Woolen Industries Co

# Template State Owned Enterprises- Company Overviews OCPA - Ministry of Industry & Minerals Note on Currencies: Unlike other profiles, most data below is in US $. 1. General Information Company Name: State Company for Woolen Industries Sector Textile Brief Description Manufacturer of woolen fabrics, men's suits, carpets and blankets. Revenue in 2002 (US $) 12050371 # of Employees 3201 (2,700 permanent and 500 seasonal) Annual Employee Salaries & Bonus 2449815 Headquarters Address Baghdad 2. Company Highlights 70% of revenue and all profits generated from sales to Iraqi army. Products are not critical to any other Iraqi industry. Consumer demand can easily be supplied by imports and private local companies. Company can not currently compete in free market due to higher costs and lower quality, but: Factories experienced minimal damage. Massive raw materials inventory, which will last at least 18 months. Although this Company may not be viable in the long term, it has almost everything it needs to operate for 18 months, except for operating cash. If we are going to pay employees anyways, why not let the Company operate and see if it can transform itself in that timeframe into a viable entity? Allocated $2M USD for 2H 2003 operating budget (G Corliss opposed) and provided with 2 mw off of grid. 3. Facilities Name Province City Grid Damage % Power Needs Baghdad Baghdad MB397925 2 mw 1st June - Men's Wear Fabrics 0.2 2 mw Carpet Factory 2 mw Woven Carpet Factory 2 mw Scouring and Dying Factory Al Taji 2 mw 13 July - Acrylic Blankets 2 mw Nasiriyah - Men's Wear Fabrics & Blankets Nasiriyah 0.2 2 mw Value of All Plant & Equipment Before War, and Initial Purchase Dates and Prices for Major Items 4. Products Product Name Unit Measurement Design Capacity Available Capacity 2002 Production 2002 Revenue Fabrics 1000 Sq. Meters 3291 2630 718 Carpets 1000 Sq. Meters 600 350 134 Blankets 1000 Blankets 2310 1100 610 Description of Importance of Products to Other Iraqi Industries Of little importance. Imports and local private enterprise could satisfy local consumer demand. 5. Customers Customer Name 2002 Revenue Subsidized (Y/N) Products Sold to Customer and Unit Pricing Iraqi Army 70% of total No Sold above market price, effectively subsidizing wool co. Iraqi Private Sector 30% of total Yes Sold at 10% below market price 6. Suppliers Supplier Name 2002 Purchases Subsidized (Y/N) Products Purchased and Unit Pricing Iraqi Wool 2,500 tons Yes Hilaturas/Spain 500 ton Acrylic Yarns Yes 2,007,500 Euro Spain 300 ton Acrylic Yarns Yes 1,250,000 Euro China 250 tons yarn yes 2,337,400 Euro Current Payment Terms From Suppliers Standard MOU contract terms 7. Imports & Exports 2002 Import Markets for Raw Materials Europe and China Potential Import Markets in Free Market USA and Australia 2002 Export Markets for Finished Products None Potential Export Markets in Free Market Company can't compete even with surrounding countries in ME because of the low quality. 8. Competition Description of Competitive Situation Significant competition from imports. Market Share Description For the private market, has only 15% of market, The competitors are Syria ,Egypt, Turkey, and Iran. 9. Summary of War Damage & Looting of Property & Equipment Description of Damage Minimal overall damage. Only 1st June factory, which lost furniture in looting and experienced some damage to facilities (approx 20%), and Nasiriyah plant which was looted of some inventory and had some damage. Current Operating Status Not operating. Needs operational budget, especially to pay worker transportation. Immediate Property & Equipment Needs To Restart Operations None to get most factories running. Nasiriyah would require some equipment replacement. Cost unknown. Total Cost to Return to Pre-War Condition 2500000 10. Inventory Status Raw Material Status Massive raw material inventory. Company purchases 20% of total Iraqi wool production. However, Iraqi wool not of high quality. Must be mixed with imported wool or used only for rugs. Months of Material Supplies & Production Rate 18 months Immediate Raw Material Needs None Finished Products Supply (Units and Value) 11. Fuel & Electricity Needs Description of Fuel Needs Gas and oil. Description of Electricity Needs Each factory needs on average 2 mw. 12. Other Needs to Restart Working capital needs Minimal, as long as CPA continues to pay salaries. Security Needs Needs guards. Other Needs Needs operational budget, especially to pay worker transportation. 13. Strengths, Weaknesses, Opportunities & Threats Description of Strengths Lots of raw materials on hand. Most facilities in good condition. Description of Weaknesses Very old machines, buildings and technology. Description of Opportunities It is very hard to compete with imported woolen goods, the Iraqi wool is only good to make carpets. Description of Threats Poor quality, old machines and technology will make it very hard to compete in free market. 14. Long Term Strategy Description of Strategy Company has to become part of the private sector or to look for new investment only in the field of woolen carpet making. For the rest of the products, it is very hard to compete. Potential New Products Only in the woolen carpet field. Potential Partnership Opportunities None identified, but Company is willing to partner with other Companies. 15. Revenue and Costs Overview Description of How Pricing Was Set Army contract was priced to give Company a 20% margin. Private market sales were at or below market prices. Description of Production Costs Paid 1,600 ID per kilo of scoured wool. Outside market prices are $1.80 USD per kilo, but quality differences may make comparison inappropriate. Other raw material costs include acrylics and yarns. Potential for Profitability in Free Market Questionable, but Company has almost everything it needs to run for 18 months. So, why not let it try to become profitable in that timeframe?