About Nomee Steel Mill: Nomee Industries started its commercial production in July 1993. The production plant is situated in Hattar Industrial Estate, District Haripur, NWFP, about 50 km from Islamabad. The re-rolling plant has a capacity to produce 36,000 metric tons of MS bars per annum on a double shift basis. The unit is fully equipped having its own steel-testing laboratories (both physical and chemical along with spectrometer), billet and steel cutting machines, a cooling bed, extensive storage yards, followed by an independent weighing bridge.
We, at Nomee Industries strictly adhere to conformance of MS bars to ASTM and BSI standards in addition to ISO 9001:2008 for processes. For this purpose we have established the most modern laboratories of our highest quality precision standard. The perfection of our work has captured the sharp eyes of discerning clients, in the public and private sector including some of the top multinational construction firms. The main source for raw material is prime quality billets manufactured by Pakistan Steel Mills Corporation, Karachi. Prime quality MS billets are processed through semi automatic re-rolling plants that are designed to manufacture standardized products of exact and international specifications. Special attention is paid to the custom requirements/instructions of each particular client.
At Nomee Industries, we emphasize on customer satisfaction which can only be achieved by providing quality products on schedule. Our production is mentioned by qualified and hard working Engineers/Supervisors, and all our products go through a close inspection and test. In order to ensure a constant supply of quality raw material to meet our production targets as well customer satisfaction, we are the authorized dealer of Pakistan Steel Mills Corporation, Karachi. Each of their supplies to Nomee Industries is guaranteed and accompanied by mechanical and chemical test reports.
In the high technology world of today, there can absolutely be no compromise on quality. This realization has led Nomee Industries to ensure that every product measures up to the highest standards. Strict adherence to customers' specifications in terms of steel grade, profile, and close tolerances on unit mass have enabled Nomee Industries to supply steel to a number of projects of national importance. Naming a few such substantial projects include Dong Fang Electric Corporation (Ghazi Borotha Hydropower Project), Bahria Town, Chakwal Cement (Pakistan Cement), DGP Army Projects, FWO Projects, Pakistan Motorway Contractors.
Objectives:
We emphasize on customer satisfaction, which can only be achieved by providing quality products on schedule. All our products go through a close inspection and test.
Preliminary selection of countries
We primarily focused in Asia only reason mentioned ahead. Preliminary we selected a pool of 6 countries on the basis of geographical distance, and then we had different analytical test on those countries. Countries initially selected were:
India
Saudi Arabia
Oman
U.A.E
Egypt
Afghanistan
Why we chose Asia in selection.
We chose Asia because of the almost similar construction culture. In other big continents like Europe, America or Australia the type of construction is different like mostly in big cities they use wood structure in house, the use of re-rolled steel of rebar steel is very less in such houses only in big houses they use these steel bars. So there is not much scope of our business there.
Basic analysis of selected countries:
Macroeconomic
Factors
India
S. Arabia
Mal
U.A.E
Egypt
Oman
GDP
$1.237 trillion
$376.3 billion
$193 billion
$223.9 billion
$188 billion
$46.12 billion
GNP
$3.758 trillion
$599.13 Billion
$376.59 Billion
$179.44 Billion
$471.22 Billion
$46.11Billion
GDP(PPP)
$3.68 trillion
$590.9 billion
$383 billion
$191.9 billion
$468.7 billion
$383 billion
Per Capita Income
$3,200
$23,300
$13,800
$40,000
$5,900
$25,000
According to GDP:
According to per capita Income:
_
If we select on the basis of GDP then our selection priority should have been in this manner
India -> Saudi Arabia -> U.A.E -> Malaysia -> Egypt -> Oman
If we select on the basis of Per capita income then our selection priority should be in this manner
UAE -> Oman -> Saudi Arabia -> Malaysia -> Egypt -> India
But these are not only the variables we consider while deciding to enter business in any country. We shall also consider the market potential and as well the trade barriers like government policy and competition prevailing in the intended country.
