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Oman’s biggest cement firm to raise $600m via bond/sukuk

The board of directors of Raysut Cement Company SAOG, the largest cement manufacturer in the Sultanate of Oman, has approved the issuance of a secured rated debt instrument in the form of bonds/sukuk to raise up to $600 million (approximately RO 231 million) in two tranches under a new debt programme.

Ghose Jotirmoy Pratul Krishna, CEO, said in a filing to the Capital Market Authority (CMA) that the proceeds will go towards three key objectives: to repay existing bilateral debt, support growth initiatives of the Group and finance acquisitions identified by the company in growth markets.

The proposed bond/sukuk will be issued in Singapore by RCC Holdings PTE, Singapore, a wholly owned subsidiary of Raysut Cement, he added.

The announcement underscores ambitions by the Salalah-based cement producer to strengthen its presence across the Gulf, Middle East, Africa and potentially East Europe as well. The publicly-listed company is also augmenting its capacity in the Sultanate of Oman, notably through the construction of a new cement grinding plant in the Special Economic Zone (SEZ) in Duqm. The latter project, under development with an investment of $30 million, will add 750,000 metric tonnes (MT) per annum to Raysut Cement’s domestic cement production capacity.

However, pandemic impacts and the economic downturn did weigh on the Group’s 2021 production and financial performance, said Ahmed bin Yousuf bin Alawi al Ibrahim, Chairman of the Board of Directors.

“The Group as a whole has produced 3.104 million tonnes of clinker and 3.799 million tonnes of cement during (2021), against 3.599 million tonnes of clinker and 4.110 million tonnes of cement during (2020) respectively. The overall production of clinker is lower by 13.75 per cent and cement by 7.57 per cent. The decline in production is due to the impact of the Covid-19 pandemic, lower quantity demand in domestic and international cement markets,” the chairman stated in the Director’s Report for 2021.

Revenue earned by the Group totalled RO 93.60 million in 2021, up 3.56 per cent from the previous year’s total o RO 90.38 million. Buoyed by this uptick in revenue, the Group pared its loss after tax to 13.58 million, down from RO 18.28 million in 2020.

However, new subsidiaries added to the Group’s portfolio in recent years performed relatively better in 2021. Maldives-based Raysut Maldives Cement Pvt. Ltd, owned 75 per cent by parent company Raysut Cement, earned a profit of RO 0.13 million in 2021 on revenue of RO 2.50 million. Its new Madagascar subsidiary, Raysut Cement Trading Madagascar, generated total revenue of revenue of RO 3.46 million, but incurred a loss RO 0.39 million for the post-acquisition period in 2021.

Other subsidiaries of the group, which are 100 per cent owned by Raysut Cement include: Pioneer Cement Industries LLC (Ras Al Khaimah – UAE), Sohar Cement Factory LLC (Sohar), Raysea Navigation SA, Duqm Cement Factory LLC (Duqm SEZ), and RCC Trading DMCC (UAE).

Additionally, Raysut Cement also has a 51-per cent stake in Raysut Burwaqoo Cement Company LLC. In 2021, the company registered a further three subsidiaries – the 100 per cent owned RCC Holding Company United and RCC Trading DMCC, in addition to a 55-per cent owned RCC MSG Somaliland Cement Holding Limited.

Its 49 per cent owned associate company, Mukulla Raysut Trading and Investment Company, distributes cement in neighbouring Yemen. More recently, Raysut Cement invested 100 per cent in Raysut Cement Trading Madagascar.

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