By Peter Egwuatu

*Laments high cost of borrowing

Multi-Trex Plc has lamented the high cost of funds from the local banks in the country, just as it disclosed plans to source for foreign loans of between seven and ten million pounds (about N2.5bn) to boost its working capital.

The Chief Executive Officer, Multi-Trex Plc, Mr. Dimeji Owofemi, disclosed this at the company’s pre-Annual General Meeting (AGM) press briefing held last week in Lagos, saying, “The greatest challenge the company is facing is borrowing from banks. Our banks in Nigeria prefer short- term fund to long-term fund and that is why the cost of borrowing is high. So the Board of Directors has decided to source for cheap alternative foreign funds. We are looking for loans from foreign banks, say between 7 and 10 million pounds.”

Other problems facing the company, according to him, include: infrastructure deficiency, energy and raw materials, among others.

In his words: “Infrastructure deficiency in the country is another big problem that we are battling with. The kind of business we are doing requires regular power supply so we run generators with diesel that is very costly. We are making alternative arrangement to run our plants with natural gas.

“We are entering negotiation with the Nigerian Gas Company (NGC) to be able to get natural gas to power our plants which has the tendency to reduce the energy cost by 25 per cent. Also sourcing our local raw materials is another problem because organising and educating the farmers is not easy, Multi-Trex has a project that would engage 15,000 young youths. Therefore, we would require resources that will meet our 65,000 tons capacity.”

To this end, he disclosed that the company has not declared dividend for the financial year ended April 30th, 2011, while pleading with the shareholders to still exercise patience as they will soon begin to reap bountifully from their investment.

According to him, “Our shareholders have shown great understanding with us, knowing that they have confidence in us as they had invested for the future. We will do our business in a professional manner to ensure that our shareholders get capital appreciation as well as dividend.”

In his own comment at the briefing, Executive Director, Manufacturing, Multi-Trex, Mr. Dele Kalu Uduma said, “We have grown the capacity of the company from 10,000 tons we started in 2008 to about 65,000 tons. We are still expanding and want to grow the capacity of our plants to 75,000 tons. Nigeria would be undergoing a revolution in the industry.

“So very soon, we will be in the market with our finished products, already four of our products have been registered with NAFDAC and we have utilised up to 40 per cent of our capacity, but the greatest challenge is the working capital.

Deputy Managing Director, Multi-Trex, Mr. Yusuf Isiaka, in his own comment said: “Multi-Trex’s products enjoy good reputation in the international market for its superior quality and packaging. The switch from being a trading company to a young manufacturer of over five years demanded the restructuring of the company’s capital.

“A greater demand for increase in the company’s working capital, for example, stem from the need to address the usual imbalance in the seasonality of cocoa beans harvest and the all year round factory demand for the raw material.”

He noted that as a result of its success recorded in the trial manufacturing operation at Cocoa Industry Limited, the company, over the period 2004 – 2005, resolved to invest in the construction of its own factory and acquire cocoa processing plant of 10,000 mt. of cocoa beans capacity, which was commissioned in 2006.