Market Potential and Political Analysis.
India:
Market of India is very big it has a huge population 2nd largest population of the world, which has a great potential for our product as many construction work is also being done in the country. But the rivalry is very strong in the market of steel. Some big companies are enjoying that potential. 2 of the top 30 steel mills of the world are in India which prevents other small mills from enjoying potential of the steel market. Also the political ties of India and Pakistan is not very good that is why many Pakistani companies are either not allowed or don't wish to operate in the country.
Saudi Arabia:
Saudi Arabia the most sacred place for all the Muslims also has the potential for the steel product as the consumption of steel in the country is increasing by every passing day. Government has launched many construction projects in the country. The need of steel in the country is being fulfilled by importing steels from other countries mainly from Turkey. Also the relationship between Pakistan and Saudi Arabia is of high quality.
U.A.E:
UAE in recent years enjoyed a boom in construction field. But now the market of steel in UAE is very slow. To meet the need of steel in UAE many big investors invested in UAE. Like the POSCO of South Korea owned by Indian entrepreneur now is also there, which is the world's 3rd largest producer of steel. Though the government of UAE has announced new projects in Abu Dhabi but its requirements are most likely to be filed by local producers present in UAE. Pakistan enjoys good relationship with UAE.
Malaysia:
Malaysian though is progressing very much. Many construction projects are undertaken in the country but the demand and supply of the steel of construction work is almost equal there is not a big gap in the factor. Government of Malaysia is stable and no significant commercial risk as well. But the main issue in investing in Malaysia for steel industry is that the demand of Malaysia in respective field is not much and being fulfilled efficiently by local industry.
Egypt:
Egypt is an important state in Africa this is only non Asian state that we have considered in our selection of preliminary pool. With a slight risk of government but for business transactions Egypt's government appreciates the entrepreneurs. The demand of steel in the country is very much met by importing steel from other countries much of the steel is being provided by Turkey there as well. Demand is expected to increase in Egypt with the passage of time.
Oman:
Oman is neighboring country of Saudi Arabia. One of the important country of Middle East. It is basically a Sultanate. Economy was mainly depended on oil reserves, but now oil is depleting so they are changing their strategy, much of the foreign investment in encouraged. Overall economy of Oman has flourished in recent years got a hit back in 2008 but no much as compared to world and is expected to grow positive.
Final Selection:
After going through in depth screening we have selected following two countries.
Saudi Arabia
Oman
Reasons for selecting these countries for selection are given below.
Saudi Arabia:
Saudi Arabia is the birthplace of Islam and home to Islam's two holiest shrines in Mecca and Medina. The king's official title is the Custodian of the Two Holy Mosques. The modern Saudi state was founded in 1932 by ABD AL-AZIZ bin Abd al-Rahman Al SAUD (Ibn Saud) after a 30-year campaign to unify most of the Arabian Peninsula.
Location:
Middle East, bordering the Persian Gulf and the Red Sea, north of Yemen
Area:
Total: 2,149,690 sq km
Border countries:
Iraq 814 km, Jordan 744 km, Kuwait 222 km, Oman 676 km, Qatar 60 km, UAE 457 km, Yemen 1,458 km.
PEST Analysis:
Political Analysis:
The modern Kingdom of Saudi Arabia, which was founded in 1932 by Abdulaziz bin Abd al-Rahman Al Saud (Ibn Saud), is a monarchy. Saudi Arabia is a hereditary monarchy.
Ibn Saud's son, King Abdullah bin Abdulaziz Al Saud has been the ruler since 2005, though he had been regent from 1996, due to the illness of his brother King Fahad. The King's heir apparent is Crown Prince Sultan bin Abdulaziz Al Saud, who also holds the title of Deputy Prime Minister, and who is a half-brother of the King.
The document known as the Basic Law of Government, which articulates the government's rights and responsibilities, was established by royal decree in 1992.
