African Industries, Fidson maintain expansion despite recession
Despite economic recession that has hit many manufacturers, African Industries Group and Fidson Healthcare Plc have continued expansion, showing that they see opportunities in Nigeria.
African Industries Group is majorly involved in steel and other ancillary businesses, while Fidson Healthcare is a drug maker.
African Industries Group currently has 12 manufacturing plants across the country, out of which six are steel manufacturing plants. The group currently produces one million metric tonnes of steel, accounting for 60 to 70 percent of the steel requirements of Nigeria.
Through its subsidiary, African Foundries, the group currently produces high quality B500B Grade Rebars and Tiger TMT.
The group is now exploring the solid minerals industry so as to access iron ore and coal mines. This will enable it produce steel from them, rather than from scraps.
African Foundries Limited recently sought the support of Federal Government to allow it have access to iron ore and coal mines in Enugu, in line with its Backward Integration Programme.
The company, which is the largest steel maker in the country, says having such mines will solidly support beneficiation, pelletising and DRI processes as well create power to increase efficiency in the firm.
“The plant will employ thousands of people and will bring billions of Naira investment into the country, but the project cannot take off until there is an allocation of these mining sites,” Parduman KurmarGupta told Kayode Fayemi, minister of solid minerals development, at a tour of the factory in Lagos recently.
The group has invested over one billion dollars in the country, creating 8,000 direct employment and 100,000 indirect jobs through the spectrum of its products.
Raj Gupta, chairman of the group, recently told Real Sector that the company is confident with the Nigerian economy, but wants the government to support steel companies more and make them competitive.
“The steel sector is the backbone of any economy. There is the need to put a local content policy in place whereby all the steel users and all the government contractors should stipulate they must buy made-in-Nigeria steel,” Raj Gupta told Real Sector Watch in an exclusive interview.
“They should, like most other countries in the world, look at how to prevent cheap and substandard products coming in from China. The United States, the European Union and many countries have put anti-dumping duties on Chinese goods,” he said.
“The major thing, again, is the cost of doing business in the country. It is very, very high. The interest rates are high. I believe that there should be a fund to support the steel sector because no industry can flourish over a long time if the interest rates are double-digit. Government support is required in this area,” he further said.
Similarly, Fidson Healthcare Plc is expanding its capacity to meet the World Health Organisation (WHO)’s pre-qualification necessary for global competitiveness. The firm has just completed the long-awaited N9 billion ultra-modern manufacturing plant in Sango-Ota, Ogun State.
The firm has equally entered into partnerships with a number of foreign firms. This is a testament that the drug maker has set high standards for itself. But the new factory is not without challenges.
“Shell controls this entire area. But there is no gas running through its pipe now. So what we have done is to resort to the compressed natural gas. If we had had a good power supply system, we would not have spent N125 million,” said Abiola Adebayo, operations director, Fidson Healthcare Plc.
“We had to use contractors given to us by the Department for Petroleum Resources (DPR). You need to queue at Shell till it gets to your turn. Gas is very expensive now because it is denominated in dollars,” Adebayo said.
”We bought gas at N122 in January, but it was N213 the last time we bought it,” he said.
“This facility was completed between seven and eight months ago, but because of issues of foreign exchange, the company cannot fully take off because we have not been able to get raw materials. Commercial banks open LCs and ask you to wait for 90 days. But there is no guarantee you will get it after 90 days because they are not responsible for supply of forex,” he further said.
ODINAKA ANUDU