk since Q4 2008. Within this policy, the approach has been to target customers perceived to meet the company's credit risk appetite. Outlook The company expects the finance and leasing industry to remain challenging. While liquidity is expected to remain easy, there will be spread compression due to some increase in funding costs and increased competition for business. The company will strive hard to improve its service levels and will continue in its pursuit to develop strategies for maintaining margins through efficient operations. This combined with improved asset quality and focus on maintaining good collections is expected to provide satisfactory returns to its shareholders. 3 United Finance Company Gathering momentum United Finance Company strengthened its relationship with vehicle and equipment dealers and cashed in on the market to grow its loan book United Finance Company (UFC) extends finance to the retail and corporate segments with the objective of maintaining a balanced loan portfolio. Its corporate exposure stood at 65 per cent while the remaining 35 per cent represents retail exposure. The company strengthened its relationship with vehicle and equipment dealers and cashed in on the market to grow its loan book, albeit with an emphasis on asset quality. The company disbursed fresh loans of RO59.3mn during 2012 as against RO50.8mn in 2011. The company has registered a good performance recently with its loan book growing from RO79.3mn as on December 31, 2011 to RO97.9mn as on December 31, 2012 registering a year-on-year growth of around 23.5 per cent. The company recorded a net profit of RO3.40mn for the year 2012 as against RO2.85mn for the previous year, despite the competitive market conditions and decline in lending rates. The improvement in profitability is attributed to the increase in it's loan portfolio coupled with reduction in borrowing cost, controlling overheads and reduction in impaired assets. Concerted efforts on the recovery front aided in bringing down the level of impaired assets from RO20.5mn as on December 12, 2012 to RO15.8mn, a decrease of 23 per cent. Outlook UFC would focus on growing its loan book, albeit at a steady pace by exploiting the opportunities provided by the emerging market. The company's prime emphasis would be to improve its asset quality through stringent evaluation of fresh proposals and tightening its collection mechanism to mitigate the incidence of impairment. The company would pursue its objective of reducing credit concentration by focusing on diversification and spreading of risk through maintaining a balanced portfolio mix by adopting suitable lending strategy. 4Oman United Insurance Company Sterling track record Since its inception, steady growth has brought Oman United Insurance Company to a prominent position as one of the leading companies in Oman's insurance sector Oman United Insurance Company (OUIC) has achieved a leading position in Oman's insurance industry based on its strong business model, wide network, effective marketing strategy and top quality product offerings. OUIC enjoys a sterling track record of consistent growth and profits despite tough market conditions. As against a market growth of 13 per cent, OUIC posted a growth of 20 per cent in 2012. The company was voted as the "Oman Insurer of the year - 2013 by MENA Insurance Review. In addition, Standard & Poor's has revised its outlook for OUIC from Stable to 'BBB- Positive'. Incidentally OUIC is the only Omani company to have been rated by Standard & Poor's. Due to the high liquidity available in local banks, the prevailing interest rates on term deposits have remained low at one per cent p.a. This has put more pressure on OUIC's investment strategies. However, since investment regulations imposed a minimum of 30 per cent of total invested assets of insurance companies to be laid in bank deposits, the company opted to invest in medium and long terms deposits in order to get better rates. Outlook OUIC will continue to focus on growth in retail through effective utilisation of Bancassurance channel and expanding its agency and branch network. In another development, the company is set to form a joint venture company, along with few other promoters, for the Islamic insurance business, which is popularly known as takaful. The new joint venture, which will float an initial public offering (IPO) of RO4mn, will raise 40 per cent of its RO10mn paid- up capital. The joint venture is going to be the third takaful firm planning to raise funds from the public in Oman . 