Textile Industry under extinction at NSE

-Government blamed

 

Following the delisting of Afprint Nigeria Plc (Afprint), investadvocate.com website, a unique face in online Capital Market journalism sought to find out more about the trend and why most of the operators in the Textile subsector of the Nation’s Stock Exchange are no more doing business as listed companies.

In this interview with PETER OBIORA of investadvocate.com, Boniface Okezie, National Chairman of the Progressive Shareholders Association of Nigeria (PSAN) speaks on problems of the Nigerian Textile Industry, Government and N100 billion stimulus package for the industry, the N1.50 payoff to shareholders of the company and Afprint’s reclassification to the Agriculture/Agro-Allied sector of the NSE.

 

Others issues discussed include, post delisting emergence of Afprint as a subsidiary of the Kewalram Chanrai Group and way forward for the Textile industry in Nigeria. Excerpts:

NB: This interview was held in March 2010 and we are just publishing it for the first time.

 

 

Problem of the Nigerian Textile Industry

 

The problem that we have in the Textile industry today is an unfortunate one. The sector was once the highest employers of labour; coupled with the affordable prices of their products. In a country of about 150 million people; today we depend on the importation of clothing materials from outside our shores; as a nation, it is very sad. The industry has gone completely out of existence.

 

However, the few of them that were listed on the Floor of the Nigerian Stock Exchange (NSE) have been delisted. Afprint Nigerian Plc (Afprint) recently towed this path too, some years back, the company sold off its equipments to a Pakistani company; a country were they show some measure of seriousness in developing their Textile industry; despite the war ravaging the place.

 

Pakistan is a country that is interested in the exportation of Textiles in order to earn foreign exchange (FOREX). They bought Afprint over as I speak with you, the company has no machinery anymore; prior to this time, what people were seeing was just an empty factory.

 

The company has been sustained these periods due to its subsidiary that is into the manufacturing of edible oil and Kewalram Chanrai Group; distributors of Mitsubishi brand of automobiles. Afprint as a company has long gone under.

 

On a yearly basis, the company has been holding Annual General Meetings (AGM’s) and no dividend has been paid to investors. The company has being paying listing fees to the Exchange all these while; spending money to print Annual Reports and paying its Registrars; without yielding any income.

 

Following this, Shareholders of the company came together to advice the Board on the need to delist from the Floors of the NSE; so that they can be paid off by Afprint; while anticipating what would happen in future. Therefore, based on these, the Board of the company decided to delist and pay off its shareholders.

 

On January 06 2010, the company applied for delisting and went through the Court and appointed Financial Advisers who would quantify the shares of the company based on the current Market price; in order to determine the pay off of shareholders who invested in Afprint.

 

The share has been at the 50 Kobo nominal value and suddenly it moved up above that; which made Market Watchers wondered what would have been the key driver of that upsurge in price; knowing full well that the company has gone moribund.

 

On January 16 2010, a Court ordered Extraordinary General Meeting (EGM) was held following Regulatory approval, and it was decided that N1.50 Kobo should be paid to holders of Ordinary Shares of the company; this is the current situation now as regards Afprint.

 

 

FACTS CHECK:

 

Six (6) Textile companies were quoted on the First-Tier Securities segment of the NSE, four have been delisted. They are Enpee Plc, Asaba Textile Mills Plc, Aba Textile Mill Plc and Dangote-Owned Nigeria Textile Mill Plc while Afrprint applied for reclassification to the Agro-Allied sub-sector of the NSE due to its diversion to agricultural production and stoppage of textile manufacturing activities.

 

 EDITORS PICKS:

 

Victor Eburajolo, Deputy Managing Director (DMD) Afprint affirmed that as a good corporate citizen, Afprint pledged its loyalty to the rule of law and de-listing procedure as contained in the Companies and Allied Matters Act (CAMA) of 1990, he further affirmed that CAMA requires that shareholders’ resolutions and approval of the scheme of arrangement at the extraordinary general meeting be sanctioned by a court and registered by the Corporate Affairs Commission, Securities and Exchange Commission (SEC) and the NSE.