No opposition working inside the Kingdom of Saudi Arabia. Some activities are done from UAE. The main pressure groups are Rights of women and gas companies.
Membership of different trading blocks and partnership:
ABEDA, AfDB (nonregional member), AFESD, AMF, BIS, FAO, G-20, G-77, GCC, IAEA, IBRD, ICAO, ICC, ICRM, IDA, IDB, IFAD, IFC, IFRCS, IHO, ILO, IMF, IMO, IMSO, Interpol, IOC, IOM (observer), IPU, ISO, ITSO, ITU, LAS, MIGA, NAM, OAPEC, OAS (observer), OIC, OPCW, OPEC, PCA, UN, UNCTAD, UNESCO, UNIDO, UNRWA, UNWTO, UPU, WCO, WFTU, WHO, WIPO, WMO, WTO.
Basically the government system of Kingdom of Saudi Arabia is monarchy, and a stable one the policies are for a long term and also with no or minimum opposition as two main pressure groups are present in Saudi Arabia Woman rights and gas companies.
Economic Analysis:
Saudi Arabia has an oil-based economy with strong government controls over major economic activities. It possesses about 20% of the world's proven petroleum reserves, ranks as the largest exporter of petroleum, and plays a leading role in OPEC. The petroleum sector accounts for roughly 80% of budget revenues, 45% of GDP, and 90% of export earnings. Saudi Arabia is encouraging the growth of the private sector in order to diversify its economy and to employ more Saudi nationals. Diversification efforts are focusing on power generation, telecommunications, natural gas exploration, and petrochemical sectors. Roughly 5.5 million foreign workers play an important role in the Saudi economy, particularly in the oil and service sectors, while Riyadh is struggling to reduce unemployment among its own nationals. Saudi officials are particularly focused on employing its large youth population, which generally lacks the education and technical skills the private sector needs. Riyadh has substantially boosted spending on job training and education, most recently with the opening of the King Abdallah University of Science and Technology - Saudi Arabia's first co-educational university. As part of its effort to attract foreign investment, Saudi Arabia acceded to the WTO in December 2005 after many years of negotiations. The government has begun establishing six "economic cities" in different regions of the country to promote economic development. Five years of high oil prices during 2004-08 gave the Kingdom ample financial reserves to manage the impact of the global financial crisis, but tight international credit, falling oil prices, and the global economic slowdown reduced Saudi economic growth in 2009, prompting the postponement of some economic development projects. Saudi authorities supported the banking sector during the crisis by making direct capital injections into banks, reducing rates, and publicly affirming the government's guarantee of bank deposits.
Industries:
crude oil production, petroleum refining, basic petrochemicals, ammonia, industrial gases, sodium hydroxide (caustic soda), cement, fertilizer, plastics, metals, commercial ship repair, commercial aircraft repair, construction.
Exports: $192.3 billion, Export Commodities: Petroleum and petroleum products 90%.
Imports: $87.1 billion Import Commodities: machinery and equipment, foodstuffs, chemicals, motor vehicles, textiles.
Stock of FDI at home: $167 billion
Stock of FDI abroad: $11.41 billion
Riyal exchange rate: 0.266$ = 1 Riyal
The government continues to pursue economic reform and diversification, particularly since Saudi Arabia's accession to the WTO in December 2005, and promotes foreign investment in the kingdom. 2005 onwards the policy of Saudi Arabia for foreign investments has changed. And now they are inviting foreign investors for investing in their countries which is a positive sign.
