Tire & Rubber Cos

# 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 Companies for Tires & Rubber - Najaf & Diwaniya Sector Brief Description Two technically separate companies producing similar rubber products: tires for cars and bicycles, belts, hoses and tire tubes. Diwaniya focus on heavy equipment tires. Najaf focuses on light equipment. Diwaniya also known as "State Co. for Rubber Industry". Revenue in 2002 (Iraqi Dinars '000s) 13670000 (Najaf only,Diwaniya unknown) # of Employees 3600 (2,400 in Najaf and 1,200 in Diwaniya) Annual Employee Salaries & Bonus 4320000 (3,120,000 in Najaf and 1,200,000 in Diwaniya) Headquarters Address Najaf Haiydria 2. Company Highlights Heavily subsidized Company relying on imports for most raw materials. Worldwide tire industry extremely competitive, suffering from overcapacity, and requires massive economies of scale to compete. Unless capacity at main tire factory is increased from current 500K to 2.5M, Company will have difficulty competing Company has already spent over $70M USD to increase capacity to 2.5M tires. Needs additional $100M USD to finish build-out. Possible opportunity to focus on smaller rubber products. Company claims to be truly profitable in this niche. Management team is one of best in MIM portfolio. Well organized, able to present financials, and motivated to restart Company. Tire factory is kept clean and ready to start at all times. Tires Najaf: Allocated $500K USD for 2H 2003 operating budget and provided with zero mw off of grid - but getting 3mw from local source in Aug. Rubber Diwaniya: Allocated $500K USD for 2H 2003 operating budget and provided with zero mw off of grid. 3. Facilities Name Province City Grid Damage % Power Needs Najaf Tire Factory Najaf MA31786776 0.1 3.5 mw Najaf Rubber Hose Factory Najaf MA38893963 0.1 Diwaniyah Diwaniyah 0.1 3 mw Value of All Plant & Equipment Before War, and Initial Purchase Dates and Prices for Major Items Tire fabrication machines were made by NRM Corp (US company) in 1990. Separately, Company has $15M of equipment still in boxes (missing critical parts) and $40M worth partially erected, including an extrusion line. Additional $16M paid for other equipment that never arrived due to embargo. 4. Products - Najaf except where noted Product Name Unit Measurement Design Capacity Available Capacity 2002 Production 2002 Revenue V-Belts Unit 2000000 100000 17145 Tires Unit 576000 456000 410020 Rubber Products Unit 166725 166725 148695 Reclaim Unit 750 450 411 Polyethylene Tubes 30 M 38475 38475 32863 Hoses Unit 1500000 700000 512341 Car Tubes Unit 630000 400000 41450 Bicycle Tires Unit 170998 49998 38360 Truck Tires - Diwaniya Unit 147289 103422 69608 Light Truck Tires - Diwaniya Unit 170940 121364 37765 Description of Importance of Products to Other Iraqi Industries Nothing that couldn't be satisfied through imports. 5. Customers Customer Name 2002 Revenue Subsidized (Y/N) Products Sold to Customer and Unit Pricing The Public - through MOT The Military 6. Imports & Exports 2002 Import Markets for Raw Materials China, India, Malaysia, Vietnam Potential Import Markets in Free Market Many different countries 2002 Export Markets for Finished Products Syria and Jordan Potential Export Markets in Free Market Possible expansion in the Middle East 7. Competition Description of Competitive Situation Intense competition from importers, including regional competitors in Turkey, Egypt and Syria. Market Share Description Only 10-15% of Iraqi market for car tires and tubes. 60% market share for bicycle tires. 100% share for hoses. 25% for polyethylene tubes. Diwaniya has 15% share for heavy equipment. All else is satisfied through imports. 8. Summary of War Damage & Looting of Property & Equipment Description of Damage Najaf: furniture, cars and computers looted from headquarters. Concrete fence 100% destroyed and raw materials 20% looted. Manufacturing equipment and facilities not damaged and can be restarted. Same for Diwaniya, whose marketing department 50% was destroyed. Current Operating Status Neither running. Need electricity and spare parts. Najaf tire factory should restart limited operations in August. Immediate Property & Equipment Needs To Restart Operations Total Cost to Return to Pre-War Condition 9. Fuel & Electricity Needs Description of Fuel Needs Minimal Description of Electricity Needs 3 to 5 mw in Najaf. 3.0 mw in Diwaniya. Another source claims 7-10 mw needed at each facility. Najaf will get 3 mw, which will allow it to operate in stages. 10. Other Needs to Restart Working Capital Needs Najaf: $2M USD for raw materials. Diwaniya: $3M USD for raw materials. Security Needs FPS being stood up. Other Needs Spare parts, possible new production lines. Tires are old technology, have tube inside. Will cost $2M USD to switch technology to tubeless tires. 11. Strengths, Weaknesses, Opportunities & Threats Description of Strengths Significant investment in plant and equipment. Company claims its tires are higher quality than competitors' tires in its price category. Description of Weaknesses High cost of raw materials and spare parts and high manufacturing costs (Highly competitive market). Overstaffed by at least 25%, if not 75%. Description of Opportunities Increase capacity to 2.5M tires/year and thereby reduce unit labor costs by 80%. Description of Threats Massive global overcapacity in tire industry.