Despite a nine per cent increase in sales, National Mineral Water recorded a net loss of RO278,315 for the first nine months of this year, compared to a net loss of RO274,969 in the same period last year. The net loss was mainly due to the increase in overhead costs.
Speaking to Muscat Daily, Saibal Sen, a member of the board of directors at National Mineral Water, said that the company faces a precarious financial situation because of its inability to raise product prices due to restrictions imposed by consumer protection authority since April 2011 despite the increase in manpower and distribution costs.
He said, The prices have been frozen for more than one-and-a-half years. The major shareholders of the company have been funding the loss month after month. But the funding by individual shareholders has been overextended and they are no longer able to put money as they do not see an end in sight to the situation. They have expressed their inability to fund the company for an indefinite period, because they do not find a business logic with costs rising but prices remaining frozen.
We have been trying to persuade the consumer authority but all attempts have failed. We have around 300 employees working for the company and half of them are Omanis. If the situation continues indefinitely then their livelihoods are at serious risk. If there is no solution to the impasse then other companies could also face similar problems, said Sen.
The company board, at its meeting last week, decided to call an extraordinary general meeting (EGM) to seek shareholder consensus on the way forward for the company.
Sen said that the EGM is likely to be held in December once the Capital Market Authority approves the agenda. This is a very serious matter. We will put everything before the shareholders. There are a couple of solutions that will be discussed. If the consumer authority feels that the prices should not be increased at all, then some compensation should be provided to cover increased costs, Sen added.
The board also approved an additional investment to replace downstream packaging equipment.