Social Analysis:
Saudi Arab has a total population of 25,731,776, with a growth rate of 1.55%. Local language of Saudi Arabia is Arabic. Majority of the population is Muslim. There are two main ethnic groups consisting of 90% Arabic and 10% Afro Asian. Literacy rate of Saudi Arabia is around 78%. Total urban population is 82% of the total population. Saudi Arabian dress follows strictly the principles of hijab (the Islamic principle of modesty, especially in dress). The predominantly loose and flowing but covering garments are helpful in Saudi Arabia's desert climate. Traditionally, men usually wear an ankle-length shirt woven from wool or cotton (known as a thawb), with a keffiyeh (a large checkered square of cotton held in place by a cord coil) or a ghutra (a plain white square made of finer cotton, also held in place by a cord coil) worn on the head. he most popular food in Saudi Arabia is kabsa which is rice and meat. Arabic unleavened bread, or khubz, is eaten with almost all meals. Other staples include lamb, grilled chicken, falafel (deep-fried chickpea balls), shawarma (spit-cooked sliced lamb), and Ful medames (a paste of fava beans, garlic and lemon). People usually in urban areas prefer living in modern houses. Modern technology is being used for the building materials.
Technology:
Saudi Arabia is very much of adaptive nature in technology no much new innovations are made in the country but now a few steps are being done like KACST (King Abdul Aziz city for science and technology) has been established. The plan is divided into two parts. In first phase city for science and technology will be developed and in second phase it will become the leader in this field for the region. The area for improvement in technology is development of water, oil and gas, petrochemicals, nano and bio-technology, environment and electronics and communication.
Absolute Advantage:
Oil reserves
Country Specific Advantage:
Cheap electricity
Cheap labor
Low utility tariff
Low tax rate
Market Potential/Scope of Steel Industry in Saudi Arabia:
According to a new research report "Saudi Arabia Steel Industry Forecast to 2013", steel consumption in Saudi Arabia has rapidly surged over the past few years on the back of construction boom, growing investment in real estate and cheap & reliable gas/energy supply. Economic growth has also contributed substantially to raise domestic steel consumption by accelerating business activities. In fact, the impact of economic slowdown on the real estate projects was minimal. Out of the total real estate projects worth US$ 543 Billion, mere 4% have been cancelled or delayed. Hence, all these factors have fueled the consumption of iron and steel in the Kingdom to reach around 14.8 Million Metric Tons in 2009.
At present, the steel industry in Saudi Arabia is highly import oriented. In 2008, the Kingdom imported around 6.3 Million Metric Tons of steel which accounted for majority of domestic steel consumption
Jubail is the city that is being developed for the industrial development in the country. The construction work in this city is growing and the consumption pattern of steel in this city is going positively. Al khobar is also announced as a financial city. King Abdullah Economic City Construction started on King Abdullah Economic City, owned by Emaar Economic City Company, in 2006, with a projected completion date of 2025. The development will comprise four major phases including seaport, industrial zone, business parks and city districts.
The seaport calls for the design and construction of a 13 million m² seaport district in the city. The port will be able to handle 20 million containers annually and is expected to be able to capacitate the world's largest super container ships and receive 300,000 pilgrims every year.
Dredging work on the port, located between Jeddah and Rabigh, has already commenced and completion is expected in 2020.
According to the ease of doing business Saudi Arabia is being ranked at number 11, that is a huge improvement as compared to other countries. Now foreign investors are not bound to do a joint venture with Saudi Arabian citizen anymore now any foreigner can do independent business.
Rankings of Saudi Arabia by different ranking agencies:
AA- by Fitch
A1 by Moody's
AA- by S&P
Oman
The inhabitants of the area of Oman have long prospered on Indian Ocean trade. In the late 18th century, a newly established sultanate in Muscat signed the first in a series of friendship treaties with Britain. Over time, Oman's dependence on British political and military advisors increased, but it never became a British colony. In 1970, QABOOS bin Said Al-Said overthrew the restrictive rule of his father; he has ruled as sultan ever since. His extensive modernization program has opened the country to the outside world while preserving the longstanding close ties with the UK. Oman's moderate, independent foreign policy has sought to maintain good relations with all Middle Eastern countries.
