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29 March 2024

Arabtec's Saudi ready-mix subsidiary to be ready by Q1 2010

Published
By Sona Nambiar

Arabtec Holding's board has approved plans to establish a subsidiary that will provide ready-mix concrete for the Saudi market, a senior official told Emirates Business yesterday.

The venture is expected to be up and running by the first quarter of 2010.

"The board reviewed and approved the proposals presented for establishing the new company, Austrian Arabian Ready Mix SA LLC, which will provide ready-mix concrete for the Saudi market. We will establish a Saudi company of which Ready Mix Concrete will own the majority 51 per cent, 25 per cent will be owned by Arabtec Saudi Arabia and 24 per cent by our partners in Saudi Arabia," said Ziad Makhzoumi, Chief Financial Officer at Arabtec Holding.

Arabtec's board also approved the transfer of some of the assets of Austrian Arabian Ready Mix Concrete to Saudi Arabia to establish the new operations, said a company statement.

"The project will cost about SR80 million [Dh78.46m]. We are not putting in any cash but are contributing our equipment – that is what we mean by transfer of assets. The other partners will contribute the equity as funding. The land is ready. We will first set up a plant in Jeddah followed by a second one in Riyadh with different capacities. The plants that we are moving have about one-and-a-half million cubic metres production capacity, but we will not run them to full capacity. We have estimated that the operation will more than break even for our projects," Makhzoumi said.

In March, Arabtec Construction, a subsidiary of Arabtec Holding, announced the setting up of Arabtec Saudi Arabia, a subsidiary venture with a paid up capital of SR150m.

The deal was signed with CPC Services Company, a member of the Saudi Bin Laden Group, and Prime International Group Services, a subsidiary of a leading Saudi group, to tap "the ongoing growth of the Saudi construction and infrastructure market", said Riad Kamal, CEO, Arabtec Holding.

The venture is 45 per cent owned by Arabtec UAE, 35 per cent by CPC and 20 per cent by Prime International.

"The Saudi market is one of the best in the region in terms of construction. We had decided to move to Saudi Arabia at the beginning of the year and now we have decided to move our support services and products. With the slowdown in Dubai, we have established other outlets in Abu Dhabi and Qatar for our ready-mix products. We still think that there will be excess capacity," said Makhzoumi.

 

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