Mechanical Industries

# Template State Owned Enterprises- Company Overviews OCPA - Ministry of Industry & Minerals Note: All currency figures are in 000's of Iraqi Dinars unless otherwise noted. 1. General Information Company Name: State Company for Mechanical Industries (SCMI) Sector Engineering Brief Description SCMI was established in 1970 according to an Iraqi/USSR agrement to produce agricultural equipment and tools. It started with production capacity of 30,000 pieces of equipment. Low demand on the products in local market and poor quality forced the company to start to produce other eqipment and tools like tractors, water pumps and irrigation system. The main customer was The Ministry of Agriculture. SCMI has always been a state owned company. Revenue in 2002 (Iraqi Dinars '000s) 20429837 # of Employees 3872 Annual Employee Salaries & Bonus 6676999 (Monthly salary of employee is: 556,416) Headquarters Address Hilla Iskandaria, Grid: MB38603987 2. Company Highlights Massively subsidized Company. Needs $33M USD in raw material imports per year - almost 2x revenue. Later claimed $98M USD. Mgmt admits it has double the staff needed to run facilities. In March, 2003 Company was about to start $54M USD contract to assemble 8,000 engines for BeloRussian Company. Mgmt has no idea if this would be a profitable project. Company was forced to sell to Ministry of Agriculture at below-market prices. Farmers can not afford market prices. Tractors, for example, were sold at 5M ID (approx $3,500 USD) - approx 10% their market value. Even if production is sold at market rates, Company is still not profitable without subsidies. Company's products are of lower quality and cost more than imports. Allocated $1.2M USD for 2H 2003 operating budget and provided with zero mw off of grid. 3. Facilities Name Province City Grid Damage % Power Needs 3 Factories total. Below is description by building. Tractor Store 0.15 Exhibition Building 0.06 Harvester Spare Part Warehouse 0.1 Production Warehouse 0.02 Guest House 0.65 Tractor Spare Part Warehouse 0.1 Cooled Warehouse 0.12 Project Department 0.65 Tractor Maintenance Department 0.05 Foundry Warehouse #1 0.12 Foundry Warehouse #2 0.15 Foundry Warehouse #3 0.15 Workshop for Pump Testing 0.1 Restaurant 0.1 Workshop After Sale 0.07 Carpenter Workshop 0.06 Spare Part Warehouse 0.06 Information Building 0.02 Value of All Plant & Equipment Before War, and Initial Purchase Dates and Prices for Major Items Value of plant & equipment before war was 1,306,685. The initial cost was: 1,731,543. Need clarification on what exchange rate was used to determine initial costs. 4. Products Product Name Unit Measurement Design Capacity Available Capacity 2002 Production 2002 Revenue Tractors Units 4500 1000 427 2135000 Irrigation Systems - Solid Units 750 750 975 12,015,000 for all irrigation systems Irrigation Systems - Mobile Units 100 100 35 Irrigation Systems - Center Pivot Units 250 250 45 Irrigation Pumps Units 6900 4000 621 Hand Shovels Units 125000 80000 11500 Bolts and Nuts Units 1720 500 0 Agricultural "Equipment" Units 8500 4600 538 Description of Importance of Products to Other Iraqi Industries Serves Iraqi agricultural sector. Warranty on product For six months 5. Customers Customer Name 2002 Revenue Subsidized (Y/N) Products Sold to Customer and Unit Pricing Ministry of Agriculture 11500000 Yes, heavily All products, tractors for 5M ID, irrigation sys for 16M ID Private Retailers 2400000 Spare parts only Others 245000 6. Suppliers Supplier Name 2002 Purchases Subsidized (Y/N) Products Purchased and Unit Pricing BAUER (Austrian company) 2100000 Multi national suppliers 3500000 Local market suppliers 1130000 Current Payment Terms From Suppliers The method of payment is done in two stages, part of it after the sign of contract and the rest is after receiving material. 7. Imports & Exports 2002 Import Markets for Raw Materials Virtually all raw materials imported. Potential Import Markets in Free Market 2002 Export Markets for Finished Products None Potential Export Markets in Free Market No opportunities to export their products. 8. Competition Description of Competitive Situation Mgmt claims there is no local competition for tractors. Ministry of Agriculture does import tractors from foreign manufacturers, though. The major competitor was: State Company of Agriculturial Supplies. Mgmt admits imports are cheaper and of better quality. Market Share Description Only 20%. The company could not satisfy 100% of Iraqi market 9. Summary of War Damage & Looting of Property & Equipment Description of Damage Mgmt building destroyed. Most manufacturing equipment is OK, but tools were stolen Current Operating Status Not operating. Immediate Property & Equipment Needs To Restart Operations Total Cost to Return to Pre-War Condition First claim was $3M USD, then claimed $1.3M ($300K for repairs and $1M for tools and raw materials)