Walaa Chocolate

Pre- assessment &

Validation Report
Draft 01/ December 11, 2004

Walaa Factory
for
Food Industries & Chocolate
TABLE OF CONTENTS
1.COMPANY HISTORY /
PROFILE
2. PREMINARY FINDINGS AND
OBSERVATIONS
2.1. Marketing
2.2. Production
2.3. Finance & Accounting
2.4. Management Organisation
and Human Resources
2.5. Quality System
3. SWOT ANALYSIS
4.RECOMMENDED ACTIONS
 :UMU Team & company visit date
11th. of December, 2004
Mr. Mohamed E Al Bakry

:Company Representative
Name: Mr. Mohamed Gaber Mohamed
Position: Vice Chairman

Pre-assessment & Validation Report prepared by

Mr. Mohamed E Al Bakry
.On: 11th of December, 2004
COMPANY HISTORY / PROFILE

Walaa Factories are well

established quality oriented firm
in the confectionery industry.

Walaa is specialized in the

production of hazelnut and
chocolate spreads.

Established in 1978 to meet

with local market requirements,
Walaa now has expanded to
distribute its products to
diversified markets.

.
 The company's fully
automated plant is
situated in The 3rd
Industrial zone of Borg El
Arab, Alexandria.

The estimated plant size

and manufacturing
facilities areas are 10.000
square meters
 The factory is well
equipped with the
latest technology of
food processing.

Production-cycles
combine but not limited
to variable chocolate
manufacturing lines
producing chocolate
spreads and chocolate
drops.
In addition to lines
producing sponge
cakes & small packs of
honey, jams, vanilla,
coconut and hazelnut
cream, the company
adds on new blends as
a result of its R&D
work.

Furthermore; complete
lines to produce fresh
biscuits branded yam
yam and choco stick
are installed.
Walaa production facilities are
equipped with laboratory
equipments compliant with
International and Egyptian
standards. Laboratories and
testing equipment are
inspection from governmental
agencies.

Walaa products are made out

of the best and purest
ingredients such as selected
vegetable oils, skimmed milk
powder. Low fat cocoa and
freshly roasted hazelnuts.
They are designed to meet
customer's demand.
Walaa 's target is to
score for the best
customer satisfaction
index. The
management belief
of top quality and
excellent service
guarantees
continuous launch of
successful and
profitable products.
Customer Service Department

Walaa customer service department

listens to clients' proposals and
outstanding back –up and
partnership service.
Walaa Factories have wide range of
products & brands including:
Covertora vita (milk
– plain – white)
Covertora vita Bella
(milk – plain –
white)
Covertora vita
Bono (milk – plain –
white)
Covertora Marah
 Yam yam biscuit
fingers with cream
(cocoa hazelnut –
vanilla – strawberry)
 Choco sticks biscuit
fingers with cream
(cocoa hazelnut –
vanilla – strawberry)
 Choco kenzy (cocoa
cream with hazelnut
and vanilla cream)
 Kenzy heart (cocoa
cream with hazelnut
and vanilla cream
 Mini mono (cocoa
cream with hazelnut
and crispy)
 Mamia (cocoa cream
and hazelnut)
 Cream chantee
 Sponge cake
 Marbia Jam (caturing
& consumer packs)
Research and development
To advance with the
new products
according to the
market needs, R&D
department is now
studying to add
new lines such as
chewing gum,
snacks and
chocolate wafer
products in all its
varieties.
Sector of business: Food Industries.
Product range Chocolates.
Walaa implemented fully
automated production lines.
Production processes are
involved with mixing,
heating to various
temperatures, crushing,
conveying and transporting,
and packaging and
labelling before staffing and
storage.

The current number of fixed

and variable temporary
employees is touching 200
plus / minus 20.
Employees are generally satisfied
and those how have spent
long service with Walaa are
highly rewarded. Service life of
fixed permanent employees
can go up to twenty years.
Those who are unskilled may
be moving to other locations
after having spent 2-5 years.

Local markets are traditional

markets for Walaa products.
50% of total production goes
to exports. The United States
of America was considered
attractive market before
September. 11, 2001 slowed
down customs regulations and
procedures.
Picky notes on packaging and
comments were raised from
custom officers causing delays
of deliveries or even rejection
of sea port containers made
Walaa turn to other markets
like North Africa, Africa, and
GCC countries.

Walaa enjoys sustained growth of

over all sales that are linked to
the introduction of new
innovated products. Walaa
relies on its own expertise in
making and producing fine
chocolate with different taste
and ingredients to wholesalers
and supermarkets retailers.
Two main departments are
looking after sales and
marketing. The marketing
and sales functions are
integrated under
department heads.

Budgeting for promotions,

advertising, packaging, or
product incentive training is
determined in collective
actions by management
and middle executive
management. Executive
manager report on daily /
monthly / quarterly activities
and senior management
take corrective actions.
There is room for manoeuvre and
space provided for delegation
of authority. Off course
management may intervene
from time to time if corrections
are at all needed. The top
management does not
experience clash of interests
thus smooth decisions are
reached and implemented.

The owners are aware that by

diversifying the sources of
finance, Walaa is being a
better off corporation in terms
of trading in global markets.
Walaa received offered to
manufacture and produce for
others well established brand
names.
Walaa also received proposal for
take over and or acquisitions.
It seams to be those he
management wishes to take
this golden option once the tax
exemption is exhausted in
three years from know.

