Price freeze causes loss to water firm

10/11/2012 08:53 AST

National Mineral Water Company, the leading mineral water producer of the Sultanate, said that the Consumer Protection Authority's (CPA) decision to freeze prices of mineral water since April 2011 resulted in the company incurring losses for the first nine months of this year.

The company's board has decided to convene an extraordinary general meeting (EGM) of shareholders as early as possible to apprise the investors of the current precarious financial situation facing the company due to its inability to raise prices of its products amid restrictions imposed by CPA since April 2011, despite rise in costs.

Since all attempts to persuade CPA have failed, the company has decided to seek shareholders' consensus on the way forward, according to a statement posted on MSM website.

"Increase in cost of operations without corresponding increase in selling price would have an impact on the profitability,-? the company said in its director's report. "The net loss of the parent company was mainly due to increase in overheads,-? the report added.

The net loss of the group for the first nine months of 2012 was RO1.08 million, as against RO1.24 million for the same period in the previous year. The net sales of the group for nine months ended September 2012 were RO6.44 million compared to RO6.35 million for the same period of previous year.

The consolidated financial statements include the results and the financial position of the parent company for nine months ended September 30, 2012 and its subsidiaries -"Horizon Technologies, its subsidiary Horizon Technologies FZE Valuedeal Trading.

The parent company's sales for nine months ended September 2012 were RO6.4 million compared to RO5.87 million for the previous year resulting into an increase of 9 per cent. The parent company's net loss for nine month period was RO278,315 compared to RO274,969 in the previous year.

The board had approved additional investment in replacing downstream packaging equipment in the production process which has outlived their productive life. The equipment has been delivered and the same are being installed. These equipments will increase production and operational efficiency resulting in better production yields.

"Overall sales volume of water is expected to increase once these equipments have been installed in the factory,-? said the statement.

Referring to its subsidiary Horizon Technologies (HTF), the company said the subsidiary firm has not recorded any sales turnover owing to winding down of operations.

Times of Oman