Location:
Middle East, bordering the Arabian Sea, Gulf of Oman, and Persian Gulf, between Yemen and UAE
Area:
Total: 309,500 sq km
Geographic Boundaries:
Border countries: Saudi Arabia 676 km, UAE 410 km, Yemen 288 km
PEST Analysis:
Political Analysis:
Government type of Oman is monarchy, on 6 November 1996, Sultan QABOOS issued a royal decree promulgating a basic law considered by the government to be a constitution which, among other things, clarifies the royal succession, provides for a prime minister, bars ministers from holding interests in companies doing business with the government, establishes a bicameral legislature, and guarantees basic civil liberties for Omani citizens. Legal system is based on English common law and Islamic law; ultimate appeal to the monarch; has not accepted compulsory ICJ jurisdiction.
Chief of state: Sultan and Prime Minister QABOOS bin Said Al-Said (sultan since 23 July 1970 and prime minister since 23 July 1972); note - the monarch is both the chief of state and head of government
Head of government: Sultan and Prime Minister QABOOS bin Said Al-Said (sultan since 23 July 1970 and prime minister since 23 July 1972)
Cabinet: Cabinet appointed by the monarch
Membership of different trading blocks and partnership:
ABEDA, AFESD, AMF, FAO, G-77, GCC, IAEA, IBRD, ICAO, IDA, IDB, IFAD, IFC, IHO, ILO, IMF, IMO, IMSO, Interpol, IOC, IPU, ISO, ITSO, ITU, LAS, MIGA, NAM, OIC, OPCW, UN, UNCTAD, UNESCO, UNIDO, UNWTO, UPU, WCO, WFTU, WHO, WIPO, WMO, WTO
Economic Analysis:
Oman is a middle-income economy that is heavily dependent on dwindling oil resources. Because of declining reserves, Muscat has actively pursued a development plan that focuses on diversification, industrialization, and privatization, with the objective of reducing the oil sector's contribution to GDP to 9% by 2020. Tourism and gas-based industries are key components of the government's diversification strategy. By using enhanced oil recovery techniques, Oman succeeded in increasing oil production in 2009, giving the country more time to diversify. The drop in oil prices in 2008 and the global financial crisis reduced Oman's budget surplus in 2009 and slowed the pace of investment and development projects, but GDP growth still was positive, in part because Muscat implemented an expansionary fiscal policy.
Industries:
Crude oil production and refining, natural and liquefied natural gas (LNG) production; construction, cement, copper, steel, chemicals, optic fiber
Imports: $16.13 billion Import Commodities: machinery and transport equipment, manufactured goods, food, livestock, lubricants
Exports: $27.65 billion Export Commodities: Petroleum, re exports, fish, metals, textiles
Omani Rial Exchange Rates: 1 Omani Rial = 2.6024 US
Social Analysis:
Oman has a total population of 2,967,717, with a growth rate of 2%. 72% of the total population lives in Urban areas. Major ethnic groups are Arab, Baluchi, South Asian (Indian, Pakistani, Sri Lankan, Bangladeshi), African. According to religion the distribution is as Ibadhi Muslim 75%, other (includes Sunni Muslim, Shia Muslim, Hindu) 25%. Languages usually spoken are Arabic (official), English, Baluchi, Urdu, Indian dialects. 81.4% of total population is literate. People usually in urban areas prefer living in modern houses.
Technological Analysis:
Technology used in steel industry is of modern nature, much of the industry is moderate in production. It is highly import oriented. No much effort is being done for technological advancement.
Absolute Advantage:
Oil reserves
Gas Reserves
Country Specific Advantage:
Labor Force
Market Potential/Scope of Steel Industry in Oman:
Steel consumption in Oman is import oriented as all of the local demand is not being fulfilled by the local industry and the consumption pattern is expected to rise as the oil resources in Oman are depleting so the government is taking measures to change the source of income and now the government is allowing foreign investment in the country. Incentives are given to the foreign investors.
Investment mode in these countries:
In Saudi Arabia FDI
In Oman we will export steel from Saudi Arabia.