The vice president, who is in his

middle age, has developed
web site and attractive
broachers that reflect the
image and true culture of the
company. The company is also
participating in local fairs and
exhibitions. Senior government
officials are also keen to visit
Walaa to enhance
performance and give a
helping hand.
Walaa experiencing some
troubles in regard to multiple
supervisory government
agencies like ministry of
health, ministry of labour,
ministry of home supplies, and
specifications compliance
agency. Walaa management
wish to see one person, group,
or entity that is responsible for
the overall company audit and
compliance to the rules and
regulations. There seems to
be absence to one unified
document that carries all the
rules and regulations that
govern the monitoring and
inspection process on private
sector companies.
It took a visit from the minister of
industry to Walaa factories to
inspect closely the so call 30%
material PVC film waste before
sending the sheets for the final
packaging stages. The minister
sanctioned the act and
approved the 30% waste
blanket material as per Walaa
request. Monitoring officers are
not capable in taking this action
and approve. "Walaa vice
president claims.
The over all marketing strategy of
Walaa is to preserve
leadership with its own brands
and pace with systematic
sustained year-to – year
growth.

The company fully complies with

Egyptian standards for
chocolate making and
packaging.

continuous innovations takes

place with mixing up and
blending milk , butter oil , coco
, pistachios, nuts, sugar, and
natural flavours in order to
satisfy clients.
The company is environmentally
friendly and is filling for
HACCP and ISO 9001/2000
Quality Certifications.

The company believes with its

rational credit policy that there
is neither room for excessive
credit to wholesalers nor any
room for extended credit from
suppliers.

However; the company feel there

could be a need for open store
credit facility that is well
managed fro either bank of
Alexandria of bank le caire.
Within specified safe limited on
short term monthly basis.
Division of authorities between
sales, marketing, purchasing,
administration, human
resources, financial, exports,
and legal is well maintained
and registered. Sales staff
report to supervisors
occasionally.

Among other export markets are

Jordan, Yemen, Saudi Arabia,
GCC, North Africa, and Africa.

Europe is not a market or

prospective market for Walaa
chocolate products because
most of the raw materials are
imported from EU countries.
Preliminary findings and observations
The company enjoys favourable
production of 20-25 tons per
day. Walaa experienced this
growth from inception in 1978.
In 1998 expansion took place
and the company added new
location for production in Borg
el Arab industrial zone.

The company kept part of its

operations for sales and
administration in Mandara –
Alexandria office. The
company is carefully managing
sales offices in Cairo and
Upper Egypt. Walaa may be
enjoying 15-20 % growth each
year since inception in 1978.
However; due to increased
competition from within and
competition from outside the
country, Walaa is faced with
increasing prices of material
inputs that cannot all times be
reflected on the consumer
market.

Chocolate market in Egypt is very

much highly sensitive to the
price. The product, though
very much attractive, is
considered luxury by most
populated cities in Egypt.
Middle class has well
established its priorities and
needs ad wants from Walaa
product range.
Market research is failing to
anticipate needs, tastes,
and wants from year to
year. Many items pour into
the chocolate equation
where even the
experienced Japanese
giant marketers find difficult
to understand.

On the quantities, yes... Walaa

may be in a better position
to anticipate the size of
market with established
relations with
hypermarkets, sweet
factories, and wholesalers.
Walaa participates regularly in
international fairs and
exhibitions. France and Italy
among those fairs where
Walaa gets recognized
reputation and proper feed
back.

Among other export markets are

Jordan, Yemen, Saudi Arabia,
GCC, North Africa, and Africa.

Europe is not a market or

prospective market for Walaa
chocolate products because
most of the raw materials are
imported from EU countries.
Pricing process takes various
ways where competition is
always under scrutiny. The
company would not be
dragged into price war or
deep throat cutting. The
fundamentals are also
followed here by calculating
fixed, variable, opportunity,
and unforeseen costs.

The company is filing for ISO

9001/2000 and HACCP
with UNIDO – IMC
Technical Assistance.
SWOT ANALYSIS
Strengths
Product quality.
Management.
Effective decisions.
Product reputation.

Weaknesses
Legal environment restricts innovation.
Fluctuation of material inputs prices.

Opportunities

• Mergers would allow new markets.

Threats
• Interrupted supply program of PVC items and others.
RECOMMENDED ACTIONS
The company has
already signed an
agreement and TOR
with IMC – UNIDO
program for the
HACCP and ISO
9001/2000 technical
assistance. The
company has already
met its financial
obligation as per the
letter of commitment.
 1. Urgent trouble shooting project
Expert in chocolate making is
invited to give Walaa the
competitive edge in the global
know how market.

Request is made here to source

for a candidate who is well
versed with the making,
processing, costing, and
quality inspection testing of
chocolate industries.

The expert should be well

experienced with blending,
mixing, processing, and adding
on flavours for the fine tuning
to meet tastes and
preferences of clients in
specific target markets.
There is no age group
nor there are specific
qualification imposed
except the logic,
common sense, and
the talent in mixing the
right ingredients with
the proper dosages at
the proper cost to
come up with
inventions for target
markets.
2- Strategic development project
Tie ups. Global partners.
Branding.
3- Side development project
– IPO. The transformation
from private to corporate
entity.
– HR development for further
improvement.
– out for new and traditional
Walaa markets.
– IT development for
market speculation and
effective forecasting.
– Effective purchase /
procurement / inventory
program that would
alleviate the short
supplies problems.
– Comprehensive Market
Study. Advertising and
promotions studies
should be carried