 

 

Delisted Afprint and N1.50 Kobo payoff to shareholders

 

Due to the fact that such an EGM was ordered by the Court, a company has to report back to the Court to brief it on what has happened. The payment would have commenced since January 20 2010; but the Judge handling the case has been indisposed; but would soon give the go ahead for the payoff of investors as soon as he is available.

 

Already, the money is at the Escrow Account in United Bank for Africa Plc (UBA) for payment by Afprint Registrars.

 

Compared to N1.86 Kobo and Afprint is paying investors off with N1.50 Kobo, they have done fairly well. If they had paid the nominal value of 50 Kobo, what would shareholders have done? From my view they have tried their best paying off with N1.50 Kobo.

 

Government and N100 billion stimulus package for the Nigerian Textile industry.

 

All along, the Nigerian Government has been paying lip services to the Textile Industry. They have affirmed that N70 billion and an extra N30 billion has been approved for the bailout of this ailing sector, but up until now; no fund have been disbursed.

 

Sometime ago, the Bank of Industry (BOI) owned up that the funds were channeled through it; but the problem is why is the Bank not disbursing the funds and to which beneficiaries.

 

All the Textile firms have folded up, therefore; which one is still remaining in business that will benefit from such an amount. This money has been kept by some individuals who are earning interest on same. For your information, the funds are going to be paid back to the Government. This fund is to enable the industry revive and create job opportunities.

 

Our Textile industry has not done well; take for instance Asaba Textile Mills Plc and the rest of them, they have all gone. When you visit the North the same situation.

 

Afprint was not the first to wind up production due to the neglect in the Textile sector of the Nigerian economy. We put the blame on the door step of the Government; the Nigerian Customs Services (NCS) are not helping issues; when they have allowed substandard Textile materials to make its way into our shores through the porous borders.

 

This brought unhealthy competition in the sector; and those smuggling in these textile materials do not pay import duties. Some of our local companies were overtaxed and they compete with smugglers; we should know that this would bring unhealthy competition; which is a serious problem that has plagued the Nation’s Textile Industry.

 

Take for instance, the last surviving company on the Textile Sector of the NSE, United Nigeria Textile Plc, they are posting loss on a yearly basis and shareholders were not been paid dividends. If the N100 billion stimulus package was actually earmarked for the industry, the Government should first and foremost identify the problems of the industry before working out their bailout plans and executing same. It is not just budgeting money.

 

The Nigerian Government should not say that they have earmarked N100 billion to bailout the Textile industry; when it is actually going into extinction; rather, they should return the funds into the National Treasury so that it could be channeled into other meaningful ventures. The question is why is the money being kept at the Bank? Who is benefitting or making use of the interest accrued on such funds? Again, what time was this fund disbursed?

 

Afprint reclassification to the Agriculture/Agro-Allied sector of the NSE

 

The reclassification of the company on the Floor of the NSE was part of its delisting process. The Exchange that is saddled with the responsibilities of listing equities did not understand. However, the Regulator reclassified Afprint due to the fact that they have a subsidiary that manufactures edible oil in the Agric/Agro-Allied subsector of the NSE. At the end of this delisting exercise, their names would no longer appear on the Daily Summary (Equities) of the NSE.

 

Afprint and emergence as subsidiary of Kewalram Chanrai Group

 

Kewalram Chanrai is majority shareholder in Afprint, they own close to 50 percent (50%) shares in the company followed by BOI. If Afprint now emerge as a subsidiary of Kewalram Chanrai, there is nothing bad in it; because of the latter’s stake in it.

 

Afprint may have the chance to relist in the Nation’s Capital Market (NCM), if the Nigerian Government implements the right policy to support the Textile industry. The company is doing this to chart a new course.

 

Way forward for the Textile Industry in Nigeria

 

Take for instance Pakistan a country that is serious in Textile manufacturing in the world right now. For your information, some of the materials our people are using today are from places like Ghana and Senegal; both in the West Coast of Africa.

 

For Ghana, their materials are in high demand in Nigeria; no thanks to trade liberalisation in the Sub-region. If Nigeria had done the right thing, as a Giant of Africa, they would now be exporting to places like Ghana and other parts of the world.

 

End