METALLURGICAL INDUSTRIES CO.

( E. JS. H. CO. )

BRIEF INFORMATION MEMORANDUM

PRODUCTION LINE

1/2” - 4” LONGITUDINALLY WELDED STEEL PIPES

1 EXECUTIVE SUMMARY

1.1 INTRODUCTION

Nasr Pipes was established in 1962 as a state- owned company with the construction of the 1/2”- 4” Longitudinally welded steel pipes plants, the 6”-24” spirally welded line for commercial pipes and a foundry. These facilities were located at the southern end of the existing site, but the spirally welded line has since been moved into the now factory area east of the main site.

Later on, other facilities were added :

- 1972 - Casting and large fittings foundry

- 1978 - New spirally welded pipe line (6” - 60”)

- 1984- Longitudinally welded pipe plant (2” -8”)

Nasr Pipes, located in Helwan City (30 Km south of Cairo ), is wholly owned by the Metallurgical Industries Holding Company (MICOR), a public sector Holding Company governed by law 203/1991.

This document focuses only on Nasr Pipes 1/2” - 4” diameter longitudinally welded pipes business, which will be referred herein as the Small Pipes (1/2” - 4”) business. This activity is proposed for sale as a separate entity. Nasr Pipes’ large and spiral steel pipes business is also proposed for sale as another separate independent entity .

1.2 THE SMALL PIPES BUSINESS: ITS OPERATIONS AND FUTURE PROSPECTS

Nasr Pipes’ Small Pipes business consists of two product types:

a- Black steel pipes

b- Galvanised steel pipes

The main products are longitudinally welded pipes for use gas and water pipes, as well as sections for the construction industry. All products are manufactured to comply with selected international standards (ASTM, DIN, ISO, BS, etc. ) .

Nasr Pipes as a whole owns 462.801 sq. meters of land in Helwan. The Small Pipes business comprises a pipe mill and a galvanising facility, and a total area of 107,285 sq. meters has been allocated to it. The total built-up area of the Small Pipes business reaches 34.225 sq. meters (excluding roads and open spaces around each plant ).

Production capacity is depicted in table 1.2.

Small Pipes Business Manufacturing Capacities

( In Tonnes )

Nasr Pipes is a main player in the small diameter longitudinally welded pipes market, which consists primarily of the construction sector. The market has grown at around 15% - 20% per year over the 1994 - 1996 period. In 1996, Nasr Pipes has been able to achieve a 38% share, while INCOSTEEL, its main competitor, held 57% .

The company’s products are known to have a very high quality and recent operational improvements have allowed Nasr Pipes to improve the profitability of this business.

Going forward, Nasr Pipes’ strategy for the 1/2” - 4” steel pipes business should revolve around the continued strengthening of the Nasr Pipes position in the market through:

- Optimisation of the sale of galvanised pipes at the expense of black pipes as the former generate higher margins .

- Branding of pipes and supporting this with strong public relations targeted at key decision markers in contracting

companies .

- Controlling costs through tight production process

management, including zinc utilisation in galvanisation and

the reduction of pipes steel thickness.

1.3 SUMMARY OF FINANCIALS

Small Pipes Business Sales

( 1993 - 1998, In LE* Thousands )

* note: LE Stands for Egyptian pounds ( US$1 = LE3.4)

Production

(In Tonnes)

source : Nasr Pipes Financials

Production Equipment, Longitudinally Welded Pipe

(actual production in brackets, 1995/96)

(1/2” - 4” Pipes)