Dubai: Ajmal Perfumes, a Dubai-based perfume manufacturer and retailer with $200 million annual turnover, is considering acquiring a French perfume manufacturer, a senior official said.
"We are still evaluating the company, the financials, etc," Abdullah A. Ajmal, deputy general manager of Ajmal Perfumes, told Gulf News.
"We could make a decision later this year, once due diligence is complete."
He, however, declined to name the company. "It is a famous international company of French origin. I can't tell you more than this."
The story of Ajmal began in Assam, India, when founder Haji Ajmal Ali began trading in the lucrative oudh industry. The company's business initially flourised with the production of oudh and other oil-based perfumes.
India's northeastern region including Assam and Bangladesh's Sylhet district was once a major source of oudh - a primary ingredient for processing oil-based perfumes, popular among the Gulf Arabs. However, Laos, Cambodia, Vietnam, Malaysia and Indonesia have become major sources of oudh.
Derived from the essence of agarwood trees, oudh can take up to 40 years to harvest, and can cost tens of thousands of dollars per kilo.
As the demand for oils and fragrances made from oudh grew, Ajmal became one of the foremost suppliers of high quality oudh to the Middle East.
Today Ajmal Perfumes, managed by the second and third generation of the Ajmal family, is a sprawling business.
In 2004, as a result of its growth and increased demand for its fragrances, Ajmal invested Dh35 million to build a 150,000 square foot manufacturing facility in Al Quoz Industrial Zone, Dubai. Haji Ajmal died earlier this year.
While the 57-year old company plans to grow organically, the acquisition will be part of its global expansion strategy, Abdullah said. The company currently employs 2,300 people, of which about 585 work in the UAE. The group also has interests in real estate and textiles.
Analysts say the current economic situation has created opportunities for Gulf companies to invest in the West, where ailing companies are available at cheaper prices.
"Companies such as Ajmal which are sitting on huge cash reserves could take advantage of the current slump by acquiring companies and benefitting from the technologies," said an analyst, requesting anonymity.
"In this respect, acquisition is a good expansion strategy."
Ajmal Perfumes, Rasasi, Al Haramain Perfumes and Swissarabian Perfumes - form the big four - which together control the UAE's roughly $1 billion perfumes market and compete with global brands.
According to the International Cosmetics News (ICN), fragrances generate roughly $3.6 billion annually in the Middle East. The UAE is clearly the single largest market in the Middle East.
"This is primarily due to tourists and the re-export market as Dubai serves as the regional gateway," Abdullah says.
All four had started businesses in processing oil-based oriental perfumes. However, later they shifted towards western fragrances.
Currently western fragrances represent the largest segment of their businesses, due to a change in the demographics that shifted demand.
The company is currently investing Dh50 million in revamping its network of 128 retail outlets with a new look, feel and branding concept that is more in line with its long-term strategy to transform the company from a regional to a global brand despite the global economic slump.
"Despite the current economic slowdown we are expanding and spending in brand building. By the end of this year, we plan to expand our retail network to 135 stores and 200 stores in 3 to 5 years time," Abdullah Ajmal, the west-educated grandson of Haji Ajmal, said.
"In the next three to five years, we are also planning to spread across the world with branches in Europe, Malaysia, before entering the North American markets."
The new retail concept was unveiled last month at the Ajmal outlet in BurJuman, the first to undergo the series of revamps.
The new look reflects a whole new open-plan layout where customers can enjoy the experience of fragrances, oudhs and oils within a spacious, stylish and contemporary environment.
What is oudh?
Oudh/Aloeswood oil is derived from an agarwood tree that grows abundantly in Laos, Vietnam, Cambodia, Indonesia, parts of India and Bangladesh. The highest quality agarwood trees can be found in the former countries of Indochina, such as Vietnam, Laos, and Cambodia. Agarwood/Oud oil are products of infected species of trees, commonly being sought from Aquilaria and Gyrinops trees.
Agarwood comes in solid or liquid form. Solids are only solid at room temperature, and if warmed slightly, it turns to mobile liquid. It is an anti-asthmatic and can be applied directly to the skin as it is non-irritating. The oil is very tenacious and only the tiniest of drops is needed to fill the air with its soul-evoking aroma. It is a complex aroma with many nuances, deep and ethereal.
The aroma takes about 12 hours to unfold and it will last on the skin for more than a day, and if placed on any material, the scent can last for months. It can be used as a perfume, an aroma therapy and an essential oil or as an aid for the deepest meditation. It is believed that this fragrances will unlock the subconscious and allow one to go deep into one's memories.
Aloeswood/Oudh oil is slowly making an appearance in The West where the majority of people don't know about this gift of nature.
The Aloeswood oil termed as 'oudh' in the Middle East is highly valued for its fragrance, it can go upto astonishingly high prices due to the level of demand that exists. It is worn on clothes and skin, mainly used by men during special occasions such as Eid and Friday prayers.