El-Raey Sweetness Halva Company plans to establish a new factory in Badr City with investments worth EGP 10m, to raise its production capacity and increase exports.
Atef Adly, managing director of the company, said that the new investments are subject to the stability of the exchange rate.
El-Raey acquired EGP 10m before the liberalisation of the exchange rate to finance the project, and it will borrow more from banks if the costs of the project increased, Adly added.
He explained that the company chose to establish a factory in Badr City to take advantage of government facilities offered to investors in this area, in addition to the provision of transportation costs.
He pointed out that the company rented a factory with a production capacity of 1,000 tonnes in Minya to meet the growing export demands in recent months.
The company’s exports exceeded EGP 80m in 2016 compared to EGP 68m in 2015, marking an increase of 11%.
The company aims to increase the value of its exports to more than EGP100m after raising the production capacity and expanding in Arab and European markets.
The company owns Tahini and Halva factories on an area of 2,000sqm in Tiba City in Minya with a production capacity of 450 tonnes per day.
Adly added that the company did not raise the prices of its exporting products in the last period, especially considering the stability of prices in competing countries.
The recent increase in production costs did not exceed the currency difference, according to him.
He stated that after the Central Bank of Egypt’s (CBE) decision to float the pound, the largest proportion of exports addressed the Libyan, Yemeni, and Saudi markets due to the easy transportation across the Bab al-Mandab strait and their steady consumption of halva and tahini.
He pointed out that the rate of export-oriented production rose to 70% compared to 50% before the pound flotation. The rate of production for the domestic market accordingly reached 30%.
The price of a tonne of tahini rose to EGP 27,000, while sugar rose to EGP 30,000, making the company consider reducing its participation in international exhibitions to rationalise expenditures, according to Adly.
He added that the domestic market accepted the price increase, especially since everyone knows the circumstances that led to the increase, including the increased sugar prices that rose to EGP 11,000, and that of sesame that increased to EGP 18,000, as well as the increased energy costs.
He explained that the factory needs about 85 tonnes of fuel oil a month, offered at a price of EGP 2,400 per tonne on the black market, and that it was not available at the official price of EGP 2,100 per tonne set by the government.
He continued that the non-availability of raw materials is a top concern for manufacturers now, because they affect the companies’ production capacity and raise the fixed costs. However, the high cost problem can be met by increasing export rates or reducing expenses.
He expressed satisfaction with the government approval on the Food Safety Law, which is expected to contribute to improving the quality of products, to promote competition among companies, and to unite and simplify regulations.