5 Omani Packaging Company A pioneer in its business The increase in overall sales realisation, effective global sourcing and value engineering helped Omani Packaging Company achieve improved margins and excellent net profits Omani Packaging Co is one of the leading manufacturers of the corrugated cartons in GCC countries. The company continues to be the market leader in the Sultanate for selling high quality paper corrugated packaging products. The product range includes regular slotted cartons, telescopic top and bottom box, die cut trays, assembled partitions and single face corrugated rolls for cushioning and protection and wax lined cartons for frozen products. Among the various modes of packaging, paper corrugated packaging is the most versatile, eco friendly, secure and cost effective, which makes it a preferred choice for majority of products. Omani Packaging has been able to increase the volume and service to the customers with increase in installed capacity by 70 per cent during year 2010-11. The company is always trying to broaden its market base in local and exports to GCC, African and Asian countries, although it is not very cost effective to export to distant countries due to the high cost of freight. The increased plant capacity expansion helped the company in maintaining its strong competitive position in the local market which has contributed a major portion of total sales. It's export market comprises UAE and Pakistan where volume is increasing gradually. Omani Packaging's main raw material is paper which is mainly imported from GCC, European, Russian and American sources. The international price of paper is highly volatile and increase in paper price affects the company's profitability. Outlook Omani Packaging expects to sustain /exceed the growth achieved during the past years. The challenges shall be met by increased market share in local and exports through customer focus, value engineering, continuous improvement and cost reductions with economy of scale after capacity expansion. 6 Oman Chlorine Gaining competitive edge Oman Chlorine focuses on optimal utilisation of the plant to increase production, productivity and profitability Oman Chlorine which started commercial operation in 2000 deploys state-of- the-art "membrane cell" technology supplied by US-based Oxytech, for manufacturing its various produces such as hydrochloric acid, caustic lye (liquid caustic) and sodium hypochlorite. The company also manufactures value-added products like caustic flakes and calcium chloride in order to operate the plant at optimal levels. Hydrochloric acid is mainly used in oil drilling and stimulation jobs, the demand of this product depends almost entirely on upstream activities in the Gulf market. The liquid caustic is widely used in various industries such as detergents, desalination plants, electricity generating plants, refinery etc. Sodium Hypochlorite (bleach) which is used mainly by laundries, garment factories, disinfectant manufactures etc. The company enjoys a strong competitive position both in the local and GCC market, with an excellent track record in safety and reliability. The local market contributed 73.35 per cent of the turnover of the company and the balance 26.65 per cent is contributed by the export market. The GCC market contributed 100 per cent of the export turnover during 2012. Outlook The demand and price levels of the company's products are related to the activities in the upstream oil sector. The company is cautiously optimistic about the prospects in the future as it envisages that the activities in the oil field sector will show mild improvement. However the growing demand in oil exploration and production activities in the region will lead to higher product demand for the acid over the medium/long term. 7 Majan College Setting benchmarks Commitment to the provision of quality education, enhancing standards and continuous improvement are fundamental to Majan College's core values Majan College , the first private college in the Sultanate, offers undergraduate and post graduate degrees in business management, finance, accounting, marketing, computing and information technology and English language through full-time and part-time modes of study. The college has academic partnerships with both the University of Bedfordshire and the University of Glasgow in UK . The college has grown in leaps and bounds with various achievements to be proud of including, its numerous graduates gainfully employed and working in all sectors of the economy. All the undergraduate programmes are validated by the University of Bedfordshire . At the postgraduate level, Majan hosts a number of programmes. Master's programmes in Business (MBA) and Computing are offered by the University of Bedfordshire . Orginsational leadership masters are offered by the University of Glasgow in Majan. Majan goes through the institutional review by the University of Bedfordshire , an exercise that takes place every four to five years. The college has strengthened its financial performance in the core business despite increasing competition. Its total income has increased by 16.22 per cent to RO3.96mn in 2012 compared to 2011 which is mainly contributed by an increase in the student numbers in the undergraduate, post graduate and professional courses. Outlook The college has reviewed its strategic plans and initiated the process of identifying areas for the next strategic plans for the years 2013-2018. It is planning to increase the range of its academic provision at both undergraduate and postgraduate programmes and its resources. The postgraduate area is a key focus of the business strategy and in this regards, the college is planning to expand the range of its academic programmes. 