We need 3m customers to manufacture fridge in Nigeria — Harvey

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By Franklin Alli
Richard Harvey is the global chairman of PZ Cussons Plc. He was in the country last week to commission the company’s subsidiary (HPZ Limited) new assembling line for its fridge products. In this interview, he noted that fridge factory is highly capital intensive and in order for the company to be competitive, “We need more customer base of three million Nigerians to be able to go into fridge manufacturing.” Excerpt:

How long have you been doing business in Nigeria?
As you know, PZ Cussons Nigeria is the largest subsidiary of PZ Cussons. We have been operating in the country for more than a hundred year. So , Nigeria has been a backbone of our operation as a group.

What is the contribution of PZ Nigeria to your global sales?
That is a very good question. PZ Nigeria contributes about 30 percent to our global turnover. So Nigeria is a very important part of the group.

Do you have plans of extending your products category to other sectors of the Nigerian economy?
AS you are probably aware, we have interest in Nigeria’s agriculture sector where we have invested N10 billon in palm oil refinery at Ikorodu area of Lagos.
We have started producing our vegetable oil under the brand name ‘Mamadore’ produced from crude oil palm and refined to the highest quality and bottled to international standard. For us it is exciting bringing into the market great product. The product has been in the market in the last three months.

What are your key challenges and how is it affecting productivity?
Productivity actually is improving. We are improving productivity with the patronage our brands are enjoing and we have been bring in new machinery and equipment to improve productivity and produce products that are of high quality and competitive. PZ is a global brand and we are producing according to global standards.

How much money have you invested in Nigeria in the past five years?
In the last five years, we have invested about 130 million dollars.

What did you want to achieve with this new production line?
It will help to rapidly expand the distribution of our fridge products in Nigeria and Ghana. We anticipate that the demand will keep growing and with the factory, we are ready to sustain supply.

What message do you have for your Nigerian shareholders?
They are investing in the right company.

You have spent so much money on internal expansion, are you thinking of doing any capital issues?
No. The group as a whole is strongly capitalised. Besides we are conservative about borrowing.
How many jobs have you created in support of Nigerian government’s Transformation Agenda?
Currently, we have 2,500 workers across the country on our payroll and we are increasing the number by 30 to 50 percent, through our PZ Wimar palm oil project. In 2010, PZ Cussons Plc entered into a joint venture (PZ Wilmar Ltd) with Wilmar International to build a palm oil refinery in Nigeria and build up an associate food ingredients business.

What is your capacity utilisation?
The capacity utiisation in this factory is a little bit lower than what we would like to do now.Honestly, we are building for the future.

What percentage of your raw materials is sourced locally?
Honestly, our record speaks for itself; we make much use of local raw materials in our milk products like Nunu milk.The content and can are sourced locally except the machinery for packaging it.

What about transition to full scale manufacturing instead of assembling?
Of course, we would love to produce locally, but most certainly it is a long – term plan. This is because the fridge factory is highly capital intensive and in order for us to be competitive, we probably need more customer base of three million Nigerians to be able to go into fridge manufacturing. As of now; we have not decided to go into it until we are able to capture more market out of the 160 million people in the country.

In recent times, many foreign companies have been increasing their shareholdings in Nigerian companies; do you intend to do the same?
No. We have over 85,000 shareholders and we are holding about 70 percent. As of now, there is no plan to increase our shareholding in a Nigerian subsidiary. However, we are committed to our shareholders and the Nigerian economy.

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