8 Taageer Finance Company Living its promise Taageer Finance Company is riding the growth wave being experienced by the leasing companies in Oman , thanks to the positive macros of higher government spending, ample liquidity, new job creation and higher employee wages Taageer Finance Company has decided to expand its reach to potential customers with a number of new business initiatives in the coming years and increase its share in the market. The company has also achieved reduction in borrowing costs which is evident by interest costs of RO2.19mn in 2012 as compared to RO2.37mn in 2011 notwithstanding the increase in asset size during 2012. The minimum paid-up capital is required to be RO22.60mn by December 31, 2013 as per the guidelines of Central Bank of Oman . After issuance of shares for stock dividend of RO2.03mn, the share capital of the company stands at RO23.70mn against the regulatory requirements of RO21.60mn in the second half of 2013. Taageer holds a five per cent stake in equity capital of The Arab Leasing Company (TALC), Sudan , with an original investment of RO578,000 and carrying value of RO636,000. TALC, Sudan has paid a dividend of RO21,000 during 2012 while RO117,000 has been the increase in carrying value of investment, based on operating results of TALC, Sudan and foreign exchange gain arising from swap agreement entered by TALC, Sudan with Central Bank of Sudan . Outlook As the government boosts its infrastructure and other projects spending, coupled with private consumption and investment, the outlook for the economy as a whole and for leasing and the finance industry appears to be bright. The competition among leasing and finance companies, is however, expected to intensify bringing margins under pressure. The growing Islamic banking and Islamic finance products could pose a challenge for the industry. 9 National Gas Company Spreading its wings National Gas Company has made up for the unviable circumstances in Oman's LPG industry by reinforcing its operations in the UAE and KSA and foraying into Malaysia National Gas Company (NGC) has leveraged its expertise in LPG marketing and engineering to provide many innovations that are helping it to target niche segments in the GCC region. This has ensured that the company continues to secure positive results despite the unviable circumstances afflicting the Omani LPG industry. The company's business outside Oman contributed positively through growth in bulk LPG market in UAE and Synthetic Natural Gas projects in Saudi Arabia and the UAE . The company is in the process of consolidating its position in the UAE by boosting its storage and service capabilities, which is expected to be operational before the end of 2013. This would not only result in operational efficiency, but also reinforce the company's capacity to provide superior service and reliability to it's UAE clientele. The company also launched its first venture out of the Middle- East with its acquisition of Shell's LPG assets in West Malaysia . This acquisition positioned NGC's subsidiary NGC Energy Sdn Bhd as the second largest LPG supplier in peninsular Malaysia , and laid a firm platform for the company to benefit from growth opportunities arising in the high potential Southeast Asian region. NGC also signed a JV agreement with Buzwair Industrial Gases, Qatar to set up a subsidiary that will target industrial gas opportunities arising in Oman . Outlook NGC has emerged stronger and is well positioned to unleash its full potential across its principal markets. The company's vision is to emerge as a significant cross regional energy player and the coming year marks a new beginning that will see NGC moving even closer to its goal. 10 Areej Vegetable Oils & Derivatives Quality matters The recent expansion of its capacity and product range will allow Areej Vegetable Oils & Derivatives to improve its coverage of current and new market segments and market niches Areej Vegetable Oils & Derivatives (AVOD) is engaged in the manufacturing and distribution of a variety of refined vegetable oils, fats, margarines, butters, mayonnaise and dressings, with its manufacturing facilities at Rusayl. The company caters to the needs of the individual and institutional customers in the region. AVOD operates primarily in the Middle East market and its products primarily cater to the cooking oil & fats segment. The company's sales volumes have been stable in 2012, despite a drop in exports to Syria due to the unsettled conditions. The company recorded a turnover of RO92mn in 2012 and a net profit after tax of RO2,313,710. The company operates in an extremely competitive market environment. There are ten other manufacturers in the GCC with duty free access into Oman . Further, the GCC is a net exporter of vegetable oils and fats. GCC products are generally available in all other markets in the region. In addition, the company operates in an industry characterised by high raw material content. Its products are also subject to price regulation in Oman and some export markets as an essential food item. The international prices of vegetable oils are volatile, and the company's ability to pass on cost changes to its customers can significantly impact it's profitability. Outlook The company expanded its production facilities recently. This recent expansion in capacity and the product range will allow the company to improve its coverage of current and new market segments and market niches. Barring unforeseen circumstances, the company hopes to sustain its performance in the coming years.
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